Mainstream Renewable Power, the Dublin-based green energy group, has moved to restructure the debt of two companies linked to its key wind and solar platform in Chile under auspices of the country’s courts.
It comes as US investment firm Ares Management, a provider of junior construction finance to the Chilean platform, filed a lawsuit in New York on Friday against Mainstream, claiming at least $313 million (€281 million) of damages for unpaid principal and interest.
Mainstream, led by chief executive Mary Quaney, had reached a restructuring agreement with its 10 senior lenders on the project and had been in advanced talks with Ares on its subordinated facilities before the alternative finance provider decided to take legal action.
Mainstream, which was taken control of by Norway’s Aker Horizons in 2021, booked 4.24 billion Norwegian krone (€380 million) of impairment losses last year on assets in Chile, where it won contracts in 2016 to develop 1.35 gigawatts of wind and solar energy projects at a cost of $1.8 billion (€1.6 billion).
A series of problems affecting the Chilean electricity market have resulted in financial losses to 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.
The first signs of crisis were seen last year when energy firm María Elena Solar announced its exit from the spot market. The company was declared bankrupt in April at the request of its main creditor, German lender KfW.
“Following a period of constructive engagement with the lenders of the portfolio, Mainstream has initiated the reorganisation proceedings, which represent the next phase of the restructuring of the capital and the debt,” the Irish company said on Friday.
The restructuring will “allow for an injection of new capital” into the two Mainstream companies, Huemul Energia SpA and Condor Energia SpA, it said.
Ares Management has claimed in its lawsuit that Mainstream failed to provide necessary notice after construction delays and instead created an “unlawful and bad faith scheme intended to deprive the lenders of their rights and ability to recover under the credit agreement”. A spokesman for Mainstream said that the allegations are “baseless” and that the company will contest them vigorously.
