Riverstone Credit Opportunities Income Plc
Interim Report and Unaudited Interim Condensed Financial
Statements
For the six months ended 30 June 2024
At a General Meeting held on 22 May 2024, Riverstone Credit
Opportunities Income Plc ("RCOI" or the "Company") adopted a
revised Investment Objective in order to facilitate a managed
wind-down of the Company.
The Company aims to realise the Company's assets on a timely
basis with the aim of making progressive returns of cash to holders
of Ordinary Shares as soon as practicable.
Company number:
11874946
All capitalised terms are defined in the list of defined
terms below unless separately defined.
Riverstone Credit Opportunities Income
PLC
Riverstone Credit Opportunities Income Plc is an externally
managed closed-ended investment company listed on the London Stock
Exchange.
The Company's Ordinary Shares were
admitted to the Specialist Fund Segment of the London Stock
Exchange plc's Main Market and incorporated and registered on 11
March 2019 in England and Wales with an unlimited life.
At the Annual General Meeting
("AGM") held on 22 May 2024, Riverstone Credit Opportunities Income
Plc adopted the Wind-Down Investment Policy and entered into a
managed wind-down.
The Company's investment objective
and investment policy is now to realise the Company's assets on a
timely basis with the aim
of making progressive returns of cash to holders
of Ordinary Shares as soon as practicable.
INVESTMENT MANAGER
The Company's Investment Manager
is Riverstone Investment Group LLC, which is controlled by
affiliates of Riverstone Holdings LLC ("Riverstone").
On 31 December 2023, Riverstone
entered into a sub-management agreement with Breakwall Capital LP
("Breakwall" or "Sub-Manager") for all the credit vehicles managed
by Riverstone.
Riverstone was founded in 2000 and
is currently one of the world's largest and most experienced
investment firms focused on energy, power, infrastructure and
decarbonisation. The firm has raised over $45 billion of capital
and committed approximately $45 billion to over 200+ investments in
North America, South America, Europe, Africa, Asia and Australia.
Headquartered in New York, Riverstone has built a global platform
with additional offices located in Menlo Park, Houston, London,
Amsterdam and Mexico City. Since its founding, the Firm has grown
its presence significantly and currently employs over 33
professionals worldwide.
The registered office of the
Company is 5th
Floor, 20 Fenchurch Street, London, England, EC3M 3BY.
Key Financials
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2024
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2023
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NAV as at 30 June 2024/ 31
December 2023
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$92.13m
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$96.02m
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NAV per Share as at 30 June 2024/
31 December 2023
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$1.01
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$1.06
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Market capitalisation as at 30
June 2024
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$83.09m
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$81.72m
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Share price at 30 June 2024/ 31
December 2023
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$0.92
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$0.87
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Total comprehensive income for
period ended 30 June 2024/ 30 June 2023
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$0.2m
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$3.7m
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EPS for the period ended 30 June
2024/ 30 June 2023
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0.24 cents
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4.02 cents
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Distribution per share with
respect to the period ended 30 June 2024/ 30 June 2023
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2.70 cents
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4.00 cents
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Highlights
· The
NAV at 30 June 2024 was $1.01
per
share (31 December 2023:
$1.06).
· Distributions of 2.70 cents per
share (30 June 2023: 4.00 cents per
share) approved with respect to the period ended 30 June
2024. Given that a significant portion of
the Company's previously expected earnings for the second quarter
was expected to come from a possible H&W refinancing, the Board
is aware of the reduced level of dividend to pay for the second
quarter.
·
There was one full
realisation of EPIC Propane executed in the period ended 30
June 2024 .
INVESTMENT OBJECTIVE AND POLICY
Following the outcome of the vote
held at the AGM on 22 May 2024, the Company adopted a revised
investment objective and investment policy in order to facilitate a
managed wind-down of the Company. The revised Investment Policy is
now "to realise the Company's assets on a timely basis with the aim
of making progressive returns of cash to holders of Ordinary Shares
as soon as practicable" (the "Wind-down Investment
Policy").
The Investment Manager expects
generally to realise the loans comprising the Company's portfolio
by holding them until they come to term and returning the resulting
proceeds to Shareholders. The Investment Manager may also dispose
of loans in the secondary market, including through sales to other
funds, vehicles or managed accounts advised or managed by the
Investment Manager or Breakwall.
The precise mechanism for the
return of cash to holders of Ordinary Shares in the managed
wind-down is at the discretion of the Board, but includes a
combination of capital distributions, tender offers, mandatory
share redemptions and share repurchases. The return of proceeds to
Shareholders may require further Shareholder approvals, depending
on the methods used.
The Company will continue to carry
on its investment business during the managed wind-down.
Prior to the 2024 AGM, the
Company's investment objective was to lend to companies working to
drive change and deliver solutions across the energy sector,
spanning renewable as well as conventional sources, with a primary
focus on infrastructure assets, by building a portfolio that
generated as well as driving an attractive and consistent risk
adjusted return for investors, as well as drive a positive action
with regard to climate change by structuring loans as Green Loans
or Sustainability-Linked Loans.
Further details on the Company's
previous investment strategy, investment restrictions and
distribution policy are outlined in the Company's Annual Report for
the year ended 31 December 2023.
Chairman's Statement
Overview
On behalf of the Board, I would
like to thank our shareholders for their ongoing support.
On the 22 May 2024, following shareholder
approval at the Company's Annual General Meeting, the Company
entered a Managed Wind Down. Accordingly, the Company is required
to amend its investment policy "To realise the Company's assets on a timely
basis with the aim of making progressive returns of cash to holders
of Ordinary Shares as soon as practicable."
We are very proud of the portfolio of loans built
by the Investment Manager to help support the energy transition and
we are committed to maximising shareholder value through the
Managed Wind Down process.
Overall, we are pleased with the
financial performance of the Company and the beneficial impact its
loans are having on the journey towards greater environmental
sustainability in global energy infrastructure. During the first
half of 2024, apart from the unrealised markdown of the position in
Harland & Wolff, the Company's performance remained stable from
2023, posting consistent earnings for the period, and remains well
positioned in the current environment. The Company has delivered a
NAV total return of 40.4% to investors since inception in May 2019
and 36.1 cents of income.
Going forward, the Company will
focus on the realisation of the Company's assets and return of
capital to shareholders.
Key
Developments
RCOI's current NAV per share is
$1.01 (31 December 2023: $1.06).
There was one realisation that
occurred during the first half of 2024, Epic Propane. Epic Propane
was fully realised in April 2024 with a 16.9 per cent gross IRR and
a 12.8 per cent net IRR and 1.24x gross MOIC and 1.18x net MOIC
respectively. This was an attractive return for our
Shareholders.
Performance
The Company reported a profit of
$0.2 million for the period ending 30 June 2024, resulting from
income received from the investment portfolio and changes in the
portfolio's valuations. The Net Asset Value ("NAV") of the Company
remained stable and ended the period at $1.01 per share.
As of June 30, 2024, 33% of the Company's assets
consist of cash and cash equivalents, 85% of which is currently
uncommitted, 61% are loans and 7% are equity investments.
The Company is paying distributions of 2.70 cents
per share to investors within the first half of 2024.
The current unrealised portfolio
remains attractive, marked at an average 1.24x gross MOIC and 1.15x
net MOIC. Characteristics of RCOI's investment strategy,
particularly the focus on a conservative LTV, diversified
sub-sectors and end-user base, as well as structured incentives for
early repayment, have helped mitigate negative portfolio impact
from the broader market fluctuations.
RCOI has executed 25 direct
investments and participated in two secondary investments since
inception and cumulatively invested $253 million of capital since
the IPO in May 2019. The Company has now realised a total of 19
investments, delivering an average gross IRR of 17.2 per cent and
net IRR of 12.7 per cent.
As the company has adopted the
Wind Down Investment policy, the Company's investment objective and
investment policy is to realise the Company's assets on a timely
basis with the aim of making progressive returns of cash to holders
of Ordinary Shares as soon as practicable.
Outlook
The Investment Manager would
expect generally to realise the loans comprising the Company's
portfolio by holding them until they come to term and returning the
resulting proceeds to Shareholders. The Investment Manager may also
dispose of loans in the secondary market, including through sales
to other funds, vehicles or managed accounts advised or managed by
the Investment Manager or Breakwall.
The precise mechanism for the
return of cash to holders of Ordinary Shares in a managed wind-down
is at the Board's discretion but may include (subject to compliance
with all applicable legal requirements) a combination of capital
distributions, tender offers, mandatory share redemptions and share
repurchases. The return of proceeds to Shareholders may require
further Shareholder approvals, depending on the methods proposed.
We look forward to providing further updates on the progress of the
Company's Managed Wind Down in due course.
Reuben Jeffery, III
Chairman
7 August 2024
INVESTMENT MANAGER'S REPORT
ABOUT THE INVESTMENT MANAGER
Appointed in May 2019, the
Investment Manager, an affiliate of Riverstone, sought to generate
consistent shareholder returns predominantly in the form of income
distributions principally by making Green and
Sustainability-Linked, senior secured loans to energy transition
businesses. Loans are classified as Green Loans when they support
environmentally sustainable economic activity and
Sustainability-Linked Loans when they contain sustainability
performance targets or other equivalent metrics to be monitored.
RCOI has participated in loans to companies working to drive change
and deliver better solutions across the energy sector, spanning
renewable as well as conventional energy, with a primary focus on
infrastructure assets. The Company's aim
was to build a portfolio that generates an attractive and
consistent risk-adjusted return for investors, as well as drive
positive impact regarding climate change by structuring loans as
Green Loans or Sustainability-Linked Loans.
The Company sought to achieve its
investment objective predominantly through managing its diversified
portfolio of direct and indirect investments in loans, notes,
bonds, and other debt instruments, including convertible debt,
issued by Borrowers operating in the energy sector. Riverstone's
investment professionals have a unique combination of industry
knowledge, financial expertise, and operating capabilities. The
Company also benefited from the guidance and input provided by
non-Riverstone credit team members of Riverstone's credit
investment committee who are involved in the Company's investment
process. The Company believes that Riverstone's global network of
deep relationships with management teams, investment banks and
other intermediaries in the energy sector led to enhanced sourcing
and deal origination opportunities for the Company.
