TIDMRCOI
RNS Number : 8648I
Riverstone Credit Opps. Inc PLC
10 August 2023
Riverstone Credit Opportunities Income Plc
Interim Report and Unaudited Interim Condensed Financial
Statements
For the six months ended 30 June 2023
We lend to companies that build and operate the infrastructure
used to generate, transport, store and distribute both renewable
and conventional sources of energy, and companies that provide
services to that infrastructure.
We also lend to companies seeking to facilitate the energy
transition by decarbonising the energy, industrial and agricultural
sectors, building sustainable infrastructure and reducing or
sequestering carbon emissions.
We seek to ensure that our investments are having a positive
impact on climate change by structuring each deal as either a Green
Loan or a Sustainability-Linked Loan, documented using industry
best practices.
Company number: 11874946
All capitalised terms are defined in the list of defined terms
below unless separately defined.
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.
INVESTMENT MANAGER
The Company's Investment Manager is Riverstone Investment Group
LLC, which is controlled by affiliates of Riverstone Holdings LLC
("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 $44 billion of capital and committed approximately $44
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 90 professionals worldwide.
The registered office of the Company is 5 th Floor, 20 Fenchurch
Street, London, England, EC3M 3BY.
Key Financials
2023 2022
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NAV as at 30 June 2023 $97.59 $93.74
NAV per Share as at 30 June 2023 $1.07 $1.02
Market capitalisation as at 30 June 2023 $81.72 $76.90m
Share price at 30 June 2023 $0.90 $0.84
Total comprehensive income for period ended 30 June 2023 $3.7m $3.83m
EPS for the period ended 30 June 2023 4.02 cents 4.18 cents
Distribution per share with respect to the period ended 30 June 2023 4.00 cents 4.00 cents
------------------------------------------------------------------------ ----------- -----------
All capitalised terms are defined in the list of defined terms
below unless separately defined.
Highlights
-- The NAV at 30 June 2023 was $1.07 per share.
-- Distributions of 4.00 cents per share approved with respect
to the period ended 30 June 2023.
-- The Company is over 90% invested in the period ended 30 June 2023.
INVESTMENT OBJECTIVE
The Company seeks to generate consistent Shareholder returns
predominantly in the form of income
distributions, principally by making senior secured loans to
energy-related companies.
The Company lends 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. The Company's aim is to build a portfolio
that generates 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.
INVESTMENT POLICY
The Company seeks to achieve its investment objective through
investing primarily in a diversified portfolio of direct loans to
companies that build and operate the infrastructure used to
generate, transport, store and distribute both renewable and
conventional sources of energy, and companies that provide services
to that infrastructure. We also lend to companies seeking to
facilitate the energy transition by decarbonising the energy,
industrial and agricultural sectors, building sustainable
infrastructure and reducing or sequestering carbon emissions. We
seek to ensure that our investments are having a positive impact on
climate change by structuring each deal as either a Green Loan or a
Sustainability-Linked Loan, documented using industry best
practices.
Further details on the Company's investment strategy, investment
restrictions and distribution policy are outlined in the Company's
Annual Report for the year ended 31 December 2022.
Chairman's Statement
Overview
On behalf of the Board, I would like to thank our shareholders
for their ongoing support as we continue to pursue our strategy of
building shareholder value and income through exposure to a high
quality portfolio of loans in the energy transition sector.
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 infrastructure.
During the first half of 2023, the Company continued its strong
performance from 2022, posting excellent earnings for the period,
and remains well positioned in the current environment. The Company
has delivered a NAV total return of 37.8% to investors since
inception in May 2019 and 27.57 cents of income. In the six months
ended June 30, 2023, our NAV total return was 4.1%, vs the AIC Debt
- Direct Lending peer group average of 3.7%.
The Company has a unique focus on short duration lending and the
re-balancing of the portfolio to energy-transition focused
investments is now complete. As of June 30, 2023, all of the loans
in the portfolio and over 95% of the Company's NAV were either
Green Loans or Sustainability-Linked Loans, with the only outliers
being small equity positions or take-back instruments received from
previous loans. Therefore all loans in the Company's portfolio
should advance some form of decarbonisation or enhance
sustainability across the broader energy complex. A good example of
this is the Company's loan to Streamline Innovations in November
2021, upsized in May 2022, and refinanced in June 2023. Streamline
has over 40 treating plants in service or fabrication with the
capacity to eliminate the flaring of over 100 million pounds of
toxic sulphur dioxide per year and eliminate the production of over
50 million gallons of hazardous waste per year.
