EXPLANATORY NOTE
This Offering Circular of Energea
Portfolio 2 LP is filed as a Post-Qualification Amendment No. 3 ("PQA")
to the offering statement qualified by the U.S. Securities and Exchange
Commission on June 6, 2024 pursuant to Rule 252(f) of Regulation A under the
Securities Act of 1933, which was filed by Energea Portfolio 2 LLC prior to its
conversion to a limited partnership as described below.
This PQA includes audited
financial statements as of December 31, 2024, and updates certain disclosures
in the previously qualified Offering Circulars. In particular, this PQA
consolidates disclosures made in all Form 1-U, Form 1-SA, Form 253(g) and Form
1-K filings made on behalf of the Company since June 6, 2024. It is filed to
maintain the qualification of the offering beyond twelve months from the
original qualification date.
Unless otherwise indicated or the
context otherwise requires, all information in this Offering Circular reflects
the terms and conditions of the as of the date of this amendment.
No material changes have been
made to the terms of the securities being offered.
Post-Qualification
Offering Circular
Amendment No. 3
File No. 024-12347
Page i
Part II -
Information Required in Offering Circular
AN OFFERING STATEMENT PURSUANT
TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE U.S. SECURITIES
AND EXCHANGE COMMISSION (THE "SEC"). INFORMATION CONTAINED IN THIS
PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE
OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY
OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN
WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR
QUALIFICATION UNDER THE LAWS OF ANY SUCH STATE. WE MAY ELECT TO SATISFY OUR
OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN
TWO BUSINESS DAYS AFTER THE COMPLETION OF OUR SALE TO YOU THAT CONTAINS THE URL
WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL
OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.
Energea Portfolio
2 LP
Up to $50,000,000
in Class A Investor Shares
Offering Circular
(Subject to Completion) Dated
August 8, 2025
This Offering
Circular Follows the Form 1-A Disclosure Format
Energea Portfolio 2 LP (the "Company",
"us", "we", "our" and similar terms) is a limited partnership organized under
the laws of Delaware to invest in the acquisition, development, and operation
of solar energy projects in Brazil (each a "Project"). The Company may
also lend money to Development Companies and use solar projects as collateral
rather than acquiring Projects for direct ownership (each a "Loan"). The
Company's day-to-day operations are managed by Energea Global LLC (the "General
Partner" and together with its affiliates "Energea Global").
The Company is currently offering
up to $50.0 million in limited partnership interests designated as "Class A
Investor Shares" (the "Offering") pursuant to Regulation A ("Regulation
A") of the Securities Act of 1933, as amended (the "Securities Act").
The current price of the Class A Investor Shares is $1.00 per Class A Investor
Share, and the minimum initial investment is $100.
There is currently no
established secondary market for the Class A Investor Shares, and Investors may
not be able to sell their Class A Investor Shares. While Investors should view
an investment in the Company as long-term, the Company offers a Redemption Plan
in order to provide Investors with an opportunity to obtain liquidity. See
"Redemption Plan" and "Risk Factors-No Market for the Class A Investor Shares".
Investors
may not be able to sell their Class A Investor Shares except by submitting a
Redemption Request to the Company through our General
Partner's website, www.energea.com (the "Platform"). Pursuant to the Redemption Plan, Investors must hold
their Class A Investor Shares for at least 60 days before they can request
redemption of their Class A Investor Shares via the Platform; if the General
Partner agrees to honor a Redemption Request, the Company has 90 days to make
payment on such redemption; and the General Partner may, in its sole
discretion, amend, suspend, or terminate the Redemption Plan at any time
without prior notice. Additionally, Class A Investor Shares may not be
transferred without the Company's consent, which can be withheld in its sole
discretion, and the General Partner has a right of first refusal to purchase
any Class A Investor Shares proposed to be transferred. See
"Redemption Plan" and "Risk Factors-No Market for the Class A Investor Shares".
Investors should note that
the General Partner may decide to sell the Projects or the Company at any time.
Should the General Partner decide to sell the Company, Investors could be
forced to sell their Class A Investor Shares at the direction of the General
Partner. See "Drag-Along Right".
The purchase of these
securities involves a high degree of risk. Before investing, you should read
this entire Offering Circular and exhibits hereto, including "Risk Factors".
The Company is selling Class A
Investor Shares directly to the public through the Platform. Neither the
Company nor any affiliated entity involved in this Offering is a member firm of
the Financial Industry Regulatory Authority, Inc. ("FINRA"), and no
person associated with this Offering will be deemed to be a broker solely by
reason of his or her participation in the sale of our Class A Investor Shares.
Investors will not pay upfront selling commissions or broker fees in connection
with the purchase of Class A Investor Shares. We will reimburse our General
Partner for certain expenses incurred on our behalf, and pay our General
Partner certain fees, as described further under "Compensation of General
Partner".
This is a "best efforts - no
minimum" offering. The Offering commenced on June 6, 2024 and will end on the
date we raise the maximum amount being offered, unless earlier terminated by
the Company. We will reimburse the General Partner for marketing expenses in an
amount up to 5% of the total Offering amount raised. See "Use of Proceeds".
|
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Per Share
|
Total Maximum
|
|
Public
Offering Price
|
$1.00
|
$50,000,000
|
|
Marketing Expenses
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$0.05
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$2,500,000
|
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Proceeds
to the Company from this Offering to the Public
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$0.95
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$47,500,000
|
THE SEC DOES NOT PASS UPON THE
MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE
OFFERING, NOR DOES IT PASS JUDGEMENT UPON THE ACCURACY OR COMPLETENESS OF ANY
OFFERING CIRCULAR OR OTHER SOLICITING MATERIALS. THESE SECURITIES ARE OFFERED
PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION
HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE
EXEMPT FROM REGISTRATION.
GENERALLY, NO SALE MAY BE MADE
TO A NON-ACCREDITED INVESTOR FROM THIS OFFERING IF THE AGGREGATE PURCHASE PRICE
THE NON-ACCREDITED INVESTOR PAYS IS MORE THAN 10% OF THE GREATER OF THEIR
ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND
NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES
NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C)
OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO
REFER TO WWW.INVESTOR.GOV FOR MORE INFORMATION, SEE "LIMIT ON AMOUNT A
NON-ACCREDITED INVESTOR CAN INVEST".
NEITHER THE SEC NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Page ii
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We
make statements in this Offering Circular that are forward-looking statements.
The words "outlook," "believe," "estimate,"
"potential," "projected," "expect,"
"anticipate," "intend," "plan," "seek,"
"may," "could" and similar expressions or statements
regarding future periods are intended to identify forward-looking statements.
These forward-looking statements involve known and unknown risks, uncertainties
and other important factors that could cause our actual results, performance or
achievements, or industry results, to differ materially from any predictions of
future results, performance or achievements that we express or imply in this
offering circular or in the information incorporated by reference into this
offering circular.
The
forward-looking statements included in this Offering Circular are based upon
our current expectations, plans, estimates, assumptions and beliefs that
involve numerous risks and uncertainties. Assumptions relating to the foregoing
involve judgments with respect to, among other things, future economic,
competitive and market conditions and future business decisions, all of which
are difficult or impossible to predict accurately and many of which are beyond
our control. Although we believe that the expectations reflected in such
forward-looking statements are based on reasonable assumptions, our actual
results and performance could differ materially from those set forth in the
forward-looking statements. Factors which could have a material adverse effect on
our operations and future prospects include, but are not limited to:
· our
ability to effectively deploy the proceeds raised from this Offering;
· ability
to attract and retain Investors on the Platform;
· risks associated
with breaches of our data security;
·
public health crises, pandemics and
epidemics, such as those caused by new strains of viruses such as H5N1
(avian flu), severe acute respiratory syndrome (SARS) and, most recently, the
novel coronavirus (COVID-19);
·
climate change and natural disasters that could
adversely affect our Projects and our business;
·
changes in economic conditions generally and the
renewable energy and securities markets specifically;
·
limited ability to dispose of assets because of the
relative illiquidity of renewable energy Projects and Loans;
·
our failure to obtain necessary outside financing;
·
risks associated with derivatives or hedging activity;
·
intense competition in Brazilian renewable energy
markets that may limit our ability to attract or retain Subscribers (as defined
below);
·
defaults under Supporting Contracts (see "Summary of
Supporting Contracts");
·
increased interest rates and/or operating costs;
·
the risk associated with potential breach or expiration
of a ground lease, if any;
·
our failure to successfully construct, interconnect,
operate or maintain the Projects;
·
inability of a Borrower to make payments on a Loan;
·
the failure of Projects and Loans to yield anticipated
results;
·
exposure to liability relating to environmental and
health and safety matters;
Page 1
·
our level of debt and the terms and limitations imposed
on us by our debt agreements;
·
our General Partner's ability to retain executive
officers and other key personnel;
·
the ability of our General Partner to source, originate
and service our Projects and Loans;
·
the ability for our engineering, procurement and
construction contractors and equipment manufacturers to honor their contracts
including warranties and guarantees;
·
regulatory changes impacting our business or our assets
(including changes to the laws governing the taxation of corporations and SEC
guidance related to Regulation A, or the Jumpstart Our Business Startups Act of
2012 (the "JOBS Act");
·
changes in business conditions and the market value of
our Projects, including changes in renewable energy policy, interest rates,
prepayment risk, operator or Borrower defaults or bankruptcy, and generally the
increased risk of loss if our investments fail to perform as expected;
·
our ability to implement effective conflicts of interest
policies and procedures among the various renewable energy investment
opportunities sponsored by our General Partner;
·
our compliance with applicable local, state and federal
laws, including the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), the Investment Company Act of 1940, as amended, and other laws; and
·
changes to U.S. generally accepted accounting principles
("U.S. GAAP").
Any
of the assumptions underlying forward-looking statements could be inaccurate.
You are cautioned not to place undue reliance on any forward-looking statements
included in this Offering Circular. All forward-looking statements are made as
of the date of this Offering Circular and the risk that actual results will
differ materially from the expectations expressed in this Offering Circular
will increase with the passage of time. We undertake no obligation to publicly
update or revise any forward-looking statements after the date of this Offering
Circular, whether because of new information, future events, changed
circumstances or any other reason. Considering the significant uncertainties
inherent in the forward-looking statements included in this Offering Circular,
including, without limitation, those named above and those named under "Risk
Factors", the inclusion of such forward-looking statements should not be
regarded as a representation by us or any other person that the objectives and
plans set forth in this Offering Circular will be achieved.
Energea Portfolio 2 LP (the "Company")
is a limited partnership organized under the laws of Delaware. The Company has
elected to be taxed as a "C" corporation for United States federal and state
income tax purposes. The Company's day-to-day operations are managed by Energea
Global LLC (the "General Partner").
The Company was created to invest
in the acquisition, development, and operation of solar energy projects in
Brazil (each a "Project"). The Projects will be rented to groups of
households and businesses (which we collectively refer to as "Subscribers")
for monthly payments based on the amount of electricity produced by the Project
and credited to them. The Company may also lend money to Development Companies (which
we collectively refer to as "Borrowers") and use solar projects as
collateral rather than acquiring Projects for direct ownership (each a "Loan").
Page 2
To date, the Projects have produced
a stable and predictable stream of cash flow from Subscribers paying their
monthly energy bills. As the Company earns revenue from the sale of energy to
Subscribers and receives interest payments on Loans and/or Company Investments,
it uses the revenue to pay for operating expenses (see "Our Operating Costs
and Expenses") and distributes the remaining cash to the holders of our
Class A Investor Shares (our "Investors"), our Reg D Investors (as such
term is defined herein and together with the Investors, the "Preferred
Equity Investors") and the holders of our Common Shares (which is currently
the General Partner). See "Company Operations and Other Matters". To
date, the Company has not issued any Loans to Borrowers.
Projects are owned by
special-purpose entities (each, a "SPE"). Each SPE is organized as a
Brazilian Limitada or Ltda, the Brazilian equivalent of a U.S. limited
liability company. Under Brazilian law, the assets and liabilities of a Ltda
are distinct. Thus, the liabilities of Projects held in one SPE will not affect
the assets of another Project held in a different SPE.
The Company is offering up to $50.0
million of Class A Investor Shares pursuant to Regulation A. The proceeds of
our Offering will be used to construct and/or acquire Projects and to issue
Loans.
We
are offering to sell, and seeking offers to buy, the shares only in
jurisdictions where such offers and sales are permitted. You should rely only
on the information contained in this Offering Circular. We have not authorized
anyone to provide you with any information other than the information contained
in this Offering Circular. The information contained in this Offering Circular
is accurate only as of its date, regardless of the time of its delivery or of
any sale or delivery of our securities. Neither the delivery of this Offering
Circular nor any sale or delivery of our securities shall, under any
circumstances, imply that there has been no change in our affairs since the
date of this offering circular. This offering circular will be updated and made
available for delivery to the extent required by the federal securities laws.
The Company generates cash flow
in three ways: (i) payments from Projects, (ii) payments from Loans and (iii) returns
from investments (for example, interest gained from a money market savings
account from cash-on-hand) ("Company Investments"). Cash flow will first
be used to pay operating costs and expenses, including fees and reimbursements
payable to our General Partner (see "Our Operating Costs and Expenses").
The remaining cash flow, if any, is distributed to the Preferred
Equity Investors and the General Partner in the following order of
priority:
·
First, a preferred return equal to a 7% IRR payable to Preferred
Equity Investors, as more fully described in the Authorizing Resolutions (the "Preferred
Return");
·
Thereafter, any additional cash flow will be split between the
Preferred Equity Investors and the General Partner such that 70% is distributed
to Preferred Equity Investors and 30% to the General Partner (the "Carried
Interest")
Be advised that only proceeds on the
interest, and not on the repayment of the principal, which the Company receives
from Loans and returns from Company Investments will be eligible for distribution.
Repayment of principal of either Loans or Company Investments will not be
eligible to be distributed to either the General Partner or the Limited
Partners (together, the "Partners") and will be available for investment
by the Company, in the General Partner's sole discretion.
See "Compensation of General
Partner" and "Calculating Distributions" for more detailed
information regarding fees and distributions payable to the General Partner.
Preferred Equity Investors have
no voting rights.
CAUTION: ALTHOUGH THE CASH FLOW
FROM OUR PROJECTS AND LOANS WILL LARGELY BE ESTABLISHED BY CONTRACT IN ADVANCE,
THERE IS NO GUARANTEE THAT OUR PROJECTS OR LOANS WILL GENERATE ANY POSITIVE
CASH FLOW.
Page 3
BUYING CLASS A INVESTOR SHARES IS
SPECULATIVE AND INVOLVES SIGNIFICANT RISK, INCLUDING THE RISK THAT INVESTORS
COULD LOSE SOME OR ALL OF THEIR MONEY. THIS SECTION DESCRIBES SOME OF THE MOST
SIGNIFICANT FACTORS THAT THE COMPANY BELIEVES MAKE AN INVESTMENT IN THE CLASS A
INVESTOR SHARES RISKY. THE ORDER IN WHICH THESE FACTORS ARE DISCUSSED IS NOT
INTENDED TO SUGGEST THAT SOME FACTORS ARE MORE IMPORTANT THAN OTHERS. You should carefully consider the following
risk factors in conjunction with the other information contained in this
offering circular before purchasing the CLASS A INVESTOR SHARES.
Risks Associated with
Renewable Energy Projects: The market for renewable energy is changing
rapidly. If renewable technology proves unsuitable for widespread commercial
deployment or if demand for renewable energy products, especially solar energy,
fails to develop sufficiently, our Projects and Loans might not be able to
generate enough revenues to achieve and sustain profitability. The factors
influencing the widespread adoption of renewable energy technology include, but
are not limited to: cost-effectiveness of renewable energy technologies as
compared with conventional technologies; performance and reliability of
renewable energy products as compared with conventional energy products; and
the success of other enabling technologies such as battery storage and
Distributed Energy Resource Management Systems ("DERMS").
Fluctuations
in Income from Projects: Project Rental Contracts typically provide for
fluctuations in rent based on changes in energy prices and/or changes in
consumer prices. Thus, it is possible that our income from one or more Projects
could decrease.
The Investment environment may
change over time: The Company's investment in the Projects and Loans
is intended to extend over a period of years, during which the business,
economic, political, regulatory, and technology environment within which the Company
operates may undergo substantial changes, some of which may be adverse to the Company.
The General Partner will have the exclusive right and authority (within
limitations set forth in the LP Agreement) to determine the manner in which the
Company shall respond to such changes, and Limited Partners generally will have
no right to withdraw from the Company or to demand specific
modifications to the Company's operations in consequence thereof. A major
recession or adverse developments in the securities or credit markets might
have an impact on the Company's investments in the Projects and Loans. In
addition, factors specific to the Projects and Loans may have an adverse effect
on the Company.
Net Losses: We are
currently incurring net losses and may continue incurring net losses in the
future. If our operating expenses exceed our expectations, our financial
performance could be adversely affected. If our revenue does not grow to offset
these increased expenses, we may never become profitable. In future periods, we
may not have any revenue growth, or our revenue could decline.
Distributions to Investors:
Whether to distribute operating cash flow or capital proceeds and how much to
distribute, is at the sole discretion of the General Partner. No returns are guaranteed,
and Investors will receive distributions only if the Company generates
distributable cash flow from the Projects and Loans. Investors will not have
any recourse in the event we are unable to pay distributions. Because we have
not made any profit to date and have no current or accumulated earnings and
profits, such cash distributions to Investors will be considered a return of
capital for U.S. federal income tax purposes to the extent that the
distributions do not exceed the adjusted tax basis of the U.S. Holder's Class A
Investor Shares. See "Management Discussion and Analysis of Financial
Condition and Result of Operation-Distributions."
Distributions Generally: Our
ability to achieve our investment objectives and to pay distributions depends
upon the performance of our General Partner in the acquisition of our Projects and
Loans and the ability of our Manager to source investment opportunities for us.
In the event we are unable to timely locate suitable investments, we may be
unable or limited in our ability to pay distributions, and we may not be able
to meet our investment objectives. If we pay distributions from sources other
than our cash flow from Projects and Loans, we will have less funds available
for investments and your overall return will be reduced.
Page 4
Competition:
There are many solar developers actively building solar projects in Brazil.
Some are multi-national independent power producers (such as ENEL, Brookfield
and Engie). In addition to these large established players, there are several
smaller developers the Company views as direct competition. Aggressive pricing
by competitors or the entrance of new competitors could reduce the Company's profitability
and ability to acquire and develop Projects and secure Loan opportunities.
Our
Subscribers and/or Borrowers Might Default: The Company rents Projects to
Subscribers, not to utilities. Some Subscribers may default. Although we expect
other Subscribers to quickly take their place, if enough Subscribers default,
it would affect our ability to generate cash flows from Projects and reduce
anticipated returns to Investors. While the General Partner monitors
Borrowers and their collateral, Borrowers are also susceptible to defaulting on
their obligations to make principle and interest payments to the Company.
Subscribers and Borrowers may face intense competition, changing business and
economic conditions, risks of technological acceptance and obsolescence or
other developments that may adversely affect their ability to pay. Within the
limitations set forth in the LP Agreement, the General Partner will have the
right and authority to cause the Company's investment management and
liquidation strategies and procedures to deviate from those described in this
Offering Circular.
We Might Own Only a Small
Number of Projects: If the Company is successful in raising the current maximum
offering amount of $50.0 million in this Offering, the Company would likely acquire
or invest in between 10 and 20 new Projects. If the Company raises
significantly less than the maximum offering amount, it may not be able to
invest in as many Projects. If the Company owns only a small number of
Projects, Investors will be exposed to greater concentration risk.
Possible
Changes in Governmental Policies: The Projects depend on a Brazilian Electricity
Regulatory Agency ("ANEEL") policy called Normative Resolution No. 482 which
allows Subscribers who generate solar power to offset electric costs at any
locations within the same utility network. This policy could expire, phase-out
over time, require renewal by the applicable authority, or become a victim of
political pressure. ANEEL has instituted several changes to the policy over the
past three years. Some of those changes have positively affected our business
while others have had a negative impact. The new policies could disfavor solar
projects in general and our Projects in particular.
Delays in
Connecting to Power Grid: The Projects must be physically connected to the
power grid, a process that involves sophisticated engineering and government regulation.
Delays are not uncommon. For example, the utility involved might be required to
perform physical upgrades to allow for the safe and consistent generation,
distribution, and/or transmission of electricity from a Project to the grid.
Delays in the performance of the interconnecting utility's obligations to make
such grid upgrades can negatively impact the financial performance of the Company.
Operational
Risks: The Projects are subject to operating and technical risks, including
risk of mechanical breakdown, failure to perform according to design
specifications, labor and other work interruptions and other unanticipated
events that adversely affect operations. The success of each Project, once
built, depends in part upon efficient operations and maintenance.
Construction
and Development Risks: In some cases, the Company will invest in Projects
before construction is complete. Construction of any kind involves risk,
including labor unrest, bad weather, design flaws, the unavailability of
materials, fluctuations in the cost of materials, and labor shortages. Delays
are common, which could adversely affect the economics of the Company.
Equipment
Supply Constraints: The construction and maintenance of renewable energy
facilities relies on the availability of certain equipment that may be in
limited supply, such as solar modules, trackers, inverters and monitoring
systems. Much of this equipment comes from China. There is no guarantee that
the production of this equipment will match demand, and this may adversely
impact the ability to construct and the cost of the Projects.
Disputes with Utility
Companies Over Credit Management: The Company may encounter challenges when
dealing with utility companies regarding the minting, verification, transfer
and allocation of energy credits produced by the Projects. We rely on utility
companies to transmit energy, in the form of credits, to Subscriber's energy
bills, to realize revenue. Failure by the utility companies to perform this
important role effectively can pose financial risks to the Company.
Rapid Acceptance of Changes in
Ratio: Pursuant to Brazilian energy regulations, each month, Company
must submit a document to the utility company with jurisdiction over the
Project which instructs the utility company to allocate energy to the
Subscribers known as a "Ratio". Subscribers may use more or less
energy each month and the Ratio must be updated frequently to prevent excess
credits being allocated to any particular Subscriber or to replace a Subscriber
who hasn't paid with a new Subscriber. If the utility company does not accept
and update the Ratio according to Brazilian energy regulations, revenue from
credits may be postponed or result in lost revenue for the effected Projects.
