Mainstream Renewable Power, the Dublin-based green energy group, has ceded a minority stake in its key Chilean portfolio to a US lender, as it sought a wider restructuring of debt against the massive solar and wind farm platform.
The Irish company said in July that it was moving to restructure the debt of two companies linked to the Chilean platform, after the project had been dogged by major challenges relating to the South American country’s market.
US investment firm Ares Management, a provider of junior construction finance to the Chilean platform, filed a lawsuit in New York around the same time against Mainstream, claiming at least $313 million (€281 million) of damages for unpaid principal and interest.
The case was subsequently settled. However, details of the wider restructuring, announced by Mainstream on Tuesday evening, show that Ares funds have secured a “minority equity interest” in the Chilean platform, known as Andes Renovables, while Mainstream “retains majority ownership”. A spokesman declined to comment on the exact future stakes.
Mainstream founder, businessman Eddie O’Connor, and a group of Irish high-net-worth individuals continue to own about 16.5 per cent of the company.
Mainstream won contracts in Chile in 2016 to develop 1.4 gigawatts (GW) of wind and solar energy projects – the equivalent of about a quarter of peak Irish electricity demand. However, a series of problems affecting the Chilean electricity market resulted in financial losses for a number of renewable energy companies in recent times.
The problems include a lack of energy transmission and battery storage capacity in the market as well as the design of the so-called spot market, where energy is traded for immediate delivery.
Mainstream, in which Norwegian group Aker Horizon’s took a majority stake in 2021, has booked the equivalent of €780 million impairment charges against Chilean assets since the start of last year – driving €1.2 billion of pretax losses at the Irish company over the same period.
The wider debt restructuring has seen Mainstream renegotiate the terms of $1 billion of debt of two Chilean units, Huemul Energia and Condor Energia.
The agreement includes a deferral period for interest until the third quarter of 2026, and a deferral of principal payments until 2027 for Condor and 2029 for Huemul, in addition to other concessions, Mainstream said in a statement.
Mainstream will also inject $145 million into the two companies through a so-called payment-in-kind debt instrument that matures in 2035. This will be funded by a new $220 million debt facility the Irish company has received from Norwegian bank DNB, which has been guaranteed by Mainstream shareholders, led by Aker Horizons.
“We are very pleased to have successfully concluded this restructuring process and I wish to sincerely thank the senior and mezzanine lenders for their commitment and support during this challenging process, which demonstrates their confidence in the long-term strength and sustainability of the [two] companies,” said Mainstream chief executive Mary Quaney.
“We look forward to continuing to work with government and industry in Chile to address the prevailing distortions in the market in order to secure a fair and level playing field for all forms of electricity generation in the future.”
