EXPLANATORY NOTE
This Offering Circular of Energea Portfolio 2 LP is filed as a
Post-Qualification Amendment No. 4 ("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. 4
File No. 024-12347
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
Page i
Offering Circular (Subject to Completion)
Dated February 13, 2026
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
"Securities Being Offered: The Class A Investor Shares-Summary of LP
Agreement and Authorizing Resolution-Redemption Plan" and "Risk
Factors-No Market for the Class A Investor Shares; Limits on
Transferability".
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. Those interested in investing will find this
Offering Circular, along with all SEC filings for the Company, on the
Platform. Prior to making an investment, potential Investors will be
required to create a password-protected account and provide certain
personal information as required by law. The Platform also provides
potential Investors the ability to contact an Energea representative for
assistance. For more information, please see "How To Invest".
The General Partner is not engaged in the business of underwriting
securities. The General Partner is an associated person of the Company
(relying on the Safe Harbor provided in Rule 3a4-1 of the Securities
Exchange Act of 1934, as amended), and will be acting as a fiduciary
that is substantially focused on managing the Company. The General
Partner's activities will consist of administrative and informational
activities including hosting and maintaining the Platform. The General
Partner will act solely on behalf of the Company and in compliance with
a Tier 2 Regulation A offering upon qualification of the Company's Form
1-A.
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
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Total Maximum
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Public Offering Price
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$1.00
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$50,000,000
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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
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Page ii
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 iii
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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; 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").
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.
Page 2
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"); and
·
Thereafter, any additional cash flow will be split between the
Preferred Equity Investors and the General Partner such that 80% is
distributed to Preferred Equity Investors and 20% 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.
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.
Page 3
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 General Partner 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.
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.
Page 4
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.
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.
Page 5
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.
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.
Page 6
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/or Borrowers and therefore our
Projects, Loans and Company Investments.
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 one of the forms attached hereto depending on your
preferred method of investment, which shall either be the choice to (i)
make a one-time purchase of Class A Investor Shares, (ii) make an
initial purchase of Class Investor Shares, followed by subsequent of
purchases of Class A Investor Shares over a periodic basis or (iii) make
an initial purchase of Class A Investor Shares, followed by subsequent
purchases of Class A Investor Shares using the proceeds of distributions
received from the Company (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
LPs), 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 Securities Exchange Act of 1934 (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 the 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.
Page 8
·
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.
·
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 increase
the likelihood that an investor may lose their entire investment.
Page 9
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.
The Company is an "Emerging Growth Company" Under the JOBS Act: As of the date of this Offering Circular, 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.
Page 10
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.
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 (including the General
Partner) 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.
Page 11
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.
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 that 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").
Page 12
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.
|
|
|
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 Expenses (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 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.
Page 13
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").
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.
Investment Strategy
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:
Page 14
·
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.
·
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.
Page 15
·
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.
·
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.
Investment Committee
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
|
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,
emergency services 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 necessary.
|
|
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 believe that we
will have fewer competitors today than we would have had 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 investments 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 the Projects that we have
targeted for acquisition.
Although we believe that 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 and
conduct our business effectively.
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
|
Page 17
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
|
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;
Page 18
·
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;
·
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.
Page 19
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.
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 is a Delaware limited partnership but 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").
Page 21
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.
Alternative Minimum Tax
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".
Page 22
·
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".
·
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 contract title will most likely differ from Project
to Project, we will attempt to ensure that the rights and obligations of
the parties will generally be consistent across all of the Projects.
However, there is no assurance that we will be able to negotiate
consistent terms, and the terms and conditions of each contract may
contain material differences.
Loan Contracts
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
principal 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.
Page 23
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.
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%.
Page 24
·
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.
·
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
|
$4,574,848
|
|
Divinópolis III
|
Energea Divinopolis Ltda.
|
2.3 MW
|
12/23/21
|
$3,055,486
|
|
Araxa I
|
Energea Araxa I Ltda
|
2.5 MW
|
12/23/21
|
$314,926
|
|
Araxa II
|
Energea Araxa II Ltda
|
2.5 MW
|
12/23/21
|
$315,470
|
|
Divinópolis II
|
Energea Divinopolis II Ltda
|
2.5 MW
|
1/4/22
|
$4,220,712
|
|
Corumbaíba
|
Energea Corumbaíba Ltda
|
2.5 MW
|
9/9/22
|
$2,288,099
|
|
Diamantina II
|
Energea Diamantina II Ltda
|
2.5 MW
|
10/17/22
|
$133,417
|
|
Formiga I
|
Energea Formiga I Ltda
|
2.5 MW
|
10/17/22
|
$201,778
|
|
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
|
$1,037,215
|
|
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
|
$168,898
|
|
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
|
$1,892,794
|
|
Micros II
|
Energea Micros II Ltda
|
750kW
|
11/11/24
|
$456,388
|
|
TOTAL
|
$22,208,351
|
* as of June 30, 2025
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
|
$4,574,848
|
$4,574,848
|
|
|
Divinopolis III
|
Energea Divinopolis Ltda.