Page 5
Finding Customers to Subscribe
to Our Projects: Attracting and retaining Subscribers to use the energy
credits from our Projects is critical to realizing the maximum amount of
revenue from each Project. Identifying and reaching out to potential Subscribers,
convincing them to use our solar energy and addressing their specific needs are
vital for each Project's success. If we are unable to fully subscribe the
Projects, revenues may be lower than projected.
Discount Rates We Offer Our Subscribers:
Offering competitive discount rates to entice residences and businesses to
become Subscribers is critical for the success of the Company. Setting
appropriate rates that balance profitability with incentives is a delicate
balancing act. If other solar companies offer more competitive discount rates
for Subscribers, we may be unable to find Subscribers willing to procure energy
from our Projects.
Commissions We Have To Pay to
Find New Subscribers: The Projects pay commissions to salespeople who work
for third party commercialization companies. These companies specialize in
connecting Subscribers to solar projects like our Projects. Calculating and
managing these commissions to ensure they align with the Project's financial projections
is essential to control costs and maximize revenue. If companies we compete
with pay higher commissions to commercialization companies, we may have to
increase our commissions to retain the service which could have a negative
impact on net income.
Risks
Associated with Investments Outside the U.S.: All of the Company's Projects
will be in Brazil. Projects located in developing countries, such as Brazil,
may be subject to certain risks that generally do not apply to investments in
developed countries such as the United States. Such risks include the
following:
·
Historically, the markets of developing countries have been more
volatile than the markets of developed countries.
·
Developing countries may have less developed legal and accounting
systems. The legal systems of developing countries might be less reliable in
terms of enforcing contracts.
·
The governments of developing countries may be more unstable and
more likely to impose capital controls, nationalize a company or industry,
place restrictions on foreign ownership and on withdrawing money from the
country, and/or impose punitive taxes that could adversely affect prices.
·
The economies of developing countries may be dependent on
relatively few industries that are more susceptible to local and global
changes.
·
Brazil faces security challenges, and the Projects can be
vulnerable to theft, vandalism, and damage. Ensuring robust security measures
is essential to mitigate these risks and protect project assets. If we are
unable to properly secure the Projects, the Projects could be negatively
affected by crime, which could reduce our net income.
·
Some areas in Brazil are influenced or controlled by local
non-governmental groups called "militias". Local militias may impact the
security and operations of the Projects. Investors should carefully assess the
presence of militias in Project locations and consider how this could affect
our operations.
·
Development challenges, such as land acquisition, permitting
delays, and poor infrastructure, can hinder progress and increase costs of the
Projects. Navigating these obstacles is crucial to the successful development
of our Projects. Ineffective land acquisition practices, slow reaction to
permitting delays or selecting sites with poor infrastructure can negatively
affect the financial performance of the Projects and the Company.
·
Investments in controlled foreign corporations ("CFCs") by
United States persons are subject to tax and information reporting in the
United States, and certain local taxes paid may not be creditable under the
foreign tax credit rules. The United States does not currently have a tax
treaty with Brazil which would give rise to the risk of double taxation in
certain circumstances.
Page 6
Foreign Currency Exposure:
The contracts entered into by the Projects will be denominated in
Brazilian real ("BRL"). Contracts denominated in BRL will
be subject to fluctuations in exchange rates between BRL and the United States
dollar ("USD"), which could impact the Company's returns. While the General
Partner might be able to hedge the Company's foreign currency exposure to some
degree, such hedging may be expensive and may not be entirely effective.
Imprecise
Language Translations: All of the Company's legal contracts in Brazil will
be written in both English and Portuguese. Given that these languages have
different historical and cultural roots, it is possible that some of the
materials or proceedings may not directly translate across languages and any
deviation from the Company's intentions, especially with respect to some of the
more technical terms or work involved, may cause disruptions or
misunderstandings that may negatively impact the Projects.
Risks Upon
Disposition of Investments: If the Company sells a Project, it might be
required to make representations about the business and financial affairs of
the Project, and to indemnify the purchaser if those representations prove to
be inaccurate or misleading. These arrangements may result in contingent
liabilities.
Regulatory
Risks: The Projects will be subject to extensive regulatory requirements,
including those imposed by Brazilian environmental, safety, labor and other
regulatory and political authorities. These regulatory requirements will impose
substantial costs on the Projects. Further, should any Project fail to comply
with one or more regulatory requirements, it could result in substantial fines
and penalties or a shutdown of the Project.
Unavailability
of Insurance Against Certain Catastrophic Losses: Certain losses of a
catastrophic nature, such as earthquakes, wars, terrorist attacks or other
similar events, may be either uninsurable or insurable at such high rates that
to maintain such coverage would cause an adverse impact on the related Project.
As a result, not all Projects may be insured against all possible risks. If a
major uninsured loss occurs, the Company could lose both the amount it invested
in and anticipated profits from the affected Projects.
Potential
Environmental Liability: The Projects, like any large-scale physical plant,
could cause environmental contamination under some circumstances. Further, the
SPE could be found liable for environmental contamination that occurred before
the Project was built. The cost of remediation and penalties could be very
large.
Liability
for Personal Injury and Damage to Property: The Company could be held
liable for accidents and injuries at the Project site. The SPE will carry
insurance to protect against the potential losses, but the insurance might not
be adequate.
Global or National Economic
Conditions: An economic slowdown in Brazil could affect our Subscribers and
therefore our Projects.
No
Participation in Management: Investors will have no voting rights and no
right to participate in the management of the Company or the Projects. Instead,
the General Partner will make all decisions. You will have the ability to
replace our management team only under very limited circumstances, as described
in "Summary of LP Agreement and Authorizing Resolution."
Reliance
on Management: The success of the Company and its Projects will depend in
part on the skills of our General Partner and its management team. If our General
Partner fails to retain its key personnel, the Company and its Investors could
suffer.
Sale of
Other Securities: The Company could, at any time, sell classes of Company
shares other than those being offered by this Offering, for example, in a
private placement (including, but not limited to, the sale of Reg D Shares). A
different class of securities could have greater rights than those associated
with the Class A Investor Shares, including but not limited to preferential
rights to distributions.
Limitations
on Rights in Investment Agreements: To purchase Class A Investor Shares,
you are required to sign an investment agreement, in the form attached hereto
and if you decide to invest over time or automatically reinvest your
distributions, you will be required to sign an additional investment agreement
(such investment agreements, the "Investment Agreements"). The
Investment Agreements will limit your rights in several important ways if you
believe you have claims against us arising from the purchase of your Class A
Investor Shares:
Page 7
·
Any claims arising from your purchase of Class A Investor Shares
must be brought in the state or federal courts located in Wilmington, Delaware,
which might not be convenient to you.
·
You would not be entitled to recover any lost profits or special,
consequential, or punitive damages. However, that limitation does not apply to
claims arising under Federal securities laws.
Following your initial purchase
of Class A Investor Shares, you may to continue to participate in this Offering
by electing to either (i) establish with the Company, a plan for you to
automatically invest in the Offering on a periodic basis, subject to the terms
of an Auto-Invest Agreement signed by you and the Company or (ii) to reinvest
the distributions you receive from your Class A Investor Shares into the
purchase of additional Class A Investor Shares, subject to the terms and
conditions of the applicable Investment Agreement, signed by you and the
Company.
General Partner's Drag-Along
Rights: The General Partner may decide to sell the Projects or the Company
at any time. Should the General Partner decide to sell the Company, Investors
could be forced to sell their Class A Investor Shares at the direction of the General
Partner according to the General Partner's drag-along rights granted to them in
the LP Agreement (see "Summary of LP Agreement and Authorizing Resolution.").
Forum Selection Provision:
Our Investment Agreements and our LP Agreement both provide that disputes will
be handled solely in the state or federal courts located in the state of Delaware.
We included this provision primarily because (i) the Company is organized under
Delaware law, (ii) Delaware courts have developed significant expertise and
experience in corporate and commercial law matters and investment-related
disputes (which typically involve very complex legal questions), particularly
with respect to alternative entities (such as LLCs), and have developed a
reputation for resolving disputes in these areas in an efficient manner, and
(iii) Delaware has a large and well-developed body of case law in the areas of
corporate and alternative entities law and investment-related disputes,
providing predictability and stability for the Company and its Investors. This
provision could be unfavorable to an Investor to the extent a court in a
different jurisdiction would be more likely to find in favor of an Investor or
be more geographically convenient to an Investor. It is possible that a judge
would find this provision unenforceable and allow an Investor to file a lawsuit
in a different jurisdiction.
Section 27 of the Exchange Act
provides that Federal courts have exclusive jurisdiction over lawsuits brought
under the Exchange Act, and that such lawsuits may be brought in any Federal
district where the defendant is found or is an inhabitant or transacts
business. Section 22 of the Securities Act provides that Federal courts have
concurrent jurisdiction with State courts over lawsuits brought under the
Securities Act, and that such lawsuits may be brought in any Federal district
where the defendant is found or is an inhabitant or transacts business.
Investors cannot waive our (or their) compliance with federal securities laws.
Hence, to the extent the forum selection provisions of the Investment Agreements
or the LP Agreement conflict with these Federal statutes, the Federal statutes
would prevail.
Waiver of
Right to Jury Trial: The Investment Agreements and the LP Agreement both
provide that legal claims will be decided only by a judge, not by a jury. The
provision in the LP Agreement will apply not only to an Investor who purchases
Class A Investor Shares in the Offering, but also to anyone who acquires Class
A Investor Shares in secondary trading. Having legal claims decided by a judge
rather than by a jury could be favorable or unfavorable to the interests of an
owner of Class A Investor Shares, depending on the parties and the nature of
the legal claims involved. It is possible that a judge would find the waiver of
a jury trial unenforceable and allow an owner of Class A Investor Shares to
have his, her, or its legal claim decided by a jury. In any case, the waiver of
a jury trial in both the Investment Agreements and the LP Agreement do not
apply to claims arising under federal securities laws.
Conflicts
of Interest: The interests of the Company and the General Partner could
conflict with the interests of Investors in a number of ways, including:
·
Our General Partner and its officers perform similar roles for
other entities that are affiliated with the General Partner and are not
required to devote all of their time and effort to the Company and are only
required to devote such time to our affairs as their duties require.
·
Our General Partner will receive fees based, in part, on the
amount of cash flow the Company generates. The General Partner might,
therefore, have an incentive to raise more capital and invest in more Projects
and Loans than they would otherwise, leading them to invest in borderline
Projects and Loans.
Page 8
·
The entire business of the General Partner consists of investing
in solar projects, including solar projects in Brazil. There could be conflicts
between Projects they decide to invest in through the Company and projects they
invest in through other vehicles.
Risk of Failure to Comply with
Securities Laws: The Offering relies on an exemption from registration with
the SEC pursuant to Regulation A. If the Offering did not qualify for exemption
from registration under the Securities Act, the Company could be subject to
penalties imposed by the federal government and state regulators, as well as to
lawsuits from Investors.
We may be subject to claims
for recission or damages from our Investors. Through December 26, 2023, a
prior offering sold 14,241,631 Class A Investor Shares and raised approximately
$11,923,000 in capital (the "Prior Offering"). During the Prior
Offering, we may not have been eligible for an exemption from registration
under the Securities Act for certain sales of Class A Investor Shares because
we did not file a post-qualification amendment on at least an annual basis with
updated financial statements as required by Rules 251(d)(3)(i)(F) and
252(f)(2)(i) of Regulation A, and because of the at-the-market prohibition in
Rule 251(d)(3)(ii) of Regulation A. Unless another exemption from registration
under the Securities Act is available for these sales, we may be subject to
claims for recission or damages for sales of up to $10,531,901.20 of Class
A Investor Shares that were made following the first anniversary of the initial
qualification of the Prior Offering.
No Market for the Class A Investor
Shares; Limits on Transferability: There is currently no established market
for the Class A Investor Shares. An Investor who wishes to sell or otherwise
transfer their Class A Investor Shares may be limited because:
·
There will be no established market for the Class A Investor
Shares, meaning the Investor could have a hard time finding a buyer for its
shares.
·
Although the Company offers a Redemption Plan, there is no
guarantee that an Investor who wants to sell his, her, or its Class A Investor
will be able to do so.
·
Class A Investor Shares may not be transferred without the
Company's consent, which we can withhold in our sole discretion. The Company
also has a right of first refusal to purchase any Class A Investor Shares
proposed to be transferred.
Our General Partner reserves the
right to reject any Redemption Request for any reason or no reason or to amend
or terminate the Redemption Plan without prior notice. Therefore, you may not
have the opportunity to make a Redemption Request prior to a potential
termination of the Redemption Plan and you may not be able to sell any of your
Class A Investor Shares back to the Company pursuant to the Redemption Plan.
Moreover, if you do sell your Class A Investor Shares back to the Company
pursuant to the Redemption Plan, you may not receive the same price you paid
for the Class A Investor Shares being redeemed. In addition, pursuant to our
Redemption Plan, an Investor may only (a) have one outstanding Redemption
Request at any given time and (b) request that we redeem up to $50,000 worth of
Class A Investor Shares per each Redemption Request.
For more information regarding
the Redemption Plan see "Redemption Plan".
"Best efforts-no minimum"
offering. The Offering is a "best efforts" basis and does not require a
minimum amount to be raised. This means that any investment made could be the
only investment in this Offering, leaving the Company without adequate capital
to pursue its business plan. If we are not able to raise sufficient funds, we
may not be able to fund our investment strategy as planned, and our growth
opportunities may be materially adversely affected. This could cause an
investor to lose their entire investment.
Corporate Governance Risk:
As a non-listed company conducting an exempt offering pursuant to Regulation A,
the Company is not subject to a number of corporate governance requirements
that an issuer conducting a registered offering or listed on a national stock
exchange would be. For example, the Company does not have (i) a board of
directors of which a majority consists of "independent" directors under the
listing standards of a national stock exchange, (ii) an audit committee
composed entirely of independent directors and a written audit committee
charter meeting a national stock exchange's requirements, (iii) a
nominating/corporate governance committee composed entirely of independent
directors and a written nominating/corporate governance committee charter
meeting a national stock exchange's requirements, (iv) a compensation committee
composed entirely of independent directors and a written compensation committee
charter meeting the requirements of a national stock exchange, and (v)
independent audits of the Company's internal controls.
Page 9
The
Company is an "Emerging Growth Company" Under the JOBS Act: Today, the
Company qualifies as an "emerging growth company" under the JOBS Act of 2012.
If the Company were to become a public company (e.g., following a registered
offering of its securities) and continued to qualify as an emerging growth
company, it would be able to take advantage of certain exemptions from the
reporting requirements under the Exchange Act and exemptions from certain
investor protection measures under the Sarbanes Oxley Act of 2002. Using these
exemptions could benefit the Company by reducing compliance costs but could
also mean that Investors receive less information and fewer protections than
they would otherwise. However, these exemptions - and the status of the Company
as an "emerging growth company" in the first place - will not be relevant
unless and until the Company becomes a public reporting company.
The Company has elected to delay
complying with any new or revised financial accounting standard until the date
that a company that is not an "issuer" (as defined under section 2(a) of the
Sarbanes-Oxley Act of 2002) is required to comply with such new or revised
accounting standard, if such standard also applies to companies that are not
issuers. As a result, owners of Class A Investor Shares might not receive the
same disclosures as if the Company had not made this election.
For example, because we are an
emerging growth company, you will not be able to depend on any attestation from
our independent registered public accounting firm as to our internal control
over financial reporting for the foreseeable future. Our independent registered
public accounting firm will not be required to attest to the effectiveness of
our internal control over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act until the later of the year following our first annual
report required to be filed with the Commission or the date we are no longer an
"emerging growth company" as defined in the JOBS Act. Accordingly, you will not
be able to depend on any attestation concerning our internal control over
financial reporting from our independent registered public accounting firm for
the foreseeable future.
Breaches
of Security: It is possible that our Platform, systems or the systems of
third-party service providers could be "hacked," leading to the theft or
disclosure of confidential information Investors provide to us. Because
techniques used to obtain unauthorized access or to sabotage systems change
frequently and generally are not recognized until they are launched, the
Company, General Partner and our service providers may be unable to anticipate
these techniques or to implement adequate defensive measures.
Unanticipated changes in our tax
laws that may impact us, the enactment of new tax legislation, or exposure to
additional income tax liabilities could affect our profitability: We are
obligated to comply with income tax laws in the regions where we operate,
including recent changes like the Inflation Reduction Act. These evolving tax
regulations could impact our financial health. We also face potential tax
audits that may result in additional tax assessments, with uncertain outcomes.
Changes to our effective tax rate, driven by shifts in our operational
structure, could have significant effects on our financial well-being.
The price of Class A Investor Shares
was determined by our General Partner (see "Price of Class A Investor Shares").
The Company sells shares to raise capital for the purchase and construction of
Projects and to issue Loans. As new Investors purchase Class A Investor Shares
(or other classes of stock, see "Other Concurrent Offerings"), existing
Investors may be temporarily diluted until new Projects are acquired and/or
constructed and new Loans are originated and contribute to monthly cash flow. Cash
in treasury may be invested into Company Investments to optimize yield and
minimize the dilution impact. Such Company Investments will not earn as high of
a return as we expect to earn on our investments in Projects and Loans.
Additionally, we may in the
future offer additional classes and/or series of Investor Shares (such as in
the Reg D Offering) or other securities convertible into or exchangeable for such
class or series of Investor Shares. Although no assurances can be given that we
will consummate a financing, in the event we do, or in the event we sell additional
classes and/or series of Investor Shares (such as in the Reg D Offering) or
other securities convertible into shares of our Class A Investor Shares in the
future, additional and substantial dilution will occur. In addition, investors
purchasing Class A Investor Shares or other securities in the future could have
rights superior to Class A Investor Shares Investors in this Offering.
Subsequent offerings at a lower price (a "down round") could result in
additional dilution.
Page 10
The Company is offering to sell
up to $50,000,000 of Class A Investor Shares to the public. As of the date of
this Offering, 466,547,801 Class
A Investor Shares remain authorized but unissued. This Offering is being
conducted as a continuous offering pursuant to Rule 251(d)(3) of Regulation A,
meaning that while the offering of securities is continuous, active sales of
securities may happen sporadically over the term of the Offering. Further, the
acceptance of subscriptions, whether via the Platform or otherwise, may be
briefly paused at times to allow us to effectively and accurately process and
settle subscriptions that have been received.
The Offering will commence as
soon as this offering statement is "qualified" by the SEC and will end on the
sooner of (i) a date determined by the Company, or (ii) the date the Offering
is required to terminate by law.
Only the Company is offering
securities in this Offering. None of our existing officers, directors, or
stockholders are offering or selling any of their securities of the Company in
this Offering.
The Company is not using an
underwriter or broker to sell the Class A Investor Shares and is not paying
commissions. Class A Investor Shares will be offered and sold only through the
Platform.
This is a "best efforts - no
minimum" offering. This means that the Offering does not have a minimum threshold
amount that we must raise before we can have a closing. Even if a very small
number of Class A Investor Shares are sold, the Company does not plan to return
funds to Investors.
The Company reserves the right to
reject any subscription to purchase Class A Investor Shares in this Offering in
whole or in part and for any reason (or no reason). If the Company rejects an
investment, it will promptly return all the Investor's money without interest
or deduction.
Anyone can buy Class A Investor
Shares. The General Partner does not intend to limit investment to people with
a certain income level or net worth, although there are limits on how much
non-accredited investors may invest in this Offering (see "Limit on the
Amount a Non-Accredited Investor Can Invest").
After the Offering has been
"qualified" by the SEC, the General Partner intends to advertise the Offering
using the Platform and through other means, including public advertisements,
social media and audio-visual materials, in each case, only as we authorize and
in compliance with the rules and regulations of Regulation A. Although these
materials will not contain information that conflicts with the information in
this Offering Circular and will be prepared with a view to presenting a
balanced discussion of risk and reward with respect to the Class A Investor
Shares, the advertising materials will not give a complete understanding of
this Offering, the Company, or the Class A Investor Shares and are not to be
considered part of this Offering Circular.
The Offering is made only by
means of this Offering Circular and prospective Investors must read and rely on
the information provided in this Offering Circular in connection with their
decision to invest in Class A Investor Shares.
In
addition to this Regulation A offering, the Company may conduct concurrent
private offerings of securities under Rule 506(c) of Regulation D of the
Securities Act of 1933. These private offerings (the "Reg D Offerings") will
be open exclusively to verified accredited investors and may be offered through
general solicitation and advertising, in compliance with applicable securities
laws. Each of these classes of Company shares ("Reg D Shares") offered
to investors participating in these private offerings (the "Reg D Investors")
shall participate in distributions with the Investors on a pari passu
basis.
Securities
sold pursuant to Regulation D will not be registered with the SEC and will be
subject to transfer restrictions.
Page 11
Proceeds
from the Regulation D offering will be combined with proceeds from this
Offering and used by the Company for the same common purpose (see "Use of
Proceeds"). While proceeds from each offering may be used to acquire
overlapping or similar energy infrastructure assets, the Company will maintain
separate accounting of capital raised under each offering and allocate capital
in a manner consistent with the rights and expectations of each investor class.
We expect to use all of the net
proceeds of this Offering, after marketing expenses, to acquire, develop and construct
Projects and to issue Loans. Proceeds waiting to be invested into Projects and
Loans may be invested into Company Investments like government bonds or money
market accounts. The Company expects to use Offering proceeds to fund new
Projects and Loans. For more information regarding our investment strategy, see
"Description of Business-Investment Strategy". For more information
regarding current Projects and Loans, see "Description of Property".
We expect to pay for operating
expenses at the Company with cash flow from the Projects and Loans, but if the
Projects and Loans have not earned enough revenue to pay for any given
operating expense, the General Partner may use the proceeds from this Offering
to pay such operating expense. The types of operating expenses the Company expects
to pay are described in "Our Operating Costs and Expenses".
