TIDMAEET
RNS Number : 8206I
Aquila Energy Efficiency Trust PLC
21 April 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU NO. 596/2014) AS IT
FORMS PART OF THE DOMESTIC LAW OF THE UNITED KINGDOM BY VIRTUE OF
THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (AS AMENDED)
21 April 2022
Aquila Energy Efficiency Trust PLC
("AEET" or the "Company")
Result of Investment Strategy Review
The Company announced on 31 January 2022 that given slower
investment deployment than originally anticipated, the Board was
undertaking a comprehensive review of the Company's investment
strategy (the "Review") with a view to ascertaining how best to
accelerate deployment, whilst maintaining the Company's prudent
credit criteria and return objectives.
The Board, which has been assisted by Complete Strategy Ltd, and
having consulted widely with Shareholders, has now finalised the
Review and has concluded that, whilst certain changes are required
to enable the Investment Adviser to execute on the Company's
investment strategy, the market opportunity for Energy Efficiency
Investments located in Europe remains attractive, particularly in
the context of high energy prices. The Investment Adviser is
confident that deployment will materially increase over the
remainder of this year, targeting full deployment of the IPO
proceeds by the end of December 2022.
The Review recommended a number of actions to improve execution
of the Company's investment strategy and the following steps have
been agreed with the Investment Adviser:
- Initial Continuation Resolution: at the time of its IPO (and
as set out in the Company's prospectus dated 10 May 2021), the
Company proposed to hold a vote (as an ordinary resolution) on the
continuation of the Company at the AGM to be held in 2025. This
initial continuation resolution will now be brought forward and is
expected to be voted on by Shareholders during February 2023.
Should deployment not improve materially in the next three months,
the Board will consider bringing the date of the Initial
Continuation Resolution forward;
- Advisory Fees: under the Investment Advisory Agreement, the
Investment Adviser is entitled to an advisory fee based on the
Company's NAV. The Investment Adviser has agreed to amend the
current Investment Advisory Agreement such that any advisory fees
payable are charged only on committed capital (being the sum of
funds actually invested and funds committed for investment in
Energy Efficiency Investments), with this amendment to be applied
retrospectively from the time of the Company's IPO;
- Resource: the Investment Adviser is prepared to increase its
dedicated investment team with further new team members in addition
to the resources it has already brought to the team since the IPO,
to further assist in the Investment Adviser's target of full
deployment of the IPO proceeds by the end of December 2022; and
- Complete Strategy Ltd will be engaged by the Company for an
initial period of six months to provide the Board with a detailed
analysis of monthly deployment performance, with the costs to be
borne by the Investment Adviser.
The Board are of the opinion that a combination of the
re-forecasting provided by the Investment Adviser (as reviewed by
Complete Strategy Ltd), actions to be taken to improve the
execution of the investment strategy, proposed amendments to the
advisory fee, revised timing of the Initial Continuation Resolution
and the additional resources outlined in this announcement provide
a basis for the Company to execute on its stated Investment
Objective in the near-term.
The fundamental importance to society of reducing primary energy
consumption is clear and the benefits of doing so remain highly
attractive, including lower energy costs, energy security,
household savings, productivity and carbon emission reductions.
Alongside the Review, the Board has been active in its search to
recruit additional Directors. High quality candidates have been
identified and the Company intends to provide an update on Board
recruitment in the near-term.
Update on deployment & dividends
At the last update on 31 January 2022, the Company had agreed to
invest a total of approximately EUR17.6m, of which it had deployed
a total of approximately EUR11.9m. Since that time, the Company has
deployed a further EUR6.3m and committed EUR5.5m, taking total
commitments to approximately EUR23.1m, and deployment to
approximately EUR18.2m. In addition, the Company has approved a
further EUR4m of investments which have not yet contractually
completed.
In light of slower than anticipated deployment to date and the
current expectation that the IPO proceeds will not be significantly
deployed within twelve months of Admission, the Company does not
expect that its stated dividend target of 3.5 pence per Ordinary
Share for the financial year ending 31 December 2022 will be
covered by earnings. The Board will review the position in respect
of any dividend which may be declared for the financial year ending
31 December 2022 in light of the deployment of the IPO proceeds as
the year progresses.
Other matters
As a result of the Review and specifically the proposed
amendments to the Investment Advisory Agreement in respect of the
advisory fee, the Company expects to publish its audited report and
accounts for the year ended 31 December 2021 by no later than 30
June 2022, in accordance with the temporary forbearance granted by
the FCA in respect of DTR 4.1.3 pursuant to the Statement of Policy
dated 26 March 2020.
The Company put in place a Placing Programme in its prospectus
published at IPO, which is scheduled to conclude on 9 May 2022. The
Company will not be issuing new Ordinary Shares and/or C Shares
under that Placing Programme and the Board has concluded to end
that Placing Programme with immediate effect. As a result, the
Company will not be publishing a supplementary prospectus in
relation to this announcement.
Any terms used in this announcement, unless otherwise defined,
will have the same meaning as given to them in the prospectus
issued by the Company on 10 May 2021.
For further information please contact:
Peel Hunt (Broker) 020 7418 8900
Luke Simpson, Huw Jeremy (Investment Banking)
Buchanan (Financial PR) 020 7466 5000
Charles Ryland, Henry Wilson, George Beale
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