On November 6, 2023, Riverstone
Holdings LLC and their affiliate Riverstone Investment Group
(collectively, "Riverstone") announced that they intended to enter
into an agreement with Breakwall Capital LP to provide
sub-management services (the "Sub-Management Agreement") for all
credit vehicles managed by Riverstone, including RCOI (the
"Existing Credit Vehicles"). Breakwall is a newly formed
independent asset-management firm regulated by the SEC as a
Registered Investment Advisor, owned and operated by the former
Riverstone Credit Partners team. Services provided by Breakwall
commenced on January 2, 2024.
Under the arrangement, Riverstone
has remained the manager of RCOI on the terms of RCOI's existing
management agreement and all aspects of the ongoing management of
the Company, including the day-to-day investment team, have
remained consistent with current practices. There was no increase
in fees payable by RCOI as a result of the modified arrangements.
The Board of RCOI was involved in establishing the Sub-Management
Agreement and are confident that the structure of Riverstone as
manager and Breakwall as the sub-manager will continue to deliver
strong returns for shareholders during this period of Managed
Wind-down.
INVESTMENT PORTFOLIO SUMMARY
As of 30 June 2024, the Company
holds a diverse portfolio of investments in seven companies across
energy infrastructure & infrastructure services and energy
transition assets as further discussed below. In addition, RCOI
holds the warrants of one investment where the loan was fully
realised.
In the descriptions that follow,
yield to maturity is inclusive of all upfront fees, original issue
discounts, drawn spreads and prepayment penalties through the
stated maturity of the loan. Most loans have incentives to be
called early. A portion of the loans have a "payment-in-kind"
feature for drawn coupons for a limited time period. Similarly,
some of the loans have a "delayed-draw" feature that allows the
borrower to call capital over time, but always with a hard
deadline. Loans that are committed are loans with signed definitive
documentation where a structuring fee and/or original issue
discount have been earned and the Company earns an undrawn spread.
Loans that are invested are signed with definitive documentation
and, where a structuring fee and/or original issue discount have
been earned, the Company has funded the loan to the Borrower and
the Company is earning a drawn coupon.
The Investment Manager expects
that every loan it has made will advance the cause of energy
transition one way or another. For new
green energy infrastructure, or conversion of older assets to a
more sustainable use, we typically issue Green Loans. For existing
hydrocarbon related businesses, we typically issue
Sustainability-Linked Loans that tie loan economics to meeting
specific sustainability performance targets. Both structures are
based on LSTA guidelines and are subject to third party independent
opinion from Sustainable Fitch, a division
of Fitch Group focused on ESG.
Harland & Wolff - In
March 2022, RCOI participated in a $35.0 million
first lien Green Term Loan to Harland & Wolff ("H&W"), an
infrastructure operator engaged in the development and operation of
strategic maritime assets across the United Kingdom. At the
initial closing RCOI committed $11.8 million. As part of the
terms of the loan, RCOI has also been granted 5.1 million warrants
to purchase stock in H&W. This has subsequently been upsized to
$14.6 million. RCOI has not
participated in any further financing since 2022.
As of 30 June 2024, $14.6 million
remains invested, reflecting 23.5 per cent of RCOI's overall
commitments.
This loan has subsequently been
upsized to $115 million and is due December 2024.
As noted in RCOI's London Stock
Exchange announcement on 19 July 2024, the
most significant move in the Company RCOI's NAV in the second
quarter came from a $2.8 million reduction in the value of this
position, equivalent to 3.0% of NAV. The reduction in value of this
loan in the second quarter was taken in consultation with the
Company's external valuation provider and reflects the best
estimate of the investment manager as to the fair market value of
the position. The principal reason for the reduction in value is
that, as announced on 19 July 2024 by H&W, the UK Department
for Business and Trade has notified H&W that HM Government will
not be proceeding with the provision of export development
guarantee or loan facilities that had long been considered for
H&W.
On 2 August 2024, H&W
announced that it had received a new financing commitment of $25.0
million from credit funds managed by
Riverstone. The new capital is being classified as a super priority
position to the existing facility in which the RCOI is a Lender. As
a condition to the financing, the most recent $15 million upsize of
the facility completed in February 2024 (in which RCOI did not
participate), is being recharacterised as part of the new super
priority facility. As announced by H&W, the increase in debt
facilities is accompanied by a change in personnel of H&W's
senior management and the insertion of new non-executive
directors.
RCOI will not participate in the
new super priority facility as it has now entered into managed
wind-down (and had previously already reached its concentration
limit in H&W). The Q2 NAV does not reflect the impact of this
new financing as it had not closed as of 30 June
2024.
The Board will continue to closely
monitor developments regarding the Company's investment in H&W,
in particular when considering the appropriate timing for cash
returns to Shareholders pursuant to its wind-down strategy. In the
meantime, the Company's cash balances are invested in a money
market and are yielding a healthy risk-free return.
Seawolf Water Resources - In
September 2022, RCOI made a secondary investment in a stapled
bundle of private securities in Seawolf Water Resources
("Seawolf"), a privately held water infrastructure services company
with operations primarily in Loving County, TX and southern New
Mexico. The investment includes a Sustainability-Linked first lien
term loan along with preferred stock and common equity,
collectively purchased at a significant discount to market value.
The loan portion of the investment is due in March 2026 and was
purchased at an estimated all-in yield to maturity of 10.6 per cent
to RCOI. The preferred stock and common equity are perpetual
in nature but benefit from excess cash returned to the shareholders
from time to time.
Across the term loan, preferred
stock, and common equity, RCOI committed a total of $9.0 million,
which has subsequently been reduced to $8.8 million via repurchases
of preferred stock by the company. This reflects 14.3 per
cent of RCOI's overall commitments as of 30 June 2024.
Hoover Circular Solutions - In November 2022, RCOI participated in a $160mm
Sustainability-Linked first lien term loan to Hoover CS, a leading
provider of sustainable packaging and fleet management solutions,
that is paving the way for customers across the chemical, refining
and general industrial-end markets to move away from single-use
containers. Sustainable Fitch provided a Second Party Opinion
("SPO") on the loan. The loan is due in
November 2026 and was made at an estimated all-in yield to maturity
of 10.6 per cent.
At closing, RCOI committed $13.7
million. As of 30 June 2024, the full $13.7 million remains
invested, reflecting 22.2 per cent of RCOI's overall
commitments.
Max Midstream - In December
2022, RCOI participated in a $28.6 million Sustainability-Linked,
first lien term loan (the "Term Loan") to a subsidiary of Max
Energy Industrial Holdings US LLC ("Max"). Max is developing the
first carbon-neutral crude oil export terminal on the Gulf Coast of
Texas, which it believes will lead to increased market share as
crude consumers globally seek to reduce their overall carbon
footprint. The loan is due in December 2024, subject to some mutual
extension options that would extend the maturity to December 2025.
At the time of close, the term loan was SOFR+650 bps with all in coupon of 11.0 percent.
At close, RCOI committed $5.0
million. As of 30 June 2024, the full $5.0 million remains
invested, reflecting 8.1 per cent of RCOI's overall
commitments.
Streamline Innovations - In
June 2023, RCOI participated in a $55
million Green term loan to Streamline Innovations, a leader in
environmentally-advanced treatment solutions for the removal of
hydrogen sulfide (H2S) from natural gas, renewable fuels,
wastewater, and industrial processes. The facility was structured
as a Green Loan with Sustainable Fitch providing a Second Party
Opinion. The loan is due in December 2026 and was made
at an estimated all-in yield to maturity of 12.5 per
cent.
As closing, RCOI committed $9.9
million and funded $3.5 million. As of 30 June 2024, RCOI's
commitment remains at $9.9 million with the funded amount
increasing to $5.4 million, representing 16.0 per cent of RCOI's
total commitments.
Blackbuck Resources -
In June 2021,RCOI participated in a $50.0
million first lien delayed-draw Sustainability-Linked Term Loan to
the BlackBuck Resources, a sponsor-backed water infrastructure
company focused on providing E&P operators with a one-stop shop
for all things related to water management, including treatment,
gathering, recycling, storage and disposal. Sustainable Fitch
provided a Second Party Opinion. The loan is due in December
2024 and was made at an estimated all-in yield to maturity of 17.0
per cent.
At closing, RCOI committed $9.9
million and funded $8.9 million. As of 30 June 2024, RCOI's
commitment has been reduced to $9.2 million, with all $9.2 million
now funded, representing 14.8 per cent of RCOI's total
commitments.
Imperium3 New York, Inc - In
April 2021, RCOI participated in a $63.0 million first lien
delayed-draw Green term loan to Imperium 3 New York, Inc, as
lithium-ion battery company that will commercialise high performing
lithium-ion batteries by developing a large-scale manufacturing
facility in Endicott, NY. The loan was fully refinanced
In April 2022, the Company fully refinanced this
loan with a new source of financing, resulting in a 32.5 per
cent realised IRR and 1.25x realised MOIC.
At closing RCOI committed $6.8
million. In addition, as part of the loan terms, RCOI was granted
warrants to purchase 0.4 per cent of the Imperium's equity and 0.3
per cent of the equity in one of Imperium's parent company's Charge
CCCV. As of 30 June 2024, none of the loan is outstanding but the
warrants remain the Company's portfolio.
Caliber Midstream - In July
2019, RCOI participated in a $10.0 million upsize of a $65.0
million first lien holding company term loan to Caliber Midstream
(the "HoldCo Term Loan"),a sponsor-backed Bakken focused midstream
company that provides crude oil and natural gas gathering and
processing, produced water transportation and disposal, and
freshwater sourcing and transportation.
At closing $3.4 million was
committed by RCOI to the HoldCo Term Loan. Subsequently, in April
2021, an additional $0.6 million was invested on a secondary basis
in a senior secured first lien loan made to Caliber (the "Opco
Loan"), bringing RCOI's total commitment to Caliber to $4.0
million.
In March 2021, Caliber's largest
customer, Nine Point Energy, terminated their midstream contract
with Caliber and subsequently filed for Chapter 11 bankruptcy,
triggering significant financial distress. In May 2021, RCOI and
the other HoldCo Lenders completed a recapitalisation of Caliber
resulting in HoldCo Term Loan Lenders receiving substantially all
of the equity in HoldCo.
In March 2022, the Caliber and the
OpCo Loan lenders subsequently closed a second restructuring with
the OpCo Loan lenders receiving approximately 100% of the
equity.