The capital raised in this
Offering will not be used to compensate officers or directors because the
Company has no employees. However, Offering proceeds may be used to pay fees
owed to the General Partner and its affiliates (see "Compensation of General
Partner"). The Company does not expect to pay
fees to the General Partner from the proceeds of the Offering. Fees are instead
expected to be paid with revenue produced by the Projects, Loans and Company
Investments. However, it is possible that the revenue would be insufficient to
pay management fees, at which time, fees may be paid for from the proceeds of
this Offering.
The General Partner may make
short term advances to the Company to make payments on an as-needed basis. The General
Partner has also secured a loan on behalf of the Company. We do not anticipate
any additional sources of capital apart from funds from operations, the
advances, funds generated through this Offering (and other concurrent
offerings) and the loan to fund the Projects and Loans and to cover marketing expenses.
It is important to note that no
capital will be allocated to any Project or Loan until it has received formal
approval from the Investment Committee and has been reported in accordance with
the appropriate procedures (see "Investment Committee").
We might invest in Projects or
Loans using the General Partner's capital before we have raised enough capital
from Investors. In that case, we will replace the General Partner's capital
with capital from Investors as soon as we raise it. To the extent the General
Partner or its affiliates invest capital, they will do so on the same price and
terms as other Investors (see "Compensation of General Partner").
The table below sets forth our
estimated use of proceeds from this Offering assuming we sell $50.0 million in
Class A Investor Shares. This is a "best effort" offering. This Offering does
not have a minimum to close. The Company is not paying commissions to
underwriters, brokers, or anyone else in connection with the sale or
distribution of the Class A Investor Shares. In some cases, retirement
custodians, investment advisers, and other intermediaries will offer to invest
on behalf of their clients. In such cases, the custodian, adviser, or
intermediary will be paid a fee from their client's invested funds. In such
cases, the client (rather than the Company) is paying those fees.
Page 12
|
|
|
Maximum
Offering
|
|
10% of Maximum
|
|
25% of Maximum
|
|
50% of Maximum
|
|||||
|
|
|
Amount (1)
|
|
Amount
|
|
Amount
|
|
Amount
|
|||||
|
Gross Offering Proceeds
|
|
$
|
50,000,000
|
|
|
5,000,000
|
|
|
12,500,000
|
|
|
25,000,000
|
|
|
Less:
Marketing Reimbursements (1)
|
|
$
|
2,500,000
|
|
|
250,000
|
|
|
625,000
|
|
|
1,250,000
|
|
|
Net Proceeds from this Offering
|
|
$
|
47,500,000
|
|
|
4,750,000
|
|
|
11,875,000
|
|
|
23,750,000
|
|
|
Estimated Amount Available for New Projects and Loans
|
|
$
|
47,500,000
|
|
|
4,750,000
|
|
|
11,875,000
|
|
|
23,750,000
|
|
|
TOTALS
|
|
$
|
50,000,000
|
|
|
5,000,000
|
|
|
12,500,000
|
|
|
25,000,000
|
|
|
(1) The Company will
reimburse the General Partner in an amount up to 5% of proceeds from this
Offering to pay for organization and offering expenses, including marketing
expenses. Any such amounts in excess of such 5% will be paid, without
reimbursement, by the General Partner.
|
|||||||||||||
The Company reserves the right to
change the above use of proceeds without notice if the General Partner believes
it is in the best interests of the Company.
The Company's offices are located
at 52 Main Street, Chester, CT 06412. The Company itself has no employees.
Rather, the Company has engaged the General Partner to manage the Company and
utilizes employees and services provided by the General Partner as described
more fully in the section "Directors, Executive Officers & Significant
Employees".
Company Overview
Energea Portfolio 2 LP is a
limited partnership, treated as a "C" corporation for United States federal and
state income tax purposes, and organized under the laws of Delaware as of
January 13, 2020. The Company and its day-to-day operations are managed by
Energea Global LLC (the "General Partner"). The Company was created to
invest in the acquisition, development, construction and operation of solar
energy Projects in Brazil (each a "Project"). Subscribers make monthly
payments based on the amount of electricity produced by the Project and
credited to them. The Company may also lend money and use solar projects as
collateral rather than acquiring Projects for direct ownership (each a "Loan").
The most likely entities the Company intends to lend to are Development
Companies ("Borrowers"). To date, the Company has not issued any Loans due
to the large volume of high-quality Project investment opportunities in the
Brazilian solar market today.
Projects are each owned by a
single-purpose entities ("SPE"). Each SPE is organized as a Brazilian
Limitada or Ltda, the Brazilian equivalent of a U.S. limited liability company.
Under Brazilian law, the assets, and liabilities of a Ltda are distinct. Thus,
the liabilities of a Project held in one SPE will not affect the assets of
another Project held in a different SPE.
As of the date of this Offering
Circular, the Company owns 100% of each SPE, although there could be instances
where the Company is a partner in a SPE with another party, such as the
Development Company (as defined below). In all cases, the Company will exercise
management control over the SPE.
The revenue from our Projects
consists of the payments we receive from Subscribers each month. Revenue from
Loans and Company Investments come from the interest earned while cash is
invested. The Company will make a profit if cash flow from Projects, Loans and Company
Investments exceed our expenses (see "Our Operating Costs and Expenses").
Page 13
While we have opportunistically
sold Projects in the past (see "Projects Sold"), the Company generally
plans to hold the Projects indefinitely, creating a reliable stream of cash
flow for Investors. Should the Company decide to sell Projects in the future,
however, the General Partner would consider the following factors:
·
Yield and Cashflow: Many investment funds look for
reliable cashflows generating a targeted yield. With both revenue and most
expenses locked in by contract, the cash flow from any Project should be
predictable and consistent for as long as 25 years.
·
Project Consolidation: Some of the Projects will be too
small or unusual for institutional buyers to consider purchasing on their own.
The Company could package these Projects into a larger, more standardized
portfolio that will be attractive to these larger, more efficiency-focused
players. In the aggregate, a portfolio of Projects might be expected to
generate 50+ megawatts of power with relatively uniform power contracts,
engineering standards, and underwriting criteria. A portfolio of that size can
bear the fees and diligence associated with an institutional-grade transaction
or securitization.
·
Cash Flow Stabilization: When the Company buys a Project,
it will typically share the construction or repowering risk with the
Development Company that originated the Project. Larger investors are generally
unwilling to take on construction risk and will invest only in Projects that
are already generating positive cash flow, referred to as "stabilization".
Thus, the Company may acquire Projects before stabilization and sell them after
stabilization. Institutional investor interest in the Portfolio should increase
as the portfolio stabilizes.
·
Increase in Residual Value: When the Company acquires a
Project, the appraisal is based solely on the cash flows projected from
executed Project Rental Contracts, with no residual value assumed for the
Project. There is a high probability that a Project will continue to create revenue
after its initial contract period in the form of a contract extension,
repositioning, or sale of energy into the merchant energy markets. This creates
a sort of built-in "found value" for our Projects, which may be realized upon
sale.
The Company sources most of its
Projects from third parties in Brazil who specialize in developing solar
projects ("Development Companies"). Energea Brasil Operações Ltda ("Energea
Brazil"), an affiliate of the General Partner, is a Development
Company. The Company's relationship with Development Companies may take
several different forms. A Development Company might identify a potential
project and permit, engineer and construct it. It might provide operations and
maintenance support for a Project after it is built or might sell a Project to
us and exit entirely.
Development Companies are
compensated for their work and their risk. This compensation may take the form
of an origination fee or a continued economic interest in the SPE. As of the
date of this Offering Circular, no Development Companies have any economic
interest in the SPEs. Where a Project is originated through Energea Brazil,
Energea Brazil will cap the related-party origination fee at 5.0% of the
overall Project's cost, which we believe is below the standard market rate for
developing a Project (see "Compensation of General Partner").
We believe that we will be able
to continue to source new Projects in Brazil for several reasons, including the
fact that the cost of electricity in Brazil has risen over time. We believe
this rise in energy costs has occurred for several reasons:
·
Even with the relatively low rates of economic growth Brazil has
experienced in recent years, as compared to other developing countries, its
energy needs continue to grow as the country modernizes and increases its use
of electronic devices.
·
Brazil has relied extensively on electricity generated from
hydropower. Hydroelectricity fluctuates with the seasons and most large
hydroelectric projects have already been developed, so new projects come online
at more expensive pricing.
Page 14
·
Previous governments subsidized energy costs for decades. Recent
changes in government have removed some of these subsidies, so the true cost of
energy is now being passed through to end-users.
We seek a price for electricity
that is simultaneously high enough to be profitable for our Investors and low
enough to attract Subscribers. In markets where solar equipment is installed
directly on a customer's property, larger discounts are generally required to
provide adequate incentive for a deal. In Brazil, where solar energy is
generated remotely and with little or no inconvenience to the Subscriber, we have
historically provided Subscribers a discount off energy provided by the utility
company between 15-25%. As of the date of this Offering Circular, the Company
has 518 Subscribers with an average discount rate of 25.13% which is slightly
higher than our target.
We primarily invest in Projects
with the following characteristics:
·
Locations: We select locations based primarily on:
o
Brazilian states which have the most advantageous tax and energy
economics;
o
Efficient access for maintenance;
o
Interconnection points with the electricity grid;
o
Solar irradiance; and
o
Acceptable security risks. The Company tries to avoid
selecting Projects in locations with high crime areas which could expose the
Project to an increased risk of theft and vandalism.
·
Right to Land: Typically, we lease the land where the
Projects are built, pursuant to a lease that continues for at least the
duration of the Project Rental Contract and gives us, as tenant, the right to
extend.
·
Subscribers: A SPE will rent each Project to Subscribers
through a Project Rental Contract (see "Summary of
Supporting Contracts"). The Subscribers for a given Project will be
private households and small businesses. Subscribers may opt out of a Project
at any time and will be replaced by other Subscribers from a waiting list.
Subscribers are entitled to a credit on their electric bill administrated
through the local utility company and managed by Energea Brazil. The General
Partner allocates energy to each Subscriber each month by submitting a Ratio
to the interconnecting utility.
·
Operation and Maintenance: Each SPE will hire a company to
perform some or all of the services necessary to maintain each Project in good
working order. This includes preventative maintenance (such as inverter
diagnostics, cleaning inverter fans and string testing), emergency maintenance
(which is when a technical crew is dispatched to a Project to address an
unexpected issue that occurred in the field), modules cleaning, site security
and landscaping. In some cases, Energea Brazil will provide operations and
maintenance services to the Projects (see "Compensation of General Partner").
·
Connecting Projects to the Local Electric Grid: Projects
will not be connected directly to Subscribers. Instead, they will be connected
to the local electric grid.
·
Minimum Technical Requirements ("MTR"): All
technical aspects of each Project we invest in must meet the Company's MTR. The
MTR is a comprehensive list of all venders and equipment makes/models which
have gotten through the General Partner's due diligence process and are
acceptable for use in the Projects. We analyze venders and the equipment they
make to predict the field performance of the equipment and the financial
strength behind warranties and guarantees. In addition to tracking venders and
materials used in the construction, we also track best installation practices
through the MTR. Each Project leaves lessons learned, and those lessons are
incorporated into the collective memory of the General Partner by being added
to the best practices component of the MTR.
·
Compliance with Brazilian Laws Applicable to Solar Projects:
Each Project will comply with Normative Resolution ANEEL n° 482/2012 ("Ren
482"), the primary law governing community solar electricity systems in
Brazil.
Page 15
·
When the Company Invests in Projects: Normally, the
Company will not invest in a Project until certain conditions are satisfied.
Among these:
o
The SPE has executed contracts for the lease of the underlying
land, for engineering, and for the construction of the Project, for the rental
of the Project to a "Consortium", a full list of committed Subscribers
and for operations and maintenance;
o
The electric utility has confirmed that the Project can connect
with the electric grid;
o
All environmental and installation permits have been obtained;
o
We have executed installation service agreements (e.g.,
for all civil and site work, electrical installation, installation of racking,
etc.); and
o
We have obtained insurance.
Thus, in most cases Investors are
not exposed to significant Project-level risks until all these conditions are
satisfied. However, the General Partner might make exceptions for exceptionally
promising Projects. The General Partner will have sole discretion over whether
to acquire or invest in a Project. See "Risks Factors" for more
information.
Loans
The
Company may provide Loans to Borrowers in Brazil. These Loans are designed to
finance the development of new solar energy projects while relying on the
credit of existing projects that rest on the balance sheet of the
Borrower. Each time a new project reaches commercial operation; it
contributes to the Borrower's overall collateral which allows the Company to
extend additional credit to the Borrower.
·
Loan Issuance: As the Company raises capital through this Offering, the General
Partner may lend some or all of it to Borrowers each month. Each disbursement
is amortized on a separate amortization schedule which adheres to the terms and
conditions of the Loan Agreement (see "Summary of Supporting Contracts").
·
Collateral: The Loans are senior debt and collateralized by a pledge
of the shares in the Borrower's enterprise which includes solar projects held
on the corporate balance sheet. Thus, by serving as the sole lender to a
Borrower, the solar projects act as the primary form of collateral. As Loans
are issued, the Borrower uses the loan proceeds to develop and construct more
projects which are added to the overall collateral calculations.
As the Projects achieve commercial operation, Subscribers begin
to make payments to our Borrower for energy produced by the Projects. In some
cases, payments from the Subscribers to our Borrower are made directly to a
segregated account controlled by the Company. As a condition to close a Loan,
the Borrower grants the Company controlling rights to the collateralized assets,
in the event of a default, the General Partner can easily step into the
Borrower's cash flow to prevent revenue leakage during a default event. We
believe the Company is particularly well-suited to issue Loans when solar
projects act as collateral due to our General Partner's extensive experience
owning and operating solar projects.
·
Loan Management: The General Partner will oversee the performance and
compliance of Borrowers and the associated collateral. Their responsibilities
include continuous monitoring of construction progress, energy production and
cash flows to help ensure that loan terms are met. By working closely with the
Borrowers and their projects, we mitigate risks associated with project delays
and underperformance which could impair the Borrower. Close scrutiny of
underlying projects during due diligence and loan servicing also ensures an
efficient step-in during a default scenario.
When we find a Project or Loan that
meets the fundamental criteria described above, we consider the opportunity at
a multi-disciplinary committee of experienced renewable energy executives of
the General Partner ("Investment Committee"). To approve a Project or
Loan for funding, a unanimous approval of the investment by the Investment
Committee is required to move forward. A copy of the memorandum prepared by the
General Partner for each Project or Loan is provided to Investors on the
Platform and in our filings with the SEC through Form 1-U and 253(g)(2) filings.
As of the date of this Offering Circular, the Investment Committee consists of
the members outlined in the table below:
Page 16
|
Name
|
Title
|
Due Diligence
Responsibility
|
|
Arthur
Issa /
Daniel
Chavez
|
Financial Analyst
|
Reviews
historical financials and prepare projections for each Project and Loan
incorporating cash flow, tax, technical and energy market variables.
|
|
Dave Rutty
|
Project Analyst
|
Compiles the IC Memos for
Projects.
|
|
Francielle
Assis
|
HR & HSEC Legal Coordinator
|
Examines
the area where a Project is located for environmental, security and
community-related risk factors.
|
|
Isabella Mendonca
|
General Counsel
|
Examines and/or prepares all
documents related to a Project or Loan to ensure contracts meet Energea
Global's requirements.
|
|
Juan
Carvajales
|
Loan Analyst
|
Compiles
the IC Memo for Loans.
|
|
Julio Cezar dos Santos de Morais
|
Electrical Engineer
|
Ensures all Projects meet our MTR.
Produces a "punch list" of failures to be remedied if necassary.
|
|
Mike
Silvestrini
|
Managing Partner
|
Originates
and negotiates most investment opportunities.
|
|
Paulo Vieira
|
Director of Operations & Maintenance
|
Confirms the cost and strategy
for operating and maintaining Project investments.
|
Our net
income depends, in large part, on our ability to source, acquire and manage
investments with attractive risk-adjusted yields. We compete with many other
entities engaged in renewable energy in the Brazilian market, including
individuals, corporations and private funds, many of which have greater
financial resources and lower costs of capital than we have.
There
are numerous companies with investment objectives similar to ours. That said,
the industry is going through a consolidation phase where a large pool of
market participants is being consolidated into a smaller group of "successful"
enterprises. Thus, we have fewer competitors today than we did five years ago,
but those competitors are generally larger and more sophisticated than those
that have folded or sold their position in the market.
Competitive
variables include market presence and visibility, amount of capital to be
invested per Project and underwriting standards. To the extent that a
competitor is willing to risk larger amounts of capital in a particular
transaction or to employ more liberal underwriting standards when evaluating
potential risk than we are, our investment volume and profit margins could be
impacted. Our competitors may also be willing to accept lower returns on their
investments and may succeed in buying projects that we have targeted for
acquisition.
Although
we believe we are well positioned to compete effectively in each facet of our
business, there is competition in the market and there can be no assurance that
we will compete effectively or that we will not encounter increased competition
in the future that could limit our ability to grow the portfolio in the future.
The revenue comes from payments
from our Subscribers in our Projects and the interest portion that we receive
from Borrowers on our Loans. For the fiscal years ended December 31, 2024 and
2023, respectively, the Company's total revenue was $692,328 and $433,895,
respectively, which is broken down below:
|
Revenue Recognition
|
Amount
as of 12/31/2024
|
Amount
as of 12/31/2023
|
|
Project Revenue
|
$692,328
|
$433,895
|
|
Loan Revenue
|
$0
|
$0
|
In addition to the revenue
described above, the company may also earn additional income from Company
Investments and gains from the sale of Projects. For the fiscal years ended
December 31, 2024 and 2023, respectively, the Company's total other income was
$69,665 and $262,919, respectively, which is broken down below:
|
Other Income Recognition
|
Amount as of
12/31/2024
|
Amount as of
12/31/2023
|
|
Company Investments
|
$69,665
|
$18,102
|
|
Sale of Projects
|
$0
|
$244,817
|
Page 17
Our Revenue Recognition Policy
follows ASC-606 which is a five-step procedure:
|
Procedure
|
Example
|
|
Step 1 - Identify the Contract
|
Project
Rental Contract or Loan Agreement
|
|
Step 2 - Identify the Performance Obligations
|
Delivery of electricity from
solar plant
|
|
Step 3 - Determine the
Transaction Price
|
Amount
contractually signed with Subscriber or Borrower
|
|
Step 4 - Allocate the Transaction Price
|
Obligation is satisfied by
transferring control of the electricity produced to the Subscriber
|
|
Step 5 - Recognize Revenue
|
At a
point in time when the Subscriber or Borrower is invoiced
|
The Company incurs a variety of
costs and expenses ("Company Operating Expenses"), including:
·
banking fees;
·
legal expenses;
·
payments to the General Partner for fees;
·
fees to wire money from Brazil to the U.S.;
·
payments to U.S. states to comply with their respective
securities law ("Blue Sky Laws");
·
debt service and transactional payments (where we borrow money at
the Company level);
·
annual financial audit expenses;
·
depreciation; and
·
U.S. and Brazilian taxes, some of which may not be eligible for a
foreign tax credit in the United States.
The Projects also incur a variety
of costs and expenses ("Project Operating Expenses"), including:
·
payments to third parties to operate and maintain the Projects;
·
lease payments to landowners;
·
debt service and transactional payments (where we borrow money at
the Project level);
·
utilities;
·
on-site security;
·
payments to the third party that manages Subscriber electric bill
credits;
·
Brazilian taxes, some of which may not be eligible for a foreign
tax credit in the United States due to the absence of a tax treaty between the
United States and Brazil;
·
banking fees;
Page 18
·
depreciation; and
·
Project insurance.
This PQA is not providing, or
purporting to provide, any tax advice to Investors. Every potential Investor
is advised to seek the advice of his, her or its own tax professionals before
making this investment. The securities sold in this Offering may have issues
related to taxation at many levels, including tax laws and regulations at the
state, local and federal levels in the United States, and at all levels of
government in non-U.S. jurisdictions.
It is impractical to comment on
all aspects of federal, state and local, and foreign tax laws that may affect
the tax consequences of participation in the Company. Therefore, each
prospective Investor should satisfy himself, herself or itself as to the tax
consequences of participating in the Company by obtaining independent advice
from his, her or its own tax advisers. Furthermore, while the Company will
furnish to you any information required to be provided to you under applicable
tax laws, preparation and filing of each Investor's tax returns shall be such
Investor's responsibility.
The following summarizes the most
significant Brazilian taxes that will be imposed on the SPEs and the Company,
as well as the Federal income tax consequences of acquiring Class A Investor
Shares. This summary is based on the current tax laws of Brazil, the U.S.
Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations promulgated thereunder ("Regulations"), and current
administrative rulings and court decisions, all as of the date hereof. These
authorities may be changed, possibly retroactively, so as to result in United
States federal income tax consequences different from those set forth below.
This is only a summary,
applicable to a generic Investor. Your personal situation could differ. We
encourage you to consult with your own tax advisor before investing.
Brazilian Taxes
Like the United States, taxes in
Brazil are imposed at the federal, state, and local level. The federal
government will impose the following taxes which are paid for by each SPE. It
is important to note that each SPE elects to be paid on a real profit tax
regime or a presumed profit tax regime each calendar year. Each year, the
General Partner runs an analysis as to which tax regime they feel will be the
most tax efficient for each SPE and makes the election accordingly on behalf of
the SPE. Tax rates which are affected by this election are noted below:
·
A corporate income tax ("IRPJ") equal to (i) 15% of the
SPE's taxable income, plus (ii) 10% of the SPE's taxable income per month in
excess of R$20,000.
·
A social contribution tax ("CSLL") equal to 9% of the
taxable income of the SPE.
·
A social integration tax ("PIS") equal to 1.65% (real) or
.65% (presumed) of the SPE's gross sales revenue.
·
A social security tax ("COFINS") equal to 7.6% (real) or
3% (presumed) of the SPE's gross sales revenue.
