MPC Caribbean reorganisation pushed back to 2024
Shareholders will have to wait an extra quarter for the reorganisation of MPC Caribbean Clean Energy Limited (MPCCEL) to be completed due to the complexity of the restructuring.
Shareholders voted at the company’s May 30 annual general meeting (AGM) for the restructuring of the company which would see it have direct exposure to the renewable energy assets which is currently held in a fund. Currently, MPCCEL has an 85.69 per cent of MPC Caribbean Clean Energy Fund LLC which owns the renewable energy assets in Jamaica, El Salvador, Dominican Republic and Costa Rica. The reorganization was expected to have been completed in the current fourth quarter.
“MPC team and legal counsels are currently working on the issuance and listing of the additional Class B shares with licensed brokers in Jamaica (Sagicor) and Trinidad & Tobago (First Citizens), however, due to complexity and involvement of many jurisdictions, the completion of all relevant documentation and specifically Lenders’ consents are pending. We expect to execute all reorganization documents in January / February 2024,” said MPC in response to Jamaica Observer questions.
During the third quarter, MPCCEL saw a sudden spike in audit fees and director fees to US$14,000 and US$18,000, respectively, which likely reflects the current costs being undertaken for the reorganisation. These higher fees contributed to MPCCEL’s net loss jumping 46 per cent to US$58,851. For the overall nine months, the net loss has increased 20 per cent to US$146,707.
MPC clarified in an additional response to the Caribbean Business Report that it adjusted the director fees which were last reviewed in 2019 with the independent director fee has been doubled to US$10,000 and the corporate director fee to US$7,000. MPCCEL currently has two independent directors and one corporate director.
MPCCEL’s fair value interest in the MPC Fund is valued at US$28.58 million with the stake set to be remeasured during the current fourth quarter. The MPC Fund owns a 34.4 per cent interest in the Paradise Park, Westmoreland, which is a 51.5 MWp solar PV farm; a 50 per cent joint venture interest with Ansa McAl in CCEF ANSA Renewable Energies Holdings Limited which owns the Tila Wind CorporatiÃ³n S A that consists of a 21 MWp wind farm in Costa Rica; 100 per cent interest in San Isidro which is a 6.4 MWp solar park in El Salvador and a 72.794 per cent interest in Electronic JRC SRL which owns the 33 MWp asset Monte Plata Phase I in the Dominican Republic.
Its Paradise Park solar park had reduced energy generation below forecasts due to operational issues during the quarter. The energy production of the Tilawind and Monte Plata Phase I assets were also below forecasts with the Costa Rican asset undergoing maintenance while the Dominican solar park is still dealing with issues related to PV modules. Only the San Isidro asset was in line with energy generation despite being disconnected three times during the quarter due to their being more irradiation than expected.
These assets contributed to US$1.16 million in EBITDA (earnings before interest, tax, depreciation and amortization) during Q3, a 25 per cent jump over the prior year due to a lower energy output variation. For the overall nine months, the EBITDA is up 15 per cent to US$5.30 million with the energy output variation below ten per cent and weighted average availability for wind power assets above 98 per cent.
EBITDA is a financial measure to determine a company’s earnings when adjusted for non-cash items and other metrics to gauge a firm’s earning potential. The energy output variation simply refers to the accumulated difference between actual output from renewable energy assets and the forecasted energy output for the period.
MPCCEL was able to extend its US$10 million convertible promissory note to March 2026 earlier this year. Its largest shareholder is the Teachers Credit Union Co-Operative Society with a 25.15 per cent stake. All shareholders are set to be diluted once the reorganisation is complete as MPC CCEF Participation GmbH is set to receive 5,278,319 class B shares relative to the 21,666,542 class B shares in issue.
MPCCEL’s stock price closed the Jamaica Stock Exchange on Wednesday at J$91.99/US$0.57 and at US$0.98 on the Trinidad & Tobago Stock Exchange. Martin Vogt who is the Managing Director for renewable energies at MPC Capital GmbH and Chief Executive Officer (CEO) of MPC Energy Solutions resigned on July 5 with Stefan H.A. Meichsner managing responsibilities until a new CEO is found.
“Final approvals were obtained from the lenders and the finance document package is ready to be executed by the end of December. Which means that construction activities can be accelerated, and Commercial Operations Date is scheduled for the end of September 2024 subject to signing of the loan agreement by the end of this year and all construction activities following current agreed schedule,” MPC said on Monte Plata phase II which was to begin construction during this quarter in the Dominican Republic.