MPC Energy sells power plant in Caguas for $4M
As a result of the sale, the company will record a noncash write-off of approximately $5 million against the project’s book value in 2024.
MPC Energy Solutions NV has sold a combined heat and power (CHP) plant located at Neolpharma Inc. in Caguas, Puerto Rico, for $4 million. The buyer, identified as a company related to the pharmaceutical firm, was not disclosed. MPC had previously announced its intention to sell the plant this year.
MPC acquired the project during its construction phase in early 2022, investing $9 million. By the end of its first operational year in 2023, $500,000 of the investment had been recovered, the company stated.
MPC also has a second business agreement with Johnson & Johnson in Añasco, as News is my Business reported.
The first installment of the sales price was paid immediately, increasing the company’s free cash position by $2.8 million. A second installment will be collected within the next nine months and is secured by an irrevocable first-demand bank guarantee, MPCES confirmed.
“In addition to the sales price of $4 million, MPCES and the buyer agreed to a potential additional cash payment in case the off-taker successfully restructures its operations in the coming years and increases energy consumption from the power plant,” it stated.
This transaction aligns with MPCES’ strategy of optimizing its portfolio by focusing on core markets in Guatemala, El Salvador and Panama.
“While a sale of the CHP plant — which is the smallest in the company’s portfolio based on capacity and annual energy output — has been on the company’s agenda, it was fast-forwarded due to the uncertain restructuring of the local off-taker,” it stated.
MPCES had shared in previous quarterly reports that the off-taker’s energy demand had dropped substantially, resulting in revenue and profits below expectations. Payment irregularities and delays further complicated the plant’s operations, the company stated.
“The outlook shared by the off-taker for its restructuring was not satisfactory, and we were faced with intolerable delays. Given the uncertainty and to prevent greater losses down the road, we concluded that it is best to sell the asset and recover as much of our investment as possible at this time,” said Stefan H.A. Meichsner, chief financial officer of MPCES.
The sale will result in a noncash write-off of approximately $5 million against the project’s book value in 2024, $800,000 of which was already impaired in the company’s third-quarter results.
Despite the setback, Meichsner assured stakeholders of the company’s resilience. “We are diversified across multiple countries and off-takers. This is an isolated event that does not affect any of our other projects at all,” he said.
