Around a dozen-odd years ago.....I was working in Germany, and paying German taxes. It's a fairly complicated mess, and I ended up hiring an accountant to handle this business. So I had this meeting with the accountant to rationalize tax credits and 401k benefits.
My accountant was nice about this need for clarity, but kindly made it blunt.....my 401k contributions would be worthless for tax credits or easing my tax situation. In fact, there were basically only two investment platforms at the time.....freighter ships and solar/wind power enterprises....that I could invest into and get some type of credit.
I spent a month reading over some literature for wind power enterprises in Germany, and eventually came to this decision....it just didn't pay back that much, and the potential for failure was greater than most average Wall Street investments that I'd make. I hated that decision, but stuck with it.
This week, one of those little wind-mill operations came up in the news here in Germany. Ökounternehmen Prokon is the name of the company. They do wind-power only.
The deal is....you buy into a syndicate, and the management team sells to the national power grid. The profits are kinda split up....some go to more wind-mills.....most should go back to the investment crowd. There are roughly 75,000 folks who are into this company....to the tune of about 1.4 billion Euro (Focus's numbers that I saw this morning). It's a fair sum of money.
What Prokon did at some point.....trying to get more people into the system....was promise a higher yearly percentage payback. It's hard to say if the finance side of the company was agreeable to this, or if some of the folks were hoping to hype up the generous payback.....to get more folks onto the system.
The general problem? They just weren't making the kind of profit to sustain both a eight percent return and a decent maintenance program with their company employee costs.
Prokon wants the investment crowd to stay around, and give them some patience. They think they can work themselves around to some other deal. It's hard to say what that deal might be. Maybe getting themselves sold to someone else? Maybe some billionaire buying them? Maybe some of the folks they owe money to.....giving them a year's extension?
You can imagine these 75,000 Germans sitting there. They all had some advice from an accountant a decade or two ago....just like me....and wanted an investment vehicle that would be a tax credit in some way. The German government has never had any desire to enter into the 401k episode....mostly I think....because Germans in general hate the Wall Street environment and extreme risks. Although, if you look at the freighter environment or the windmill power deal.....it's a pretty big risk itself.
I won't predict what happens here. But I kinda wonder what would happen if Prokon goes bankrupt and how their property might be bought up by players out there for a cheap price. The eight percent return? That disappears overnight in that case, and everyone would probably return to the standard two or three percent return with the new company. The value of 1.4B Euro? Well....that would be a curious thing on how it holds value in the end.
So when you hear Prokon mentioned.....it's mostly a woeful tale of money spent, personal capital invested, and some unwise financial moves that just never worked right.
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