Mainstream Renewable Power, the Dublin-based green energy group, wrote down the value of its problem Chilean assets by a further €134 million in the third quarter of the year, amid reports it is planning to sell its operations in the South American country.
The company’s chief executive, Mary Quaney, also said on a call with analysts on Friday it plans a “material reduction” in its head office running expenses as part of an ongoing cost-cutting programme. A spokesman said redundancies are likely. Mainstream currently employs 74 in Dublin and 370 globally.
The latest Chilean impairment charge pushed the business, which is owned by Norway’s Aker Horizons, into a net loss of €176 million for the period, Oslo-listed Aker Horizons said as it reported its latest financial results.
It brings total impairment charges taken against the Chilean assets since the start of 2022 to as much as the equivalent of €880 million, according to calculations based off disclosures in various Aker Horizons financial reports.
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Chilean online publications Redimin and La Tercera reported this week that Mainstream hired Brazilian investment bank BTG Pactual during the summer to find a buyer for its Chilean portfolio.
Executives at Aker Horizons declined to comment on the analysts call, though they did highlight that Mainstream has been streamlining its business to focus on growth in core markets South Africa, Australia and Philippines, as well as certain offshore projects.
“On a more general level, our interest is certainly to maximise the value of Mainstream – and we do continuously assess strategic options, including potential partnerships,” said Aker Horizon’s new chief executive, Lars P Sorvaag Sperre.
Mainstream concluded a €900 million debt restructuring at its Chilean operations 12 months ago.
It is one of the first markets Mainstream ventured into when it was set up in 2008 by the late green energy entrepreneur Eddie O’Connor, and currently comprises of 1 gigawatts (GW) of wind and solar projects in operation and a further 1.7GW in development. Combined, that equates to half of peak Irish electricity demand.
However, it has turned into a particularly tricky market for renewable energy companies. The main problem is the nature of power purchase agreements that Mainstream and others have with local electricity distributors.
Its plants, focused in northern Chile, are committed to delivering power to clients at fixed rates in the mainly high-demand central part of the country. To fulfil contracts, it often has to buy power on wholesale markets in the high-demand areas, where prices have been high in recent times. The lack of properly functioning electricity transmission and storage systems has exacerbated the problem.
Mainstream handed over a 10 per cent stake in its Chilean portfolio to US alternative lender Ares Management as part of last year’s debt restructuring.
“Given massive losses and a restructuring that we described as solely a ‘kick the can down the road exercise’, valuing the Chilean assets accurately has proven challenging,” said analysts at Norwegian brokerage Clarksons Securities in a note to clients on Wednesday.
The reports from Chile say that preliminary offers are due next month.
Aker owns 58.4 per cent of Mainstream, while Japan’s Mitsui Bank holds a further 25 per cent interest. Legacy Irish investors, including the estate of the late Mr O’Connor, own a little over 16 per cent.
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