TIDMAEET
RNS Number : 6467P
Aquila Energy Efficiency Trust PLC
13 February 2023
13 February 2023
Aquila Energy Efficiency Trust PLC
(the "Company")
Publication of Circular
The Board of the Company announces that it has today published a
circular to Shareholders (the "Circular") convening a general
meeting of the Company to consider recommended proposals, including
(i) a continuation vote (by way of an ordinary resolution) and (ii)
the adoption of new articles of association (by way of a special
resolution).
Following the Company's Investment Strategy Review in April
2022, the Board announced that the Company's first continuation
vote following its initial public offering in June 2021 would be
brought forward from 2025, to February 2023. As such, the general
meeting will provide Shareholders with the opportunity to vote on
an ordinary resolution on the continuation of the Company. In
addition, Shareholders are also being asked to approve a
consequential amendment to the Company's articles of association
such that the next continuation vote should occur in a further four
years (i.e. 2027).
The Board unanimously recommends that Shareholders vote FOR the
continuation of the Company and amendment to the articles of
association, the rationale for which is included in the Chair's
letter within the Circular published today and extracted, without
material amendment, in the appendix to this announcement.
The Circular contains a notice of a general meeting of the
Company to be held at 2.00 p.m. on 28 February 2023 at the offices
of Apex Listed Companies Services (UK), 6th Floor, 125 London Wall,
London EC2Y 5AS (the "General Meeting").
The notice of General Meeting and the Form of Proxy will be
submitted to the National Storage Mechanism and shortly be
available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the
Company's website at https://www.aquila-energy-efficiency-trust.com
.
For further information please contact:
Aquila Capital (Investment Adviser) Via Buchanan
Buchanan (Financial PR)
Charles Ryland, Henry Wilson, George Beale 020 7466 5000
Peel Hunt (Broker)
Luke Simpson, Huw Jeremy (Investment Banking) 020 7418 8900
Apex Listed Companies Services (UK) Limited
(Company Secretary)
Maria Matheou, Brian Smith 020 3327 9720
The Company's LEI is 213800AJ3TY3OJCQQC53
Capitalised terms used but not defined in this announcement have
the meanings given to them in the Circular published by the Company
today.
Appendix
Expected timetable*
Notice posted to Shareholders 13 February 2023
Latest time and date for receipt of 2:00 p.m. on 24 February
Forms of Proxy 2023
General Meeting 2:00 p.m. on 28 February
2023
*Each of the times and dates above are subject to change by the
Company. Reference to time in this announcement, the Circular and
the Form of Proxy are to London time unless stated otherwise. If
any of the above times and/or dates changed, the revised time(s)
and/or date(s) will be notified to Shareholders by announcement
through a regulatory information service.
"Dear Shareholder
NOTICE OF GENERAL MEETING
PROPOSED CONTINUATION AND NEW ARTICLES OF ASSOCIATION
1. Introduction
I am writing to inform you that a General Meeting of the Company
will be held at 2:00 p.m. on 28 February 2023 at the offices of the
Company Secretary, 6(th) Floor, 125 London Wall, London EC2Y 5AS at
which Shareholders will be asked to vote upon (i) Continuation; and
(ii) the adoption of New Articles.
The Continuation of the Company and adoption of New Articles are
both conditional upon the approval of the relevant Resolutions by
Shareholders at the General Meeting, notice of which is set out at
the Notice of General Meeting. The purpose of this Notice is to
provide Shareholders with details of the Continuation and New
Articles and to explain why the Directors are recommending that
Shareholders vote in favour of the Resolutions at the General
Meeting.
2. Rationale for Proposed Continuation
The Board unanimously recommends that Shareholders vote for the
Continuation of the Company.
The Board is of the view that the Company has reached an
important inflection point. An increase in the origination
resources deployed by the Investment Adviser to build pipeline
relationships with ESCOs is now delivering results. The Company
achieved its revised target to substantially commit the gross
proceeds raised through its IPO by the end of 2022, with total
commitments of GBP96.7 million and deployed capital of GBP61.2
million. Since 31 December 2022, a further GBP3.5 million of
commitments have been made. The total commitment and deployment
amounts as at 30 January 2023 were at GBP100.7 million and GBP60.4
million, respectively. The Company's portfolio of 31 investments is
diversified across geographies (Italy, Spain, Germany and the UK),
technologies, counterparties and ESCO partnerships. This portfolio
of investments is forecast to achieve an unleveraged, average yield
of 8 per cent per annum, which the Board believes is attractive
given the credit quality of the portfolio.
