Barbadian investment holding company MPC Caribbean Clean Energy Limited (MPCCEL) has completed its structural reorganisation which has given it direct economic access to several renewable energy assets.

The reorganisation, which began last May, was officially completed on September 25 as seen from a disclosure to the Jamaica Stock Exchange (JSE) and Trinidad & Tobago Stock Exchange (TTSE). Prior to the reorganisation, MPCCEL owned an 85.69 per cent stake in Cayman-based MPC Caribbean Clean Energy Fund LLC (MPC Fund) which was the entity that held the renewable energy investments across Latin America and the Caribbean. The other 14.31 per cent interest was held by MPC Team Investment LP.

That intermediary layer (MPC Fund) meant that MPCCEL’s income statement only reflected a fair value gain or loss adjustment each year for its investment in the MPC Fund. Unless that MPC Fund paid any dividends up to MPCCEL, the company would earn no income and only have a cash burn to cover its ongoing expenses.

Now, MPCCEL owns direct equity interests in different renewable energy projects across the region. These include a 68.8 per cent equity stake in Barbados-based EREC Investment Limited, a holding company which owns 49.99 per cent of Eight Rivers Energy Company Limited, the entity set up to operate the 37 MW solar PV plant in Paradise Park, Westmoreland, Jamaica; a 50 per cent joint venture (JV) interest with the other JV partner ANSA McAl Limited in CCEF ANSA Renewable Energies Holdings Limited (CARE), a Barbados International Business Company (IBC) which owns the 21MW Tilawind Wind Farm in Guanacaste, Costa Rica; a 100 per cent interest in Panama-based MPC Renewables Central America and Caribbean, SA, an entity that owns the 6.4 MWp solar park in San Isidro, El Salvador; and a 72.794 per cent stake in Monte Plata Solar Holding, Sociedad Limitada which owns phase 1 of the 33.3894 MW Monte Plata solar park project and phase 2 of the 40.50 MW Monte Plata solar park project. The stake in Monte Plata Solar Holding is held through CARE, the JV entity used by MPCCEL and ANSA McAL.

The way these investments will be accounted for are yet to be determined, but the removal of the MPC Fund will save the company an estimated US$350,000 per year in operational expenses and allow for any economic benefits such as dividends or associated fees to flow directly to MPCCEL’s bank account and income statement.

The company’s third-quarter report will be published by November 14, while the fourth-quarter report to be published by February 14 will reflect the first quarter of the new organisational structure.

As part of this reorganisation, the previous 14.31 per cent stake in the MPC Fund was transferred to MPCCEL in exchange for the company issuing 5,278,319 additional class B shares at a cost of US$0.877 per share to MPC CCEF Participation GmbH, a nominee company beneficially owned by MPC Capital AG. This would bring MPC Capital AG’s total class B share count to 5,970,140 shares and make it the largest class B shareholder of MPCCEL, just ahead of the Teachers Credit Union Co-Operative Society.

As a result of this share issuance, MPC Capital AG would own 22.16 per cent of the class B shares while the Teachers Credit Union Co-Operative Society stake would be diluted from 25.15 per cent to 20.22 per cent. Despite this voting interest dilution, the disclosure noted that there was no economic dilution to existing shareholders. MPCCEL will apply to the JSE and TTSE to have a supplemental listing of the newly issued shares to MPC CCEF Participation GmbH.

Also, MPCCEL’s by-laws were amended to allow for any class B shareholder with a shareholding above 15 per cent to appoint a single member to the advisory committee which gives directions on investments by the company in the Caribbean basin. This means that the Teachers’ Credit Union Co-Operative Society and Sagicor Pooled Funds would be able to appoint a member to this committee.

As part of the move to delayer the whole management structure, MPCCEL has entered into two agreements with MPC Renewables Panama SA, which now owns the class A management share. MPC Renewables Panama SA will now act as the manager of the company under a management services agreement which will cover investor relations, the listing management on both stock exchanges and other ongoing operational requirements. There will also be a transaction management services agreement which covers support to MPCCEL’s ownership and operation of the renewable energy projects and future acquisitions or divestments.

The MPC Fund and all other Cayman entities in the MPCCEL group structure will be de-registered with the Cayman Islands Monetary Authority, liquidated and wound up.

Prior to the completion of the reorganisation, MPCCEL’s second quarter (April to June) report showed it recording a US$1.33-million fair value gain on the MPC Fund. The fair value adjustments related to the MPC Fund usually take place in the company’s fourth quarter. MPCCEL’s MPC Fund investment was valued at US$31.73 million at the end of June.

That fair value gain resulted in MPCCEL recording a net profit of US$1.23 million for Q2 and US$1.47 million for the six-month period, slightly below the US$1.59-million recorded in 2023.

The portfolio assets recorded an EBITDA (earnings before interest, tax, depreciation and amortisation) of US$3.90 million for the six months, which was 11 per cent below the US$4.40-million figure in the corresponding 2023 period. There was also a higher energy output variation and lower weighted average availability for the period.

MPCCEL closed Monday at $88/US$0.7099 on the JSE and at US$0.98 on the TTSE. Based on the US$0.877 issue price for the new shares, that translates to $137.63 and TT$5.88 based on Monday’s foreign exchange rates.