MPC Caribbean Clean Energy Limited, a management company for renewable projects, announced that an investor provided the company with US$10 million in cash by way of a new promissory note, which will result in growing its capital base by half to US$30 million.
But there’s also a conversion clause that could make the investor, whose identity was not disclosed, the largest shareholder in the listed company that trades on both the Jamaica Stock Exchange and Trinidad & Tobago Stock Exchange.
The note in the amount of “US$10 million to an accredited investor” will go into the MPC Caribbean Clean Energy Fund. The company utilises the fund to finance acquisitions in energy ventures. MPC Caribbean’s major assets include holdings in a wind plant in Tilawind, Costa Rica, and a solar plant at Paradise Park in Westmoreland, Jamaica.
The investor will receive dividends capped up to 8.0 per cent each year, the market notice stated. So, it’s likely that the company will seek out projects that earn above the cost of servicing the note, which is to be issued today, November 6, upon approval for registration by the Trinidad and Tobago Securities and Exchange Commission. The company’s capital will grow from about US$20 million to US$30 million with the note.
At maturation in three years, there’s also a clause that allows the notes to be converted to ordinary shares, a transaction that will need the approval of shareholder approval at an annual general meeting. This would result in the undisclosed investor holding nearly US$10 million in shares, assuming all the notes are converted, which, at present levels, would make the investor the largest shareholder in the renewable energy company. Currently, that status belongs to Teachers Credit Union Co-operative Society of Trinidad, which holds 4.9 million MPC units, equivalent to 23 per cent.
“Upon maturity,on March 31, 2023, if the principal sum of the note has not been paid in cash on that date or earlier, the note will convert into Class B shares of the company, subject to the prior approval of such conversion at a shareholders’ meeting,” MPC disclosed to the market this week.
The company, which is controlled by equity firm MPC Capital in Germany, made no disclosures on its affiliate issuing the note up to press. Requests for comment from MPC Caribbean were unanswered up to press time.
The company agreed to pay a dividend to its new noteholder whenever it issues dividends to its current shareholders.
“The note will entitle the holder to receive, from time to time, distributions equivalent to the dividends approved by the directors of the company to be paid from time to time to holders of Class B shares, with each US$1 of the principal of the note corresponding to one Class B share, limited to a maximum of eight percent per annum in aggregate in any one year,” the notice said.
Since its listing on the two exchanges last year, MPC Caribbean has paid out around US$1 million in dividends, which was distributed last year September at 8.9 cents per share. No dividend has been declared so far in 2020.
The notes will become the first substantial addition to its capital by way of convertible debt. MPC Caribbean Clean Energy raised equity on the two regional markets in 2019 via an initial public offering of shares, amounting to US$11.4 million; and in early 2020, it tapped the market again for another round of capital, US$10.2 million, via a rights issue on both exchanges.