MPower’s $10.36M Narromine Facility Converts to Equity, $700K Gain Expected
MPower Group has finalized the conversion of a $10 million project funding facility for its Narromine Renewable Energy Project into equity, with AMPYR Distributed Energy acquiring full ownership. The move strengthens MPower's balance sheet and supports its strategic push into hybrid renewable assets.
- Narromine project funding facility converted into 100% equity by AMPYR
- MPower expects a $700K gain from the transaction upon deconsolidation
- Conversion subject to Foreign Investment Review Board approval
- MPower continues as operations and maintenance provider for Narromine
- Active pursuit of funding for hybrid renewable energy project rollout
Narromine Project Debt-to-Equity Conversion
MPower Group Limited (ASX: MPR) has taken a significant step in reshaping its financial structure by finalizing terms to convert the $10.36 million project funding facility for its Narromine Renewable Energy Project into equity. This transaction, agreed with AMPYR Distributed Energy, will see AMPYR acquire 100% equity ownership of the project, extinguishing all associated funding costs including principal and accrued interest.
The Narromine project, a 6.7MWdc/4.99MWac solar installation in central-west New South Wales, achieved commercial operations in July 2024 and has performed in line with expectations, generating over 5,400MWh in its first five full months. The conversion from debt to equity is binding and awaits only Foreign Investment Review Board (FIRB) approval to complete.
Financial and Operational Implications
MPower anticipates recording a gain of approximately $700,000 following the deconsolidation of the Narromine asset, subject to final audit review. Despite relinquishing ownership, MPower will retain responsibility for the design, construction, operations, maintenance, and asset management of the project, ensuring ongoing involvement and revenue streams from service activities.
This restructuring alleviates MPower’s balance sheet pressures by removing a significant debt obligation, a move that comes amid stretched cash resources and the need to meet upcoming liabilities. The company reported increased cash receipts during the quarter, boosted by revenues from the Narromine project and its Lakeland solar and battery assets in Queensland.
Strategic Focus on Hybrid Renewable Energy Assets
Beyond Narromine, MPower is actively advancing its pipeline of hybrid renewable energy projects. The company has refined its strategic approach to distribution-connected hybrid assets, focusing on project design, delivery, offtake arrangements, geographic priorities, and crucially, project funding. Securing third-party capital remains a key challenge, with MPower engaging multiple development groups and capital partners to accelerate rollout.
MPower is also planning upgrade works at its 100% owned Lakeland project to enhance performance and reliability, reflecting a broader commitment to optimizing existing assets while expanding its portfolio.
Funding Challenges and Outlook
While the conversion of Narromine’s debt to equity improves MPower’s financial position, the company acknowledges ongoing funding constraints. Operating cash flows remain positive but insufficient for long-term sustainability without additional capital. MPower is exploring options including capital recycling and potential equity raises to support operations and growth ambitions.
The successful completion of the Narromine equity conversion, contingent on FIRB approval, will be a critical milestone. It not only strengthens MPower’s balance sheet but also signals confidence in its hybrid renewable energy strategy, which could unlock further investment and project development opportunities.
Bottom Line?
MPower’s debt-to-equity swap at Narromine clears a path for hybrid project expansion but hinges on timely FIRB approval and fresh funding.
Questions in the middle?
- When will FIRB approval for the Narromine equity conversion be finalized?
- What are the prospects and timelines for securing third-party funding for MPower’s hybrid projects?
- How will MPower balance capital recycling and potential equity raises to sustain operations?
