TIDMSEQI
RNS Number : 4858V
Sequoia Economic Infra Inc Fd Ld
04 December 2023
04 December 2023
Sequoia Economic Infrastructure Income Fund Limited
(the "Company" or "SEQI")
Portfolio Update
Update on the Company's loan to Clyde Street and Bulb Energy
Sequoia Economic Infrastructure Income Fund, the specialist
investor in economic infrastructure debt, provides an update on its
investments in Clyde Street and Bulb Energy.
Clyde Street
SEQI has a senior secured interest in a hotel in Clyde Street,
Glasgow, Scotland. The hotel substantially opened in late August
2023 following a challenging construction period throughout the
pandemic. Since then, it has been ramping up with growing occupancy
however, a portion of the hotel remains unavailable, subject to
internal fit-out.
The Investment Adviser has been working with the Borrower to
develop plans to maximise recovery of the loan, while exploring
options for addressing ongoing funding requirements. After
considerable efforts to find a solution, the Investment Adviser has
successfully petitioned the Court to appoint specialists from
Interpath Advisory to act as Interim Managers and subsequently
Administrators to optimise the asset realisation process and to
secure the working capital necessary for its operations in the
interim.
The Investment Adviser will be taking a conservative view on
value and a downward valuation adjustment will be applied to this
position, to be published in the next monthly factsheet. The
ultimate recovery and Net Asset Value (NAV) impact (total position
represented c3.1% of NAV as at 31 October 2023) will depend on the
outcome of the administration process.
The Investment Adviser is expecting the positive impact on NAV
from Bulb Energy, as described below, to materially offset negative
movements in this position.
Bulb Energy ("Bulb")
Following a confidential mediation process and a partial
settlement of claims with the Joint Energy Administrators of Bulb,
SEQI expects to receive a distribution of GBP25 million in cash
from Bulb. Of this amount, GBP9 million is expected shortly, and a
further GBP16 million is expected (conditional on criteria which
the Company expects to be met) in or shortly after September 2024.
In certain limited circumstances, the latter amount may be deferred
until or shortly after September 2025, although if that occurs the
amount will increase from GBP16 million to GBP18.4 million.
The distribution will take the total recoveries from the
defaulted loan to Bulb to GBP50.3 million, compared to the
principal amount outstanding at the time the Special Administration
took effect of GBP55 million. The recovered amount is comprised of
GBP39 million in cash and GBP11.3 million in shares of Zoa
Technologies Ltd ("Zoa"), a software company set up to redevelop
Bulb's consumer technology platform and licence it to energy supply
companies in the UK and elsewhere. Realisation of value from the
Company's majority equity stake in Zoa will be dependent on Zoa's
business performance and any future fundraise.
Further distributions are expected over time from Simple Energy
(the parent of Bulb) and the Company will update investors on
progress on this. It is also possible that there may be further
distributions by Bulb over time.
Steve Cook, Director and Head of Portfolio Management of the
Investor Adviser commented:
"Our experience is that restructuring or work-out phases like
Clyde Street take time, however we will continue to work to ensure
a fair outcome for all parties.
"On our loan to Bulb, it has indeed taken time, with a
complicated two-year process to reach a resolution in a most
difficult situation for all parties. We are pleased that we now
expect to recover a large proportion of the loan owed by Bulb.
Although lengthy, this successful process demonstrates the
defensive nature of infrastructure assets with strong recovery
potential for lenders."
For further information, please contact:
Sequoia Investment Management
Company
Steve Cook
Randall Sandstrom
Anurag Gupta +44 (0) 20 7079 0480
Jefferies International Limited
(Corporate Broker & Financial
Adviser)
Gaudi Le Roux
Stuart Klein +44 (0) 20 7029 8000
Vico Partners (Communications jsunnucks@vicopartners.com
Adviser)
John Sunnucks
Sanne Fund Services (Guernsey)
Limited (Company Secretary)
Matt Falla
Lisa Garnham +44 (0) 20 3530 3107
Notes to Editors
1. About Sequoia Economic Infrastructure Income Fund Limited
Sequoia Economic Infrastructure Income Fund is a closed-ended
fund listed on the FTSE 250 Index of the London Stock Exchange. It
invests in economic infrastructure private loans and bonds across a
range of industries in stable, low-risk jurisdictions, creating
equity-like returns with the protections of debt. It is the only
London-listed fund investing exclusively in economic infrastructure
debt.
The Company seeks to provide investors with regular, sustained,
long-term distributions and capital appreciation from a diversified
portfolio of senior and subordinated economic infrastructure debt
investments.
The Company is advised by Sequoia Investment Management Company
Limited, a long-standing investment advisory team with extensive
infrastructure debt origination, analysis, structuring and
execution experience.
2. History of Loan to Bulb Energy
-- 2018-2021 : SEQI invests in a GBP55 million senior secured
loan to Bulb, guaranteed by its parent company, Simple Energy,
which held its software and technology assets
-- Nov 2021: Bulb defaults on its loan to SEQI as Bulb enters a
Special Administration Regime, leaving SEQI unable to enforce its
senior security over Bulb's assets. At the same time,
Administrators are appointed to Simple Energy
-- Feb 2022: The Joint Energy Administrators for Bulb, and the
Administrators for Simple Energy jointly start a combined sales
process for Simple Energy and Bulb
-- Oct 2022 : Joint Energy Administrators enter into a sale
transaction in relation to Bulb's business with Octopus Energy,
conditional on court approval for an Energy Transfer Scheme
-- Oct 2022 : UK government approves deal between the special
administrators of Bulb and Octopus Energy to acquire Bulb's 1.5
million customers
-- Nov 2022 : In a separate process, all of Simple Energy's
technology and related employees were transferred into a new
company, Simple Energy Technology Ltd ("SETL") which was later
rebranded as Zoa
-- Nov 2022 : SEQI is granted an option to acquire a majority
stake in Zoa for GBP1, in exchange for approximately GBP11.3
million of its loan to Bulb. The option was exercised on 3(rd)
March 2023
-- Dec 2022: The Energy Transfer Scheme takes effect
-- Mar 2023 : SETL completes rebranding to Zoa
-- Nov 2023 : SEQI and the Joint Special Administrators of Bulb
agree to a partial settlement of SEQI's claim, taking total
recoveries from the defaulted loan to GBP50.3m
3. About Zoa Technologies LTD
Zoa was created in November 2022 following the transfer of the
technology assets and product and technology teams from Simple
Energy. Zoa has redeveloped Bulb's technology into a leading
consumer energy platform that helps energy companies work with
consumers to drive energy transition. Zoa's platform uses data and
AI to let consumers understand and manage their energy usage, help
them adopt electrified devices like EVs and solar panels and lower
energy company costs by automating customer service.
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