·
A financial operations tax ("IOF") equal to 3.5% on non-dividend
foreign transactions and 0.38% on dividend transactions between the Company and
the SPE.
The SPEs which elect for a real
profit tax regime will be entitled to depreciation deductions with respect to
certain equipment. Under a presumed profit tax regime, taxable income is set as
32% of total gross revenue, so no deductions apply.
Page 19
At the state level, each SPE will
be subject to a tax on purchased goods ("ICMS"). The ICMS rates vary by
state but will typically be imposed at 18%.
At the local level, many
municipalities impose a tax on revenues from services provided. These taxes are
typically imposed at a rate of 5%.
NOTE: Brazil does not impose a
tax on the Company itself or on Investors, nor does it require SPEs to withhold
any taxes from distributions to the Company.
If
the Company issues a Loan to a Borrower in Brazil, the transaction will be
executed directly between the Company and the Borrower, without the use of a
SPE. In such cases, the Company will be subject to the following taxes on the
interest portion of the revenues generated from the Loan:
·
An
IOF tax equal to:
·
0.0041%
per day on the principal balance for loans to corporate borrowers;
·
0.0082%
per day on the principal balance for loans to individual borrowers;
·
An
additional flat rate of 0.38% applies to both corporate and individual
borrowers.
·
An
IRRF tax equal to:
·
22.5%
for loans with a term of up to 180 days;
·
20%
for loans with a term of 181 to 360 days;
·
17.5%
for loans with a term of 361 to 720 days;
·
15%
for loans with a term exceeding 720 days.
If
the Company makes a Company Investment in Brazil, it will be subject to the
following taxes on interest income, depending on the duration of the
investment:
·
An
IOF tax equal to:
·
3%
of interest earned from investments held less than 29 days;
·
0%
(exempt) if the investment is held for 30 days or more.
·
An
income withholding tax ("IRRF") on interest earned equal to:
·
22.5%
on interest earned from investments held for up to 180 days;
·
20%
for investments held between 181 and 360 days;
·
17.5%
for investments held between 361 and 720 days;
·
15%
for investments held for more than 720 days.
Page 20
As used herein, the term "U.S.
Holder" means a beneficial owner of the Class A Investor Shares that is,
for U.S. federal income tax purposes, an individual citizen or resident of the
United States, a corporation (or any other entity taxable as a corporation for
U.S. federal income tax purposes) created or organized in or under the laws of
the United States or any state or political subdivision thereof or the District
of Columbia, an estate the income of which is subject to U.S. federal income
taxation regardless of its source, or a trust, if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more U.S. persons control all of the substantial decisions of
the trust or if a valid election is in place to treat the trust as a U.S.
person.
In addition, if a partnership, including any entity or
arrangement, domestic or foreign, classified as a partnership for United States
federal income tax purposes, holds Class A Investor Shares, the tax treatment
of a partner generally will depend on the status of the partner and upon the
activities of the partnership. Accordingly, partnerships that hold Class A
Investor Shares, and partners in such partnerships, should consult their tax
advisors.
The Company, although formed as a
Delaware limited partnership, has affirmatively elected to be treated as a
corporation under Subchapter C of the Code for federal income tax purposes.
Thus, the Company will be taxed at regular corporate rates on its income before
making any distributions to holders of Class A Investor Shares as described
below.
The General Intangible Low-Tax Income ("GILTI")
tax on foreign investments is more favorable to our investors under a corporate
tax structure as opposed to a partnership, where the tax on international
assets would be levied on individuals. Under a partnership an investor would be
responsible for 37% of all foreign profits generated from an international
investment. A corporate tax structure allows the corporation to realize foreign
tax credits. Under this corporate tax reporting structure, the corporate entity
would only pay 21% tax on 50% of the foreign profits after foreign tax credits
have been applied.
The income of the Company will
consist primarily of cash available for distribution ("CAFD") received
from the SPEs in the form of a dividend. Because the SPEs will be foreign
corporations, these dividends will be "non-qualified dividends" within the
meaning of the Code and therefore subject to tax at ordinary income tax rates
("qualified dividends," including dividends from most U.S. corporations, are
subject to tax at preferential rates).
The Company, but not the Investors,
might be entitled to credits for taxes paid by the SPEs in Brazil. Taxes
imposed in Brazil which are not imposed on income may not receive a foreign tax
credit.
Distributions to U.S. Holders out
of the Company's current or accumulated earnings and profits, if any, will be
taxable as dividends. A non-corporate U.S. Holder who receives a distribution
constituting "qualified dividend income" may be eligible for reduced federal
income tax rates. U.S. Holders are urged to consult their tax advisors
regarding the characterization of corporate distributions as "qualified
dividend income." Dividends received by a corporate U.S. Holder may be eligible
for the corporate dividends-received deduction if certain holding periods are
satisfied. Distributions in excess of the Company's current and accumulated
earnings and profits will not be taxable to a U.S. Holder to the extent that
the distributions do not exceed the adjusted tax basis of the U.S. Holder's
Class A Investor Shares. Rather, such distributions will reduce the adjusted
basis of such U.S. Holder's Class A Investor Shares. Distributions in excess of
current and accumulated earnings and profits that exceed the U.S. Holder's
adjusted basis in its Class A Investor Shares will be taxable as capital gain
in the amount of such excess if the Class A Investor Shares are held as a
capital asset. In addition, Section 1411 of the Code imposes on individuals,
trusts and estates a 3.8% tax on certain investment income (the "3.8% NITT").
Upon any taxable sale or other
disposition of Class A Investor Shares, a U.S. Holder will recognize gain or
loss for federal income tax purposes on the disposition in an amount equal to
the difference between the amount of cash and the fair market value of any
property received on such disposition; and the U.S. Holder's adjusted tax basis
in the Class A Investor Shares. A U.S. Holder's adjusted tax basis in the Class
A Investor Shares generally equals his or her initial amount paid for the Class
A Investor Shares and decreased by the amount of any distributions to the
Investor in excess of the Company's current or accumulated earnings and
profits. In computing gain or loss, the proceeds that U.S. Holders receive will
include the amount of any cash and the fair market value of any other property
received for their Class A Investor Shares, and the amount of any actual or
deemed relief from indebtedness encumbering their Class A Investor Shares. The
gain or loss will be long-term capital gain or loss if the Class A Investor
Shares are held for more than one year before disposition. Long term capital gains
of individuals, estates and trusts currently are taxed at a maximum rate of 20%
(plus any applicable state income taxes) plus the 3.8% NIIT.
Page 21
The Code imposes an alternative
minimum tax on individuals and corporations. Certain items of the Company's
income and loss may be required to be taken into account in determining the
alternative minimum tax liability of Investors.
The Company will report its
income and losses using the calendar year.
The Company will furnish each
Investor with the information needed to be included in his or her federal
income tax returns, if any; provided, however, the Investors shall be
responsible for determining their adjusted basis in their respective Class A
Investor Shares. Each Investor is personally responsible for preparing and
filing all personal tax returns that may be required as a result of his
purchase of Class A Investor Shares. The tax returns of the Company will be
prepared by accountants selected by the Company.
If the tax returns of the Company
are audited, it is possible that substantial legal and accounting fees will
have to be paid to substantiate our position and such fees would reduce the
cash otherwise distributable to Investors.
Each Investor must either report
Company items on his or her tax return consistent with the treatment on the
information return of the Company or file a statement with his tax return
identifying and explaining the inconsistency. Otherwise the IRS may treat such
inconsistency as a computational error and re-compute and assess the tax
without the usual procedural protections applicable to federal income tax
deficiency proceedings.
The Code imposes interest and a
variety of potential penalties on underpayments of tax.
The foregoing discussion
addresses only selected issues involving Federal income taxes and does not
address the impact of other taxes on an investment in the Company, including
federal estate, gift, or generation-skipping taxes, or State and local income
or inheritance taxes. Prospective Investors should consult their own tax
advisors with respect to such matters.
Summary of
Supporting Contracts
Project Contracts
The Company will cause the SPEs
to enter into five (5) main contracts for each Project:
·
Land Leases: The SPE will lease (rather than buy) the land
where the Project is located, pursuant to a contract we refer to as a "Land
Lease".
·
Project Rental Contracts: In all cases, the SPEs will rent
the Projects to Subscribers (so that the Subscribers are, in form, generating
their own solar power) pursuant to a contract we refer to as a "Project
Rental Contract".
·
Construction Contracts: To build the Projects, the SPE
will hire a third party to provide engineering, procurement, and construction
services pursuant to a contract referred to as a "Construction Contract".
Page 22
·
Project Maintenance Contracts: The SPE will then hire a company,
and in some cases Energea Brazil, to operate and maintain the Projects pursuant
to a contract referred to as a "Project Maintenance Contract" (see "Interest
of Management and Others in Certain Transactions" and "Compensation of General
Partner").
·
Credit Management Agreements: Each Project produces energy
credits. To convert those energy credits into revenue, the SPE must hire a
service provider to onboard Subscribers and administrate the allocation of
energy to each Subscriber on a monthly basis. In most cases, these services are
performed by Energea Brazil under the terms and conditions set forth in a "Credit
Management Agreement" (see "Interest of Management and Others in Certain
Transactions" and "Compensation of General Partner").
Each of these contracts are bi-lingual, both in English and
in Portuguese, the national language of Brazil. Although the final terms and
conditions and the title of the contract might differ from Project to Project,
the rights and obligations of the parties will generally be consistent across
all of the Projects.
The Company will enter into three
(3) main contracts when making a Loan to a Borrower:
·
Loan Agreement: A Loan Agreement ("Loan Agreement")
is a contract where the Lender provides funds to a Borrower up to a specified
limit over a set borrowing period. The Borrower uses these funds to construct
new solar projects. The Borrower grants the Lender a first-priority lien on all
its assets as collateral, including the solar projects. The agreement includes
conditions for advances, default triggers, and remedies for the Lender, with
covenants ensuring compliance and asset segregation when appropriate.
·
Collateral Agreements: The "Collateral Agreements"
are a collection of agreements and instruments designed to secure obligations
under a Loan Agreement between a Borrower and the Company. These documents
collectively establish, and perfect the Company's security interests in various
assets and equity interests of the Borrower and related parties. They may
include personal guarantees, corporate guarantees, promissory notes outlining
repayment terms, and pledge agreements granting the Company priority liens on
specific collateral. Supporting resolutions and certificates confirm the
Borrower's authorization and compliance. The Collateral Agreements address
repayment conditions, default remedies, rights over collateral, and ensure the
Company's enforcement capabilities while defining limits on recourse where
applicable.
·
Trust Agreement: Some, but not all, Loans will also have a
"Trust Agreement". In circumstances where the General Partner requires
more fiscal oversite over a Borrower, we will set up a trust which will receive
all of the Borrowers revenue (usually payments for energy from their Subscribers).
The General Partner will instruct the Trustee to pay principle and/or interest
payments owed to the Company prior to distributing the remaining cash to the
Borrower for their use in operations.
Material Legal Proceedings
In March 2023, two of the
Company's SPEs, Energea Pedra do Indaiá Ltda ("Pedra do Indaia") and
Energea Iguatama Aluguel de Equipamentos e Manutenção Ltda ("Iguatama"),
initiated legal action against Alexandria Indústria de Geradores S.A. ("Contractor")
due to breaches of the terms and conditions stipulated in the Construction
Contracts.
The Contractor's failure to
fulfill its obligations under both Construction Contracts resulted in the
accrual of "Liquidated Damages" owed to the SPEs of Pedra do Indaia and
Iguatama. Prior to legal action, a Confession of Debt was executed between the
Company and the Contractor. This Confession of Debt imposed strict personal and
corporate responsibility upon the Contractor to guarantee the owed amount to
the SPEs. Regrettably, the Contractor failed to meet the payment obligations
outlined in the Confession of Debt.
Subsequently, the Construction
Contracts were terminated and the General Partner promptly initiated legal
proceedings. The Company sought an injunction from the Courts of Rio de Janeiro
to secure the payment, including the freezing of the Contractor's corporate
bank accounts as a means to compel compliance.
Page 23
The presiding Judge initially
granted the injunction, compelling the Contractor to remit all Liquidated
Damages, interest on overdue payments, and legal fees as specified in the
Confession of Debt, within a three-day timeframe. Shortly thereafter, the proceedings
were further complicated when the Contractor filed for bankruptcy protection
and other secured creditors entered the process of collecting unpaid amounts.
The lawsuit is still in process and may take several years to reach a final
verdict.
Factors Likely to
Impact the Performance of the Company
A comprehensive discussion on
risks of investing in the Company can be found at the beginning of this
Offering Circular. Below are risks that we believe deserve specific attention
as they have the highest likelihood of impacting Investor returns. Following
each risk is a brief description of mitigating strategies employed by the General
Partner:
·
Foreign Country: There is an inherent risk when doing business in a foreign
country. Foreign country risks include unexpected fees and taxes, unfair
contact disputes, policy changes and other risks which may negatively affect
estimated internal rate of return ("IRR").
o
Mitigating Strategy: Energea Global has a strong local presence in Brazil
through our Rio de Janeiro office which employs approximately 35 Brazilian
nationals. Foreign country risk is highest when we start doing business in a
new foreign country and diminishes as we gain experience, diversify our local
partnerships and develop best practices for dealing with unique challenges
specific to a country. The General Partner has been operating energy
investments in Brazil for over 7 years.
·
Foreign Exchange Rates: The revenue contracts for the Projects are paid in BRL.
Exchange rates could worsen creating reduced dividends to our investors which
are paid in U.S. dollars USD.
o
Mitigating Strategy: First, our long-term financial projections include a
perpetual weakening of the BRL versus USD, so we expect a continuation of that
phenomenon but can tolerate some level of FX softening while still maintaining
our targeted returns. Second, Project Rental Contracts with Subscribers fluctuate
each year based on changes in the energy price being charged by the
interconnecting utility. Thus, if the BRL were to weaken substantially, it is
likely that the cost of energy in Brazil would increase substantially and the
Projects would generate more BRL per kWh delivered to Subscribers, thereby
offsetting a portion of our exposure to FX risk.
·
Construction: There is a risk that
the Project could encounter unforeseen delays or costs during the construction
phase that could potentially delay dividends and result in a lower-than
expected IRR.
o
Mitigating Strategy: Energea
Global builds in liquidated damages whenever possible into contacts with our construction
contractors. Liquidated damages hold the contractor responsible for any lost
revenue resulting from construction delays. The General Partner also employs a
team of construction managers who oversee the construction of Projects and
ensure Projects meet our MTR.
·
Customer Default: Subscribers save
10-20% on their electric bills for each energy credit they receive from the
Project. They have the option of unsubscribing any time they want, without
penalty.
o
Mitigating Strategy: The Projects provide electricity to thousands of small Subscribers
instead of a single, large, Subscriber. If one or several Subscribers don't pay
their invoice or defect from the Project, the impact of projected returns is
very small. We estimate a 4% default rate when projecting the cash flow from a
Project, while historical default rates for utilities in the region are
actually closer to 1%.
·
Theft / Damage: The equipment may be
subject to theft or damage which is beyond the Company's control.
o
Mitigating Strategy: The Projects carry insurance to protect against major
loss. We carry property insurance to cover theft or unexpected damage to the
equipment, general liability insurance to protect us from incidents or injuries
that could occur on site and business interruption insurance to cover lost revenue
if a Project is out of operation for an extended period of time.
Page 24
·
Solar Irradiance: The General Partner forecasts
the energy production of each Project based on historical weather patterns. A
deviation from historical weather patterns could result in lower-than-expected
electrical production and decreased dividends. Projected returns use a P-50
production estimate. P-50 is an estimate of electrical production where there
is a 50% statistical probability that the Project will produce more electricity
and a 50% probability that the Project will produce less. This is an industry
standard method of weather prediction and production estimating.
o
Mitigating Strategy: Diversifying across many Projects and geographical locations
helps to mitigate the solar irradiance risk of any one specific Project. Loans
also carry a lower exposure to solar irradiance than Project ownership.
·
Materials / Equipment: Equipment may fail
or break down resulting in lower than anticipated production or unplanned
additional operating expenses.
o
Mitigating Strategy: Equipment used in the Projects come with warranties
(usually for 25 years) that protect against failure or lower than anticipated
output. The General Partner also accounts for light-induced degradation when
projected energy production from a Project and sets aside a contingency reserve
for unforeseen mechanical issues that may arise.
The only property owned by the
Company are the Projects. To date, the Company has not issued any Loans.
|
Project
Name
|
Entity
Name
|
Project
Size (AC)
|
Acquisition
Date
|
Amount Invested*
|
|
Salinas
|
5.0
MW
|
4/15/19
|
$265,148
|
|
|
Itaguai
III
|
Energea Itaguai III Aluguel de Equipamentos e Manutenção
Ltda.
|
1.0
MW
|
3/6/20
|
$35,707
|
|
Iguatama
|
Energea Iguatama Aluguel de Equipamentos e Manutencao
Ltda.
|
2.3
MW
|
10/12/20
|
$2,536,004
|
|
Pedrinopolis
|
Energea
Pedrinopolis Ltda.
|
2.3
MW
|
5/21/21
|
$118
|
|
Pedra
do Indaiá
|
Energea Pedra do Indaiá Ltda.
|
2.3
MW
|
10/1/21
|
$4,563,090
|
|
Divinópolis III
|
Energea
Divinopolis Ltda.
|
2.3
MW
|
12/23/21
|
$3,004,954
|
|
Araxa
I
|
Energea
Araxa I Ltda
|
2.5
MW
|
12/23/21
|
$302,931
|
|
Araxa
II
|
Energea
Araxa II Ltda
|
2.5
MW
|
12/23/21
|
$303,475
|
|
Divinópolis
II
|
Energea
Divinopolis II Ltda
|
2.5
MW
|
1/4/22
|
$4,151,068
|
|
Corumbaíba
|
Energea
Corumbaíba Ltda
|
2.5
MW
|
9/9/22
|
$1,490,688
|
|
Diamantina
II
|
Energea
Diamantina II Ltda
|
2.5
MW
|
10/17/22
|
$152,090
|
|
Formiga
I
|
Energea
Formiga I Ltda
|
2.5
MW
|
10/17/22
|
$205,557
|
|
Formiga
II
|
Energea
Formiga II Ltda
|
1.5
MW
|
10/17/22
|
$73,236
|
|
Naque
|
Energea
Naque Ltda
|
1.5
MW
|
10/17/22
|
$123,330
|
|
Micros
I
|
Energea
Micros I Ltda
|
1.1
MW
|
12/29/22
|
$1,036,863
|
|
Itabapoana
|
Energea
Itabapoana Ltda
|
2.5
MW
|
12/29/22
|
$94,590
|
|
Aparecida
do Taboado II
|
Energea Aparecida do Taboado II Ltda
|
2.5
MW
|
4/12/23
|
$179,044
|
|
Frei
Inocêncio
|
Energea
Frei Inocêncio Ltda
|
2.5
MW
|
4/12/23
|
$95,567
|
|
Nova
Lacerda
|
Energea
Nova Lacerda Ltda
|
2.5
MW
|
4/12/23
|
$73,611
|
|
Monte
Sião
|
Energea Portfolio Geração de Projetos MG II Ltda
|
2.5
MW
|
4/17/23
|
$95,833
|
|
Aparecida
do Taboado I
|
Energea Aparecida do Taboado I Ltda
|
2.5
MW
|
5/24/23
|
$155,176
|
|
Iguatama II
|
Energea Iguatama II Ltda
|
2.5
MW
|
12/20/24
|
$1,889,588
|
|
Micros
II
|
Energea
Micros II Ltda
|
750kW
|
11/11/24
|
$0
|
|
TOTAL
|
$20,827,668
|
* as of December 31, 2024
Page 25
As of the date of this Offering
Circular, the Company has sold 10 Projects.
|
Project
Name
|
Entity
Name
|
Project
Size (AC)
|
Date
Sold
|
Sale Price Net of Taxes
|
|
Salinas
|
Project Salinas Geracao S.A.
|
5.0
MW
|
05/11/2021
|
$147,717
|
|
Pedrinopolis
|
Energea Pedrinopolis Ltda.
|
2.3
MW
|
05/11/2021
|
$150,379
|
|
Itaguai
III
|
Energea Itaguai III Aluguel de Equipamentos e Manutencao
Ltda.
|
1.0
MW
|
05/19/2021
|
$44,408
|
|
Aparecida
do Taboado I
|
Energea Aparecida do Taboado I Ltda
|
2.5
MW
|
06/06/2023
|
$136,029
|
|
Frei
Inocêncio
|
Energea
Frei Inocêncio Ltda
|
2.5
MW
|
06/06/2023
|
$124,925
|
|
Monte
Sião
|
Energea Portfolio Geração de Projetos MG II Ltda
|
2.5
MW
|
06/06/2023
|
$126,224
|
|
Nova
Lacerda
|
Energea
Nova Lacerda Ltda
|
2.5
MW
|
06/06/2023
|
$93,427
|
|
Formiga
II
|
Energea
Formiga II Ltda
|
1.5
MW
|
06/06/2023
|
$100,344
|
|
Naque
|
Energea
Naque Ltda
|
1.5
MW
|
06/06/2023
|
$178,011
|
|
Itabapoana
|
Energea
Itabapoana Ltda
|
2.5
MW
|
06/06/2023
|
$133,061
|
|
TOTAL
|
|
$1,234,525
|
As of the date of this Offering
Circular, the Company holds 13 Projects. The table below lists the total
amount the Company invested into each Project and the estimated Project cost.