Following the restructuring, new
management was hired, a new contract was executed and at 30 June
2024 there remains increased focus on cost cutting initiatives and
new revenue opportunities.
As of 30 June 2024, the full $4.0
million commitment remains invested, reflecting 1.1% of RCOI's
overall commitments post restructuring.
SUBSEQUENT EVENTS AND OUTLOOK
As discussed in the Chair
statement, following careful consideration and consultation with
Riverstone Investment Group LLC (the "Investment Manager"), its
sub-manager, Breakwall Capital LP, its advisers and certain
significant Shareholders, the Company's board of directors (the
"Board") has determined that a managed wind-down of the Company's
portfolio at this time is in the best interests of
Shareholders.
Following shareholder approval at
the Company's AGM, the Company's investment objective and
investment policy has been changed to now realise the Company's
assets on a timely basis with the aim of making progressive returns
of cash to holders of Ordinary Shares as soon as
practicable. In order to meet this
objective, the Company will continue to carry on its investment
business during the managed wind-down. We look forward to providing
regular updates on our progress to towards this
objective.
BUSINESS REVIEW
MANAGED WIND-DOWN
Following the AGM on 22 May 2024
the Company adopted a wind-down investment policy. Details of the
adoption of the managed wind-down are as follows:
· The
Company's investment objective and investment policy is now to
realise the Company's assets on a timely basis with the aim of
making progressive returns of cash without reinvesting any realised
cash to holders of Ordinary Shares as soon as
practicable.
· The
Investment Manager expects generally to realise the loans
comprising the Company's portfolio by holding them until they come
to term and returning the resulting proceeds to Shareholders. The
Investment Manager will also dispose of loans in the secondary
market, including through sales to other funds, vehicles or managed
accounts advised or managed by the Investment Manager or
Breakwall.
· The
Company will maintain its listing on the Specialist Fund Segment
and continue to conduct its affairs (including as regards payment
of dividends) so as to qualify as an investment trust for the
purposes of section 1158 of the Corporation Tax Act 2010, in each
case for as long as the Board believes such status to be
practicable and cost-effective for Shareholders.
· The
unaudited net asset value of the Company will continue to be
calculated on a quarterly basis in accordance with the Company's
accounting policies per the notes to the financial statements and
will be published through a Regulatory Information Service,
although the Board would keep this net asset value reporting policy
under review in light of the diminishing size of the Company's
portfolio during the course of the managed wind-down.
· The
precise mechanism for the return of cash to holders of Ordinary
Shares in a managed wind-down will be at the discretion of the
Board, but will include a combination of capital distributions,
tender offers, mandatory share redemptions and share repurchases.
The return of proceeds to Shareholders may require further
Shareholder approvals, depending on the methods used.
At a Board Meeting held on 18 June
2024, the Board considered a range of options for returning its
available cash to Shareholders.
The Company will continue to carry
on its investment business during the managed wind-down.
GOING CONCERN
The Directors, as at the date of
this report, are required to consider whether they have a
reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future.
Following the AGM held on 22 May 2024 at which shareholders
unanimously voted in favour of a change in the Company's Investment
Policy to Wind-Down Investment Policy.
The Company's Investment objective
and Wind-Down Investment Policy is to "realise the Company's assets
on a timely basis with the aim of making progressive returns of
cash to holders of Ordinary shares as soon as practicable." The Company is
therefore preparing its financial statements on a basis other than
going concern due to the company being in a managed
wind-down.
The Company will continue to carry
on its investment business during the managed wind-down and with
the expectation of realising the Company's assets and returning of
capital to its Shareholders.
The Directors consider that the
change to the Company's objectives and Investment Policy proposed
at the AGM, including the Wind-down Resolutions passed, are in the
best interests of Shareholders as a whole.
In conjunction with the Company
amending its Investment Policy to Wind-Down Investment Policy, the
senior secured revolving credit facility's credit agreement with
the Company was also amended.
The RCF credit agreement was
amended to allow aggregate amount of borrowings of up to $500,000
in order to optimise cash flows during the Managed Wind-Down. The
amendment also sets forth a Utilisation Fee of one percent per
annum due and payable quarterly by the Company to the
lender.
As of 30 June 2024, the Condensed
Statement of Financial position reflects a negative current net
asset value which does not reflect the Company's overall liquidity
and its ability to meet its current liabilities. The Company has
sufficient cash held in the SPVs reflected in the value of the
Company's investments in the SPVs. As of the date of the interim
report, the Company and its SPVs have $29.9m cash and cash
equivalents available of which $27.3m is short-term money market
fix deposits and the remaining $2.6m in cash within the SPV and the
Company. The Company's current cash will be able to meet the
near-term current liabilities when come due.
The Directors agree that the
Company has adequate resources to continue in operation throughout
the wind down period and will be able to meet all of its
liabilities as they fall due. The Directors considered it to be
appropriate to adopt the basis other than going concern in
preparing the financial statements given the Company is now in a
managed wind down. There were no material changes to accounting
policies or the valuation basis resulting from the Company
commencing the managed wind-down. All of the balance sheet items
have been recognised on a realisation basis. The Directors and the
Investment Manager have made the appropriate provisions in order to
bring about an orderly wind-down of the Company and its
operations.
As of 30 June 2024, the weighted
average remaining contractual tenor of the loans in the Company's
portfolio is 1.46 years. The Investment Manager would expect
generally to realise the loans comprising the Company's portfolio
by holding them until they come to term and returning the resulting
proceeds to Shareholders. The Investment Manager may also dispose
of loans in the secondary market where it considers this to be in
the best interests of the Company, including through sales to other
funds, vehicles or managed accounts advised or managed by the
Investment Manager or Breakwall.
The Directors will make further
announcements on the progress of the Managed Wind-Down strategy and
the return of cash to Shareholders in due course.
PRINCIPAL RISKS AND UNCERTAINTIES
Under the FCA's Disclosure
Guidance and Transparency Rules, the Directors are required to
identify those material risks to which the Company is exposed and
take appropriate steps to mitigate those risks. Risks relating to
the Company are disclosed in the Company's prospectus which is
available on the Company's website https://www.riverstonecoi.com.
The Company's assets consist of
investments, through SPVs, within the global energy industry, with
a particular focus on opportunities in the global E&P and
midstream energy sub-sectors. The Company also focuses on energy
transition, infrastructure and infrastructure services by
structuring deals as either a Green Loan or a Sustainability-Linked
Loan. Its principal risks are therefore related to market
conditions in the energy sector in general, but also the particular
circumstances of the businesses in which it is invested.
The Investment Manager seeks to
mitigate these risks through active asset management
initiatives.
The Board thoroughly considers the
process for identifying, evaluating and managing any significant
and emerging risks faced by the Company on an ongoing basis and has
performed a robust assessment of those risks, which are reported
and discussed at Board meetings.
PRINCIPAL RISKS AND UNCERTAINTIES
The Board ensures that effective
controls are in place to mitigate these risks and that a
satisfactory compliance regime exists to ensure all applicable
local and international laws and regulations are upheld.
For each material risk, the
likelihood and consequences are identified, management controls and
frequency of monitoring are confirmed and results reported and
discussed at the quarterly Board meetings.
The key areas of risk faced by the
Company and mitigating factors are summarised below:
1. The Ordinary
Shares may trade at a discount to NAV per Share for reasons
including but not limited to market conditions, liquidity concerns
and actual or expected Company performance. In its efforts to
mitigate this risk, the Investment Manager closely monitors and
identifies the reasons for significant fluctuations, and considers
the Company's share repurchase program when applicable and in the
interests of Shareholders. As such, there can be no guarantee that
attempts to mitigate such discount will be successful or that the
use of discount control mechanisms will be possible, advisable or
adopted by the Company.
2. Investment
decisions of the Investment Manager will depend upon the ability of
its employees and agents to gather relevant information. The
Company would continue to carry on its investment business during
the managed wind-down.
3. The Company's
Investment objective and Wind-Down Investment Policy is to "realise
the Company's assets on a timely basis with the aim of making
progressive returns of cash to holders of Ordinary shares as soon
as practicable." The Investment Manager will manage current
investments in accordance with the Investment Policy, market
conditions and the economic environment. To mitigate the risk of
realising investments not indicative of the fair value, the
Company's Investment Policy and investment restrictions enable the
Company to realise the loans comprising the Company's portfolio by
holding them until they come to term and returning the resulting
proceeds to Shareholders, with the precise mechanism for the return
of cash to holders of Ordinary Shares in the managed wind-down at
the discretion of the Board.
4. Environmental
exposures and existing and proposed environmental legislation and
regulation may adversely affect the operations of Borrowers. Delay
or failure to satisfy any regulatory conditions or other applicable
requirements could prevent the Company from acquiring certain
investments or could hinder the operations of certain Borrowers. To
mitigate this risk, the Investment Manager has usual and customary
inspection rights and affirmative covenants regarding environmental
matters contained in credit agreement documentation. The Investment
Manager has a clear ESG policy which is implemented and reviewed by
the Board.
5. The valuations
used to calculate the NAV on a quarterly basis will be based on the
Investment Manager's unaudited estimated fair market values of the
Company's investments and may be based on estimates which could be
inaccurate. To mitigate this risk, the Investment Manager has an
extensive valuation policy and also has engaged the independent
valuation services of Houlihan Lokey on a quarterly
basis.
6.
In today's global technological environment, the Company, its
investments and its engaged service providers are subject to risks
associated with cyber security. The effective operation of the
Investment Manager and the businesses of Borrowers are likely to be
highly dependent on the availability and
operation of complex information and technological systems. To
mitigate this risk, the Audit and Risk Committee Chairman monitors
cyber security risk and best practices. Cyber security due
diligence and ongoing monitoring is performed on each potential and
current borrower.
7. The Company
may be exposed to fluctuations and volatility in commodity prices
through investments it makes, and adverse changes in global supply
and demand and prices for such commodities may adversely affect the
business, results of operations, and financial
condition of the Company. To
mitigate this risk, the Investment Manager intends to create a
diversified portfolio across various energy subsectors, commodity
exposures, technologies and end-markets to provide natural
synergies that aim to enhance the overall stability of the
portfolio.