|
2.3 MW
|
$3,198,961
|
$3,055,486
|
|
|
Araxa I
|
Energea Araxa I Ltda
|
2.5 MW
|
$324,291
|
$314,926
|
|
|
Araxa II
|
Energea Araxa II Ltda
|
2.5 MW
|
$328,767
|
$315,470
|
|
|
Corumbaíba
|
Energea Corumbaíba Ltda
|
2.5 MW
|
$2,915,386
|
$2,288,099
|
|
|
Divinópolis II
|
Energea Divinopolis II Ltda
|
2.5 MW
|
$4,312,924
|
$4,220,712
|
|
|
Micros I
|
Energea Micros I Ltda
|
1.1 MW
|
$1,040,946
|
$1,037,215
|
|
|
Aparecida do Taboado II
|
Energea Aparecida do Taboado II Ltda
|
2.5 MW
|
$203,303
|
$168,898
|
TBD
|
|
Diamantina II
|
Energea Diamantina II Ltda
|
2.5 MW
|
$152,090
|
$133,417
|
TBD
|
|
Formiga I
|
Energea Formiga I Ltda
|
2.5 MW
|
$211,255
|
$201,778
|
TBD
|
|
Iguatama II
|
Energea Iguatama II Ltda
|
2.5 MW
|
$1,955,102
|
$1,892,794
|
|
|
Micros II
|
Energea Micros II Ltda
|
750kW
|
$604,181
|
$456,388
|
|
|
|
TOTAL
|
|
$22,358,058
|
$21,196,035
|
|
* as of June 30, 2025
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 Subscriber/Borrower
·
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; and
·
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:
Page 28
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 80% to
Preferred Equity Investors and the Carried Interest to the General
Partner.
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 20% of the excess
and Preferred Equity Investors will get 80% 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 (80%)
|
Carried Interest* (20%)
|
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.
Page 31
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.
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.
Liquidity and Capital
Resources
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.
Method of Accounting
The compensation described in this section was calculated using the
accrual method in accordance with U.S. GAAP.
Page 32
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.
|
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, the Managing Partner. There are no other family
relationships among the executive officers and significant employees of
the General Partner.
Energea Global, 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.
Page 33
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 four funds formed to acquire
and operate solar power projects: the Company, Energea Portfolio 3
Africa LP, Energea Portfolio 4 USA LP, and Energea Portfolio 5 LATAM LP.
See "Other Solar Energy Funds" below for the status each fund's
offerings.
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 many
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:
Page 36
·
Energea Portfolio 3 Africa LP ("Portfolio 3"), which was formed
to acquire and operate projects with located in Africa.
·
Energea Portfolio 4 USA LP ("Portfolio 4"), which was formed to
acquire and operate projects located in the United States.
·
Energea Portfolio 5 LATAM LP ("Portfolio 5"), which was formed
to acquire and operate projects located in Latin America.
The status of each of the Company's, Portfolio 3's, Portfolio 4's, and
Portfolio 5'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. If the Company were to raise the $50,000,000 we hope to
raise through this Offering, we would estimate the marketing
costs and reimbursements to be approximately (and not over)
$2,500,000 (1).
|
|
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 20% 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.
|
(1) The estimated amount of "marketing costs and reimbursements"
represents a "not-to-exceed" estimate for organization, offering, and
marketing reimbursements. This figure is a cap only. Actual
reimbursements are tied to actual expenses incurred and may be
substantially lower.
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.
Page 38
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%
|
|
-
|
|
-
|
(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.
Page 39
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".
Contracts Currently Signed
with Related Parties
|
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
|
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.
Page 40
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.
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 Shares into
one or more classes by adopting one or more authorizing resolutions.
The Class A Investor Shares will, for the most part, be owned by
Investors and are the subject of this Offering. The General Partner
currently owns 232,613 Class A Investor Shares. 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.
Page 41
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
real estate and other 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.
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 the General Partner is not entitled to be
exculpated under the standard described in the preceding paragraph by
the LP Agreement, the General Partner shall promptly reimburse the
Company for any reimbursed or advanced expenses.
Page 42
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.
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.
Page 43
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:
·
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.
Page 44
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).
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.
Page 45
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.
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.
Page 46
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.
Investors will own the majority of the Class A Investor Shares while the
General Partner will own all the Common Shares. The General Partner
currently owns 232,613 Class A Investor Shares as described herein. 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:
Page 47
·
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.
·
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 Shares : 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 LP
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:
Page 48
·
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 LP 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.