The majority of the Company's forecast project cash flows -
approximately 69 per cent - are investment grade, as assessed by
using both the Investment Adviser's credit analysis and external
agencies. In projects which are non-investment grade, there are
usually additional protections; these include the ability to export
power to a grid and to extend the maturity of a contract with an
ESCO and underlying counterparty to recover missed payments. The
latter is possible because the Company's financing agreements are
of a shorter duration than the useful life of equipment installed
and, in many cases, of a shorter duration than the contract between
the ESCO and the counterparty.
The Company's portfolio also benefits from a combination of
fixed and variable return payments. While approximately 67 per cent
of the total investment value provides a fixed rate of return from
contractual cash flows, approximately 33 per cent by investment
value has variable cash flows linked to power production and power
prices, or inflation indexation. In many cases, these variable
return investments have downside protections, for example, minimum
contractual returns, which reduce the risk of lower than forecast
cash flows.
The Company targeted a dividend of 3.5 pence per Ordinary Share
for the year to 31 December 2022 and is targeting 5.0 pence per
Ordinary Share for the year to 31 December 2023. Following
consultation with Shareholders in April 2022, it was decided that
the Company's dividend payment in respect of the year to 31
December 2022 would be paid principally out of capital. It is
anticipated that dividend payments for the year to 31 December 2023
will be substantially covered by net income.
A key priority for 2023 is to deploy all of the remaining
capital raised at IPO. Given recent good progress, and as set out
in the Company's investment update announcement published on 30
January 2023, the Investment Adviser now anticipates deployment by
the end of the first quarter of 2023 to exceed the approximately 80
per cent of IPO proceeds referred to in the Trading Update
published on 20 December 2022. The Company's "Superbonus" projects
are forecast to be repaid during 2023, providing the ability to
reinvest in further energy efficiency projects generating
attractive returns. The Board believes that the Company's strong
origination capability together with its partnerships with ESCOs
and large global industrial companies are driving a significant
pipeline of larger transactions, which, it is anticipated, will
enable the timely redeployment of Superbonus returns and others
too. It is this capacity to originate new energy efficiency
projects through ESCO relationships and other origination
partnerships that now stands the Company in particularly good
stead.
The Company is in the process of arranging a revolving credit
facility to enable further investment. The Board is encouraged by
the progress seen in RCF discussions and the current expectations
are that it will be able to put in place a facility in the first
half of 2023.
The Board is further assured that opportunities for investment
in European energy efficiency infrastructure have increased since
the launch of the Company in June 2021. The impact on European
energy prices of the war in Ukraine is leading to a much greater
focus on reducing energy bills and energy usage. Through ESCO and
other relationships, the Investment Adviser is witnessing a much
higher demand from businesses across its main investment
geographies of Italy, Spain, Germany and the UK, and other parts of
the EEA, to finance the installation of energy efficiency
infrastructure. As announced previously, in April 2022, the Board
has appointed an independent external consultant, Complete Strategy
Ltd, to conduct a monthly review and report to the Board on the
Investment Adviser's performance in relation to the achievement of
investment commitments and deployment. Complete Strategy Ltd has
reconfirmed to the Board that, in its opinion, the market for
energy efficiency projects remains positive and there is a strong
origination capability within the team at the Investment Adviser.
As at the date of this announcement, the Company has a pipeline of
78 potential deals originated by established ESCO partners with an
aggregate value of GBP488.8 million, which provides a strong
visibility of continuing investment opportunities.
I am also pleased to report that the Board is now at full
strength, with the addition of David Fletcher, as Chair of the
Audit and Risk Committee, and Janine Freeman, as a Non-Executive
Director. David Fletcher is a highly experienced audit chair, a
role that he performs for several other listed investment
companies. David Fletcher was, for 17 years, Group Finance Director
of Stonehage Fleming Family & Partners, a leading,
independently owned, multi-family office. Janine Freeman is an
experienced, senior energy industry executive and non-executive
director with over 20 years of experience in the energy industry.
Driving investment in clean energy infrastructure has been her
primary focus for much of that time. I believe that these
complementary additions have greatly strengthened the breadth of
expertise of the Board.