8. The Company
will only lend to Borrowers in the global energy sector and such
single industry concentration could affect the Company's ability to
generate returns. Adverse market conditions in the energy sector
may delay or prevent the Company from making appropriate
investments. To mitigate this risk, the Investment Manager intends
to create a diversified portfolio across various energy subsectors,
commodity exposures, technologies and end-markets to provide
natural synergies that aim to enhance the overall stability of the
portfolio.
9. The
performance of the Company may be affected by changes to interest
rates and credit spreads. To mitigate this risk, the Investment
Manager assesses credit risk and interest rate risk on an ongoing
basis and closely monitors each investment with the assistance of
each respective management team and the engaged service
providers.
10. The Company
relies on a third-party provider for the key operational tasks of
the Company. The failure of any service provider to carry out their
duty may have a detrimental effect on
the operation of the Company. To
mitigate these risks the Board will review the internal control
reports and consider business continuity arrangements of the
Company.
The principal risks outlined above
remain the most likely to affect the Company in the second half of
the year
Directors' Responsibilities
Statement
The Directors are responsible for
preparing this Interim Report in accordance with applicable law and
regulations.
The Directors confirm that to the
best of their knowledge:
· The
unaudited interim condensed financial statements have been prepared
in accordance with UK-adopted IAS 34 Interim Financial Reporting;
and
· The
Chairman's Statement, Investment Manager's Report and the notes to
the condensed financial statements include a fair review of the
information required by:
i. DTR 4.2.7R of
the Disclosure Guidance and Transparency Rules, being an indication
of important events that have occurred during the period and their
impact on the unaudited interim condensed financial statements; and
a description of the principal risks and uncertainties for the
remaining six months of the year; and
ii. DTR 4.2.8R
of the Disclosure Guidance and Transparency Rules, being related
party transactions that have taken place in the period and that
have materially affected the financial position and performance of
the Company during that period.
· For
the reasons stated in the Business Review and Note 2, the financial
statements have not been prepared on a going concern
basis.
On behalf of the Board
Reuben Jeffery, III
Chairman
7 August 2024
Condensed Statement of Financial
Position
As at 30 June 2024
|
|
|
30 June
2024
|
31 December
2023
|
|
|
Note
|
$'000
|
$'000
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
Investments at fair value through
profit or loss
|
4
|
92,583
|
94,639
|
|
|
|
92,583
|
94,639
|
|
Current assets
|
|
|
|
|
Dividends receivable
|
4
|
-
|
1,728
|
|
Trade and other
receivables
|
6
|
157
|
97
|
|
Cash and cash
equivalents
|
|
373
|
627
|
|
|
|
530
|
2,452
|
|
Current liabilities
|
|
|
|
|
Trade and other
payables
|
7
|
(980)
|
(1,067)
|
|
|
|
|
|
|
Net current assets
|
|
(450)
|
1,385
|
|
|
|
|
|
|
Net assets
|
|
92,133
|
96,024
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Share capital
|
8
|
908
|
908
|
|
Capital redemption
reserve
|
8
|
92
|
92
|
|
Other distributable
reserves
|
8
|
90,528
|
90,528
|
|
Retained earnings
|
|
605
|
4,496
|
|
Total Shareholders' funds
|
|
92,133
|
96,024
|
|
|
|
|
|
|
Number of Shares in issue at year
end
|
|
90,805,237
|
90,805,237
|
|
|
|
|
|
|
Net assets per share (cents)
|
12
|
101.46
|
105.75
|
The interim condensed financial
statements were approved and authorised for issue by the Board of
Directors on 7 August 2024 and signed on its behalf by:
Reuben Jeffery,
III
Emma Davies
Chairman
Director
The accompanying notes below form
an integral part of these interim condensed financial
statements.
Condensed Statement of Comprehensive
Income
For the six months ended 30 June 2024
(Unaudited)
|
|
|
For the six months ended
30 June 2024
|
For the six months ended
30 June 2023
|
|
|
Note
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Investment (loss)/gain
|
|
|
|
|
|
|
|
|
Change in fair value of
investments at fair value through profit or loss
|
4
|
-
|
(1,492)
|
(1,492)
|
-
|
306
|
306
|
|
|
|
-
|
(1,492)
|
(1,492)
|
-
|
306
|
306
|
|
Income
|
|
|
|
|
|
|
|
|
Investment income
|
4
|
3,028
|
-
|
3,028
|
4,328
|
-
|
4,328
|
|
|
|
3,028
|
-
|
3,028
|
4,328
|
-
|
4,328
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
Directors' fees and
expenses
|
14
|
(76)
|
-
|
(76)
|
(80)
|
-
|
(80)
|
|
Other operating
expenses
|
|
(607)
|
-
|
(607)
|
(532)
|
-
|
(532)
|
|
Liquidation expenses
|
|
-
|
(500)
|
(500)
|
-
|
-
|
-
|
|
Profit share
|
10
|
(147)
|
-
|
(147)
|
(388)
|
-
|
(388)
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
(830)
|
(500)
|
(1,330)
|
(1,000)
|
-
|
(1,000)
|
|
|
|
|
|
|
|
|
|
|
Operating profit for the year
|
|
2,198
|
(1,992)
|
206
|
3,328
|
306
|
3,634
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
|
|
|
|
|
|
|
|
Interest income
|
|
11
|
-
|
11
|
19
|
-
|
19
|
|
Total finance income
|
|
11
|
-
|
11
|
19
|
-
|
19
|
|
|
|
|
|
|
|
|
|
|
Profit for the year before tax
|
|
2,209
|
(1,992)
|
217
|
3,347
|
306
|
3,653
|
|
|
|
|
|
|
|
|
|
|
Tax
|
11
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
Profit for the year after tax
|
|
2,209
|
(1,992)
|
217
|
3,347
|
306
|
3,653
|
|
|
|
|
|
|
|
|
|
|
Profit and total comprehensive income for the
year
|
|
2,209
|
(1,992)
|
217
|
3,347
|
306
|
3,653
|
|
|
|
|
|
|
|
|
|
|
Profit and total comprehensive income attributable
to:
|
|
|
|
|
|
|
|
|
Equity holders of the
Company
|
|
2,209
|
(1,992)
|
217
|
3,347
|
306
|
3,653
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per
Share (cents)
|
12
|
2.43
|
(2.19)
|
0.24
|
3.68
|
0.34
|
4.02
|
The 'Total' column of this
statement is the profit and loss account of the Company and the
'Revenue' and 'Capital' columns represent supplementary information
prepared under guidance issued by the Association of Investment
Companies. Profit / (loss) for the period after tax also represents
Total Comprehensive Income.
The accompanying notes below form
an integral part of these interim condensed financial
statements.
Condensed Statement of Changes in
Equity
For the six months ended 30 June 2024
(Unaudited)
|
|
|
Share
capital
|
Capital redemption
reserve
|
Other distributable
reserve
|
Retained
earnings
|
Total
|
|
For the six months ended 30 June 2024
|
Note
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
|
|
|
|
|
|
|
|
Opening net assets attributable to
Shareholders
|
|
908
|
92
|
90,528
|
4,496
|
96,024
|
|
Total comprehensive income for the
year
|
|
-
|
-
|
-
|
217
|
217
|
|
Distributions paid in the
year
|
13
|
-
|
-
|
-
|
(4,108)
|
(4,108)
|
|
|
|
|
|
|
|
|
|
Closing net assets attributable to
Shareholders
|
|
908
|
92
|
90,528
|
605
|
92,133
|
Following the IPO of the Company,
the share premium account was cancelled by a court order dated 16
July 2019. The amount of $97,000 remaining in the share premium
account of the Company at this date was subsequently cancelled and
transferred to distributable reserves. This may be applied in any
manner in which the Company's profits available for distribution
are able to be applied, as determined in accordance with the
Companies Act 2006.
The Company's total distributable
reserves comprise its other distributable reserve and retained
earnings, excluding unrealised movement of its investments. After
taking account of cumulative unrealised gains of $949k and
distributions made, the total distributable reserves as at 30 June
2024 were $90,184k.
|
|
|
Share
capital
|
Capital redemption
reserve
|
Other distributable
reserves
|
Retained
earnings
|
Total
|
|
For the six months ended 30 June 2023
|
Note
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
|
|
|
|
|
|
|
|
Opening net assets attributable to
Shareholders
|
|
908
|
92
|
90,528
|
6,948
|
98,476
|
|
Total comprehensive income for the
year
|
|
-
|
-
|
-
|
3,653
|
3,653
|
|
Distributions paid in the
year
|
13
|
-
|
-
|
-
|
(4,541)
|
(4,541)
|
|
|
|
|
|
|
|
|
|
Closing net assets attributable to
Shareholders
|
|
908
|
92
|
90,528
|
6,060
|
97,588
|
The Company's total distributable
reserves comprise its other distributable reserve and retained
earnings, excluding unrealised movement of its investments. After
taking account of cumulative unrealised gains of $3,775k and
distributions made, the total distributable reserves as at 30 June
2023 were $92,813k.
The accompanying notes below form
an integral part of these interim condensed financial
statements.
Condensed Statement of Cash Flows
For the six months ended 30 June 2024
(Unaudited)
|
|
Note
|
For the six months ended
30 June 2024
|
For the six months ended
30 June 2023
|
|
|
|
$'000
|
$'000(1)
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
Profit for the year before
tax
|
|
217
|
3,653
|
|
|
|
|
|
|
Adjustments for non-cash transaction in profit for the year
before tax:
|
|
|
|
|
Interest Income
|
|
(11)
|
(19)
|
|
Movement in fair value of
investments
|
4
|
1,492
|
(306)
|
|
Investment income per Statement of
Comprehensive Income
|
4
|
(3,028)
|
(4,328)
|
|
Adjustments for Statement of Financial Position
movement:
|
|
|
|
|
Movement in payables
|
|
(87)
|
(1,234)
|
|
Movement in receivables
|
|
(62)
|
(68)
|
|
|
|
|
|
|
Bank interest received in
cash
|
|
13
|
30
|
|
Loan interest received
|
|
3,302
|
2,605
|
|
Dividend received
|
|
2,018
|
4,436
|
|
Net cash generated from operating
activities
|
|
3,854
|
4,769
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
Investment additions
|
4
|
-
|
-
|
|
Investment proceeds
|
|
|
|
|
Net cash (used in) / generated from investing
activities
|
|
-
|
-
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Distributions paid
|
13
|
(4,108)
|
(4,540)
|
|
Net cash used in financing activities
|
|
(4,108)
|
(4,540)
|
|
|
|
|
|
|
Net movement in cash and cash
equivalents during the period
|
|
(254)
|
229
|
|
Cash and cash equivalents at the
beginning of the period
|
|
627
|
957
|
|
Cash and cash equivalents at the end of the
period
|
|
373
|
1,186
|
(1) Cash
flows from operating activities for the six months ended 30 June
2024 are presented by adjusting Profit for the year before tax as
opposed to Operating profit for the year. Cash flows from operating
activities for the six months ended 30 June 2023 have been
re-presented in the format adopted for the six months ended 30 June
2024.
