Maple Energy announces strategic investment offer

By Erin Voegele | October 21, 2014

Peru-based Maple Energy plc has announced it has received an offer from two strategic investors. The agreement is expected to secure the sustainability of the company’s ethanol business. If the transaction is finalized, the company would, in effect, dispose of a substantial part of its interest in its principal trading subsidiaries to the investors, Graña y Montero S.A.A. and Alcogroup SA, in return for a material investment at the subsidiary level that is expected to provide sufficient capital to support ongoing operations of Maple Energy’s ethanol business.

Under the agreement, the investors would pay an initial $4 million to acquire a 40 percent equity interest in The Maple Companies Ltd, the subsidiary dedicated to ethanol production and hydrocarbons operations. Maple currently has a 95.4 percent interest in that subsidiary. The investors would also commit to make an additional $13 million equity investment as part of a capital increase. According to information released by Maple Energy, Graña y Montero Petrolera S.A., a subsidiary of Graña y Montero S.A.A., will pay $31 million to acquire the entire issued share capital of The Maple Gas Corp. del Peru S.R.L., which is a wholly owned subsidiary of MCL. The proceeds for the sale and the planned equity injection would be paid to MCL, which will transfer the funds to the ethanol operating subsidiaries.

As a result of the proposed transaction, Maple Energy would retain a 24.1 percent interest in MCL, which would own 100 percent of the ethanol business. G&M and Alcogroup will retain an interest of 30.4 percent and 43.5 percent, respectively.

In late September, Maple Energy released financial results for the first half of the year. Revenues were $49.4 million, down from $71.6 million for the same period of the prior year. The decrease was attributed to lower ethanol sales prices and lower ethanol production volumes, which resulted from a lower sugarcane harvest.

Gross profit was $3.7 million, down from $18.8 million. Maple Energy attributed the drop to lower ethanol sales price, lower ethanol production and a $3.8 million negative adjustment for the fair value of the biological asset.

Net loss after taxes was $20.5 million, or 11.9 cents per share, compared to a net loss after taxes of $8.6 million, or 5.1 cents per share, the previous year.

As of June 30, Maple Energy had harvested and processed approximately 369,105 gross metric tons of sugarcane, or about 315,755 metric tons on a net basis. The average recoverable sugars from the sugarcane processed was approximately 11.95 percent. Approximately 6.4 million gallons of ethanol was produced during the first half of the year, with an average yield of 20.1 gallons per net metric tons of sugarcane processed. The ethanol facility generated an estimated 35,395 MWh of power during the first half of the year, while the energy required for the agricultural and industrial operations was approximately 37,695 MWh.

Maple Energy sold approximately 6.1 million gallons of ethanol to Mitsui as of June 30. The company also sold about 175,000 gallons into domestic and regional markets during the same period. The average price received was $2.09 per gallon, down from $2.76 per gallon during the first half of 2013.

The company plans to harvest and process approximately 690,000 gross tons of sugarcane this year. The volume processed could be slightly higher if the company is able to purchase and process third-party cane. In April, Maple Energy obtained government approvals to expand its sugarcane planation by 2,000 hectares.