Please refer to the links in the column labeled "Form 1-U" for the
Project Memo which gives in-depth information regarding each Project such as
its location, the system size, contractors used to construct the Project,
information about other stakeholders, information about the buyer of the energy
and environmental commodities and the estimated economics of the Project. The
Project Memos can also be found on the Platform.
|
Project Name
|
Entity Name
|
Project Size (AC)
|
Estimated
Projected Cost
|
Amount
Invested*
|
Form
1-U
|
|
Iguatama
|
Energea Iguatama
Aluguel de Equipamentos e Manutencao Ltda.
|
2.3 MW
|
$2,536,004
|
$2,536,004
|
|
|
Pedra do Indaiá
|
Energea Pedra do
Indaiá Ltda.
|
2.3 MW
|
$4,563,090
|
$4,563,090
|
|
|
Divinopolis III
|
Energea Divinopolis Ltda.
|
2.3 MW
|
$3,198,961
|
$3,004,954
|
|
|
Araxa I
|
Energea Araxa I Ltda
|
2.5 MW
|
$324,291
|
$302,931
|
|
|
Araxa II
|
Energea Araxa II Ltda
|
2.5 MW
|
$328,767
|
$303,475
|
|
|
Corumbaíba
|
Energea Corumbaíba Ltda
|
2.5 MW
|
$2,915,386
|
$1,490,688
|
|
|
Divinópolis II
|
Energea Divinopolis II Ltda
|
2.5 MW
|
$4,312,924
|
$4,151,068
|
|
|
Micros I
|
Energea Micros I Ltda
|
1.1 MW
|
$1,040,946
|
$1,036,863
|
|
|
Aparecida do Taboado II
|
Energea Aparecida do
Taboado II Ltda
|
2.5 MW
|
$203,303
|
$179,044
|
TBD
|
|
Diamantina II
|
Energea Diamantina II Ltda
|
2.5 MW
|
$152,090
|
$152,090
|
TBD
|
|
Formiga I
|
Energea Formiga I Ltda
|
2.5 MW
|
$211,255
|
$205,557
|
TBD
|
|
Iguatama II
|
Energea Iguatama II Ltda
|
2.5 MW
|
$1,955,102
|
$1,889,588
|
|
|
Micros II
|
Energea Micros II Ltda
|
750kW
|
$604,181
|
$0
|
|
|
|
TOTAL
|
|
$22,346,300
|
$19,815,352
|
|
* as of December 31, 2024
Page 26
The following discussion of our
financial condition and results of operations should be read in conjunction
with our financial statements and the related notes thereto contained in this
Offering Circular. The following discussion contains forward-looking statements
that reflect our plans, estimates, and beliefs. Our actual results could differ
materially from those discussed in herein (see "Caution Regarding
Forward-Looking Statements" and "Risk Factors"). Unless otherwise
indicated, the latest results discussed below are as of December 31, 2024.
For financial statement purposes,
the Company accounts for investments in Projects under ASC 360. The Projects
are carried at cost and will be depreciated on a straight-line basis over the
estimated useful life of the related assets.
The Company evaluates for
impairment under ASC 360, utilizing the following required steps to identify,
recognize and measure the impairment of a long-lived asset to be held and used:
·
Indicators of impairment - Consider whether indicators of
impairment are present.
· Test
for recoverability - If indicators are present, perform a recoverability test
by comparing the sum of the estimated undiscounted future cash flows
attributable to the long-lived asset in question to its carrying amount (as a
reminder, entities cannot record an impairment for a held and used asset unless
the asset first fails this recoverability test).
·
Measurement of an impairment - If the undiscounted cash flows
used in the test for recoverability are less than the carrying amount of the
long-lived asset, determine the fair value of the long-lived asset and
recognize an impairment loss if the carrying amount of the long-lived asset
exceeds its fair value.
The company follows ASC 606
guidelines for revenue recognition. To apply this principle, the standard
establishes five key steps:
· Step
1: Recognize the contract with the customer
· Step
2: Specify performance obligations
· Step
3: Establish transaction price
· Step
4: Allocate transaction price to performance obligations
· Step
5: Recognize revenue
Page 27
The Brazilian solar market is
expected to continue growing steadily through 2025 and 2026, with total
installed capacity likely to exceed 50 gigawatts by the end of the period.
Growth is driven primarily by the distributed solar segment (the segment the
Company participates in), which represents more than 60 percent of national
capacity and continues to benefit from high retail electricity rates and
favorable economics for Subscribers. While the implementation of Law 14.300 has
introduced a phased-in network usage fee for new distributed solar projects,
the grandfathering of legacy projects and continued demand in the commercial
and agricultural sectors are expected to sustain momentum. To date, all of the
Projects owned by the Company have been grandfathered into the previous framework
which minimizes network usage fees.
In
the utility-scale segment, the shift from
government auctions to private bilateral contracts is accelerating. Corporate
offtake agreements-particularly in sectors such as agribusiness and retail-are
now the dominant driver of new project development, supported by the ongoing
expansion of Brazil's deregulated energy market. At the same time, financing
sources have diversified, with green debentures, private credit, and
international capital increasingly supplementing traditional development bank
funding.
Challenges include transmission
constraints in solar-intensive regions and continued exposure to currency
volatility. Despite these headwinds, Brazil remains one of the most resilient
solar markets in Latin America, with a maturing regulatory framework, improving
access to capital, and growing corporate demand supporting its medium-term
outlook.
The Company intends to make
distributions monthly, to the extent the General Partner, in its discretion,
determines that cash flow is available for distributions and in a manner
consistent with the Authorizing Resolutions. Any other distributions shall be
made pursuant to the terms of the LP Agreement which gives the General Partner
broad discretion whether to make any distributions. To date, the Company has
not made a profit, although it has had distributable cash flow. Below are the
activities of the Company that generate the cash flow which could be used to
fund distributions:
·
Net income received from the Projects
·
Interest payments received from the Borrowers
·
Interest payments received from Company Investments
·
Net Proceeds from Capital Transactions
o
Originates from the sale or refinancing of Projects
o
Net proceeds are the gross proceeds of the capital transaction
minus associated expenses, including debt repayment
·
Liquidated Damages from Construction Agreements
o
Penalties paid by EPC Contractors when Projects are delivered
behind schedule
o
Liquidated Damages are not booked as revenue but are considered
distributable cash flow
When the Company has
distributable cash flow and the General Partner determines to make a
distribution, here is an overview of how these distributions are allocated and
calculated:
Distributable cash flow, if any,
is distributed to the Preferred Equity Investors, on a pari passu basis,
and the General Partner in the following order of priority:
·
First, the Preferred Return;
·
Thereafter, any additional cash flow shall be distributed 70% to Preferred
Equity Investors and the Carried Interest to the General Partner.
Page 28
The General Partner discounts
each month of Estimated NOI (see "Price of Class A Investor Shares") by
the same discount rate until the cash flow results in an internal rate of
return ("IRR") of 7% ("Adjusted NOI"). The IRR is calculated
using the XIRR function and is based upon the price an Investor paid per Class
A Investor Share. The resulting Adjusted NOI is the monthly distribution that
would need to be paid to Investors for them to receive their Preferred Return.
Since all months of Estimated NOI are discounted evenly, the Adjusted NOI
maintains the same seasonality curve as the Estimated NOI. If the actual NOI
for any month is less than the Adjusted NOI, the Investors receive all the cash
distributed that month and the shortfall is carried forward so that Investors
catch up on their Preferred Return prior to any Carried Interest being paid.
The IRR is calculated based upon the price an Investor paid per Class A
Investor Share, and not on any revenue or profit achieved by the Company. To
date, the Company has not made a profit, although it has had distributable cash
flow. To the extent the Company has distributable cash flow but has no current
or accumulated earnings and profit, such distributions are considered a return
of capital for U.S. federal income tax purposes to the extent that the
distributions do not exceed the adjusted tax basis of the U.S. Holder's Class A
Investor Shares.
If the General Partner determines
that a distribution can be made with distributable cash flow, and the amount of
distributable cash flow is greater than the Adjusted NOI for the month (and the
Investors are therefore on track to receive their Preferred Return), the General
Partner will receive a Carried Interest. Any distributable cash flow that is
greater than the Adjusted NOI (plus any shortfall from previous months) will be
divided between the General Partner and the Preferred Equity Investors where
the General Partner will get 30% of the excess and Preferred Equity Investors
will get 70% of the excess.
Distributions
Provided
we have distributable cash flow (see "Sources of Distributable Cash Flow"),
we will authorize and declare distributions based on the Projects' net income,
interest paid on Loans and interest earned on Company Investments during the
preceding month minus any amounts held back for reserves.
While
we are under no obligation to do so, our General Partner may declare other
periodic distributions as circumstances dictate.
To date, the Company has not
made a profit, although it has had distributable cash flow. To the extent the
Company has distributable cash flow but has no current or accumulated earning
and profit, such distributions are considered a return of capital for U.S.
federal income tax purposes to the extent that the distributions do not exceed
the adjusted tax basis of the U.S. Holder's Class A Investor Shares and
reported to Investors on a Form 1099-B. To the extent the Company makes
distributions from profits in the future, such distributions will be classified
as dividends and reported to Investors on a Form 1099-DIV.
Please
note that in some cases, Investors have cancelled their purchase of Class A
Investor Shares after distributions were made. In that case, the distribution
allocated to that Investor is returned to the Company and the bookkeeping is
updated to reflect the change in cash distributed. Thus, all figures below are
subject to change.
Below is a
table depicting the fees paid and distributions made from the Company since
inception. Note that whenever the table shows that the General Partner has
received its Carried Interest, the Investors have received their full Preferred
Return, as defined in "Allocations of Distributions". In those cases
where the General Partner does not receive its Carried Interest, distributions
were not sufficient to distribute to Investors their Preferred Return.
Page 29
|
Distribution Date
|
Distributable Cash Flow
|
Preferred Return
|
Additional Cash Flow (70%)
|
Carried Interest* (30%)
|
Class A Investor Distributions**
|
Cash on Cash Yield***
|
|
5/20/21
|
137,235.23
|
50,103.18
|
82,716.23
|
4,415.82
|
132,819.41
|
20.18%
|
|
6/24/21
|
34,398.08
|
11,331.28
|
22,183.64
|
883.16
|
33,514.92
|
2.99%
|
|
7/24/21
|
33,961.13
|
8,663.79
|
24,414.18
|
883.16
|
33,077.97
|
2.74%
|
|
8/26/21
|
20,320.88
|
6,615.89
|
12,821.83
|
883.16
|
19,437.72
|
1.40%
|
|
9/23/21
|
20,320.79
|
6,829.13
|
12,608.50
|
883.16
|
19,437.63
|
1.27%
|
|
10/27/21
|
20,320.80
|
6,951.10
|
12,486.54
|
883.16
|
19,437.64
|
1.09%
|
|
11/30/21
|
20,320.80
|
7,054.00
|
12,383.64
|
883.16
|
19,437.64
|
1.02%
|
|
12/24/21
|
18,977.20
|
13,651.91
|
5,325.29
|
0.00
|
18,977.20
|
0.84%
|
|
2021
Total
|
$305,854.91
|
$111,200.28
|
$184,939.85
|
$9,714.78
|
$296,140.13
|
31.53%
|
|
1/26/22
|
10,973.59
|
3,316.66
|
5,890.61
|
1,766.32
|
9,207.27
|
0.32%
|
|
2/24/22
|
8,787.12
|
3,020.41
|
4,883.55
|
883.16
|
7,903.96
|
0.27%
|
|
3/29/22
|
9,860.27
|
3,957.94
|
5,019.17
|
883.16
|
8,977.11
|
0.28%
|
|
4/29/22
|
7,068.65
|
3,351.29
|
3,717.36
|
0.00
|
7,068.65
|
0.22%
|
|
5/31/22
|
7,068.14
|
2,992.40
|
4,075.74
|
0.00
|
7,068.14
|
0.21%
|
|
6/30/22
|
24,999.75
|
10,725.17
|
14,274.58
|
0.00
|
24,999.75
|
0.68%
|
|
7/29/22
|
25,000.10
|
6,134.70
|
18,865.40
|
0.00
|
25,000.10
|
0.66%
|
|
8/27/22
|
24,073.19
|
20,127.59
|
3,156.48
|
789.12
|
23,284.07
|
0.56%
|
|
9/27/22
|
23,677.18
|
10,506.53
|
10,536.52
|
2,634.13
|
21,043.05
|
0.48%
|
|
10/27/22
|
23,774.37
|
10,254.62
|
10,815.80
|
2,703.95
|
21,070.42
|
0.72%
|
|
11/29/22
|
33,759.97
|
14,656.27
|
15,282.96
|
3,820.74
|
29,939.23
|
0.44%
|
|
12/28/22
|
27,897.02
|
12,302.77
|
12,475.40
|
3,118.85
|
24,778.17
|
0.70%
|
|
2022 Total
|
$226,939.35
|
$101,346.35
|
$108,993.57
|
$16,599.43
|
$210,339.92
|
5.54%
|
|
1/27/23
|
23,705.24
|
10,855.76
|
11,623.77
|
1,225.71
|
22,479.53
|
0.39%
|
|
2/24/23
|
28,739.48
|
12,192.29
|
13,072.28
|
3,474.91
|
25,264.57
|
0.41%
|
|
3/27/23
|
33,687.38
|
15,314.18
|
15,617.22
|
2,755.98
|
30,931.40
|
0.48%
|
|
4/28/23
|
33,709.20
|
15,474.53
|
15,499.47
|
2,735.20
|
30,974.00
|
0.44%
|
|
5/30/23
|
35,708.77
|
16,432.24
|
16,385.05
|
2,891.48
|
32,817.29
|
0.43%
|
|
6/26/23
|
43,709.57
|
20,252.44
|
19,938.56
|
3,518.57
|
40,191.00
|
0.48%
|
|
7/25/23
|
98,709.19
|
45,896.06
|
44,891.16
|
7,921.97
|
90,787.22
|
0.95%
|
|
8/28/23
|
33,708.43
|
15,668.70
|
15,333.77
|
2,705.96
|
31,002.47
|
0.31%
|
|
9/27/23
|
85,715.70
|
41,000.83
|
38,007.64
|
6,707.23
|
79,008.47
|
0.76%
|
|
10/27/23
|
88,636.35
|
35,620.88
|
45,063.15
|
7,952.32
|
80,684.03
|
0.72%
|
|
11/24/23
|
83,704.70
|
40,601.46
|
36,637.08
|
6,466.16
|
77,238.54
|
0.67%
|
|
12/26/23
|
79,097.93
|
38,374.75
|
34,613.45
|
6,109.73
|
72,988.20
|
0.59%
|
|
2023 Total
|
$668,831.94
|
$307,684.12
|
$306,682.60
|
$54,465.22
|
$614,366.72
|
6.63%
|
|
1/26/24
|
57,055.87
|
26,770.27
|
25,742.36
|
4,543.11
|
52,512.63
|
0.41%
|
|
2/27/24
|
58,167.84
|
34,041.33
|
22,678.83
|
1,447.68
|
56,720.16
|
0.41%
|
|
3/26/24
|
67,053.57
|
32,587.99
|
32,397.48
|
2,068.10
|
64,985.47
|
0.46%
|
|
4/26/24
|
50,056.17
|
25,750.84
|
24,305.33
|
0.00
|
50,056.17
|
0.35%
|
|
5/24/24
|
50,361.60
|
26,356.09
|
24,005.48
|
0.00
|
50,361.57
|
0.34%
|
|
6/27/24
|
52,259.23
|
24,629.08
|
24,314.24
|
3,315.62
|
48,943.32
|
0.32%
|
|
7/26/24
|
72,671.64
|
37,364.11
|
35,306.85
|
0.00
|
72,670.96
|
0.47%
|
|
8/26/24
|
111,083.25
|
55,830.45
|
50,252.39
|
5,000.00
|
106,082.84
|
0.61%
|
|
9/27/24
|
112,739.23
|
53,582.40
|
50,282.70
|
8,873.52
|
103,865.10
|
0.57%
|
|
10/28/24
|
122,722.56
|
65,708.06
|
39,889.80
|
17,104.35
|
105,597.86
|
0.50%
|
|
11/26/24
|
131,924.48
|
68,088.72
|
55,506.92
|
8,298.65
|
123,595.64
|
0.57%
|
|
12/24/24
|
137,163.19
|
75,732.81
|
59,884.78
|
1,535.76
|
135,617.59
|
0.62%
|
|
2024 Total
|
$1,023,258.63
|
$526,442.15
|
$444,567.16
|
$52,186.79
|
$971,009.31
|
5.63%
|
|
1/24/25
|
92,252.30
|
54,300.15
|
37,952.14
|
0.00
|
92,252.30
|
0.41%
|
|
2/25/25
|
100,850.44
|
63,545.60
|
37,304.84
|
0.00
|
100,850.44
|
0.39%
|
|
3/27/25
|
100,000.00
|
67,246.88
|
32,753.12
|
0.00
|
100,000.00
|
0.37%
|
|
2025 Total
|
$293,102.74
|
$185,092.63
|
$108,010.11
|
$0.00
|
$293,102.74
|
1.17%
|
|
TOTAL
|
$2,517,987.57
|
$1,231,765.53
|
$1,153,193.29
|
$132,966.22
|
$2,384,958.82
|
50.50%
|
Page 30
*Note: The General Partner reserves
the right to reduce its Management Fees and/or Carried
Interest payments for any reason or to protect the desired cash yield to
Investors. For more information regarding the Management Fees and Carried Interest paid to our General Partner, see
"Compensation of General Partner".
**Note: Class A Investor
distributions are equal to the Preferred Return plus any additional cash flow,
please see "Calculating Distributions".
***Note: Monthly cash-on-cash
yield values are calculated by dividing the Investor Distributions amount by
the total cost basis of all outstanding shares at the time the distribution is
issued. Year-end cash-on-cash yields are calculated by summing all monthly cash-on-cash
yields for the respective year.
Since the Company's inception in
2020, it has grown each year with the construction and acquisition of new
Projects. In 2022, the Company turned its first Project on: Iguatama I. In
2023, the Company added Micros I. In 2024, we completed Pedra do Indaiá and
Divinópolis II, and acquired an operational project, Iguatama II. In 2025,
Divinópolis III, Corumbaíba, and Micros II are expected to be completed. In
addition to completing these construction Projects, the Company intends to
acquire additional fully-operational Projects as well.
During the construction phase,
the Company has experienced challenges which have caused us to strategize
alternatives for maintaining targeted cash yield. These challenges are mainly
related to construction and interconnection delays. Many of our Projects are in
remote parts of Brazil where finding sophisticated construction partners and
responsive utility companies can be difficult. The Company's second large
format asset, Pedra do Indaia, reached mechanical completion in July 2023 but
was not interconnected to utility until May of 2024. To offset the impact on
cash flows caused from the delays in interconnecting Pedra do Indaia, the
Company added Micros I, sold certain Projects (see "Description of Property")
and collected Liquidated Damages from contractors (see "Material Legal
Proceedings").
As a result of these maneuvers,
the overall returns of the Company have held firmly within our targeted range
of 14-16% after fees paid to the General Partner and delivered distributions on
schedule every month of 2024. As the Company completes construction of the
remaining Projects, we expect the portfolio to stabilize and to settle into a
consistent rhythm of dividends to Investors.
We will delay the construction of
Araxa I and Araxa II until we have taken full advantage of a market rife with
operational projects for sale and have completed the construction of Corumbaíba
and Micros II. We plan to sell Diamantina II and Formiga I prior to
construction.
The
significant increase in assets and liabilities, was due to the escalation of
investments to complete the Projects under construction and the increase of
capital raised from Investors.
For
the fiscal years ended December 31, 2024 and 2023, the Company generated
revenue of $692,328 and $433,895, respectively. This increase was primarily
driven by the Pedra do Indaiá and Micros I Projects, which began generating
revenue in 2024.
Page 31
As of
December 31, 2024 and 2023, the Company's portfolio operating expenses were
$338,673 and $159,274, respectively, including professional fees, advertising
and marketing, software subscription, taxes, depreciation, and other general
and administrative expenses. As of December 31, 2024 and 2023, the Projects'
operating expenses were $527,917 and $234,181 respectively, covering
professional fees, travel, taxes, depreciation, operation and maintenance, and
other general and administrative expenses. The increase in operating expenses
was due to the addition of Projects being turned on.
Consequently,
for the fiscal year ended December 31, 2024, the Company incurred a loss from
operations totaling $174,262, compared to a gain of $40,440 in 2023. For the
fiscal years ended December 31, 2024 and 2023, total other expenses were
$539,056 and $162,733, respectively. As a result, the Company's total net loss
for the years ended December 31, 2024 and 2023 was $713,318 and $122,293,
respectively. Unrealized foreign currency exchange loss for the years ended
December 31, 2024 and 2023 was $248,301 and $13,905, respectively. Although
several Projects became operational and revenue increased, the Company will not
realize the full revenue potential of these Projects until all associated
Project Rental Contracts are fulfilled.
The Company might borrow money to
invest in Projects, depending on the circumstances at the time. If the Company
needs to move quickly on a Project and has not yet raised enough capital
through the Offering (or other concurrent offerings), it might make up the
shortfall through borrowing. The General Partner will make this decision on an
as-needed basis.
On October 5, 2020, the Company
entered into a third-party Credit Agreement with Lattice Energea Global
Revolver I, LLC ("Lender"), which is unaffiliated with the General
Partner. This Agreement extends up to $5,000,000 of credit to the Company which
can be used to construct Projects. After construction, the amounts owed convert
into long-term project finance for a 10-year term. As of December 31, 2024, the
Company's outstanding balance under the line of credit is $4,481,843.
On December 22, 2023, the parties
amended the above described Credit Agreement to release the General Partner and
establish the Company as the sole borrower. This included certain underlying
Projects as collateral: Iguatama, Pedra do Indaiá, Divinopolis II, Divinopolis
III, and Micros I.
Since the interest rate on this
loan is lower than the anticipated IRR of the Projects, we expect this loan to
lever returns to Investors while providing liquidity necessary to accelerate
through construction to achieve distributions to Investors faster.
We are dependent upon the net
proceeds from the Offering to conduct our proposed investments. We will obtain
the capital required to purchase new Projects and to issue Loans and conduct
our operations from the proceeds of the Offering and any future offerings we
may conduct, from secured or unsecured financings from banks and other lenders,
from short term advances from the General Partner and from undistributed funds
from our operations. As of December 31, 2024, the Company had $4,593,375 of
cash on hand and equivalents, which will be used to pay for the remaining costs
of constructing Divinopolis III, Corumbaíba and Micros II Projects.