The accompanying notes below form an
integral part of these interim condensed financial
statements.
Notes to the Unaudited Interim Condensed
Financial Statements
For the six months ended 30 June 2024
1. General
Information
The Company was incorporated and
registered in England and Wales on 11 March 2019 with registered
number 11874946 as a public company limited by shares under the
Companies Act 2006
(the ''Act''). The principal
legislation under which the Company operates is the Act. The
Directors intend, at all times, to conduct the affairs of the
Company so as to enable it to qualify as an investment trust for
the purposes of section 1158 of the Corporation Tax Act 2010, as
amended.
2. Basis of
preparation
The condensed financial statements
have been prepared in accordance with the provisions of the
Companies Act 2006, with UK-adopted International Accounting
Standards ("UK-adopted IAS") 34 Interim Financial Reporting, and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority. Where presentational guidance set out
in the AIC SORP, 2022 edition, is consistent with the requirements
of UK-adopted IAS, the Directors have sought to prepare the
condensed financial statements on a basis compliant with the
recommendations of the AIC SORP. In particular, supplementary
information which analyses the Statement of Comprehensive Income
between items of a revenue and capital nature has been presented
alongside the total Statement of Comprehensive Income.
The condensed financial statements
have been prepared on a realisation basis. As a result of the
change of basis and considering the costs of the wind-down process
a provision of liquidation expenses of $500k has been recorded in
trade and other payables. The investments at fair value through
profit & loss remain presented as non-current assets as the
weighted average remaining contractual tenor of the loans in the
Company's portfolio is 1.46 years, with contractual maturity dates
of the loans ranging between December 2024 and December 2026. No
other material adjustments to accounting policies or the valuation
basis have arisen as a result of ceasing to apply the going concern
basis. All of the balance sheet items have been recognised on a
realisation basis, which is not materially different from the
carrying amount. This basis of preparation has been amended from
the Company's 2023 annual financial statements. The Company's 2023
annual financial statements were prepared on the historic cost
basis, as modified for the measurement of certain financial
instruments at fair value through profit or loss and in accordance
with UK-adopted IAS and with those parts of the Companies Act 2006
applicable to companies under UK-adopted IAS.
These condensed financial
statements do not constitute statutory accounts as defined in
section 434 of the Companies act and do not include all information
and disclosures required in an Annual Report. They should be read
in conjunction with the Company's Annual Report for the year ended
31 December 2023.
The Company's Annual Report for
the year ended 31 December 2023 included an unqualified audit
report that did not reference any matters by way of emphasis and
did not contain any statements under sections 498 (2) and (3) of
the Companies Act 2006. A copy of this annual report has been
delivered to the Registrar of Companies.
Going concern
As of the date of the report, the
Directors evaluated whether they have a reasonable expectation that
the Company has adequate resources to continue in operational
existence for the foreseeable future. Following the AGM held on 22
May 2024 at which Shareholders voted in favour of a change in the
Company's Investment Policy to Wind-Down Investment Policy.
The Company's investment objective and Wind-Down Investment Policy
is "to realise the Company's assets on a timely basis with the aim
of making progressive returns of cash to holders of Ordinary Shares
as soon as practicable". The Company is therefore preparing its
financial statements on a basis other than going concern due to the
Company being in a managed wind-down.
The Company will continue to carry
on its investment business during the managed wind-down and with
the expectation of realising the Company's assets and returning of
capital to its Shareholders.
The Directors consider that the
change to the Company's objectives and Investment Policy proposed
at the AGM, including the Wind-down Resolutions passed, are in the
best interests of Shareholders as a whole.
In conjunction with the Company
amending its Investment Policy to Wind-Down Investment Policy, the
senior secured revolving credit facility's ("RCF") credit agreement
with the Company was also amended. The RCF credit agreement
was amended to allow aggregate amount of borrowings of up to
US$500,000 in order to optimise cash flows during the Managed
Wind-Down. The amendment also sets forth a Utilisation Fee of one
percent per annum due and payable quarterly by the Company to the
lender.
As of 30 June 2024, the Condensed
Statement of Financial position reflects a negative current net
asset value which does not reflect the Company's overall liquidity
and its ability to meet its current liabilities. The Company has
sufficient cash held in the SPVs reflected in the value of the
Company's investments in the SPVs. As of the date of the interim
report, the Company has $29.9m cash and cash equivalents available
of which $27.3m is short-term money market fix deposits and the
remaining $2.6m in cash within the SPV and the Company. The
Company's current cash will be able to meet the near-term current
liabilities when come due.
The Directors agree that the
Company has adequate resources to continue in operation throughout
the wind down period and will be able to meet all of its
liabilities as they fall due. The Directors considered it to be
appropriate to adopt the basis other than going concern in
preparing the financial statements given the Company is now in a
managed wind down. There were no material changes in the valuation
of investments held at fair value as a result of the change in
accounting policies applied as a result of the financial statements
now being prepared on a realisation basis. All of the balance sheet
items have been recognised on a realisation basis. The Directors
and the Investment Manager have made the appropriate provisions in
order to bring about an orderly wind-down of the Company and its
operations.
As of 30 June 2024, the weighted
average remaining contractual tenor of the loans in the Company's
portfolio is 1.46 years. The Investment Manager would expect
generally to realise the loans comprising the Company's portfolio
by holding them until they come to term and returning the resulting
proceeds to Shareholders. The Investment Manager may also dispose
of loans in the secondary market where it considers this to be in
the best interests of the Company, including through sales to other
funds, vehicles or managed accounts advised or managed by the
Investment Manager or Breakwall.
The Directors will make further
announcements on the progress of the Managed Wind-Down strategy and the return of cash to
Shareholders in due course.
Segmental Reporting
The chief operating
decision-maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been
identified as the Board of Directors, as a whole. The key measure
of performance used by the Board to assess the Company's
performance and to allocate resources is the Company's Net Asset
Value, as calculated under UK-adopted IAS, and
therefore no reconciliation is
required between the measure of profit or loss used by the Board
and that contained in the Interim Report.
For management purposes, the
Company is organised into one main operating segment, which invests
through its SPVs in a diversified portfolio of debt instruments,
issued by Borrowers operating in the energy sector. All of the
Company's current income is derived from within the United
States.
All of the Company's non-current
assets are located in the United States. Due to the Company's
nature, it has no customers.
Seasonal and Cyclical Variations
The Company's results do not vary
as a result of seasonal activity.
3. Significant
accounting judgements, estimates and assumptions
The preparation of the financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and
expenses.
Judgements, estimates and
assumptions are continually evaluated and are based on management
experience and other factors, including expectations of future
events that are believed to be reasonable under the
circumstances.
Estimates and assumptions that are
significant to the financial statements include the valuation of
the investments as detailed in note 4 and the potential impact of
climate change.
As per AIC SORP, where an
Investment Company is approaching a wind-up and a provision for
liquidation expenses has been made, the Board needs to consider why
those expenses have been/are going to be incurred and whether the
circumstances meet the maintenance or enhancement test for
allocating them to capital. It may also be the case that certain of
the costs should be treated as being related to the disposal of the
Investment Company's assets. Certain expenses, such as brokerage
fees and stamp duty, are incurred as part of the process of buying
and selling Investments and, for Investment Companies, it is
considered that such expenses are capital in nature. The
liquidation expenses provided for in the accounts are in relation
to the disposal of the Company's assets and the ultimate costs of
returning the shareholders capital. Thus, these have been included
within the Capital section of the Statement of Comprehensive
Income.
Further details of these
judgements, estimates and assumptions made by the Directors are
given in the annual financial statements for the year ended 31
December 2023. During the interim period there has been no change
to the judgements, estimates and assumptions outlined in the annual
report.
4. Investments at fair
value through profit or loss
Reconciliation of Level 3 fair value measurements of
financial assets
|
|
For the six months ended
30 June 2024
|
For the year ended 31
December 2023
|
|
|
Loans
|
Equity
|
Total
|
Loans
|
Equity
|
Total
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Opening balance
|
60,800
|
33,839
|
94,639
|
59,397
|
35,173
|
94,570
|
|
Movement in Loan interest receivable
|
(564)
|
-
|
(564)
|
1,403
|
-
|
1,403
|
|
Unrealised movement in fair value
of investments
|
-
|
(1,492)
|
(1,492)
|
-
|
(1,334)
|
(1,334)
|
|
|
60,236
|
32,347
|
92,583
|
60,800
|
33,839
|
94,639
|
As set out above the Company's
investment in Riverstone International Credit Corp. comprises of a
loan investment and an equity investment and the investment in
Riverstone International Credit L.P. comprises of an equity
investment. The SPVs invest in a diversified portfolio of direct
and indirect investments in loans, notes, bonds and other debt
instruments.
Interest receivable on the loan
investment at 30 June 2024 was $0.8m (31 December 2023: $1.4m). The
unrealised movement in fair value of investments was shown in the
Change in fair value of investments at fair value through profit or
loss in the Condensed Statement of Comprehensive Income.
The dividend receivable on the
equity investment at 30 June 2024 was $nil (31 December 2023:
$1.7m). The total unfunded commitments of the Company by its SPV
investments as at 30 June 2024 is $4.5m (31 December 2023:
$6.4m).
Reconciliation of investment income recognised in the
period
|
|
|
For the six months ended
30 June 2024
|
For the six months ended
30 June 2023
|
|
|
|
$'000
|
$'000
|
|
Movement in loan interest
receivable at year end
|
(564)
|
125
|
|
Loan interest received as
cash
|
3,302
|
2,605
|
|
Total loan interest recognised in the period
|
2,738
|
2,730
|
|
Dividend income
|
290
|
1,598
|
|
Total investment income recognised in the
period
|
3,028
|
4,328
|
Total cash received in relation to
interest income in the period was $3.3m (2023: $2.6m). This
comprises $3.3m (2023: $2.6m) of loan interest in the period and
$nil (2023: $nil) of amounts capitalised in the prior
period.
