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Auditors reclassify MPC profit as loss

MPC CARIBBEAN Clean Energy booked its largest audited net loss while extending its convertible debt load for another three years.

The company’s outlook remains positive despite the 2022 setbacks. The unaudited US$700,700 net income booked by MPC in the year was reclassified by its auditors as a US$2.18-million comprehensive net loss. It was due to including fair value adjustments to its assets. Its auditors were BDO Jamaica.

The company holds ownership stakes in Paradise Park solar farm in Jamaica, Tilawind wind farm in Costa Rica, San Isidro solar park in El Salvador, and its latest, Monte Plata solar park in the Dominican Republic.

The company blamed its audited loss on the ongoing global challenges, which negatively affected the underlining fair value of its energy plant holdings. MPC periodically books the changes in the value of the fund to its accounts.

“Due to the ongoing global macro-economic environment, including increasing interest rates, it is inevitable that the fair value estimation of the assets is exposed to adjustments,” stated the financial notes.

It explained that because of the increasing cost of equity, the fair value of the portfolio of the investment company has been negatively affected in 2022.

Formed in 2017, MPC acts as an investment holding firm, with a separate, but affiliated fund called MPC Caribbean Clean Energy Fund LLC. The fund holds the assets of renewable energy projects across Jamaica and the region.

“Following the results of the audit, the accounting treatment of the fair value of the investment in the MPC Caribbean Clean Energy Fund LLC has been adjusted due to the impact of transactions and balances within the structure of various holding companies. However, it is a pure accounting calculation effect and the company believes in a steady growth of the investment portfolio in the future,” stated MPC in its financials.

The 2022 comprehensive loss of US$2.1 million, compared to US$1 million comprehensive income in the prior year.

Regarding the extension of its US$10-million convertible loan, MPC explained that the maturity date of the note was extended from March 2023 to March 2026. The company did not expand on the rationale for the extension, beyond stating it was “agreed between both parties”.

“The company and RBC Investment Management Caribbean Limited agree on an extension of the term for the convertible promissory note,” stated Fernando Zuniga, chairman of MPC in a preface to financials.

The extension means that MPC would not have to find millions to pay out the convertible note at this time. It also means that RBC would not convert the note into ordinary shares which would have resulted in dilution for existing shareholders. The conversion option, if it occurred, would have increased the shares by roughly 50 per cent from 21.6 million units to roughly 31.6 million units, based on a US$1 to one share conversion in the agreement.

“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,” stated the company.

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