A key strategic focus of the Company over the past year has been
to put more of its capital to work to optimise investor returns.
The Investment Manager's strategy of making senior-secured
asset-based loans has certainly paid off in terms of generating
attractive results for shareholders - but it has also left the
Company underinvested at times, just as interest rates began to
rise. A concerted effort was made to alleviate this issue, while
remaining faithful to the Company's strategy, as well as preserving
portfolio diversification and counterparty quality. As an example,
secondary purchases of the Hoover Circular Solutions loan and
Seawolf Water Resources loan (which included preferred and common
equity) helped deploy capital into compelling investments very well
known to the Investment Manager and consistent with the Company's
overall strategy. Furthermore, in December the Company's SPVs
entered into a $15 million Revolving Credit Facility ("RCF") which
allows the Company's SPVs the potential to be over 100% invested
while still retaining the necessary liquidity to meet ongoing
expenses and future obligations under delay-draw loan commitments.
These investments, combined with rising underlying rates, should
serve to support earnings capacity for the overall portfolio, while
maintaining the potential to grow distributions.
Going forward, the Company will remain focused on continuing to
execute its stated strategy, taking advantage of a wide range of
energy transition investment opportunities, enhanced by a strong
energy market and supportive interest rate environment. We will
continue to seek to improve investor awareness of the Company's
strategy and track record, with the ambition of attracting further
new investors.
Key Developments
RCOI's NAV has remained stable during the turbulent macro period
under review, with a current NAV per share of $1.07 (31 December
2022: $1.08).
In the first half of 2023, the Company remained extremely well
positioned with a focus on infrastructure spending and
decarbonisation combined with a rising rate environment forming
tailwinds for the Company's strategy. Furthermore, the re-balancing
of the portfolio to accredited energy-transition focused
investments through green or sustainability linked structures has
been completed. There was one refinancing of an existing investment
made by the Company for Streamline Innovations.
RCOI committed $9.9m to Streamline Innovations to refinance the
Company's investment in leading environmentally-advanced treatment
solutions for the removal of hydrogen sulphide (H2S) from natural
gas, renewable fuels, wastewater, and industrial processes.
The original term loan for Streamline Innovations was fully
realised in June 2023 with a 23.6 per cent gross IRR and an 18.5
per cent net IRR and 1.29x gross MOIC and 1.23x net MOIC
respectively.
Based on the current portfolio commitments, as well as the
addition of the RCF in Q4 2022, the Company is nearly fully
invested as of 30 June 2023.
We have a highly attractive pipeline of investment
opportunities, focused on energy infrastructure, infrastructure
services and energy transition opportunities.
Performance
The Company reported a profit of $3.7 million for the period
ended 30 June 2023, 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 $1.07 per share. The Company has paid distributions
of 5.0 cents per share to investors as of June 30, 2023,
comfortably achieving our stated distributions target. The Company
has now delivered NAV total returns of 37.8% to investors since
inception in May 2019 (4.1% year to date return) and 27.57 cents of
income.
The current unrealised portfolio remains profitable at an
average 1.16x Gross MOIC and 1.09x 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
$251 million of capital since the IPO in May 2019. The Company has
now realised a total of 17 investments and have delivered for the
Company an average gross IRR of 17.3 per cent and net IRR of 13.2
per cent.
Outlook
The Board is pleased with our diversified and dynamic portfolio
of investments and the pipeline of new opportunities. Our focus on
decarbonising energy infrastructure and infrastructure services
will continue, with the current portfolio already making a positive
impact. We are finding that businesses at the forefront of energy
transition view our first lien, short-duration, floating rate
product as being highly attractive and a good fit for their
development plans.
We are keenly aware of the persistent discount at which the
shares trade, and that the Board does not believe reflect the value
of the portfolio. We are also cognisant of the forthcoming
realisation opportunity in May 2024 and are working assiduously
with the manager on a number of initiatives to reduce the discount
including active asset management and proactive and frequent
engagement
with equity market participants. As always, the Board and the
manager remain vigilantly focused on optimising the portfolio to
ensure long-term value creation for our shareholders.
We look forward to a promising second half of 2023 and thank you
again for your support.
