MPC Caribbean Clean Energy Limited (MPCCEL) has received an extension from RBC Trust (Trinidad & Tobago) Limited for its non-voting convertible promissory note for an additional three years.

The US$10-million promissory note was set to mature last Friday and be converted into class B shares if the principal sum of the note was not paid in cash. However, a disclosure noted that the directors had approved the extension of the maturity date of the promissory note which will now be March 2026. The note entitles the holder to distributions equivalent to dividends paid to holders of the class B shares with US$1 in principal equating to one class B share.

The proceeds from that promissory note went into MPC Caribbean Clean Energy Fund LLC which acquired solar parks in San Isidro, El Salvador in December 2020 and Monte Plata, Dominican Republic in September 2021. The Cayman LLC acts as the feeder vehicle meant to accommodate the needs of Caricom investors who invest alongside the entity into solar PV and wind farm assets in the Caribbean. It is 85.69 per cent owned by MPCCEL.

MPCCEL experienced a net loss of US$2.19 million (J$334.36 million) for 2022 compared to the net profit of US$1.14 million. This was due to a US$2-million unrealised loss in the MPC Fund LLC with the investment now valued at US$28.58 million. This fair value loss was driven by the ongoing global macroeconomic environment which includes higher interest rates.

The reduction happened despite the 29 per cent increase in the portfolio’s earnings before interest, tax, depreciation and amortisation (EBITDA) to US$5.69 million and weighted average availability of 99.15 per cent.

Despite this improvement in earnings, MPCCEL’s portfolio still faces significant headwinds for 2023. Apart from the La Nina weather phenomenon, the San Isidro solar asset was limited in its production from the operating inverters. The replacement of the installed inverters was supposed to be complete during the first quarter.

The Monte Plata Phase II expansion is expected to bring on an additional 40.5 MWp with construction to start this quarter and be complete by the second quarter of 2024 with a total output of 74 MWp.

MPCCEL’s portfolio of assets has three solar parks and one wind farm spread across Jamaica, Costa Rica, El Salvador and the Domincan Republic. Its Paradise solar farm in Jamaica experienced malfunctions with its medium-voltage transformers and the theft of solar panels in the second quarter. However, it was 5.38 per cent above the expected business plan for the fourth quarter. The TilaWind Corporatión S A in Costa Rica was able to refinance a loan on January 5 which resulted in a lower interest rate and reserve balance as well as preferable repayment conditions.

While the promissory note holder has not received any distributions to date, investors at the company’s initial public offering (IPO) have only received a US$0.089 dividend totalling US$1.02 million in September 2019. Despite hunting for US$72.85 million between its IPO and rights issue, MPCCEL has only received US$21.67 million in equity capital for its class B shares.

While MPC listed at US$1/J$130, its stock price on the Jamaica Stock Exchange currently trades at US$0.6977 and J$71 and US$0.98 on the Trinidad and Tobago Stock Exchange.

“The company’s outlook is strongly linked to the projected resource availability in the region (meaning: wind and solar resources). The first forecasts for 2023 are positive and experts assume that the La Nina phenomenon will phase out in mid-2023. This should therefore result in a higher production potential compared to the previous year. The company believes in a steady growth of the investment portfolio in the future,” said chairman of MPCCEL José Fernando Zuñiga Galindo in the chairman’s report.