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MPC Caribbean transferring fund assets

Renewal energy investor MPC Capital will transfer assets of MPC Caribbean Clean Energy Fund LLC to MPC Caribbean Clean Energy Limited, MPCCEL, under a restructuring of the German company’s regional holdings that’s subject to approval by shareholders.

Under the restructuring, MPCCEL will create and issue nearly 5.28 million additional shares worth US$4.63 million to a third entity called MPC CCEF Participation GmBH, at the price of 87.7 US cents per share. That price is currently at a premium to the US 60 cents at which the MPCCEL stock last traded in Jamaica.

MPCCEL, which is listed on both the Jamaica and Trinidad Stock Exchanges, invests in energy assets in various countries of the region, including Jamaica’s largest solar farm known as Paradise Park, in which MPC holds a 34 per cent stake.

The listed shares in MPC Caribbean are designated ‘Class B’ status and are mainly held by pension funds and other large investors. MPC Capital holds a single ‘Class A’ or management share through which it controls MPC Caribbean.The additional 5.28 million Class B shares will be listed in Jamaica and Trinidad, alongside the over 21.66 million shares that currently trade in both markets.

The transaction will see MPC Capital AG’s indirect stake in MPC Caribbean Clean Energy Limited climbing from 3.19 per cent to approximately 22.2 per cent, ultimately placing it among the top three shareholders, said Managing Director of MPC Capital Martin Voight.

In an interview with the Financial Gleaner, Voight said the reorganisation of the group would reap savings of around US$2.5 million to US$3.5 million of savings from the elimination of about 25 per cent of expenses.

It will, essentially, redomicile the energy assets from The Cayman Islands, where the fund is incorporated, to Barbados, where MPCCEL is registered and currently operates as a regular company.

“When the fund assigns the assets from Cayman to Barbados, there are no tax impacts such as capital gains or withholding or transfer taxes,” said Voight. “The economic transfer will have no adverse impact on shareholders,” he said.

The reorganisation and creation and issue of the new shares will be put to a vote at the upcoming MPC Caribbean annual general meeting on May 30 in St Michael, Barbados.

Voight said the MPC Caribbean Fund wrapped up its investment cycle last year after raising US$35 million through various transactions, inclusive of the MPCCEL IPO in Jamaica and Trinidad in late 2018 and rights issue in January 2020, a US$10 million convertible note held by RBC Bank.

The RBC debt is convertible to MPC Caribbean shares at a price of $1 per share, and is exercisable at the the end of March 2026.

“The fund closed its fundraising period in 2022 and has also effectively deployed its capital. The the last investment was in the Dominican Republic,” said Voight.

He added that the changes had become necessary because the situation in The Cayman Islands has become untenable and impractical due to the clampdown by the European Union on such trying to reign in tax havens. Cayman is on a watch list for countries that need to tighten their governance and financial structures given the potential for contagion from tainted money.

As a result of those pressures: “Our reporting requirements to operate and maintain the fund structure just became significantly more expensive and intensive in the last years,” Voight said.

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