TIDMGSF
RNS Number : 0883J
Gore Street Energy Storage Fund PLC
18 December 2020
18 December 2020
Gore Street Energy Storage Fund plc
(the "Company" or "Gore Street")
Positive Asset Management Update
Smaller Related Party Arrangements: Upgraded operational asset
management services brought in-house
Further to the disclosure in the Company's prospectus dated 30
November 2020, the Board of Gore Street is pleased to announce that
it has entered into a Commercial Management Agreement (the "CMA")
with Gore Street Technical Management Limited ("GSTM"), a wholly
owned subsidiary of Gore Street Capital Limited (the "Investment
Manager"), in connection with additional management services to be
provided in respect of the Company's growing portfolio of battery
storage assets. In addition, the Company announces certain
amendments to the terms of its AIFM agreement with the Investment
Manager (the "AIFM Agreement").
This is a core element of the Company's existing strategy to
bring control of the asset management of Gore Street's growing
portfolio in-house to deliver greater value for shareholders and
optimise asset performance. These mandatory costs are expected to
be charged at or below market rate, while currently these costs are
being paid to external third parties for this service.
The Commercial Management Agreement
Pursuant to the CMA, GSTM will provide certain additional
services to the Company. These include services in respect of both
the Company's development projects (the "Construction Services")
and operational assets (the "Operational Services"). The services
provided under the CMA will help to provide the oversight and cost
transparency required for the growing portfolio of battery storage
assets, with an experienced team providing a dedicated service for
the Company.
The Construction Services include, inter alia, managing
development related matters that arise in relation to each
development project until the project has been commissioned,
overseeing the exercise of lease options and negotiation of lease
terms and overseeing the construction phase of the project. In
consideration for the provision of the Construction Services, GSTM
is entitled to receive a fixed fee per development project per
annum of GBP110,750 for a maximum term of 1.5 years in respect of
each development project.
The Operational Services include, inter alia, facilitating the
timely response to issues on site, including dispatch of
engineering resources and technicians, assessing daily performance
of energy storage assets, identifying and monitoring project
operations risks and issues and interfacing with and holding
accountable the asset manager and operation and maintenance
provider. In consideration for the provision of the Operational
Services, GSTM is entitled to receive a maximum fixed fee per
operational asset of GBP20,000 per annum, with a lower fee per
annum payable in respect of certain smaller projects within the
Company's portfolio.
The CMA may be terminated on 6 months' written notice and is
subject to earlier termination on the occurrence of certain
events.
Amendment to the AIFM Agreement
The Company has also entered into an amendment to its existing
AIFM Agreement with the Investment Manager, pursuant to which the
Investment Manager will be providing accounts administration
services as well as additional transactional support services to
the Company. In respect of the accounts administration services,
the Investment Manager will be entitled to a fixed fee per annum of
GBP50,000, plus an additional nominal fee per asset per annum in
respect of each energy storage project held (beginning with, and
including, the tenth energy storage project). The transactional
support services fee is a fixed fee of GBP124,596 per annum.
In addition, under the terms of the AIFM Agreement, the
Investment Manager is currently entitled to receive from the
Company an advisory fee payable quarterly in arrear calculated at
the rate of one-fourth of one per cent. of Adjusted Net Asset
Value. For these purposes "Adjusted Net Asset Value" means Net
Asset Value, minus cash on the Company balance sheet. Pursuant to
the proposed amendment to the AIFM Agreement, the definition of
"Adjusted Net Asset Value" will now mean Net Asset Value, minus
"Uncommitted Cash", where Uncommitted Cash means cash that has not
been allocated for repayment of a liability on the balance sheet of
any member of the Company's group. For the avoidance of doubt,
Adjusted Net Asset Value shall not exceed Net Asset Value.
Costs of provision of management services
Based on the size of the existing portfolio, the additional
costs for the Company in relation to the management services set
out above are expected to be approximately GBP650,000 per annum,
based on the current number of the Company's subsidiaries and
near-term pipeline. These costs are accounted for within the SPVs
and by bringing these mandatory services in-house at what is
expected to be at or below market prices.
In consideration for services already rendered and set up, a
one-off fee of GBP181,026.59 (plus VAT to the extent applicable)
will be paid to the Investment Manager, calculated in accordance
with the fee structure set out above, as part of the smaller
related party arrangements.
The Investment Manager and any member of its group are related
parties of the Company for the purpose of the Listing Rules. Based
on the amounts involved, the arrangements constitute a smaller
related party transaction as set out in Listing Rule 11.1.10R.
The Board believes that the arrangements will be beneficial to
shareholders for the following reasons:
-- cost and transparency: a transparent cost base for the
Company, with the fixed costs per asset expected to deliver cost
savings, particularly as the Company moves towards larger MW
projects, and with the other fixed costs reducing as the fund size
grows; and
-- control, oversight and direct accountability: increased
control over the asset management and construction management
services, accounting and transaction support services for the
Company from a dedicated team that has specialist expertise in
respect of battery storage assets.
Pat Cox, Chairman of Gore Street, commented:
"The Board believes after carefully reviewing the proposals that
there is a clear and compelling commercial and operational
rationale for this decision. These changes will provide the Company
with a complete suite of beneficial services to further enhance the
performance of our growing portfolio of assets, a central feature
of the Company's focus .
The Gore Street Capital and Gore Street Technical Management
teams, strengthened by additional experienced hires and adding to
significant existing in-house expertise , will bring a wealth of
skills to the highly specialist field of battery storage asset
management and will add measurable value to the Company.
We are confident that this will result in considerable benefits
for the Company by way of implementing increased efficiencies
across the portfolio, based on fixed cost per asset service fees .
Importantly, we believe these key services are being executed at,
or below, market prices. This decision provides additional
transparency on the overall cost base together with a more bespoke
and dedicated level of service for the Company, as the operational
and development portfolio continues to grow."
For further information:
Gore Street Capital Limited
Alex O'Cinneide / Paula Travesso Tel: +44 (0) 20 3826 0290
Shore Capital (Joint Broker)
Anita Ghanekar / Darren Vickers / Tel: +44 (0) 20 7408 4090
Hugo Masefield (Corporate Advisory)
Henry Willcocks / Fiona Conroy (Corporate
Broking)
J.P. Morgan Cazenove (Joint Broker)
William Simmonds / Edward Gibson-Watt Tel : +44 (0) 20 7742 4000
/ Jérémie Birnbaum (Corporate
Finance)
Buchanan (Media Enquiries)
Charles Ryland / Henry Wilson / George Tel: +44 (0) 20 7466 5000
Beale
Email: Gorestreet@buchanan.uk.com
JTC (UK) Limited, Company Secretary Tel: +44 (0) 20 7409 0181
Notes to Editors
About Gore Street Energy Storage Fund plc
Gore Street is London's first listed energy storage fund and
seeks to provide Shareholders with a significant opportunity to
invest in a diversified portfolio of utility scale energy storage
projects. In addition to growth through exploiting its considerable
pipeline, the Company aims to deliver consistent and robust
dividend yield as income distributions to its Shareholders.
The Company targets an annual dividend of 7.0% of NAV per
Ordinary Share in each financial year, subject to a minimum target
of 7.0 pence per Ordinary Share. Dividends are paid quarterly.
https://www.gsenergystoragefund.com
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