The compensation described in
this section was calculated using the accrual method in accordance with U.S.
GAAP.
The Company itself has no officers or employees. The
individuals listed below are the Managing Partners, Executive Officers, and
Significant Employees of Energea Global, the General Partner of the Company.
Page 32
|
Name
|
Position with General Partner
|
Age
|
Term of Office
|
Approximate Hours Per Week If Not Full Time (1)
|
|
Executive Officers
|
|
|
|
|
|
Mike Silvestrini
|
Managing Partner
|
45
|
01/01/2017 - Present
|
Full Time
|
|
Chris Sattler
|
Managing Partner
|
45
|
01/01/2017 - Present
|
Full Time
|
|
Gray Reinhard
|
Managing Partner, CTO
|
40
|
01/01/2020 - Present
|
Full Time
|
|
Isabella Mendonça
|
Managing Partner, General
Counsel
|
33
|
10/02/2020 - Present
|
Full Time
|
|
|
|
|
|
|
|
Significant Employees
|
|
|
|
|
|
Arthur Issa
|
Financial Analyst
|
30
|
05/23/2018 - Present
|
Full Time
|
|
Paulo Vieira
|
Director of O&M
|
38
|
01/29/2024 - Present
|
Full Time
|
|
Francielle Assis
|
HR & HSEC Legal Coordinator
|
33
|
07/24/2023 - Present
|
Full Time
|
|
Marta Coelho
|
Controller, Global
|
52
|
12/07/2018 - Present
|
Full Time
|
|
Dave Rutty
|
Project Analyst
|
35
|
06/13/2022 - Present
|
Full Time
|
|
Julio Cezar dos Santos de Morais
|
Electrical Engineer
|
35
|
09/25/2023 - Present
|
Full Time
|
|
Juan Carvajales
|
Loan Analyst
|
52
|
08/01/2023 - Present
|
Full Time
|
(1) The above listed employees
do not record specific hours to each company managed by Energea Global Rather,
the employees focus their full-time and energy to each Project, Loan, or
process as needed. The General Partner cannot estimate number of hours per week
spent managing this or any particular company as the employees are salaried.
The work required to manage the Company and other companies managed by Energea
Global changes from time to time depending on the number and frequency of
Projects resulting from the amount they raise in each Offering. As the
companies grow, dedicated staff are brought in to exclusively manage a specific
company. As of December 31, 2024, there are no staff members exclusively
dedicated to the Company and it is managed by the General Partner's executive
team and certain significant employees.
Marta Coelho, the General Partner's
Controller, is the sister-in-law of Mike Silvestrini, a Managing Partner. There
are no other family relationships among the executive officers and significant
employees of the General Partner.
The General Partner of the
Company, is majority owned by Mike Silvestrini, a resident of Chester,
Connecticut. Energea Brazil, our affiliated Development Company in Brazil, is
owned by Energea Global.
Mike is an accomplished
professional with over 15 years of experience in the solar energy industry. He
has played an executive key role in the development of over 500 solar projects
across the United States, Brazil, and Africa while being directly responsible
for nearly one billion of combined solar project finance.
Since 2017, Mike has been the
Co-Founder & Managing Partner at Energea Global LLC. In his capacity as
Co-Founder & Managing Partner of the General Partner, Mike directs the
Investment Committee which determines the investment strategy for all funds
managed by the business. To date, Energea Global manages 3 funds formed to
acquire and operate solar power projects: the Company, Energea Portfolio 3
Africa LP, and Energea Portfolio 4 USA LP. See "Other Solar Energy Funds"
below for the status each fund's offerings.
Page 33
Since 2015, Mike has served as a
Board Member of the Big Life Foundation, an organization dedicated to
preserving over 1.6 million acres of wilderness in East Africa. Through
community partnerships and conservation initiatives, Big Life protects the region's
biodiversity and promotes sustainable practices.
From 2008 to 2017, Mike
co-founded and served as the CEO of Greenskies Renewable Energy LLC, a leading
provider of turnkey solar energy services. His expertise contributed to the
development, financing, design, construction, and maintenance of solar projects
across the United States. Notably, he was involved in solar installations on
Target Corporation stores and distribution centers, Wal-Marts and Sam's Clubs,
Amazon distribution centers, capped municipal landfills, and any schools and
universities.
Mike's track record in renewable
energy, his involvement in hundreds of solar projects worldwide, and his
dedication to environmental sustainability position him as a driving force in managing
investments in solar generating assets.
Chris Sattler
Chris is a seasoned energy
entrepreneur with a proven track record in building and scaling companies in
the renewable and retail energy sectors. Most recently, he served as Chief
Executive Officer of IVI Energia, a joint venture between Energea Global and
Brookfield Asset Management. Over his 18-month tenure, he led the company from
inception to a $280 million valuation before returning to his role at Energea
Global.
Earlier in his career, Chris
co-founded North American Power and served as Chief Operating Officer. Under
his leadership, the company expanded into more than 35 utility markets across
the U.S., serving over one million residential and small commercial customers.
In 2017, the company was acquired by Calpine Corporation with annual gross
sales exceeding $850 million.
Chris holds a Bachelor's degree
in Real Estate and Urban Economics from the University of Connecticut School of
Business and is an alumnus of Harvard Business School's Program for Leadership
Development. He currently resides in Rio de Janeiro.
Gray Reinhard
Gray is an experienced software
engineer specializing in business intelligence tools across multiple
industries. Early in Gray's career, he worked primarily in E-Commerce where he
built and supported sites for over 20 brands including several Fortune 500
companies. From there, Gray moved into renewable energy where he developed the
project management software for the country's largest commercial solar
installer, Greenskies. This custom platform managed everything from sales and
financing to the construction, maintenance, and performance monitoring of over
400 solar projects owned by the company.
Prior to joining Energea Global in
January 2020, Gray served as the CTO of Dwell Optimal Inc. which assists
businesses providing employees with travel accommodations.
Gray studied at Princeton
University.
Isabella Mendonça
Isabella is a corporate lawyer
with experience in cross-border M&A transactions and the drafting and
negotiation of highly complex contracts and corporate acts in different
sectors, such as energy, oil & gas and infrastructure. Isabella has previously
worked as an attorney for Deloitte and Mayer Brown in Brazil, where she was an
associate in the Energy group, working in regulatory, contractual and corporate
matters related to renewable energy project development.
From 2016 until she joined
Energea Global, Isabella was an associate in the corporate and securities
practice at Mayer Brown in the Rio de Janeiro office.
Isabella studied law at Fundacão
Getulio Vargas, in Brazil and has a master's degree (LLM) from the University
of Chicago.
Page 34
Arthur Issa
Arthur Issa was one of the first
employees at Energea Global, starting in May, 2018. Over the course of his time
with the business, Arthur has participated in the successful closing of more
than 100 MW of solar projects and developed the financial models that support
more than $300mm of AUM. Arthur is responsible for financial modeling of all
Projects and Loans at Energea Global. He also supports the company's corporate
financial planning through detailed financial modelling, reporting and cash
flow management. As an integral part of the team, he provides the tools
necessary for management to make investment decisions for Energea Global and
the Company. Arthur has a B.S. in Production Engineering from University
Candido Mendes in Rio de Janeiro, Brazil.
Paulo Vieira
Paulo is an accomplished
electrical engineer with a master's degree in Energy Resources Engineering and
over 5 years of leadership experience in the renewable energy sector. He
currently serves as the Global O&M Manager at Energea Global, where he
oversees operations and maintenance across a global portfolio of photovoltaic
assets spanning the USA, Brazil, and South Africa. Paulo is a member of Energea
Global's Investment Committee.
Specializing in solar energy
systems, Paulo has led the operations of more than 2.2 GW of solar projects.
His expertise includes O&M strategy development, performance optimization,
technical team leadership, and cost control initiatives aimed at improving
operational KPIs and financial performance. His professional journey includes
strategic roles at Recurrent Energy, Enel Green Power, COMERC Energia, Solarig,
and AKTOR SA, where he managed large-scale solar assets and drove operational
excellence through data-driven decision-making and cross-functional
coordination.
Paulo also brings a strong
academic foundation, with a postgraduate specialization in Photovoltaic Solar
Systems and international experience through Brazil's Scientific Mobility
Program in the U.S., where he studied at The University of Texas at El Paso. He
is deeply committed to advancing clean energy and delivering high-impact,
data-driven solutions in the solar power sector.
Francielle Assis
Francielle has over five years of
professional legal experience with a focus on labor and corporate law within
large-scale corporate environments. Since September 2024, she has served as HR &
HSEC Legal Coordinator at Energea Global. In that capacity, she ensures
compliance with labor laws and regulations for all corporate Human Resources and
oversees the company's Health, Safety, Environment and Community ("HSEC")
compliance and risk mitigation. Her responsibilities include managing labor
litigation, advising on employment law matters, and coordinating with
regulatory agencies and external legal counsel. She also attends site visits
for each Project to opine on the community and security risk prior to
investment and sits on Energea Global's Investment Committee.
Prior to joining Energea Global,
Francielle was a Senior Strategic Labor Attorney at CPFL Energia, one of
Brazil's largest energy companies. There, she led complex employment litigation
strategies and advised on collective labor issues. She also served as Labor
Attorney at CPFL, supporting operational and strategic labor matters across the
company's various business units.
Earlier in her career, Francielle
worked in both private law firms and governmental institutions, handling labor
and civil litigation. Her experience includes managing procedural strategies
and representing corporate clients in both individual and collective labor
disputes, demonstrating a high level of legal and operational competence.
Marta Coelho
Since its inception in 2018,
Marta Coelho has served as the Controller at Energea Global, bringing with her
a wealth of experience and expertise in finance and accounting. As the global
Controller, Marta plays a crucial role in managing all financial aspects,
including account management, taxation, and audits, for Energea Global's
diverse range of operating entities and projects across Africa, Brazil, and the
USA. Marta leads a team of subordinate controllers and accountants at Energea
Global and coordinates with a bench of third-party accounting firms across our
jurisdictions of operation.
Page 35
Dave Rutty
Dave is a highly experienced
solar professional with over 12 years of hands-on experience building,
maintaining, and managing solar projects. As a Project Analyst at Energea
Global, he plays a pivotal role in overseeing construction and maintenance
operations across all markets, ensuring projects are executed with precision,
safety, and technical excellence. Dave is responsible for preparing Investment
Committee memos across Energea Global's multidisciplinary team of experts to
ensure all investments meet the company's stringent compliance requirements.
From 2020 to 2022, Dave served as
a Managing Partner at SRES, a solar contracting company based in the
northeastern U.S. Prior to that, Dave was served as the Vice President of
Operations and Maintenance at Greenskies Renewable Energy LLC.
Julio Cezar dos Santos de
Morais
Julio is an experienced
electrical engineer specializing in photovoltaic systems, currently serving as an
Electrical Engineer at Energea Global since October 2023. He oversees project
design, field and factory inspections, and engineering analysis for distributed
generation systems. His technical expertise includes tools such as PVSyst,
AutoCAD, and protection design for medium-voltage applications.
Over the past nine years, Julio
has held engineering roles at CPFL Renováveis, Deode Energia, MEPEN Energia,
and others, where he managed solar projects exceeding 100 MW of combined solar
power generation capacity. Julio led technical teams and performed system
simulations and commissioning. He holds both bachelor's and master's degrees in
Electrical Engineering from the Federal University of Technology - Paraná
(UTFPR), with academic research published in the field of power electronics.
Juan Carvajales
Juan is a seasoned business
development professional with over 15 years of experience in the renewable
energy sector across U.S. and Latin American markets. Since August 2023, he has
worked as a Loan Analyst at Energea Global, where he supports investment
strategies and portfolio architecture, leveraging his background in project
development, financing, and cross-border renewable energy transactions to
identify private credit opportunities.
Before joining Energea Global,
Juan held key leadership roles including Director of Business Development at
GeneraSol (2007-2023) and Board Member at SUA Power Company (2021-2023), where
he focused on structuring and executing solar PV and off-grid energy projects.
He has also led utility-scale solar development at Grupo BAZ and has a
foundational background in project and operations management. Juan holds a BBA
from Politécnico Costa Atlántica and additional certifications in solar energy
and environmental science.
Within the last five years, no
Director, Executive Officer, or Significant Employee of the Company has been
convicted of, or pleaded guilty or no contest to, any criminal matter,
excluding traffic violations and other minor offenses.
Within the last five years, no
Director, Executive Officer, or Significant Employee of the Company, no
partnership of which an Executive Officer or Significant Employee was a general
partner, and no corporation or other business association of which an Executive
Officer or Significant Employee was an executive officer, has been a debtor in
bankruptcy or any similar proceedings.
Energea Global, the General
Partner of the Company, is also the general partner of two other funds formed
to acquire and operate solar power projects, each of which is conducting an
offering under Regulation A:
·
Energea Portfolio 3 Africa LP ("Portfolio 3"), which was
formed to acquire and operate projects with located in Africa.
Page 36
·
Energea Portfolio 4 USA LP ("Portfolio 4"), which was
formed to acquire and operate projects located in the United States.
The status of each of the
Company's, Portfolio 3's and Portfolio 4's current and prior offerings, as of
December 31, 2024, is below:
* Gross of stock issuance costs
Our General Partner is
compensated when the Company pays the fees described in the table below ("Fees"):
|
Type of Fee
|
Timing of Fee
|
Description
|
|
Reimbursement of Marketing
Expenses
|
Ongoing
|
The Company must reimburse the General
Partner for expenses the General Partner incurs while promoting the Company
to potential investors. The maximum reimbursable amount is 5% of the total
amount raised. Types of costs that will be reimbursed by the Company to the General
Partner for marketing expenses include digital and conventional
advertisements, marketing personnel and third-party costs, promotional events
and any other cost associated with communicating this Offering to the general
public.
|
|
Management Fees
|
Ongoing
|
The General Partner will charge the Company a monthly
management fee equal to 0.167% of the aggregate capital that has been
invested into the Company.
|
|
Carried Interest
|
When the distributions exceed
the Preferred Return
|
The General Partner will receive
30% of all distributed cash flow above the monthly amount necessary for
Preferred Equity Investors to receive their Preferred Return. For more
detail, see "Carried Interest" below
|
|
Origination Fees
|
When Projects and Loans are originated
|
The General Partner might originate and develop Projects
and Loans that are acquired by the Company. If so, the General Partner shall
be entitled to compensation that is no greater than 5.0% of the Project's
cost or the Loan's outstanding balance.
|
|
O&M and Credit Management
Services ("Ancillary Services")
|
Ongoing as services are rendered
according to contract
|
Energea Brazil provides O&M
and Credit Management services to some of the Projects owned by the Company.
After an extensive search to identify third parties to provide these
services, the General Partner concluded that the nascent solar market in
Brazil lacked cost-effective and experienced options for these tasks. Energea
Brazil, on the other hand, agreed to provide these services at prices that
were lower than those offered through the competitive search process and has
extensive experience providing these services to hundreds of projects across
multiple global markets.
|
|
Interest on Loans
|
Whenever due and payable
|
The General Partner might lend to the Company to fund the
acquisition or investment in Projects and Loans or for other purposes. Such a
loan will bear interest at market rates. The amount of interest will depend
on the amount and term of any such loans.
|
Page 37
While the General Partner is not entitled to any
compensation other than the Fees as described above, it may defer some or all
of Fees at any time based on the General Partner's assessment of the cash flow
at the Company. Some Fees may be deferred indefinitely at the discretion of the
General Partner. To date, the General Partner (and, in the case of Ancillary
Services) Energea Brazil have provided services without charging the full
amount owed by the Company. As the Company and its cash flow stabilize, the General
Partner may charge for deferred Fees ("Deferred Fees") - see "Fees
Paid to General Partner" for more information.
As the Company grows, markets,
exceeds Preferred Returns and requires the General Partner for Ancillary
Services, fees are accrued to the General Partner, some of which are deferred,
as described above. Below is a table which calculates the total amounts paid to
the General Partner from all possible fees, which have been paid as of December
31, 2024:
|
Fee Type
|
Fees Paid to General
Partner in 2024
|
Fees Paid Since
Inception (including 2024)
|
|
Reimbursement of Marketing
Expenses
|
$0.00
|
$10,250.00
|
|
Management Fee
|
$75,849.66
|
$101,583.37
|
|
Carried Interest
|
$52,186.79
|
$133,0032.04
|
|
Origination Fees
|
$0.00
|
$918,514.83
|
|
Ancillary Services
|
$71,683
|
$116,792.00
|
|
Interest on Loans
|
$0.00
|
$0.00
|
|
TOTAL
|
$199,719.45
|
$1,280,172.24
|
The General Partner and its
affiliates might purchase Class A Investor Shares. If so, they will be entitled
to the same distributions as other Preferred Equity Investors. If such
investment is made to facilitate the Company's acquisition of or investment in
Projects before there are sufficient offering proceeds, the General Partner
will be entitled to redeem its Class A Investor Shares from additional Offering
proceeds as they are raised. As of December 31, 2024, the General Partner
purchased and owned 255,319 Class A Investor Shares which was 1.02% of all
outstanding shares as of that date.
The individuals named below, as
well as other employees of the General Partner, may own Class A Investor Shares
that they purchased privately through the Platform in the same manner as any
Investor.
The following table sets forth
the approximate beneficial ownership of our Class A Investor Shares as of
December 31, 2024, for each person or group that holds more than 10.0% of our
Class A Investor Shares, and for each director and executive officer of our General
Partner and for the directors and executive officers of our General Partner as
a group.
|
Name of
Beneficial Owner (1)(2)
|
Number of
Shares Beneficially Owned
|
Amount and
Nature of Beneficial Ownership Acquirable
|
Percent of All
Shares
|
|
Energea Global LLC
|
255,319
|
N/A
|
1.0175%
|
|
Michael Silvestrini
|
106,208(3)
|
N/A
|
0.4232%
|
|
Christopher Sattler
|
82,397(3)
|
N/A
|
0.3283%
|
|
Gray Reinhard
|
484
|
N/A
|
0.0019%
|
|
All directors and executive
officers of our General Partner as a group (3 persons)
|
1,290
|
N/A
|
0.0051%
|
|
-
|
|
-
|
Page 38
(1) Under SEC
rules, a person is deemed to be a "beneficial owner" of a security if that
person has or shares "voting power," which includes the power to dispose of or
to direct the disposition of such security. A person also is deemed to be a
beneficial owner of any securities which that person has a right to acquire
within 60 days. Under these rules, more than one person may be deemed to be a
beneficial owner of the same securities and a person may be deemed to be a
beneficial owner of securities as to which he or she has no economic or
pecuniary interest.
(2) Each listed
beneficial owner, person or entity has an address in care of our principal
executive offices at 52 Main Street, Chester, CT 06412.
(3) Includes shares
beneficially owned by Energea Global LLC, under the control of its Class A
Shareholders. Notably, Michael Silvestrini and Chris Sattler, as the largest
principal shareholders, hold 41.33% and 32.24% of the shares of Energea Global
LLC, respectively. (As of December 31, 2024)
The Company might enter into
other transactions with related parties. If so, any compensation paid by the
Company to the related party shall be (i) fair to the Company, and (ii)
consistent with the compensation that would be paid to an unrelated party.
By "related party" we mean:
·
The General Partner or a subsidiary of the General Partner;
·
Any director, executive officer, or significant employee of the
Company or the General Partner;
·
Any person who has been nominated as a director of the Company or
the General Partner;
·
Any person who owns more than 10% of the voting power of the
Company or the General Partner; and
·
An immediate family member of any of the foregoing.
The Company has not, and does not
intend to, enter into any related party transaction with the General Partner or
its subsidiaries or any other related party other than those transactions
described above in "Compensation of General Partner". As discussed
above, the Company may pay or reimburse the General Partner for marketing
expenses, management fees, Carried Interest, Ancillary Services and interest on
loans. There are no other expenses, nor will there be other expenses in the
future, where the Company pays a related party other than the Fees.
Certain Fees are substantiated by
a contract between the related parties. Those contracts are described in the
table below. Other Fees (such as marketing reimbursements, management fees, Carried
Interest or origination fees) are not supported by a specific contract and are
instead due and payable as described in this Offering Circular. For a detailed
description of the amounts paid by the Company to the General Partner and its subsidiaries,
please see "Compensation of General Partner".
|
Project
|
Related Party
|
Contract
|
Date Signed
|
|
Iguatama
|
Energea Brazil
|
Operations and Maintenance
Contract
|
August 22, 2023
|
|
|
Energea Brazil
|
Credit Management Agreement
|
August 22, 2023
|
|
|
|
|
|
|
Pedra do Indaiá
|
Energea Brazil
|
Operations and Maintenance Contract
|
July 1, 2024
|
|
|
Energea Brazil
|
Credit Management Agreement
|
June 1, 2024
|
|
|
|
|
|
|
Divinopolis II
|
Energea Brazil
|
Operations and Maintenance
Contract
|
March 26, 2025
|
|
|
|
|
|
|
Micros I
|
Energea Brazil
|
Operations and Maintenance
Contract
|
April 30, 2024
|
|
|
Energea Brazil
|
Credit Management Agreement
|
April 30, 2024
|
|
|
|
|
|
|
Iguatama II
|
Energea Brazil
|
Operations and Maintenance Contract
|
March 21, 2025
|
|
|
Energea Brazil
|
Credit Management Agreement
|
April 22, 2025
|
Page 39
The Company is offering up to $50,000,000
of Class A Investor Shares. All of the rights and obligations associated with
the Class A Investor Shares are set forth in:
·
The LP Agreement, which can be found here;
and
·
The Authorizing Resolution, which can be found here.
The fixed
price of Class A Investor Shares was determined by calculating the Net Asset
Value ("NAV") of the Company and dividing the NAV by the total number of
outstanding shares. The NAV is calculated as the Net Present Value ("NPV")
of the Estimated Net Operating Income ("Estimated NOI") of the Company.