Reuben Jeffery, III
Chairman
9 August 2023
Investment Manager's Report
ABOUT THE INVESTMENT MANAGER
Appointed in May 2019, the Investment Manager, an affiliate of
Riverstone, seeks 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 lends to companies working to drive change and deliver better
solutions across the energy sector, spanning renewable as well as
conventional sources, with a primary focus on infrastructure
assets. The Company's aim is 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 will seek to achieve its investment objective
predominantly through investing in a 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
benefits 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 leads to enhanced sourcing and deal origination
opportunities for the Company.
INVESTMENT STRATEGY
The Investment Manager seeks to leverage the wider Riverstone
platform to enhance its investment strategy through the
opportunities presented and the synergies gained from being part of
one the largest dedicated energy focused private equity firms.
The key elements of the Investment Manager's investment strategy
in relation to the Company's SPVs are summarised below.
INVESTMENT PORTFOLIO SUMMARY
The Investment Manager has reviewed numerous opportunities
within the Investment Guidelines since RCOI's admission. As of 30
June 2023, the Company holds ten direct investments 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. One
refinancing occurred during the period ended 30 June 2023. The
Investment Manager continues to maintain a strong pipeline of
investment opportunities and expects to make further commitments
across the infrastructure, infrastructure services and energy
transition sectors. RCOI will receive an allocation of new
investments in accordance with the limitations illustrated in the
Company's Investment Restrictions. The determination of what
percentage received will be pro rata to the available capital for
all of the RCP funds that are eligible to participate in the
investment.
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.
Riverstone expects that every loan it makes 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 will make Green Loans. For existing hydrocarbon
related businesses, we will make Sustainability-Linked Loans that
tie loan economics to meeting specific sustainability performance
targets. Both structures will be based on LSTA guidelines and be
subject to third party independent opinion from Sustainable
Fitch.
Seawolf Water Resources - RCOI participated in a
Sustainability-Linked 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 first lien term loan along with preferred
stock and common equity, collectively at a significant discount to
market value.
The investment by RCOI closed on 26 September 2022, and has a
maturity of March 31, 2026, and an estimated all-in yield to
maturity on the loan of 10.6 percent 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 has committed a
total of $9.0 million, reflecting 9.6 per cent of RCOI's overall
commitments The original total loan size was $84.2 million.
Use of proceeds was to assist in operations in water
infrastructure services across Loving County, Texas, and southern
New Mexico.
Epic Propane - RCOI amended and extended its investment in EPIC
Propane, a sponsor-backed infrastructure company that provides
propane purity offtake transportation to the Gulf Coast export
market. EPIC Propane is part of the broader EPIC Midstream system
that includes over 1,695 miles of crude oil and natural gas liquids
pipelines, collectively referred to as "EPIC".
The amendment closed in September 2022, and the loan's maturity
was extended to September 2026 and the optional prepayment feature
was amended to add a two-year make-whole provision. RCOI has
realised c. $1m profits from the extension. All other material
economic terms remain the same. As part of the amendment, the loan
was converted to a Sustainability-Linked Loan and all of the
economics associated with the original transaction were realised,
including the exit premium.
In conjunction with the amendment, RCOI's allocation to the loan
was reduced from $14.8m to $13.9m in order to comply with the
Company's diversification policies.
As of 30 June 2023, the full remaining commitment of $13.9
million has been invested, reflecting 14.8 percent of RCOI's
overall commitments. The original total loan size from the
refinance was $77.0 million.
Hoover Circular Solutions - RCOI upsized and refinanced its
investment in a Sustainability-Linked first lien term loan for
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, a division of
Fitch Group focused on ESG, provided a Second Party Opinion ("SPO")
on the loan.
At closing on 30 November 2022, all of the Borrower's
outstanding debt was refinanced by the new $160 million
Sustainability-Linked, first lien term loan due November 2026.
As part of the new deal allocations, RCOI's commitment was
further upsized to $13.7 million, and the expected returns are in
line with the initial investment.
As of 30 June 2023, the full remaining commitment of $13.7
million has been invested, reflecting 14.7 per cent of RCOI's
overall commitments. The original total loan size from the
refinance was $160.0 million.
Clean Energy Fuels Corp. - RCOI participated in, and obtained an
SPO from Sustainable Fitch on, a new four-year $150 million
Sustainability-Linked first lien term loan (the "Term Loan") to
Clean Energy Fuels Corp. ("Clean Energy Fuels" or "CLNE"), the
largest provider of clean fuel for the transportation market.
At close on 22 December 2022, RCOI committed $13.9 million. The
first lien floating rate term loan has a maturity of 22 December
2026 with an all-in yield to maturity of c.12 percent for RCOI on a
fully drawn basis.
