MPC Caribbean reorganisation on track for third quarter
MPC Caribbean Clean Energy Limited (MPCCEL) shareholders can look to the second half of 2024 for the company’s reorganisation to be complete and see the direct financial contribution of the renewable energy assets.
The MPCCEL reorganisation was set to have been completed in Q4 2023, but that timeline was pushed back due to the complexity of the arrangement in numerous jurisdictions. All the key reorganisation documents were also expected to have been executed by February.
“Also, the investment advisor has been focusing on finalising the company’s strategic reorganisation of its group structure which aims to simplify the organisation, increase transparency, and reduce administrative costs. The process of the asset transfer is expected to be finalised by the end of the second quarter of 2024 and the liquidation of the investment company
[MPC Caribbean Clean Energy
Fund LLC] by the third quarter of 2024,” said Fernando Zúñiga, MPCCEL chairman, in his report to shareholders published on Thursday.
MPCCEL received approval from its shareholders last May to reorganise the company and transfer the assets of MPC Caribbean Clean Energy Fund LLC to its own books. MPCCEL has an 85.69 per cent interest in the Cayman MPC Fund LLC which directly owns the renewable energy projects across the Caribbean and Latin America. MPCCEL currently accounts for the Cayman fund as an investment measured at fair value which leads to the company recording fair value gains or losses each year based on the underlying values of the assets.
However, under the reorganisation, MPCCEL would directly own these assets and carry the underlying performance of the assets on its income statement and balance sheet. Currently, MPCCEL’S only revenue line is the fair value changes of the Cayman MPC Fund which was a Us$1.82-million gain in 2023 compared to a fair value loss of US$2 million in 2022. While this is a positive figure, it does not represent actual cash coming into the business.
As a result, MPCCEL’S cash dwindled from US$164,442 to US$3,686 at the end of 2023 as its total expenses moved by a third to US$247,315 due to the ongoing reorganisation costs which has been budgeted for US$500,000. Thus, MPCCEL had a profitable year of US$1.59 million, but that didn’t reflect the economic reality.
Based on this reduction in cash, the Cayman MPC Fund authorised a dividend payment on February
7 to the tune of US$303,355 to its members based on MPCCEL’S low liquidity position to cover the budgeted expenses for the current financial year. MPCCEL received US$265,380 with MPC Team
Investment LP receiving US$37,975 on February 22. MPCCEL’S audited financials revealed that 93 per cent of its reorganisation budget has been spent already.
MPCCEL’S total assets at the end of 2023 were US$30.41 million with the investment in the MPC Fund LLC valued at US$30.39 million. Its total liabilities were US$10.20 million which was largely composed of the US$10 million convertible promissory note held by RBC Trust (Trinidad & Tobago) Limited. That promissory note’s maturity was extended to March 2026 and is set to be converted to the company’s class B shares on a one-to-one basis if it remains unpaid. MPCCEL’S net assets attributable to shareholders was US$20.21 million.
MPCCEL’S portfolio consists of the Paradise Park solar farm in Westmoreland, Jamaica, the Tilawind Wind Farm in Costa Rica, a 6.4-MWP solar park in San Isidro, El Salvador, and phase I of Monte Plata solar park in the Dominican Republic. The EBITDA (earnings before interest, tax depreciation and amortisation) of these assets grew nine per cent to US$6.22 million as a result of Monte Plata phase I’s contribution in 2023. Monte Plata phase II is set to be completed by the end of 2024 with the Cayman MPC Fund investing US$9.82 million to this project so far.
MPCCEL’S share price closed March at J$93.5/US$0.54 on the Jamaica Stock Exchange (JSE) and at US$0.98 on the Trinidad and Tobago Stock Exchange (TTSE).