The Estimated NOI calculation
begins with an estimation of cash flow. Cash flow comes from distributions from
Projects, interest payments from Loans and interest earned from Company
Investments. To estimate distributions from Project, we estimate monthly energy
produced by each Project using predictive software called PVsyst. PVsyst is a
vital tool in the solar industry for designing and simulating the performance
of photovoltaic systems. Its comprehensive features enable precise predictions
of solar power generation ("kWh"), considering a wide range of variables
and site-specific conditions. To estimate monthly revenue for each Project, the
energy rate described in the Project Rental Contract ("Energy Rate") is
multiplied by kWh throughout the term of the Project Rental Contracts. We then
deduct the expected Project Operating Expenses to determine the cash
available for distribution to the Company from the Projects (see "Our
Operating Costs and Expenses - Project Operating Expenses"). In addition, to
the cash available for distribution from the Projects, in determining the
Estimated NOI, we add any anticipated interest payments from Loans and Company
Investments.
We then deduct all of the
expected operating expenses Company level (see "Our Operating Costs and
Expenses - Company Operating Expenses") from the cash flow. These expenses
are fairly easy to estimate as they are either consistent and predictable (like
a bank fee) or fixed (like a management fee). By subtracting the estimated
operating costs and expenses from the estimated cash flow, we establish a
monthly Estimated NOI. We then use an XIRR calculation to compute the NPV of
that Estimated NOI using the Company's IRR as the discount rate in the NPV
equation. For example, if the Estimated NOI would result in a 12% IRR, we use
12% as the discount rate when calculating the NPV of the Estimated NOI.
Therefore, the NPV of the
Estimated NOI using the IRR as the discount rate establishes the NPV of the
Company. When we divided the NPV of the Company by the number of outstanding
Class A Investor Shares, we arrive at a price per share.
Investors will have no right to
vote or otherwise participate in the management of the Company. Instead, the
Company will be managed by the General Partner exclusively.
Page 40
The Company is governed by a Limited Partnership
Agreement dated June 3, 2025 (the "LP Agreement"). A copy of the LP Agreement
can be found here.
The Class A Investor Shares being offered were created by the General Partner under
an Authorizing Resolution pursuant to Section 3.01 of the LP Agreement. A copy
of the Authorizing Resolution can be found here.
The LP Agreement establishes
Energea Global LLC, a Delaware limited liability company, as the General
Partner.
The following summarizes some of
the key provisions of the LP Agreement and the Authorizing Resolution. This
summary is qualified in its entirety by the LP Agreement itself, a copy of
which can be found here,
and by the Authorizing Resolution itself, a copy of which can be found here.
The Company was formed in
Delaware on January 13, 2020, pursuant to the Delaware Limited Liability
Company Act. On June 3, 2025, the Company converted from a Delaware limited
liability company to a Delaware limited partnership, pursuant to the Delaware Revised
Uniform Partnership Act.
Under the LP Agreement, ownership
interests in the Company are referred to as "Share", while the owners,
are referred to as "Limited Partners".
The General Partner adopted the
Authorizing Resolution to create the Class A Investor Shares. Any Investor who
buys Class A Investor Shares in the Offering will be an "Limited Partner"
under the LP Agreement.
The interests in the Company are
denominated by 2,501,000,000 "Shares". 2,000,000,000 of these Shares are
designated as either Class B Shares, Class C Shares, Class D Shares or Class I
Shares, with the exact amount of each such class being determined by the
General Partner. In accordance with the Partnership Agreement, the General
Partner may reclassify any unsold existing class of Investor Shars into one or
more classes by adopting Authorizing Resolutions. f Investor Shares into one or
more classes, by adopting one or more authorizing resolutions.
The Class A Investor Shares will
be owned by Investors and are the subject of this Offering. By adopting other
authorizing resolutions, the General Partner may create, offer, and sell other classes
of Investor Shares in the future, which could have rights superior to the
rights of the Class A Investor Shares.
Management
The General Partner has complete
discretion over all aspects of the business conducted by the Company. For
example, the General Partner may (i) create classes of Shares with such terms
and conditions as the General Partner may determine in its sole discretion;
(ii) issue Shares to any person for such consideration as the General Partner
maybe determine in its sole discretion, and admit such persons to the Company
as Limited Partners; (iii) engage the services of third parties to perform
services on behalf of the Company; (iv) enter into one or more joint ventures;
(v) purchase, lease, sell, or otherwise dispose of any assets, including Projects
or Loans, in the ordinary course of business or otherwise; (vi) enter into
leases and any other contracts of any kind; (vii) incur indebtedness on behalf
of the Company, whether to banks or other lenders; (viii) determine the amount
of the Company's distributable cash (as described herein) and, subject to any
authorizing resolutions, the timing and amount of distributions to Limited
Partners; (ix) determine the information to be provided to the Limited Partners;
(x) grant mortgages, liens, and other encumbrances on the Company's assets;
(xi) make all elections under the Code and the provisions of State and local
tax laws; (xiii) file a petition in bankruptcy; (xiv) discontinue the business
of the Company; and (xv) dissolve the Company.
Investors who purchase Class A
Investor Shares will not have any right to vote on any issue other than certain
amendments to the LP Agreement, or to remove the General Partner.
Page 41
The General Partner can be
removed for "cause" under a procedure set forth in Section 5.06 of the LP
Agreement.
The term "cause" includes:
·
An uncured breach of the LP Agreement by the General Partner; or
·
The bankruptcy of the General Partner; or
·
Certain misconduct on the part of the General Partner, if the
individual responsible for the misconduct is not terminated.
A vote to remove the General
Partner for cause must be approved by Limited Partners owning at least seventy
five percent (75%) of the issued and outstanding Class A Investor Shares and
the Reg D Shares, voting together as a single class (the Class A Investor
Shares and the Reg D Shares being collectively referred to herein as the "Investor
Shares"). Whether "cause" exists would then be decided in arbitration
proceedings conducted under the rules of the American Arbitration Association,
rather than in a court proceeding.
These provisions are binding on
every person who acquires Class A Investor Shares, including those who acquire
Class A Investor Shares from a third party, i.e., not from the Company.
The LP Agreement protects the General
Partner and its employees and affiliates from lawsuits brought by Investors.
For example, it provides that the General Partner will not be liable to the
Company for mistakes, errors in judgment, or other acts or omissions (failures
to act) as long as the act or omission was not the result of the General
Partner's fraud or willful misconduct under the LP Agreement. This limitation
on the liability of the General Partner and other parties is referred to as
"exculpation."
The LP Agreement also requires
the Company to indemnify (reimburse) the General Partner, its affiliates, and
certain other parties from losses, liabilities, and expenses they incur in
performing their duties. For example, if a third party sues the General Partner
on a matter related to the Company's business, the Company would be required to
indemnify the General Partner for any losses or expenses it incurs in
connection with the lawsuit, including attorneys' fees. However, if it is
judicially determined that such General Partner is not entitled to be
exculpated under the standard described in the preceding paragraph by the LP
Agreement, such General Partner shall promptly reimburse the Company for any
reimbursed or advanced expenses.
Notwithstanding the foregoing, no
exculpation or indemnification is permitted to the extent such exculpation or
indemnification would be inconsistent with the requirements of federal or state
securities laws or other applicable law.
The detailed rules for
exculpation and indemnification are set forth in section 6.02 of the LP
Agreement.
Once an Investor pays for his,
her, or its Class A Investor Shares, the Investor will have no obligation to
make further contributions to the Company (except for the return of
distributions under certain circumstances as required by Sections 17-607 and 17-804
of the Delaware LP Act, as described in more detail under "Liability To Make
Additional Contributions" below.
No Investor will be personally
liable for any of the debts or obligations of the Company.
Page 42
The manner in which the Company
will distribute its available cash is described in "Securities Being Offered
- Calculating Distributions".
In general, Investors may freely
transfer their Class A Investor Shares. However, if an Investor wants to sell
Class A Investor Shares, the Investor may only offer the Class A Investor
Shares to the General Partner via the Platform. The General Partner generally
has a first right of refusal to purchase Class A Investor Shares pursuant to
Article 8of the LP Agreement. See "Risk Factors-No Market for the Class A
Investor Shares; Limits on Transferability."
If an Investor who is a human
being (as opposed to an Investor that is a legal entity) should die or become
incapacitated, the Investor or his, her or its successors will continue to own
the Investor's Class A Investor Shares.
The Company will pay certain
management fees and other fees to the General Partner, as summarized in "Compensation
of General Partner".
The General Partner may require an Investor to sell his,
her, or its Class A Investor Shares back to the Company:
·
If the Investor is an entity governed by the Employee Retirement
Income Security Act of 1974, Code section 4975, or any similar Federal, State,
or local law, and the General Partner determines that all or any portion of the
assets of the Company would, in the absence of the redemption, more likely than
not be treated as "plan assets" or otherwise become subject to such laws.
·
If the General Partner determines that the Investor has engaged
in certain misconduct described in the LP Agreement.
If an Investor's Class A Investor
Shares are purchased by the Company as provided above, the price will be equal
to 90% of the then-current share price of such Class A Investor Shares as
published on the Platform.
The purchase price will be paid
by wire transfer or other immediately available funds.
If the General Partner wants to
sell the business conducted by the Company, it may affect the transaction as a
sale of the Project owned by the Company or as a sale of all the Shares in the
Company. In the latter case, Investors will be required to sell their Class A
Investor Shares as directed by the General Partner, receiving the same amount
they would have received had the transaction been structured as a sale of
assets.
All documents, including all
tax-related documents, will be transmitted by the Company to Investors via
email and/or through the Platform.
The General Partner may amend the
LP Agreement unilaterally (that is, without the consent of anyone else) for a
variety of purposes, including to:
Page 43
·
Cure ambiguities or inconsistencies in the LP Agreement;
·
Add to its own obligations or responsibilities;
·
Conform to this Offering Circular;
·
Comply with any law;
·
Ensure that the Company isn't treated as an "investment company"
within the meaning of the Investment Company Act of 1940;
·
Do anything else that could not reasonably be expected to have, a
material adverse effect on Investors.
An amendment that has, or could
reasonably be expected to have, a material adverse effect on Investors,
requires the consent of the General Partner and Investors holding a majority of
the Class A Investor Shares.
An amendment that would require
an Investor to make additional capital contributions, delete or modify any
amendments listed in Section 11.03 of the LP Agreement or impose personal
liability on an Investor requires the consent of the General Partner and each
affected Investor.
Within a reasonable period after
the end of each fiscal year of the Company, the General Partner will provide
Investors with (i) a statement showing in reasonable detail the computation of
the amount distributed, and the manner in which it was distributed (ii) a
balance sheet of the Company, (iii) a statement of income and expenses, and
(iv) such additional information as may be required by law. The financial
statements of the Company need not be audited by an independent certified
public accounting firm unless the General Partner so elects or the law so
requires. While the Company currently maintains audited financial statements,
under the LP Agreement, the Company is not required to maintain audited
financial statements unless the General Partner so elects or the law so
requires.
As a "Tier 2" issuer under
Regulation A, the Company will also be required to provide investors with
additional information on an ongoing basis, including annual audited financial
statements, annual reports filed on SEC Form 1-K, semiannual reports filed on
SEC Form 1-SA, special financial reports filed on SEC Form 1-K, and current
reports on SEC Form 1-U. If, however, our Class A Investor Shares are held "of
record" by fewer than 300 persons, these reporting obligations could be
terminated.
A Member's right to see
additional information or inspect the books and records of the Company is
limited by the LP Agreement.
Distributions made in liquidation
of the Company will be made in the manner described "Calculating
Distributions", depending on whether the distributions consist of ordinary
operating cash flow or net capital proceeds.
The holders of the Class A
Investor Shares will not have preemptive rights. That means that if the Company
decides to issue securities in the future, the holders of the Class A Investor
Shares will not have any special right to buy those securities.
Once an
Investor pays for his, her, or its Class A Investor Shares, the Investor will
have no obligation to make further contributions to the Company (except for the
return of distributions under certain circumstances as required by Sections 17-607
and 17-804 of the Delaware LP Act).
Page 44
Under Section 17-607 of the
Delaware LP Act, a limited partnership may not make a distribution to a partner
if, after the distribution, all liabilities of the limited partnership, other
than liabilities to partners on account of their partnership interests and
liabilities for which the recourse of creditors is limited to specific property
of the limited partnership, would exceed the fair value of the assets of the
limited partnership. The Delaware LP Act provides that a partner who receives a
distribution and knew at the time of the distribution that the distribution was
in violation of Section 17-607 of the Delaware LP Act shall be liable to the
limited partnership for the amount of the distribution for three years.
Under Section 17-804 of the
Delaware LP Act, a limited partnership is required to distribute its assets:
(i) first to creditors, to the extent otherwise permitted by law, in
satisfaction of the limited partnership's liabilities other than liabilities
for which payment has been made and distributions to partners and former partners;
(ii) unless otherwise provided in its limited partnership agreement, to partners
and former partners in satisfaction of liability for distributions under the
Delaware LP Act; and (iii) unless otherwise provided in its limited partnership
agreement, to partners first for the return of their contributions and second
respecting their partnership interests, in the portions in which they share in
distributions. The Delaware LP Act provides that a member who receives a
distribution and knew at the time of the distribution that the distribution was
in violation of Section 17-804 of the Delaware LP Act shall be liable to the
limited partnership for the amount of the distribution for three years.
In some situations, the General
Partner might be required by law to withhold taxes and/or other amounts from
distributions made to Investors. The amount we withhold will still be treated
as part of the distribution. For example, if we distribute $100 to an Investor
and are required to withhold $10 in taxes, for our purposes the Investor will
be treated as having received a distribution of $100 even though only $90 was
deposited in the Investor's bank account.
At this time, all Investors are
U.S. persons for all federal tax purposes. To the extent at any point in the
future any Investors may be non-U.S. persons, the distributions to Investors
may be subject to additional tax withholding and other reporting requirements.
The Company can only distribute
as much cash flow as the Company has available for distributions (see "Distributions").
There is no guarantee that the Projects will generate enough cash flow, after
paying expenses, to distribute enough to pay a positive return to Investors or
even to return all their invested capital.
Redemption
Plan
Investors
should note that the General Partner may, in its sole discretion, amend,
suspend, or terminate the Redemption Plan at any time without prior notice for
any reason, and the General Partner reserves the right to reject any Redemption
Request at any time for any reason.
Our Class A Investor Shares are
currently not listed on a national securities exchange or included for
quotation on a national securities market, and currently there is no intention
to list our Class A Investor Shares. While Investors should
view an investment in the Company as long-term, we are adopting a redemption
plan ("Redemption Plan") whereby an Investor has the opportunity to
obtain liquidity.
At any time after sixty (60) days
following the purchase of Class A Investor Shares, an Investor may request
redemption of their Class A Investor Shares in accordance with the Company's Redemption
Plan as set forth herein.
In order to submit a redemption
request ("Redemption Request") Investors must (1) submit a time-stamped
request via the Platform, (2) have no more than one outstanding request at any
given time, and (3) request that the Company redeem no more than $50,000 worth
of Class A Investor Shares per request. In addition, the Redemption Plan is
subject to certain liquidity limitations, which may fluctuate depending on the
liquidity of the Company. We reserve the right to reject any Redemption Request
at any time to protect our operations and our non-redeemed Investors, to
prevent an undue burden on our liquidity, or for any other reason, including,
what we deem to be a pattern of excessive, abusive or short-term trading.
Page 45
As calculated below, the redemption
price ("Redemption Price") may be reduced by a discount based on the
time of the Redemption Request, rounded down to the nearest cent. The Redemption
Price will be equal to (i) the current price of the Class A Investor Shares in
effect at the time the Redemption Request is made, reduced by (ii) the
aggregate sum of distributions, if any, with record dates during the period
between the Redemption Request date and the redemption date. The current price
of the Class A Investor Shares is published on the Platform, and Investors will
be informed of the estimated Redemption Price at the time a Redemption Request
is submitted, subject to the adjustment for distributions described above.
Based on the time when an
Investor submits a Redemption Request, the Redemption Prices are set forth
below:
|
Holding Period from Date
of Settlement
|
Redemption Price (as
percentage of per share redemption price) (1)
|
|
|
Settlement date to 60 days
|
No Redemptions
|
|
|
60 days to 3 years
|
95.0
|
%(2)
|
|
More than 3 years
|
100.0
|
%(3)
|
(1) The
Redemption Price will be the per share price for our Class A Investor
Shares in effect as of the time the Redemption Request is made (i) reduced by
any distributions, if any, with record dates during the period between the
Redemption Request date and the redemption date and (ii) rounded down to the
nearest $0.01.
(2) For Class A
Investor Shares held between 60 days and three (3) years, the Redemption Price
includes a fixed 5.0% discount based on the per share price for our Class A
Investor Shares in effect at the time of the Redemption Request.
(3) There is
no discount to redemptions of Class A Investor Shares held at least three
(3) years.
Investors may withdraw their Redemption
Request at any time before the redemption is paid. If we agree to honor a Redemption
Request, such Redemption Request will be paid within 90 days.
In light of the SEC's current
guidance on redemption plans, we generally intend to limit redemptions in any
calendar quarter to Class A Investor Shares whose aggregate value is 5.00% of
the NAV of all of our outstanding Class A Investor Shares on the last business
day of the preceding quarter, with excess capacity carried over to later
calendar quarters in that calendar year, up to a maximum of 20.00% of the NAV
of all of our Class A Investor Shares outstanding during any calendar year.
Notwithstanding the foregoing, we are not obligated to redeem Class A Investor
Shares under the Redemption Plan.
We cannot guarantee that the
funds, if any, set aside for the Redemption Plan will be sufficient to
accommodate all Redemption Requests. In the event our General Partner
determines, in its sole discretion, that we do not have sufficient funds
available to redeem all of the Class A Investor Shares for which Redemption
Requests have been submitted, such pending Redemption Requests will be honored
on a first in first out basis, if at all. In the event that not all Redemption
Requests are being honored in a given quarter, due to reaching the 5.00%
quarterly limit or otherwise, the Redemption Requests not fully honored will
carry over to the first business day of the next quarter and Investors will not
need to submit a new Redemption Request the following quarter. Investors will
be notified within 10 days of submitting a Redemption Request whether their
request for Redemption has been accepted or denied.
We intend to limit Investors to
one (1) Redemption Request outstanding at any given time, meaning that, if an
Investor desires to request more or less Class A Investor Shares be redeemed,
such Investor must first withdraw the first Redemption Request. For Investors who
hold Class A Investor Shares with more than one record date, Redemption Requests
will be applied to such Class A Investor Shares in the order in which they
settled, on a first in first out basis - meaning, those Class A Investor Shares
that have been continuously held for the longest amount of time will be
redeemed first. In addition, we intend to limit Redemption Requests to $50,000
worth of Class A Investor Shares per Redemption Request.
In addition, our General Partner
may, in its sole discretion, amend, suspend, or terminate the Redemption Plan at
any time without prior notice, including to protect our operations and our
non-redeemed Investors, to prevent an undue burden on our liquidity, following
any material decrease in our NAV, or for any other reason. In the event that we
suspend our Redemption Plan, we expect that we will reject any outstanding Redemption
Requests and do not intend to accept any new Redemption Requests. In the event
that we amend, suspend or terminate our Redemption Plan, we will file an Offering
Circular supplement and/or Form 1-U, as appropriate, and post such information
on the Platform to disclose such action. Therefore, you may not have the
opportunity to make a Redemption Request prior to any potential termination of
our Redemption Plan.
Page 46
Investors will own all the Class
A Investor Shares while the General Partner will own all the Common Shares. The
principal rights associated with the Common Shares are as follows:
·
Distributions: As the holder of the Common Shares, the
General Partner will be entitled to the distributions of the Carried Interest.
·
Voting Rights: The Common Shares will have no voting
rights per se. However, the General Partner, in its capacity as the
general partner of the Company, will control the Company.
·
Obligation to Contribute Capital: Holders of the Common
Shares will have no obligation to contribute capital to the Company.
·
Redemptions: Holders of the Common Shares will have no
right to have Common Shares redeemed.
To purchase Class A Investor
Shares, you are required to sign an investment agreement, the forms of which
are attached hereto (See "How to Invest"). Each of the Investment
Agreements enable Investors to make an initial purchase of Class A Investor
Shares (to the extent the Investor is making a one-time purchase of the Class A
Investor Shares). The Auto-Invest Agreement and the Auto-Reinvestment Agreement
permit an Investor to make a one-time purchase of Class A Investor Shares
and/or enable an Investor to elect to make additional purchases of Class A
Investor Shares, pursuant to the terms of this Offering, on a periodic basis,
by either (i) establishing with the Company, a plan for the Investor to
automatically invest in the Offering on a periodic basis, subject to the terms
of an Auto-Invest Agreement signed by the Investor and the Company or (ii) to
reinvest the distributions the Investor receives from their Class A Investor
Shares into the purchase of additional Class A Investor Shares, subject to the
terms and conditions of the an Auto-Reinvestment Agreement, signed by the
Investor and the Company.
The Investment Agreements will
limit your rights in several important ways if you believe you have claims
against us arising from the purchase of your Class A Investor Shares:
·
Any claims arising from your purchase of Class A Investor Shares
must be brought in the state or federal courts located in Wilmington, Delaware,
which might not be convenient to you.
·
You would not be entitled to recover any lost profits or special,
consequential, or punitive damages. However, that limitation does not apply to
claims arising under federal securities laws.
To the extent an Investor elects to automatically invest in
the Offering on a periodic basis, such Investor will be subject to the terms
and conditions of an Auto-Invest Agreement, which include, but are not limited
to the following:
·
Upon signing the Auto-Invest Agreement, the Investor will
indicate the number of additional Class A Investor Shares ("Additional
Shares") the Investor intends to purchase and the intervals at which the
Investor will make such purchases, following their initial purchase of Class A
Investor Shares, on the Investor Information Sheet attached thereto.
·
Price: The price of Additional Shares to be purchased by
Investor shall be the same price at which Class A Investor Shares are then
being offered in the Offering.