As of 30 June 2023, the full remaining commitment of $13.9
million has been invested, reflecting 14.8 per cent of RCOI's
overall commitments. The original total loan size was $150.0
million.
Max Midstream - RCOI participated in, and obtained an SPO from
Sustainable Fitch on, a new $28.6 million Sustainability-Linked,
first lien term loan (the "Term Loan") to a subsidiary of Max
Energy Industrial Holdings US LLC ("Max"), which 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. At close on 30 December 2022, RCOI committed $5.0
million.
As of 30 June 2023, the full remaining commitment of $5.0
million has been invested, reflecting 5.3 per cent of RCOI's
overall commitments. The original total loan size was $28.3
million.
Harland & Wolff - RCOI participated in a $70.0 million first
lien Green Term Loan to this LSE listed infrastructure operator
engaged in the development and operation of strategic maritime
assets across the United Kingdom.
At closing on 9 March 2022, $11.8 million was committed by RCOI
and $7.9 million was funded for RCOI's portion of the $23.1 million
drawn at close for the $35.0 million committed facility tranche.
The first lien term loan has a maturity of December 2024 and an
estimated all-in yield to maturity of 13.2 percent for RCOI on a
fully-drawn basis. Proceeds from the term loan will be utilised to
fund working capital and capital expenditures associated with the
fabrication of wind turbine generator jackets for the NG Offshore
Wind Project, to repay existing indebtedness, to fund an interest
reserve account, and to pay transaction fees & expenses. The
Company will also grant Riverstone detachable warrants over new
ordinary shares in the Company ("Warrants") as part of this
transaction. A total of 17.2 million warrants will be issued to
Riverstone, of which 5.1 million warrants are for RCOI,
representing 27.0 per cent of the Company's outstanding
warrants.
The term loan has been structured as a Green Loan following the
Green Loan Principles published by the LMA, APLMA, and LSTA and a
Sustainability-Linked Loan with performance indicators focused on
social responsibility. Harland & Wolff is incentivised to
upscale its group-wide apprenticeship programme to benefit the
local communities in which it operates. Harland & Wolff plans
to build on its success to date and seeks further contracts within
the renewables and "green maritime" sectors, such as fabrication
contracts for offshore wind and hydrogen projects, new vessel
builds, retrofits with sustainability credentials and other such
contracts that would promote the UK Government's agenda to
achieving Net Zero by 2050.
In October and December 2022, RCOI participated in $15.0 million
and $7.2 million upsizes of the investment, respectively, bringing
RCOI's total commitment to $14.6m.
As of 30 June 2023, the full remaining commitment of $14.6
million has been invested, reflecting 15.6 per cent of RCOI's
overall commitments. The original total loan size was $100.0
million including the recent upsizes.
Streamline Innovations - RCOI amended and extended its
investment in Streamline Innovations, a leader in
environmentally-advanced treatment solutions for the removal of
hydrogen sulphide (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 ("SPO"). The SPO verifies the facility's alignment to the
LSTA Green Loan Principles with the transaction being compliant
with the four pillars of the LSTA Green Loan Principles and aligned
with the LSTA category of pollution and prevention.
During Q2 2023, the Company amended and extended its investment
in Streamline Innovations and realised c. $2.0 million of profits
at closing of the amendment and extension resulting in a 24 percent
gross IRR (19 percent net IRR) and a 1.3x gross MOIC (1.2x net
MOIC) of the initial investment in Streamline Innovations. As part
of this amendment and extension closing, the facility was upsized
to $55.0 million, the maturity was extended to December 2026, and
economic terms were adjusted for an estimated all-in yield to
maturity of 13 percent to RCOI. RCOI's allocation to the loan was
$9.9 million.
As of 30 June 2023, $3.5 million of the $9.9 million commitment
has been invested, reflecting 10.6 per cent of RCOI's overall
commitments. The original total loan size from the refinance was
$55.0 million.
Blackbuck Resources - RCOI participated in a $50.0 million first
lien delayed-draw Sustainability-Linked Term Loan to the
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. At closing on 30 June 2021, $9.9 million was
committed by RCOI. The first lien term loan has a maturity of June
2024 and an estimated all-in yield to maturity of 11.9% for RCOI on
a fully-drawn basis.