Fair value measurements
As disclosed on pages 67 and 68 of
the Company's Annual Report for the year ended 31 December 2023,
IFRS 13 "Fair Value Measurement" requires disclosure of fair value
measurement by level.
The level of fair value hierarchy
within the financial assets or financial liabilities ranges from
level 1 to level 3 and is determined on the basis of the lowest
level input that is significant to the fair value
measurement.
The fair value of the Company's
investments are ultimately determined by the fair values of the
underlying investments. Due to the nature of the investments, they
are always expected to be classified as level 3 as the investments are not traded and contain unobservable
inputs. There have been no transfers between levels during the six
months ended 30 June 2024 (31 December 2023: none).
Valuation methodology and process
The Directors base the fair value
of investment in the SPVs on the fair value of their assets and
liabilities, adjusted, if necessary, to reflect liquidity, future
commitments, and other specific factors of the SPVs and Investment
Manager. This is based on the components within the SPVs,
principally the value of the SPVs' investments, in addition to cash
and short-term money market fixed deposits. Any fluctuation in the
value of the SPVs' investments held will directly impact on the
value of the Company's investment in the SPVs.
Investment in SPVs
The SPVs' investments are valued
using a third-party valuation provider to perform a full
independent valuation of the underlying investments. This
includes the third-party valuation provider selecting the valuation
methodology and/or comparable companies; identifying the cash flows
and appropriate discount rate utilised in a yield analysis; and
providing a final value range to the Investment Manager. The
valuation adviser independently values the assets and provides
analyses to support the methodology in addition to presenting
calculations used to generate the output. The Investment Manager's
assessment of fair value of investments held by the SPVs is
determined in accordance with IPEV Valuation Guidelines. When
valuing the SPVs' investments, the Investment Manager reviews
information provided by the underlying investee companies and other
business partners and applies IPEV methodologies, to estimate a
fair value as at the date of the Statement of Financial
Position.
Investment held by SPVs
Initially, acquisitions are valued
at fair value, which is normally the transaction price.
Subsequently, and as appropriate, the Investment Manager values the
investments on a quarterly basis using common industry valuation
techniques, including comparable public market valuation,
comparable merger and acquisition transaction valuation and
discounted cash flow valuation. The techniques used in determining
the fair value of the Company's investments through its SPVs are
selected on an investment by investment basis so as to maximise the
use of market based observable inputs. These techniques also
reflect the impact of primary and transition risks on the
portfolio, although the impact of the risks are minimal as the
maximum investment period is seven years. Due to the illiquid and
subjective nature of the Company's underlying investments, the
Investment Manager uses a third-party valuation provider to perform
a full independent valuation of the underlying
investments.
Quantitative information of significant unobservable inputs -
Level 3 - SPV
|
|
30 June
2024
|
Valuation
|
Unobservable
|
Range /
weighted
|
|
Description
|
$'000
|
technique
|
input
|
average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPV
|
92,583
|
Adjusted net asset
value
|
NAV
Discount
for lack of liquidity
|
92,583
-
|
The Directors believe that it is
appropriate to measure the SPVs at their adjusted net asset value,
incorporating a valuation of the underlying investments which has
taken into account risks to fair value, inclusive of liquidity
discounts, through appropriate discount rates.
Sensitivity analysis to significant changes in unobservable
inputs within Level 3 hierarchy
The significant unobservable
inputs used in the fair value measurement categorised within Level
3 of the fair value hierarchy together with a quantitative
sensitivity analysis as at 30 June 2024 are as shown
below:
|
|
|
Sensitivity
|
Effect on
|
|
Description
|
Input
|
used
|
fair value
|
|
|
|
|
$'000
|
|
|
|
|
|
|
SPV
|
Discount
for lack of liquidity
|
-
3%
|
(2,777)
|
The Company's valuation policy is
compliant with both UK-adopted IAS and IPEV Valuation Guidelines
and is applied consistently. As the Company's investments are
generally not publicly quoted, valuations require meaningful
judgment to establish a range of values, and the ultimate value at
which an investment is realised may differ from its most recent
valuation and the difference may be significant.
For the period ended 30 June 2024,
the valuations of the Company's investments, through its SPVs, are
detailed in the table below and also detailed in the Investment
Manager's Report.
The below
table shows fair value sensitivities to a 100 BPS increase in the
discount rate and 0.5x multiple decrease used for each industry as
at 30 June 2024.
|
Industry
|
Investments at Fair Value as of June 30, 2024
(In Thousands)
|
Valuation technique(s)
|
Unobservable input(s)
|
Range
|
Fair
Value Sensitivity to a 100 bps increase in the discount
rate
(In
Thousands)
|
|
|
|
|
|
Low
|
High
|
|
|
Infrastructure
|
14,790
|
Discounted cash flow
|
Discount Rate
|
6%
|
13%
|
(143)
|
|
|
|
Recovery Approach
|
EBITDA multiple
|
3.00x
|
7.00x
|
|
|
|
|
|
|
|
|
|
|
Infrastructure
Services
|
35,058
|
Discounted cash flow
|
Discount Rate
|
6%
|
26%
|
(206)
|
|
|
|
Option Pricing Model
|
Risk Free Rate
|
5%
|
5%
|
|
|
|
|
|
|
|
|
|
|
Energy Transition
|
8
|
Implied Equity Value
|
NA
|
NA
|
NA
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
11,851
|
Discounted cash flow
|
Discount Rate
|
6%
|
7%
|
(889)
|
|
|
|
Public comparables
|
EBITDA
multiple
|
6.00x
|
7.00x
|
|
|
|
|
Waterfall Approach
|
NA
|
NA
|
NA
|
|
|
|
$
61,706
|
|
|
|
|
$
(1,238)
|
|
|
|
|
|
|
|
|
(a) The difference between the fair value of the SPVs of
$92.6m and the
fair value of the underlying investments at 30 June 2024 is due to
cash and cash equivalent balances of $29.6m and residual
receivables of $1.3m, held within the SPVs.
5. Unconsolidated
subsidiaries
The following table shows
subsidiaries of the Company. As the Company is regarded as an
Investment Entity these subsidiaries have not been consolidated in
the preparation of the financial statements:
|
Investment
|
|
Place of
business
|
Ownership interest as at 30
June 2024
|
Ownership interest as at 31
December 2023
|
|
|
|
|
|
|
|
Held directly
|
|
|
|
|
|
Riverstone International Credit
Corp.
|
|
USA
|
100%
|
100%
|
|
Riverstone International Credit
L.P.
|
|
USA
|
100%
|
100%
|
|
Held indirectly
|
|
|
|
|
|
Riverstone International Credit -
Direct L.P.
|
|
USA
|
100%
|
100%
|
The registered office of the above
subsidiaries is c/o The Corporation Trust Company, Corporation
Trust Center, 1209 Orange Street, Wilmington, Delaware
19801.
Riverstone International Credit
Corp. had a net asset value of $26.9m as at 30 June 2024 (31
December 2023: $28.6m) with a loss of $1.5m (31 December 2023:
$1.7m).
The amounts invested in the
Company's unconsolidated subsidiaries during the period and their
carrying value at 30 June 2024 are as outlined in note 4
comprising:
|
|
|
30 June
2024
|
31
December 2023
|
|
|
|
Riverstone International
Credit Corp.
|
Riverstone International
Credit L.P.
|
Total
|
Riverstone International Credit Corp.
|
Riverstone International Credit L.P.
|
Total
|
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
|
|
|
|
|
|
|
|
|
Opening balance at 1
January
|
89,406
|
5,233
|
94,639
|
89,384
|
5,186
|
94,570
|
|
Movement in Loan interest
receivable
|
(564)
|
-
|
(564)
|
|
|
|
|
Restructure of
investments
|
-
|
-
|
-
|
1,403
|
-
|
1,403
|
|
Movement in fair value
|
(1,660)
|
168
|
(1,492)
|
-
|
-
|
-
|
|
Closing balance at 31
December
|
87,182
|
5,401
|
92,583
|
89,406
|
5,233
|
94,639
|
During Q4 2022, the Company's SPVs
entered a senior secured RCF agreement for $15.0 million to enter
into new commitments ahead of anticipated realisations, enabling
the Company to minimise the drag on returns of uninvested
capital. The borrowers as defined per the RCF agreement are
Riverstone International Credit - Direct L.P. and Riverstone
International Credit L.P., and the guarantors are the Company,
Riverstone Credit Opportunities Income Partners - Direct L.L.C., a
Delaware limited liability company and Riverstone Credit
Opportunities Income Partners L.L.C., a Delaware limited liability
company.
On 23 April 2024, the SPVs entered
into an Amendment to the RCF agreement. There is now a 'utilisation
fee' of 1% per annum paid quarterly on the difference between the
amount of the commitment and the average daily outstanding
principal balance of the loan. There is also an amendment to limit
borrowings to only pay interest on the loans and fees expenses
arising under the agreement and for any follow-on
investments.
At 30 June 2024, $nil (31 December
2023: $5m) of the senior secured RCF was drawn at close and the
remaining $15 million (31 December 2023: $10m) undrawn commitment
is available for future borrowings. Pursuant to the RCF agreement,
the interest rate per annum on each borrowing under the RCF can be
referenced to SOFR + 6.50% with a 100bps SOFR floor.
At 30 June 2024 the SPVs borrowed
$nil (31 December 2023: $5 million), in the six months to the
period ended 30 June 2024 the SPVs incurred $nil million (31
December 2023: $nil million) in fees and $nil million (31 December
2023: $0.9 million) in interest. Interest is recorded as an
interest expense at the SPV level and is also included in the SPVs'
net asset value. The interest rate on 2024 borrowings was SOFR plus
6.50% (31 December 2023: SOFR plus 6.50%).
There are no restrictions on the
ability of the Company's unconsolidated subsidiaries to transfer
funds in the form of cash distributions or repayment of loans. All
of the Company's interest income and dividend income is receivable
directly from the Company's SPVs.
