MPC expects to carve a quarter off its operating costs after reorganisation
Published:Wednesday | October 2, 2024 | 12:07 AM
MPC Caribbean Clean Energy Limited, MPCCEL, expects to cut operating costs by up to 25 per cent following the reorganisation of the group to simplify its structure.
“By simplifying our organisational architecture, we are better positioned to navigate the evolving landscape of the Caribbean’s renewable energy market,” said Chairman Fernando Zúñiga in a statement.
The reorganisation, which received shareholder approval last year June, took effect a week ago, on September 25.
“The leaner, more efficient structure is anticipated to yield a reduction in annual operating expenses of up to 25 per cent,” MPC said.
That amounts to around to around US$60,000, based on the company’s annual operating expenses of US$247,315 for the 2023 financial year.
Discounting last financial year, when expenses climbed by 30 per cent due to increased accounting fees and valuation reports, the savings would hover at around US$45,000.
MPC owns stakes in four wind and solar power plants across the region: Paradise Park solar farm in Jamaica, Tilawind windfarm in Costa Rica, San Isidro solar plant in El Salvador, and Monte Plata solar plant in Dominican Republic.
The reorganisation has resulted in MPC Caribbean owning and managing the energy assets directly. Previously it did so through a fund, called MPC Caribbean Clean Energy Fund LLC, in which MPC Caribbean had a near 86 per cent stake.
“In connection with the reorganisation, all assets of the fund were transferred to the company, which obtained full ownership of the fund’s interests in renewable energy projects and operating assets across the Caribbean and Central America,” MPC said in a market filing.
The reorganisation “represents only a change in legal structure with no change of ultimate beneficial ownership, while reducing one intermediate layer,” it said.
MPC Caribbean Clean Energy was set up by MPC Capital in 2017 and listed on the Jamaica Stock Exchange and Trinidad and Tobago Stock Exchange in early 2019.
MPC’s total assets were estimated at around US$30 million in March.
The listed company is controlled via a Class A management share, while its near 21.7 million Class B shares are held by stock market investors, mainly pension funds.
With the reorganisation, MPC Caribbean’s parent in Germany, MPC Capital AG, now holds 22.16 per cent of the listed entity, up from 3.19 per cent. The listed company trades as MPCCEL on the stock market.
However, the transaction did not result in a dilution of ownership for existing shareholders of MPCCEL, it noted.
Under the restructuring, MPC Capital AG gave up and exchanged its previous holdings in the fund for additional Class B shares.
Its 14.31 per cent interest in the fund, which was previously held by “an indirect daughter company” called MPC Team Investment LP, was transferred to MPCCEL in exchange for 5,278,319 additional Class B shares. Those shares were issued to MPC CCEF Participation “at the notional price of 87.7 US cents per share”.
“As a result, the company combined its previous 85.69 per cent interest in the fund with that 14.31 per cent and now holds 100 per cent of the interests in the various renewable energy projects/operating asset investments. In the circumstances the issuance of the additional Class B Share has not caused any economic dilution per share to the existing Class B shareholders,” MPC said.
The realignment represents a change in “legal structure while maintaining continuity in beneficial ownership,” it added.
Under the restructuring, all assets previously held by the MPC Caribbean Clean Energy Fund LLC have been transferred to MPCCEL, “consolidating full ownership of the fund’s interests in renewable energy projects and operating assets across the Caribbean and Central America,” MPC said.