REG - Ecofin US Renewables - Net Asset Value & Conclusion of Strategic Review

Ecofin US Renewables Infrastructure TrustAnnouncement

09/09/2024 07:00

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RNS Number : 3265D  Ecofin US Renewables Infrastr.Trust  09 September 2024

9 Sept 2024

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW
BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. ON THE
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART, TO US PERSONS OR INTO OR WITHIN THE UNITED STATES, AUSTRALIA,
CANADA OR JAPAN, OR ANY OTHER JURISDICTION WHERE, OR TO ANY OTHER PERSON TO
WHOM, TO DO SO WOULD BE UNLAWFUL. THE INFORMATION CONTAINED HEREIN DOES NOT
CONSTITUTE OR FORM PART OF ANY OFFER TO SELL OR ISSUE, OR ANY SOLICITATION OF
ANY OFFER TO PURCHASE, SUBSCRIBE FOR OR OTHERWISE ACQUIRE, ANY INVESTMENTS IN
ANY JURISDICTION.

 

ECOFIN U.S. RENEWABLES INFRASTRUCTURE TRUST PLC

 

(the "Company")

 

Q2 2024 Net Asset Value and conclusion of the Strategic Review

 

Net Asset Value

 

The Company announces that its unaudited net asset value ("NAV") as at 30 June
2024 on a cum-income basis was $0.6503 per Ordinary Share (31 March 2024:
$0.7937) or $89.8 million (31 March 2024: $109.6 million).

The contributors to the changes in NAV were:

·    a $17.8 million decrease ($0.1291 per Ordinary Share) in the Fair
Market Value ("FMV") of investments, principally due to a 1.1% increase in
discount rates, as well as updates in forecast assumptions and quarterly
roll-off of cash flows;

·    a $1.7 million decrease ($0.0123 per Ordinary Share) due to an
increase in the deferred tax accrual, resulting from the decrease in FMV and
the Company's ability to use tax attributes; and

·    a $0.3 million decrease ($0.0020 per Ordinary Share) in cash and
accrued financial assets, primarily driven by lower than expected energy
production and revenue accrual relating to temporarily lower availability and
corrective maintenance actions at various sites, fund expenses, and interest
expense on the Company's Revolving Credit Facility.

 

The weighted average pre-tax discount rate used by the Company's independent
valuation service provider, Marshall & Stevens, Inc ("M&S"), to
determine the FMV of investments was 8.51% unlevered. The increase in the
discount rate was based on M&S's assessment of: comparable data; sales
multiples of recent M&A transactions; and current illiquidity in the
M&A marketplace.

The basis of valuation, being discounted cash flow, assuming a willing buyer
and a willing seller on an asset-by-asset basis, relies on financial forecasts
which by their very nature are uncertain. The forecasts and projections are
based upon assumptions about events and circumstances which have not yet
transpired. The Company cannot provide any assurance that the estimates will
be representative of the cash flows which will actually be achieved during the
forecast period. If these assumptions are not correct or do not hold true, the
valuations could change materially. Ecofin Advisors , LLP (the "Investment
Manager") has confirmed that the information provided to M&S is materially
complete and fair in the manner of its portrayal and, therefore, forms a
reliable basis for the valuation.

 

Conclusion of the Strategic Review

 

The Company announced a strategic review on 8 September 2023 and appointed
Marathon Capital ("Marathon"), as financial adviser,  to undertake a process
focused on a sale of all the Company's assets. An extensive marketing exercise
was undertaken by Marathon but unfortunately no buyer has been identified for
the Company's entire portfolio on acceptable terms. Accordingly, following
careful consideration of the options available to the Company, and on advice
from Marathon and taking into account feedback from shareholders, the Board
now believes it would be in the best interests of shareholders to implement a
managed wind down of the Company (the "Managed Wind Down"). Under the Managed
Wind Down, the Board will seek to implement an incremental sales programme of
the Company's assets in an orderly manner with a view to repaying borrowings
and subsequently making returns of capital to shareholders while aiming to
obtain the best available value for the Company's assets at the time of their
realisations.

 

A circular will be prepared and posted to shareholders in due course seeking
approval for the implementation of the Managed Wind Down and amendment of the
Company's existing investment policy ("Investment Policy"). The first sale of
assets under the Managed Wind Down is progressing and assuming a transaction
is agreed will be announced in due course and will be subject to shareholder
approval of the Managed Wind Down.

 

Suspension of Dividend

 

In the circumstances, the Board has decided not to declare a dividend for Q2
2024 but instead to focus the Company's cash-flows towards the repayment of
borrowings in anticipation of future returns of capital to shareholders.

 

Later this month, the Company expects to publish its half-year report for the
six months ended 30 June 2024, prepared on a going concern basis,
notwithstanding the plan to implement the Managed Wind Down.

 

Board change

 

With the conclusion of the strategic review, Louisa Vincent has decided to
step down from the Board with effect from 31 October 2024.

 

Patrick O'D Bourke, Chair, said: "Louisa joined the Board in October 2020 and
has played a key part in the development of the Company. I would like to thank
her for her very significant contribution".

 

Amendments to Investment Policy

 

The implementation of the Managed Wind Down will require amendments to the
Company's Investment Policy. Such amendments are subject to the approvals of
(inter alia) the Financial Conduct Authority and shareholders pursuant to the
Listing Rules. The Board intends to publish a circular in due course to
convene a general meeting at which it will seek approval from shareholders of
the proposed new Investment Policy by way of ordinary resolution.

 

The proposed new Investment Policy will be one of effecting an orderly
wind-down of the Company with a view to maximising the value received from the
Company's assets and making any returns to shareholders, once the Company's
Revolving Credit Facility has been repaid. The Company will not make any new
investments save that investments may be made in existing portfolio companies
when considered appropriate to maximise value for shareholders.

 

Shareholders should note that during the Managed Wind Down, the Company
intends to maintain its investment trust status and listing. Maintaining the
listing would allow shareholders to continue to trade shares during the
Managed Wind Down.

 

For further information, please contact:

 

Ecofin U.S. Renewables Infrastructure Trust plc (via the Company Secretary)

Patrick O'D Bourke

Brett
Miller

 

 Ecofin Advisors, LLC (Investment Manager)             +1 913 981 1020

 Edward Russell

 Eileen Fargis

 Marathon Capital (Financial Adviser)                  +1 646 823 1650

 Ammad Faisal
 Stifel (Corporate Broker)                             +44 20 7710 7600

 Edward Gibson-Watt

 Madison Kominski

 Apex Listed Companies Services (UK) Limited (Company  +44 20 4582 6470
 Secretary)

 Jenny Thompson

 Edmar Mabal

Further information on the Company can be found on its website
at https://uk.ecofininvest.com/funds/us-renewables-infrastructure-trust-plc/
(https://uk.ecofininvest.com/funds/us-renewables-infrastructure-trust-plc/) .

 

The Company's LEI is 2138004JUQUL9VKQWD21.

 

The person responsible for arranging for the release of this announcement on
behalf of the Company is Jenny Thompson of Apex Listed Companies Services (UK)
Limited.

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