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.
Page 49
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.
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;
Page 50
·
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
Page 51
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
headquartered in 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.
|
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.
|
Page 52
|
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.
|
|
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
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SEC form used to report significant events or changes by
companies under Regulation A.
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General Partner
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Energea Global LLC, a Delaware limited liability company.
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GILTI
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General Intangible Low-Tax Income, a federal U.S. tax on
profits made by companies outside the United States.
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HSEC
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Health, Safety, Environment and Community
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ICMS
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Brazilian state tax on goods and services (VAT-like)
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Iguatama
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Energea Iguatama Aluguel de Equipamentos e
Manutenção Ltda
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Investment Agreements
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Contracts signed to purchase or reinvest in Class A Investor
Shares, outlining limitations on investor rights.
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Investment Committee
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A multi-disciplinary committee of experienced renewable energy
executives of the General Partner which decides which Projects the
Company will invest in.
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Page 53
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Investors
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Anyone who purchases Class A Investor Shares in this
Offering.
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Investor Shares
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Combined Class A Investor Shares and Reg D Shares held by Limited
Partners, voting as a single class.
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IOF
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Brazilian tax on financial transactions.
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IRPJ
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Brazilian corporate income tax.
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IRR
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Internal rate of return.
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IRRF
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Brazilian income withholding tax.
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JOBS Act
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The Jumpstart Our Business Startups Act of 2012.
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kWh
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Kilowatt hour
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Land Lease
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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
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Owners of Class A Investor Shares in the Offering.
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Liquidated Damages
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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
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The Company's Limited Partnership Agreement dated June 3,
2025.
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Loan
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Money lent from the Company to a Development Company.
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Loan Agreement
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A deal where the Lender provides funds to the Borrower up to a
specified limit over a set period.
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NAV
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Net Asset Value
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NOI
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Net Operating Income.
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NPV
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Net Present Value.
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Militia
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Local non-government groups that influence areas of
Brazil.
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MTR
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Minimum Technical Requirement
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Offering
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The offering of Class A Investor Shares to the public pursuant
to this Offering Circular.
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Offering Circular
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The Offering Circular you are reading right now, which includes
information about the Company and the Offering.
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O&M
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Operations and Maintenance
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Partners
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The General Partner and Limited Partners collectively.
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Pedra do Indaia
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Energea Pedra do Indaiá Ltda
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PIS
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Brazilian federal tax on gross revenue (social integration).
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Platform
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The website located at www.energea.com.
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Portfolio 3
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Energea Portfolio 3 Africa LP
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Portfolio 4
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Energea Portfolio 4 USA LP
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Portfolio 5
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Energea Portfolio 5 LATAMLP
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Preferred Equity Investors
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Holders of Class A and Reg D Shares entitled to cash
distributions after expenses.
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Preferred Return
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A 7% per year preferred return to Preferred Equity Investors
before the General Partner earns a Carried Interest.
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Prior Offering
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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
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A solar power project acquired or developed by the Company.
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Project Maintenance Contract
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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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Page 54
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Project Rental Contract
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A contract pursuant to which the SPE that owns a Project will
rent the Project to the customer.
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PQA
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Post Qualification Amendment
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Ratio
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A monthly allocation of energy credits to Subscribers,
submitted to the utility per Brazilian regulations.
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Redemption Plan
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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
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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
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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
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Accredited investors participating in Reg D Offerings.
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Reg D Offerings
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Private securities offerings under Rule 506(c), open only to
accredited investors.
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Reg D Shares
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Shares issued in Reg D Offerings.
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Ren 482
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Normative Resolution ANEEL n° 482/2012, the primary law
governing community solar electricity systems in Brazil.
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Regulation A
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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
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Regulations issued under the Code by the Internal Revenue Service.
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SEC
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The U.S. Securities and Exchange Commission.
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Shares
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Ownership interest in the Company.
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Securities Act
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The Securities Act of 1933.
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SPE
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The entity we create to own and operate each Project, typically in
the form of a Brazilian Limitada.
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Subscribers
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A small business or residential customer.
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Trust Agreement
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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.
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USD
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The currency of the United States called dollars.
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U.S. GAAP
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United State Generally Accepted Accounting Principles.
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U.S. Holder
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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 55
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Description of Exhibit
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2.1**
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2.2**
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2.3**
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2.4**
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2.5**
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2.6*
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3.1**
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4.1**
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4.2**
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4.3**
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4.4**
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6.1**
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6.2**
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6.3**
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6.4**
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6.5**
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6.6**
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9**
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11.1**
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11.2**
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Consent of McCarter & English (included in Exhibit 12)
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12.1*
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* Filed herewith
Page 56
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 February 13,
2026.
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: February 13, 2026
Page 57
McCarter &
English, LLP
