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Mainstream cedes 10% stake in Chile portfolio to junior lender in debt restructuring

Dublin-based renewable energy group agreed the restructuring with Ares Management by converting certain loans into equity

Mainstream Renewable Power handed over a 10 per cent stake in its Chilean platform to junior finance provider Ares Management as part of massive debt restructuring last year

Joe Brennan
Wed Feb 21 2024 - 05:34

Mainstream Renewable Power, the Dublin-based green energy group, handed over a 10 per cent stake in its key Chilean portfolio to US alternative lender Ares Management as part of a wider restructuring of debt against the massive solar and wind farm platform.

The stake was disclosed in an investor presentation published by Mainstream’s majority owner, Norwegian group Aker Horizons, late last week.

Mainstream, founded by the late renewable energy entrepreneur Eddie O’Connor, who died last month, restructured €900 million of senior debt of two companies linked to the Chilean platform in November, after the project had been dogged by major challenges relating to the South American country’s market. This involved the deferral of principal repayments and commitment of fresh finance by Mainstream and Norwegian bank DBN.

The company, led by chief executive Mary Quaney, also revealed at the time that Ares, a provider of junior debt to the Chilean platform, had managed to secure a “minority equity interest” in the Chilean entity. This served to settle a lawsuit filed by Ares in New York months earlier, as it stood at the back of recovery queue among lenders as restructuring talks were under way.

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The investor presentation revealed that €243 million of Ares loans had been converted into a €91 million facility where interest would effectively be rolled up until it matures in 2035. It also disclosed that the minority stake offered amounted to 10 per cent in the Chilean platform, known as Andes Renovables.

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 has 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 about €870 million impairment charges against Chilean assets since the start of 2022 – driving €1.2 billion of pretax losses at the Irish company over the same period.

However, Mainstream managed to swing into a net profit of €9 million in the fourth quarter of last year, driven by accounting gains triggered by the debt restructuring.

Mainstream has a total wind and solar development pipeline of more than 20GW, spanning Chile, Norway, South Africa, the Philippines and Vietnam.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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