The Board has consulted widely with Shareholders on the
Continuation of the Company. Shareholders have widely expressed
their support for the Company's investment proposition and to date
a significant proportion has expressed support for the Continuation
of the Company. The Board, of course, remains open to discussions
with Shareholders in the period running up to the General Meeting.
Importantly, both the Board and the Investment Adviser are highly
supportive of the Company's investment strategy and are committed
to driving the growth of the Company.
The Board is very aware of the circumstances in which the
Company finds itself. The Company is small in size and with a share
price that is currently at a very significant discount to NAV, and
the Board recognises the considerable challenges that these
conditions present. Having now delivered on its initial investment
commitments, the Board and the Investment Adviser are focused on
continuing performance and on ensuring that the market understands
both the important role of investing in energy efficiency to meet
carbon reduction targets and the strong investment proposition
being offered by the Company. The Board also remains committed to a
continued, regular engagement with Shareholders. There are clearly
factors outside the control of the Board which materially influence
the Company's share price, but where we have the levers to improve
the perception of the Company and narrow the Company's discount to
NAV, we will strive to do so.
3. Proposed New Articles
The Board proposes that the Company adopts New Articles to amend
article 167 of the Articles to reflect the revised timing of future
continuation resolutions, as a result of the Continuation
Resolution being tabled at the General Meeting, such that the next
continuation resolution (following the Continuation Resolution)
would be tabled at the annual general meeting of the Company in
2027 (and every fourth annual general meeting thereafter).
A copy of the Company's existing Articles and the proposed New
Articles will be available for inspection (on request from Maria
Matheou at aeetcosecmbx@apexfs.group) during normal business hours
(excluding Saturdays, Sundays and bank holidays) at the Company's
registered office from the date of this announcement until the
close of the General Meeting, and will also be available for
inspection at the General Meeting from at least 15 minutes prior to
the start of the meeting up until the close of the meeting. A copy
of the Company's existing Articles and the proposed New Articles
are also available on the Company's website at
https://www.aquila-energy-efficiency-trust.com.
4. General Meeting
The Notice of General Meeting to be held at 2:00 p.m. on 28
February 2023 at the offices of the Company Secretary, 6(th) Floor,
125 London Wall, London EC2Y 5AS is available on the Company's
website at https://www.aquila-energy-efficiency-trust.com..
The Resolutions to be proposed at the General Meeting are as
follows:
Resolution 1: Continuation
This resolution is to approve the Continuation of the Company.
Resolution 1 is an ordinary resolution and requires a simple
majority of the votes cast on the resolution to be in favour of
such resolution.
Resolution 2: New Articles
The Company is proposing to adopt New Articles in substitution
for the existing Articles. The proposed change introduced by the
New Articles is set out in paragraph 3, above. Resolution 2 is a
special resolution and requires approval by not less than 75 per
cent of the votes cast on the resolution.
5. Action to be taken
It is important to the Company that Shareholders have the
opportunity to vote even if they are unable to attend the General
Meeting. Whether or not you propose to attend the General Meeting
in person, you are requested to complete the Form of Proxy and
submit it electronically to the Company Secretary
(aeetcosecmbx@apexfs.group), so that it arrives no later than 2:00
p.m. on 24 February 2023.
If you hold your shares in CREST, you may appoint a proxy or
proxies by completing and transmitting a CREST Proxy Instruction
using the procedures described in the CREST Manual as soon as
possible and so that the instruction is received by no later than
2:00 p.m. on 24 February 2023.
The completion and submission of a Form of Proxy or the
transmission of a CREST Proxy Instruction will not affect your
right to attend and vote in person at the General Meeting if you
wish.
Shareholders are reminded that, if their Ordinary Shares are
held in the name of a nominee, only that nominee or its duly
appointed proxy can be counted in the quorum at the General
Meeting.
6. Recommendation
The Board considers the passing of the Continuation Resolution
and the Articles Resolution to be in the best interests of
Shareholders as a whole. Accordingly, the Board unanimously
recommends that Shareholders vote in favour of both the
Continuation Resolution and the Articles Resolution at the General
Meeting, as members of the Board intend to do in respect of their
own beneficial holdings, amounting to 99,736 shares representing
0.10 per cent of the issued share capital of the Company as at the
date of this announcement.
Yours faithfully
Miriam Greenwood OBE DL
Chair".
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END
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February 13, 2023 02:00 ET (07:00 GMT)
Aquila Energy Efficiency (LSE:AEEE)
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