MIP III – Hurricane Laura Update

You will have seen the news of Hurricane Laura, a major Category 4 hurricane that made landfall in Louisiana on Thursday, August 27, 2020. The damage resulting from high winds and storm surge was significant, primarily in southwestern Louisiana and southeastern Texas. Our thoughts are with those affected by the hurricane, including any Limited Partners that have been directly impacted or who have family, friends, or colleagues in the affected areas.

As the region begins its recovery, we are evaluating the potential impact across MIP’s various portfolio companies. At this stage, Cleco Corporation (Cleco) is our key focus within the MIP III portfolio. The hurricane travelled through Cleco’s service territory in Louisiana, resulting in approximately 140,000 Cleco customers losing power. Over 120,000 of these customers have now had power restored, but it is expected that it will take a number of weeks to reconnect all remaining customers as significant repairs are required to certain sections of Cleco’s electricity distribution network.

Based on preliminary estimates, Cleco may incur $200 million or more of additional costs associated with Hurricane Laura. Cleco will initially fund these additional costs by drawing on existing company liquidity and through the potential deferral of equity distributions. Based on precedent from previous hurricanes in Louisiana, Cleco then expects to be reimbursed for these hurricane-related costs from the proceeds of a securitization financing, which in turn would be repaid over time through an additional customer rate surcharge. Both the securitization financing and the rate surcharge require approval from the Louisiana Public Service Commission (LPSC). We will provide further updates on this as we move forward.

The other MIP III portfolio company with significant operations along the Gulf coast is Ceres Terminals (Ceres), a port terminal and stevedoring business. Ceres’ port operations in Houston and New Orleans were suspended as the hurricane moved through the region, but recommenced normal activities shortly thereafter. The storm did not cause any damage to facilities or equipment, with no injuries or safety incidents for Ceres staff.

We do not anticipate any direct or material impact across the remaining MIP III assets, which are located outside of the storm zone. We remain in close contact with the management teams across the portfolio and will provide further updates as appropriate.

Should you have questions regarding these events or would like to discuss MIP III’s businesses, strategy or performance, please contact us a MIP