6. Trade and other
receivables
|
|
|
30 June
2024
|
31 December
2023
|
|
|
|
$'000
|
$'000
|
|
Prepayments
|
|
131
|
72
|
|
VAT receivable
|
|
25
|
22
|
|
Bank interest
receivable
|
|
1
|
3
|
|
|
|
157
|
97
|
7. Trade and other
payables
|
|
|
30 June
2024
|
31 December
2023
|
|
|
|
$'000
|
$'000
|
|
Provision for liquidation
costs
|
|
500
|
-
|
|
Profit share payable
|
|
154
|
879
|
|
Other payables
|
|
326
|
188
|
|
|
|
980
|
1,067
|
|
|
|
|
|
8. Share capital and
payables
|
Date
|
Issued and fully paid
|
|
Number of shares
issued
|
Share
capital
|
Capital redemption
reserve
|
Other distributable
reserves
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
GBP
|
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
1 January 2024
|
|
1
|
-
|
-
|
-
|
-
|
|
|
30
June 2024
|
|
|
1
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
|
|
1 January 2024
|
|
90,805,237
|
908
|
92
|
90,528
|
91,528
|
|
|
30
June 2024
|
|
|
90,805,237
|
908
|
92
|
90,528
|
91,528
|
|
As at 30 June 2024 the Company's
issued share capital comprises 90,805,237 Ordinary Shares at $0.01
per share and 1 E Share at $1 per share. Ordinary Shareholders are
entitled to all distributions paid by the Company and, on a winding
up, provided the Company has satisfied all of its liabilities, the
Shareholders are entitled to all of the surplus assets of the
Company. E shares are non-redeemable shares and grant the
registered holders the right to receive notice of and to attend
but, except where there are no other shares of the Company in
issue, not to speak or vote (either in person or by proxy) at any
general meeting of the Company.
|
Date
|
Issued and fully paid
|
Number of shares
issued
|
Share
capital
|
Capital redemption
reserve
|
Other distributable
reserves
|
Total
|
|
|
|
|
|
|
|
|
|
GBP
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
1 January 2023
|
1
|
-
|
-
|
-
|
-
|
|
30
June 2023
|
|
1
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
|
1 January 2023
|
90,805,237
|
908
|
92
|
90,528
|
91,528
|
|
30
June 2023
|
|
90,805,237
|
908
|
92
|
90,528
|
91,528
|
As at 30 June 2023, the Company's authorised
and issued share capital comprises 90,805,237 Ordinary Shares at
$0.01 per share and 1 E Share at $1 per share.
9. Audit fees
|
|
|
For the six months ended
30 June 2024
|
For the six months ended
30 June 2023
|
|
|
|
$'000
|
$'000
|
|
Fees to the Company's
Auditor
|
|
|
|
|
for audit of the statutory
financial statements
|
|
141
|
117
|
|
for other audit related
services
|
|
15
|
14
|
|
|
|
156
|
131
|
Other operating expenses include
fees payable to the Company's Auditor of $156k (30 June 2023:
$131k).
The fees payable to the Company's
Auditor include estimated accruals proportioned across the year for
the audit of the statutory financial statements and the fees for
other audit related services were in relation to a review of the
Interim Report. There were $nil fees paid for other non-audit
services in the year (30 June 2023: $nil).
10. Profit
Share
Under the Investment Management
Agreement, the Investment Manager will not charge any base or other
ongoing management fees, but will be entitled to reimbursement of
reasonable expenses incurred by it in the performance of its
duties.
The Investment Manager will
receive from the Company, a Profit Share based on the Company's
income, as calculated for UK tax purposes and the Company's Capital
Account.
The Profit Share will be payable
quarterly at the same time as the Company pays its distributions,
subject to an annual reconciliation in the last quarter of each
year, as disclosed on page 73 of the Company's Annual Report for
the year ended 31 December 2023.
Amounts charged as Profit Share
during the period were $147k
(30 June 2023: $388k).
11. Tax
As an investment trust, the
Company is exempt from UK corporation tax on capital gains arising
on the disposal of shares. Capital profits from its loan
relationships are exempt from UK tax where the profits are
accounted for through the Capital column of the Statement of
Comprehensive Income, in accordance with the AIC SORP.
The Company has made a streaming
election to HMRC in respect of distributions and is entitled to
deduct interest distributions paid out of income profits arising
from its loan relationships in computing its UK corporation tax
liability. Therefore, no tax liability has been recognised in the
financial statements.
|
|
For the six months ended
30 June 2024
|
For the six months ended
30 June 2023
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
|
|
|
|
|
|
|
|
UK Corporation tax charge on
profits for the year at 25% (2023: 19/25%)
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended
30 June 2024
|
For the six months ended
30 June 2023
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
|
|
|
|
|
|
|
|
Return on ordinary activities before
taxation
|
2,209
|
(1,992)
|
217
|
3,347
|
306
|
3,653
|
|
|
|
|
|
|
|
|
|
Profit / (loss) on ordinary
activities multiplied by standard rate of corporation tax in the UK
of 25% (2023: 19%/25%)
|
552
|
(498)
|
54
|
736
|
67
|
803
|
|
|
|
|
|
|
|
|
|
Effects of:
|
|
|
|
|
|
|
|
Non-taxable investment Gains
/(losses)
on investments
|
-
|
373
|
373
|
-
|
(67)
|
(67)
|
|
Non-taxable dividend
income
|
(72)
|
-
|
(72)
|
(351)
|
-
|
(351)
|
|
Tax deductible interest
distributions
|
(684)
|
-
|
(684)
|
(603)
|
-
|
(603)
|
|
Taxable income from underlying
partnership
|
-
|
-
|
-
|
37
|
-
|
37
|
|
Movement in deferred tax not
recognised
|
204
|
-
|
204
|
181
|
|
181
|
|
Non-deductible expenses
|
-
|
125
|
125
|
-
|
-
|
-
|
|
Total tax charge
|
-
|
-
|
-
|
-
|
-
|
-
|
As at 30 June 2024 the Company has
excess management expenses of $6,091,958 that are available to
offset future taxable revenue. A deferred tax asset of $1,522,990,
measured at the substantively enacted standard corporation tax rate
of 25% has not been recognised in respect of these expenses since
the Directors believe that there will be no taxable profits in the
future against which the deferred tax asset can be
offset.
Deferred tax is not provided on
capital gains and losses arising on the revaluation or disposal of
investments because the Company meets (and intends to continue to
meet for the foreseeable future) the conditions for approval as an
Investment Trust company.
Taxes are based on the UK
Corporate tax rate which existed as of the balance sheet date which
was 25%. The main rate of Corporation tax changed from 1 April 2023
for companies with profits over £250,000.
12. Earnings per share and Net
assets per share
Earnings per share
|
|
For the six months ended
30 June 2024
|
For the six months ended
30 June 2023
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
Profit/(loss) attributable to
equity holders of the Company - $'000
|
2,209
|
(1,992)
|
217
|
3,347
|
306
|
3,653
|
|
|
Weighted average number of
Ordinary Shares in issue
|
|
|
90,805,237
|
|
|
90,805,237
|
|
|
Basic and diluted earnings and
loss per Share from continuing operations in the year
(cents)
|
2.43
|
(2.19)
|
0.24
|
3.68
|
0.34
|
4.02
|
|
There are no dilutive shares in
issue.
Net assets per share
|
|
|
30 June
2024
|
31 December
2023
|
|
Net assets - $'000
|
|
92,133
|
98,476
|
|
Number of Ordinary Shares
issued
|
|
90,805,237
|
90,805,237
|
|
Net assets per Share
(cents)
|
|
101.46
|
108.45
|
|
|
|
|
|
13. Distributions declared with
respect to the period
|
|
|
Distribution per
share
|
Total
distribution
|
|
Interim distributions paid during the period ended 30 June
2024
|
|
cents
|
$'000
|
|
|
|
|
|
|
With respect to the quarter ended
31 December 2023
|
|
2.5
|
2,292
|
|
With respect to the quarter ended
31 March 2024
|
|
2.0
|
1,816
|
|
|
|
|
|
|
|
|
4.5
|
4,108
|
|
|
|
|
|
|
|
|
Distribution per
share
|
Total
distribution
|
|
Interim distributions declared after 30 June 2024 and not
accrued in the period
|
|
cents
|
$'000
|
|
With respect to the quarter ended
30 June 2024
|
|
0.7
|
588
|
|
|
|
|
|
On 7
August 2024, the Board approved a
distribution of 0.7 cents per share with respect to the quarter ended 30 June
2024. The record date for the distribution is 16 August
2024 and the payment date is
20 September 2024.
14. Related Party
Transactions
Directors
The Company has three
non-executive Directors. Directors' fees for the period ended 30
June 2024 amounted to $76k
(30 June 2023: $75k), of which
$nil (31 December
2023: $nil) was outstanding at period end. Amounts paid to
Directors as reimbursement of travel and other incidental expenses
during the period amounted to $nil (30
June 2023 $5.7k), of which $nil (31 December 2023: $nil) was
outstanding at period end.
SPVs
In 2019, the Company provided a
loan to the US Corp. which accrues interest at 9.27 percent. Any
interest that is unable to be repaid at each quarter end is
capitalised and added to the loan balance. Total interest in
relation to the period was $2.7m
(30 June 2023: $2.7m) of which $1.9m (30 June
2023: $1.3m) was received in cash and $0.8m remained outstanding at the
period end (31 December 2023: $1.3m outstanding). The balance on
the loan investment at 30 June 2024 was $59.4m (31 December 2023: $59.4m). The
Company's has equity investments, the balance of these equity
investments at 30 June 2024 was $32.3m (31 December 2023: $33.8m).
During the year the equity investments had a fair value movement of
$1.5m (31 December 2023: $1.3m).
During 2022, the SPVs entered into
a RCF Agreement for $15.0 million with BC Partners. The SPV
borrowings from the facility at 30 June 2024 were $nil (31 December
2023: $5 million), leaving the remaining $15 million (31 December
2023: $10 million) undrawn commitment for future borrowings. The
guarantors are the Company, Riverstone Credit Opportunities Income
Partners - Direct L.L.C., a Delaware limited liability company and
Riverstone Credit Opportunities Income Partners L.L.C., a Delaware
limited liability company. The SPVs are required to maintain a LTV
Ratio above the Covenant LTV of 22% and the net asset value to be
at least $40 million at each borrowing request date.