·
Opt Out: The Investor will have the ability cancel or
pause the Auto-Investments from the Purchaser's online Energea account settings
(https://www.energea.com/users/auto-invest), or by giving the Company at least
(30) calendar days' notice (via email).
·
Termination: In accordance with Regulation A, the Investor
will no longer be permitted to make Auto-Investments after the Offering is
terminated.
Page 47
·
Limitation: The law limits how much an investor who is not
"accredited" within the meaning of 17 CFR §230.501(a) may invest in the
Offering. As such, the Investor's investments could be subject to a cutback,
and the Auto-Invest Agreement subject to termination, in the event the Company
meets or exceeds the maximum amount of the Offering or, in the event the
investor is non-accredited, the Investor's cumulative amount of investments
with the Company meets or exceeds the maximum investment amounts permitted by a
non-accredited investor under Regulation A. Under either circumstance, the Investor
would be redeemed for those Class A Investor Shares subject to the cutback.
·
No Transfer of : The Investor will be prohibited from
transferring the Shares purchased pursuant to the terms of the Auto-Invest
Agreement without complying with the terms of the Partnership Agreement,
subject to rights of first refusal in favor of the Company and securities laws
limitations.
·
Forum Selection: The Auto-Invest Agreement is governed by
the internal laws of Delaware. Pursuant to the terms of the Auto-Invest
Agreement, if the Investor is not otherwise subject to service of process in
Delaware, the Investor agrees to appoint and maintain an agent in Delaware to
accept service, and to notify the Company of the name and address of such
agent.
·
Potential for Cutback of Additional Shares Purchased: As a
Tier 2 offering under Rule 251(a), the Investor's Class A Investor Shares could
be subject to a cutback, and the
agreement subject to termination, in the event the Company meets or exceeds the
maximum amount of the Offering or, in the event the investor is non-accredited,
the Investor's cumulative amount of investments with the Company meets or
exceeds the maximum investment amounts permitted by a non-accredited investor
under Regulation A. Under either circumstance, the investor would be redeemed
for those Class A Investor Shares subject to the cutback.
To the extent an Investor elects to reinvest the
distributions the Investor receives from their Class A Investor Shares into the
purchase of additional Class A Investor Shares, such Investor will be subject
to the terms and conditions of an Auto-Invest Agreement, which include, but are
not limited to the following:
·
By signing the Auto-Reinvestment Agreement, the investor will
agree to use a portion of the amount of the distributions received from the
Company through the Investor's ownership of Class A Investor Shares to purchase
Additional Shares.
·
Price: The price of Additional Shares to be purchased by
Investor shall be the same price at which Class A Investor Shares are then
being offered in the Offering.
·
Opt Out: The Investor will have the ability cancel or
pause the Auto-Investments from the Purchaser's online Energea account settings
(https://www.energea.com/users/auto-invest), or by giving the Company at least
(30) calendar days' notice (via email).
·
Termination: In accordance with Regulation A, the Investor
will no longer be permitted to make Auto-Reinvestments after the Offering is
terminated.
·
Limitation: The law limits how much an investor who is not
"accredited" within the meaning of 17 CFR §230.501(a) may invest in the
Offering. As such, the Investor's investments could be subject to a cutback,
and the Auto-Reinvestment Agreement subject to termination, in the event the
Company meets or exceeds the maximum amount of the Offering or, in the event
the investor is non-accredited, the Investor's cumulative amount of investments
with the Company meets or exceeds the maximum investment amounts permitted by a
non-accredited investor under Regulation A. Under either circumstance, the
Investor would be redeemed for those Class A Investor Shares subject to the
cutback.
·
Investor Promises: The Investor promises, among other
things, that the Shares shall not be transferred without complying with the
terms of the Partnership Agreement, subject to rights of first refusal and
securities laws limits.
·
Forum Selection: The Auto-Reinvestment Agreement is
governed by the internal laws of Delaware. If the Investor is not otherwise
subject to service of process in Delaware, the Investor agrees to appoint and
maintain an agent in Delaware to accept service, and to notify the Company of
the name and address of such agent.
·
Potential for Cutback of Additional Shares Purchased: As a
Tier 2 offering under Rule 251(a), the Investor's Class A Investor Shares could
be subject to a cutback, and the
agreement subject to termination, in the event the Company meets or exceeds the
maximum amount of the Offering or, in the event the investor is non-accredited,
the Investor's cumulative amount of investments with the Company meets or
exceeds the maximum investment amounts permitted by a non-accredited investor
under Regulation A. Under either circumstance, the investor would be redeemed
for those Class A Investor Shares subject to the cutback.
Page 48
With respect to
auto-reinvestments, investors will receive an email notification that the
Company has made a distribution. The email will indicate what portion of the
distribution will be reinvested to purchase additional Class A Investor Shares
and will include a hyperlink to the then-current Offering Statement.
The Company maintains a ledger of
each non-accredited investor to track the amounts such investor has made in
order to ensure compliance with the exemption. Furthermore, the Company
maintains a robust record-keeping system in order to monitor amounts raised
under the Offering. To the extent the Company exceeds the total Offering
amount, the Company will redeem those investors whose purchases of Class A
Investor Shares were in excess of the limits of the Offering and all
Auto-Reinvestment Agreements will be terminated, in each instance, pursuant to
their terms.
Upon receipt of the investor's
Re-Investment Agreement, Investor Information Sheet, and confirmation that the
investor has created an account on the Platform, the Company will take
reasonable steps to evaluate whether the information the investor has provided
is sufficient to establish whether such investor is accredited. If the investor
is not accredited, then pursuant to Rule 251(d)(2)(i)(C), the Company will
determine if the non-accredited investor's aggregate purchase price to be paid
by the investor is no more than ten percent (10%) of the greater of such
investor's: (1) annual income or net worth if a natural person; or (2) revenue
or net assets for such purchaser's most recently completed fiscal year end if a
non-natural person. The investor will provide this information on the Investor
Information Sheet and on the Platform.
To buy Class A Investor Shares,
go to the Platform and follow the instructions. You will be asked for certain
information about yourself, including:
·
Your name and address
·
Your email address
·
Your social security number (for tax reporting purposes)
·
Whether you are an "accredited investor"
·
If you not an accredited investor, your income and net worth
You will also be asked to sign an
Investment Agreement, a copy of which is available here.
To the extent you wish to
participate in the Offering by automatically investing on a periodic basis, you
will be asked to sign an Auto-Invest Agreement, a copy of which is available here.
To the extent you wish to
participate in the Offering by electing to use the amount of distributions that
you receive to purchase additional Class A Investor Shares, you will be asked
to sign an Auto-Reinvestment Agreement, a copy of which is provided here.
The minimum investment is $100.
You will pay for your Class A Investor Shares using one of the options
described on the Platform.
The information you submit,
including your signed Investment Agreement, is called your "subscription". The General
Partner will review your subscription and decide whether to accept it. The General
Partner has the right to accept or reject subscriptions in our sole discretion,
for any reason or for no reason.
When you invest, your money will
be held in an escrow account with a third party until your subscription is
reviewed and the General Partner decides whether to accept it. When and if the General
Partner confirms that your subscription is complete and decided to accept your
subscription, the General Partner will release your money from the escrow
account to the Company.
Page 49
Once the General Partner has
accepted your subscription, you will be notified by email and the investment
process will be complete. The General Partner will also notify you by email if
it does not accept your subscription, although it might not explain why.
You will not be issued a paper
certificate representing your Class A Investor Shares.
Anyone can buy Class A Investor
Shares. The General Partner does not intend to limit investment to people with
a certain income level or net worth, although there are limits on how much
non-accredited investors may invest in this Offering.
As long as an Investor is at
least 18 years old, they can invest in this Offering. But if the Investor not
an "accredited" investor, the amount they can invest is limited by law.
Under 17 CFR §230.501, a
regulation issued by the SEC, the term "accredited investor" means:
·
A natural person who has individual net worth, or joint net worth
with the person's spouse, that exceeds $1 million at the time of the purchase,
excluding the value of the primary residence of such person;
·
A natural person with income exceeding $200,000 in each of the
two most recent years or joint income with a spouse exceeding $300,000 for
those years and a reasonable expectation of the same income level in the
current year;
·
A trust with assets in excess of $5 million, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person;
·
A business in which all the equity owners are accredited
investors;
·
An employee benefit plan, within the meaning of the Employee
Retirement Income Security Act, if a bank, insurance company, or registered
investment adviser makes the investment decisions, or if the plan has total
assets in excess of $5 million;
·
A bank, insurance company, registered investment company,
business development company, or small business investment company;
·
A charitable organization, corporation, or partnership, not
formed for the specific purpose of acquiring the securities offered, with total
assets exceeding $5 million; or
·
A director, executive officer, or general partner of the company
selling the securities, or any director, executive officer, or general partner
of a general partner of that issuer.
If the Investor falls within any
of those categories, then the Investor can invest any amount permitted on the
Platform. If the Investor does not fall within any of those categories, then
the most they can invest in this Offering is the greater of:
·
10% of their annual income; or
·
10% of their net worth.
These limits are imposed by law,
not by the Company.
The Company will determine
whether an Investor is accredited when he, she, or it creates an account on the
Platform.
We have
filed with the SEC an offering statement under the Securities Act on
Form 1-A regarding this Offering. This Offering Circular, which is part of the offering statement, does not contain
all the information set forth in the offering statement and the exhibits
related thereto filed with the SEC, reference to which is hereby made. Upon the
qualification of the offering statement, we will be subject to the
informational reporting requirements that are applicable to Tier 2 companies
whose securities are qualified pursuant to Regulation A, and accordingly, we
will file annual reports, semi-annual reports and other information with the
SEC. The SEC maintains a website at www.sec.gov that
contains reports, information statements and other information regarding
issuers that file with the SEC.
The
information incorporated by reference herein is an important part of the
offering statement and this Offering Circular.
The following documents previously filed with the SEC are incorporated by
reference into the offering statement and this Offering Circular:
·
the Company's Annual Report for the fiscal year ended
December 31, 2024 on Form 1-K
You may
review these filings on our website and may also request a copy of these
filings at no cost, by contacting us at:
ENERGEA PORTFOLIO 2 LP
52 Main Street
Chester, CT 06412
www.energea.com
(860)-316-7466
So long
as we remain subject to the periodic reporting requirements of Regulation A,
within 120 days after the end of each fiscal year we will file on the SEC's
EDGAR website an annual report on Form 1-K. The annual report will contain
audited financial statements and certain other financial and narrative
information that we are required to provide to investors.
We also
maintain a website at www.energea.com, where there may
be additional information about our business, but the contents of that site are
not incorporated by reference in or otherwise a part of this Offering
Circular.
Certain legal matters with
respect to the Class A Investor Shares will be passed upon by the law firm of
McCarter & English, LLP, Newark, New Jersey.
The Company's financial
statements for the fiscal years ended December 31, 2024 and December 31, 2023
incorporated by reference in this Offering Circular have been audited by
Whittlesey PC, an independent registered public accounting firm, as stated in its
report appearing herein. The financial statements have been included in
reliance upon that firm's report on its authority as an expert in accounting
and auditing.
The
financial statements of the Company can be found in:
·
"Item
7. Financial Statements" of the Company's Annual Report on Form 1-K for the
fiscal year ended December 31, 2024, which can be found here and on the
Platform at https://www.energea.com/investment/5.
which is incorporated herein by reference.
The Company will provide to each holder of securities, including any beneficial
owner, upon oral or written request, at no cost to the requester, a copy of the
financial statement information that is incorporated herein by reference.
Page 51
|
A 3.8% Net Investment Income Tax on certain investment
income of individuals, trusts, and estates under Section 1411 of the Internal
Revenue Code.
|
|
|
Adjusted NOI
|
The net
operating income of the Company after being adjusted so that the IRR of the
CAFD is equal to the Preferred Return rate of 7%.
|
|
Advisers Act
|
Investment Advisers
Act of 1940.
|
|
Ancillary Services
|
Support services like
operations, maintenance, and credit management provided to solar projects.
|
|
ANEEL
|
The Brazilian Electricity Regulatory Agency.
|
|
Authorizing Resolution
|
The authorization adopted by the
General Partner pursuant to the LP Agreement that created the Class A
Investor Shares.
|
|
Blue Sky Laws
|
State-level laws governing investments.
|
|
Borrower
|
A party that repays the Company
for a Loan through principal and interest payments.
|
|
BRL
|
The Brazilian currency called real.
|
|
CAFD
|
Cash available for distribution
by the Company.
|
|
Carried Interest
|
The right of the General Partner to receive distributions
under the LP Agreement, over and above its right to receive distributions in
its capacity as an Investor.
|
|
CFC
|
Controlled foreign corporations.
|
|
Class A Investor Shares
|
The limited partnership interests in the Company being
offered to Investors in this Offering.
|
|
Code
|
The Internal Revenue Code of
1986, as amended (i.e., the Federal tax code).
|
|
COFINS
|
Brazilian federal tax on gross revenue (social security)
|
|
Collateral Agreements
|
A collection of agreements and
instruments designed to secure obligations under a primary financing
arrangement between a borrower and a lender.
|
|
Company
|
Energea Portfolio 2 LP, a Delaware limited partnership,
which is offering to sell Class A Investor Shares in this Offering.
|
|
Company Investments
|
Cash-on-hand investments
generating returns, such as interest from savings accounts.
|
|
Company Operating Expenses
|
Costs and expenses incurred by the Company.
|
|
Consortium
|
A group of residential and
business Subscribers.
|
|
Construction Contract
|
The contract whereby the Company or an SPE will hire a
third party to provide to provide engineering, procurement, and construction
services for a Project.
|
|
Contractor
|
Alexandria Indústria de
Geradores S.A., the company responsible for fulfilling obligations under the
Construction Contracts with the Company's SPEs.
|
|
Credit Management Agreement
|
A service contract for the sale and administration of
energy credits produced by the Projects.
|
|
CSLL
|
Brazilian social contribution
tax on net income.
|
|
Deferred Fees
|
Fees postponed by the General Partner due to cash flow
considerations, to be charged later at their discretion.
|
|
DERMS
|
Distributed Energy Resource
Management Systems
|
|
Development Company
|
A company focused on acquiring and/or developing solar
power projects.
|
|
Drag-Along
|
Allows the General Partner to
require Investors to sell their Class A Investor Shares in a Company sale,
receiving equivalent value as in an asset sale.
|
|
Energea Brazil
|
Energea Brasil Operações Ltda, a Brazilian entity that
is an affiliate of the General Partner.
|
Page 52
|
Energea Global
|
Energea Global LLC, a Delaware
limited liability company, which is owned by Michael Silvestrini and Chris
Sattler and serves as the General Partner.
|
|
Energy Rate
|
The price charged per unit of electricity consumed,
usually measured in kilowatt-hours.
|
|
EPC
|
Engineering, Construction, and
Procurement
|
|
Estimated NOI
|
The Net Operating Income estimated to be produced by the
Company.
|
|
Fees
|
Compensation paid to the General
Partner.
|
|
FINRA
|
Financial Industry Regulatory Authority, Inc.
|
|
Form 1-U
|
SEC form used to report
significant events or changes by companies under Regulation A.
|
|
General Partner
|
Energea Global LLC, a Delaware limited liability company.
|
|
GILTI
|
General Intangible Low-Tax
Income, a federal U.S. tax on profits made by companies outside the United
States.
|
|
HSEC
|
Health, Safety, Environment and Community
|
|
ICMS
|
Brazilian state tax on goods and
services (VAT-like)
|
|
Iguatama
|
Energea Iguatama Aluguel de Equipamentos e Manutenção Ltda
|
|
Investment Agreements
|
Contracts signed to purchase or
reinvest in Class A Investor Shares, outlining limitations on investor
rights.
|
|
Investment Committee
|
A multi-disciplinary committee of experienced renewable
energy executives of the General Partner which decides which Projects the
Company will invest in.
|
|
Investors
|
Anyone who purchases Class A
Investor Shares in this Offering.
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Investor Shares
|
Combined Class A Investor Shares and Reg D Shares held by
Limited Partners, voting as a single class.
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IOF
|
Brazilian tax on financial
transactions.
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IRPJ
|
Brazilian corporate income tax.
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IRR
|
Internal rate of return.
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IRRF
|
Brazilian income withholding tax.
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JOBS Act
|
The
Jumpstart Our Business Startups Act of 2012.
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kWh
|
Kilowatt hour
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Land Lease
|
The contract whereby the
Company or and SPE will lease the land where a Project will be located.
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Lender
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Lattice Energea Global Revolver I, LLC, the unaffiliated
entity that provides credit to the Company for project construction and
long-term financing.
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Limited Partners
|
Owners of Class A Investor
Shares in the Offering.
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Liquidated Damages
|
A penalty paid by a contractor to a SPE when the
construction of a Project is delayed beyond the schedule in the Construction
Contract.
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LP Agreement
|
The Company's Limited
Partnership Agreement dated June 3, 2025.
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Loan
|
Money lent from the Company to a Development Company.
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Loan Agreement
|
A deal where the Lender provides
funds to the Borrower up to a specified limit over a set period.
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NAV
|
Net Asset Value
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NOI
|
Net Operating Income.
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NPV
|
Net Present Value.
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Militia
|
Local non-government groups that
influence areas of Brazil.
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MTR
|
Minimum Technical Requirement
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Offering
|
The offering of Class A Investor
Shares to the public pursuant to this Offering Circular.
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Offering Circular
|
The Offering Circular you are reading right now, which
includes information about the Company and the Offering.
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O&M
|
Operations and Maintenance
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Page 53
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Partners
|
The General Partner and Limited Partners collectively.
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Pedra do Indaia
|
Energea Pedra do Indaiá Ltda
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PIS
|
Brazilian federal tax on gross revenue (social
integration).
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Platform
|
The website located at
www.energea.com.
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Portfolio 2
|
Energea Portfolio 2 LP
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Portfolio 3
|
Energea Portfolio 3 Africa LP
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Portfolio 4
|
Energea Portfolio 4 USA LP
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Preferred Equity Investors
|
Holders of Class A and Reg D
Shares entitled to cash distributions after expenses.
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Preferred Return
|
A 7% per year preferred return to Preferred Equity
Investors before the General Partner earns a Carried Interest.
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Prior Offering
|
The Company's previous
Regulation A offering that was initially qualified by the SEC on August 13,
2020 and requalified on June 6, 2024.
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Project
|
A solar power project acquired or developed by the
Company.
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Project Maintenance Contract
|
When the SPE hires Energea
Brazil to perform the actual O&M services.
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Project Operating Expenses
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Costs and expenses incurred by the Project.
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Project Rental Contract
|
A contract pursuant to which the
SPE that owns a Project will rent the Project to the customer.
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PQA
|
Post Qualification Amendment
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Ratio
|
A monthly allocation of energy
credits to Subscribers, submitted to the utility per Brazilian regulations.
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Redemption Plan
|
The redemption plan whereby Investors may request
redemption of their Class A Investor Shares following 60 days after purchase.
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Redemption Price
|
The price at which Redemption
Requests will be processed, based on the current price per Class A Investor
Shares at the time the Redemption Request is made, reduced by the aggregate
sum of distributions, if any, with record dates during the period between the
Redemption Request date and the redemption date, and subject to a discount
based on the time the Redemption Request is submitted.
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|
Redemption Request
|
A request for redemption submitted through the Platform
for up to $50,000 in Class A Investor Shares.
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Reg D Investors
|
Accredited investors
participating in Reg D Offerings.
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|
Reg D Offerings
|
Private securities offerings under Rule 506(c), open only
to accredited investors.
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|
Reg D Shares
|
Shares issued in Reg D
Offerings.
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|
Ren 482
|
Normative Resolution ANEEL n° 482/2012, the primary law
governing community solar electricity systems in Brazil.
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|
Regulation A
|
SEC exemption that allows
companies to raise up to $75 million annually from the public with fewer
disclosure requirements than a traditional IPO.
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Regulations
|
Regulations issued under the Code by the Internal Revenue
Service.
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SEC
|
The U.S. Securities and Exchange
Commission.
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Shares
|
Ownership interest in the Company.
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Securities Act
|
The Securities Act of 1933.
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SPE
|
The entity we create to own and operate each Project,
typically in the form of a Brazilian Limitada.
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|
Subscribers
|
A small business or residential
customer.
|
|
Trust Agreement
|
A fiscal control structure where cash flow to service
payments on Loans is routed through a trust to collect revenue from a
Borrower and oversee the repayment process.
|
|
USD
|
The currency of the United
States called dollars.
|
|
U.S. GAAP
|
United State Generally Accepted
Accounting Principles.
|
|
U.S. Holder
|
A beneficial owner of Class A Investor Shares that is a
U.S. citizen or resident, a U.S. corporation, a U.S. estate, or a U.S. trust
as defined for federal income tax purposes.
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Page 54
|
Exhibit No.
|
Description of Exhibit
|
|
2.1**
|
|
|
2.2**
|
|
|
2.3**
|
|
|
2.4**
|
|
|
2.5**
|
|
|
2.6**
|
|
|
3.1**
|
|
|
4.1**
|
|
|
4.2**
|
|
|
4.3**
|
|
|
4.4**
|
|
|
6.1**
|
|
|
6.2**
|
|
|
6.3**
|
|
|
6.4**
|
|
|
6.5**
|
|
|
6.6**
|
|
|
9**
|
|
|
11.1**
|
|
|
11.2**
|
Consent of McCarter &
English (included in Exhibit 12)
|
|
12.1**
|
** Previously filed
Page 55
Pursuant to the requirements of
Regulation A, the issuer certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form 1-A and has duly
caused this offering statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Chester, State of Connecticut, on August
8, 2025.
Energea
Portfolio 2 LP
By: Energea Global LLC
By /s/ MICHAEL SILVESTRINI
Name: Michael Silvestrini
Title: Co-Founder and Managing
Partner
This offering statement has been
signed by the following person in the capacities and on the date indicated.
By /s/
MICHAEL SILVESTRINI
Name: Mike Silvestrini
Title: Co-Founder and Managing
Partner of Energea Global LLC (Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
Date: August 8, 2025
Page 56