The LTV Ratio is calculated as the
total outstanding principal and accrued interest on the facility
divided by the Aggregate NAV. At 30 June 2024, the SPVs were
compliant with the Covenant LTV and the full amount of the undrawn
commitment is available.
The Company's other investments in
its SPVs are made via equity shareholdings as disclosed in note
4.
Investment Manager
The Investment Manager is an
affiliate of Riverstone and provides advice to the Company on the
origination and completion of new investments, the management of
the portfolio and on realisations, as well as on funding
requirements, subject to Board approval. For the provision of
services under the Investment Management Agreement, the Investment
Manager earns a Profit Share, as disclosed in note 12 and on pages
73 and 74 of the Company's Annual Report for the year ended 31
December 2023. The Investment Manager is entitled to reimbursement
of any reasonable expenses incurred in relation to management of
the Company and amounts reimbursed during the period were $33.7k
(31 December 2023: $261k). Christopher Abbate and Jamie
Brodsky, both portfolio managers of RCOI transferred their shares
from the Investment Manager to Breakwall Capital LP on 1 January
2024. They purchased no new shares during 2024.
15. Subsequent events
With the exception of
distributions declared and disclosed in note 13, there are no other
material subsequent events.
Glossary of Capitalised Defined
Terms
Administrator means Ocorian
Administration (UK) Limited
AGM means Annual General Meeting
AIC means the Association of Investment Companies
AIC Code means the AIC Code
of Corporate Governance
AIC SORP means the Statement
of Recommended Practice issued by the AIC in November 2014 and
updated in January 2017 for the Financial Statements of Investment
Trust Companies and Venture Capital Trusts
Annual Report means the
Company's yearly report and financial statements for the year
ending 31 December 2022
APLMA means Asia Pacific Loan
Market Association
Auditor means Ernst &
Young LLP or EY
Board means the Directors of
the Company
Borrower means entities
operating in the energy sector that issue loans, notes, bonds, and
other debt instruments including convertible debt
Breakwall means Breakwall
Capital LP
Company or RCOI means
Riverstone Credit Opportunities Income Plc and its underlying
SPVs
Directors means the Directors
of the Company
Distributable Income means
the Company's income, as calculated for UK tax purposes
DTR means the Disclosure
Guidance and Transparency Rules sourcebook issued by the Financial
Conduct Authority
ESG means environmental,
social and governance
E&P means exploration and
production
FCA means the UK Financial
Conduct Authority (or its successor bodies)
Firm or Investment Manager means Riverstone Investment Group LLC
GHG means Greenhouse
gases
GREEN LOAN means to align
lending and environmental objectives. It refers to any type of loan
instrument made available exclusively to finance or re-finance, in
whole or in part, new and/or existing eligible Green Projects.
Green loans must align with the four components of the Green Loan
Principles. We strive to enhance the decarbonisation impact of our
credit portfolio and advance the energy transition
infrastructure
GREEN LOAN PRINCIPLES means a
clear framework of the characteristics of a Green Loan with four
core components 1. Use of Proceeds, 2. Process for the Project
Evaluation and Selection, 3. Management of Proceeds and 4.
Reporting. The Green Loan principles promote the development and
integrity of the Green Loan product through leading financial
institutions active in the global loan markets. Green Loan Principles (GLP) have been developed by an
experienced working party, consisting of representatives from
leading financial institutions active in the global syndicated loan
markets, with a view to promoting the development and integrity of
the Green Loan product. The GLP comprise
voluntary recommended guidelines, to be applied by market
participants on a deal-by-deal basis depending on the underlying
characteristics of the transaction, which seek to promote integrity
in the development of the Green Loan market by clarifying the
instances in which a loan may be categorised as "green"
H&W means Harland and
Wolff
IAS means the international
accounting standards
IFRS means the International
Financial Reporting Standards, being the principles-based
accounting standards, interpretations and the framework by that
name issued by the International Accounting Standards Board, to the
extent they have been adopted by the UK
Investment Management
Agreement means the
Investment Management Agreement entered between the Investment
Manager and the Company
Investment Manager means
Riverstone Investment Group LLC
IPEV Valuation Guidelines means the
International Private Equity and Venture Capital Valuation
Guidelines
IPO means the initial public
offering of shares by a private company to the public
IRR means internal rate of
return
Listing Rules means the
listing rules made by the UK Listing Authority under Section 73A of
the Financial Services and Markets Act 2000
London Stock Exchange or LSE means London Stock Exchange plc
LSTA means Loan Syndications
& Trading Association
LTV means loan to value
ratio
Main Market means the main
market of the London Stock Exchange
MAX means Max Energy Industrial Holdings US LLC
MOIC means multiple on
invested capital
NAV or Net Asset Value means
the value of the assets of the Company less its liabilities as
calculated in accordance with the Company's valuation policy and
expressed in US dollars
Ordinary Shares means
ordinary shares of $0.01 in the capital of the Company issued and
designated as "Ordinary Shares" and having the rights, restrictions
and entitlements set out in the Company's articles of
incorporation
Profit Share means the
payments to which the Investment Manager is entitled in the
circumstances and as described in the notes to the financial
statements
RCF or Facility means
Revolving Credit Facility
RCOI mean Riverstone Credit
Opportunities Income plc or the Company
RIC
D means Riverstone International Credit -
Direct, L.P.
Riverstone means Riverstone
Holdings LLC.
Realisation Shares means
realisation shares of US$0.01 in the capital of the Company, as
defined in the prospectus
Seawolf means
Seawolf Water Resources
SPO means Second Party
Opinion
SPV means any intermediate
holding or investing entities that the Company may establish from
time to time for the purposes of efficient portfolio management and
to assist with tax planning generally and any subsidiary
undertaking of the Company from time to time
Specialist Fund Segment means
the Specialist Fund Segment of the London Stock Exchange's Main
Market
Sub-Manager means Breakwall
Capital LP
Sustainability-Linked Loans or SLL means a loan with the aim to
facilitate and support environmentally and socially sustainable
economic activity and growth. We seek to enhance the
decarbonisation impact of our credit portfolio and enhance the
energy transition infrastructure. Sustainability-Linked Loans follow a set of
Sustainability-Linked Loan Principles (SLLP) which were originally
published in 2019 and provide a framework to Sustainability-Linked
Loan structures. In order to promote the development of this
product, and underpin its integrity, the APLMA, LMA and LSTA
considered it appropriate to produce Guidance on the SLLP, to
provide market practitioners with clarity on their application and
approach
Sustainability-Linked Loan Principles (SLLP)
means principles originally published in 2019 and
provide a framework to Sustainability-Linked Loan
structures
Term Loan means
Sustainability-Linked first lien term
loan
UK or United Kingdom means the United
Kingdom of Great Britain and Northern Ireland
US or United States means the
United States of America, its territories and possessions, any
state of the United States and the District of Columbia
US Corp. means Riverstone
International Credit Corp.
Warrants means
detachable warrants over new ordinary shares in
the Company
Wind-down Investment policy means the Company's investment policy is to realise the
Company's assets on a timely basis with the aim of making
progressive returns of cash to holders of Ordinary Shares as soon
as possible.
Directors and General Information
|
Directors
|
|
|
Reuben Jeffery, III (Chairman)
(appointed 2 April
2019)
|
|
Emma Davies (Audit and Risk
Committee Chair) (appointed 2
April 2019)
|
|
Edward Cumming-Bruce (Nomination
Committee Chair) (appointed 2
April 2019)
|
|
all independent and of the registered office
below
|
|
|
|
|
|
|
|
|
|
|
Registered Office to 15 February 2023
27-28 Eastcastle Street
London
W1W 8DH
Registered Office from 16 February 2023
5th Floor
20 Fenchurch Street
London
EC3M 3BY
Investment Manager
Riverstone Investment Group
LLC
c/o The Corporation Trust
Company
Corporation Trust
Center
1209 Orange Street
Wilmington
Delaware 19801
Company Secretary and Administrator
Ocorian Administration (UK)
Limited
5th Floor
20 Fenchurch Street
London
EC3M 3BY
Independent Auditor
Ernst & Young LLP
25 Churchill Place
London
E14 5EY
Legal Adviser to the Company
Hogan Lovells LLP
Atlantic House
50 Holborn Viaduct
Sub-investment Manager
Breakwall Capital LP
174 Bellevue Avenue, Suite
200-A
Newport, RI 02840
|
Website: www.riverstonecoi.com
ISIN GB00BJHPS390
Ticker RCOI
Sedol BJHPS39
Registered Company Number 11874946
Registrar
Link Asset Services
The Registry
Central Square
29 Wellington Street
Leeds
LS1 4DL
Sole Bookrunner
J.P. Morgan Securities
plc
25 Bank Street
Canary Wharf
London
E14 5JP
Receiving Agent
Link Asset Services
Corporate Actions
The Registry
Central Square
29 Wellington Street
Leeds
LS1 4DL
Principal Banker and Custodian
J.P. Morgan Chase Bank,
N.A.
270 Park Avenue
New York
NY 10017-2014
|
Cautionary Statement
The Chairman's Statement and
Investment Manager's Report have been prepared solely to provide
additional information for Shareholders to assess the Company's
strategies and the potential for those strategies to succeed. These
should not be relied on by any other party or for any other
purpose.
The Chairman's Statement and
Investment Manager's Report may include statements that are, or may
be deemed to be, "forward-looking statements". These
forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology.
These forward-looking statements
include all matters that are not historical facts. They appear in a
number of places throughout this document and include statements
regarding the intentions, beliefs or current expectations of the
Directors and the Investment Manager, concerning, amongst other
things, the investment objectives and investment policy, financing
strategies, investment performance, results of operations,
financial condition, liquidity, prospects, and distribution policy
of the Company and the markets in which it invests.
By their nature, forward-looking
statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the
future. Forward-looking statements are not guarantees of future
performance.
The Company's actual investment
performance, results of operations, financial condition, liquidity,
distribution policy and the development of its financing strategies
may differ materially from the impression created by the
forward-looking statements contained in this document.
Subject to their legal and
regulatory obligations, the Directors and the Investment Manager
expressly disclaim any obligations to update or revise any
forward-looking statement contained herein to reflect any change in
expectations with regard thereto or any change in events,
conditions or circumstances on which any statement is
based.