The term loan was RCP and RCOI's first investment documented as
a "Sustainability-Linked Loan" per LSTA guidelines, with pricing
step-ups tied to meeting specific sustainability performance
targets ("SPTs") set by the Company's board. For Blackbuck, the
SPTs were related to the number of truckloads of water (and the
resulting emissions) that could be removed from the highways from
their activities. RCP and RCOI intend to use similar lending
structures for qualifying companies going forward. The use of
proceeds was primarily to refinance existing indebtedness and
growth capex.
In June 2022, the loan was upsized $7.0 million bringing the
total facility to $57.0 million. The proceeds, along with
incremental equity, will be used to fund growth capex associated
with new contracts.
Sustainable Fitch, a division of Fitch Group focused on ESG,
provided a Second Party Opinion ("SPO") on the
Sustainability-Linked Loan to Blackbuck. The SPO considers the loan
to be aligned with the five pillars of the LSTA
Sustainability-Linked Loan Principles.
On 31 March 2023, the remaining available commitment was
terminated as per the availability period termination on the credit
agreement.
As of 30 June 2023, the full remaining commitment of $10.5
million has been invested, reflecting 11.2 per cent of RCOI's
overall commitments. The original total loan size was $55.0 million
inclusive of recent termination of the $2.0 million unfunded
portion of the upsize.
Imperium3 New York, Inc - RCOI participated in a $63.0 million
first lien delayed-draw term loan to this lithium-ion battery
company that will commercialise high performing lithium-ion
batteries by developing a large-scale manufacturing facility in
Endicott, NY. In addition to having a first lien on the
manufacturing assets, the credit facility is supported by two
parent guarantors: Charge CCCV ("C4V"), which is a research and
development company based in Binghamton, New York with patented
discoveries in battery composition, and Magnis Energy Technologies
Limited ("Magnis") (ASX: MNS). Once producing at scale, the company
will be the first U.S. battery cell supplier not captive to an
original equipment manufacturer and supply various underserved
industrial end-markets.
At closing on 16 April 2021, $6.8 million was committed by RCOI
and $5.4 million was drawn at closing. Following the close 20% of
the funded investment was sold to a third party. The first lien
term loan has a maturity of April 2025 and an estimated all-in
yield to maturity of 22.1% for RCOI on a fully-drawn basis. The
yield is made up of upfront fees, a drawn coupon and exit fees that
are higher than the average in the rest of the portfolio.
The use of proceeds was primarily to construct the manufacturing
facility.
In April 2022, the Company fully refinanced this loan with a new
source of financing, resulting in a 32.5 percent realised IRR and
1.25x realised MOIC. Additionally, the Company will retain our
non-dilutable equity Warrants which provides meaningful upside to
this investment.
Caliber Midstream - RCOI participated in a $10.0 million upsize
of RCP's commitment to a $65.0 million first lien Holdco term loan
for 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. RCP closed the initial $65.0 million financing in
June 2018. The term loan upsize closed in August 2019.
At closing, $3.4 million was committed by RCOI. The first lien
HoldCo term loan had a maturity of June 2022 and an all-in expected
yield to maturity of 11.8% on a fully drawn basis.
Use of proceeds, combined with an Opco RCF draw, was to fund an
acquisition.
In March 2021, Caliber Midstream Partners' ("OpCo") largest
customer, Nine Point Energy, terminated their midstream contract
with Caliber and subsequently filed for Chapter 11 bankruptcy. In
April 2021, RCOI and other RCP affiliates purchased a small
allocation of the OpCo RCF with a maturity in June 2023. In May
2021, RCP and 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 Company and OpCo lender closed the
restructuring with the OpCo lenders receiving approximately 100% of
the equity. Following the restructuring, new management was hired,
a new contract was executed and there remains increased focus on
cost cutting initiatives and new revenue opportunities. In June
2023, the Priority Liquidity Facility was moved to a new entity,
Caliber MidCo LLC.
As of 30 June 2023, the full $4.0 million commitment has been
invested, reflecting 0.7% of RCOI's overall commitments post
restructuring. The original total loan size for the Opco RCF and
HoldCo were $129.4 million and $35.1 million, respectively.
SUBSEQUENT EVENTS AND OUTLOOK
In aggregate, one investment was realised during the first half
of 2023, as part of a successful refinancing. The Investment
Manager continues to believe that this is a market where patience
and a disciplined approach to investing are likely to be well
rewarded, and to create real value for shareholders.
The backdrop for the broader energy sector remains strong,
continuing the trend seen in 2022. Given our focus on energy
infrastructure, infrastructure services and energy transition
assets, RCOI is ideally poised to continue to take advantage of the
investment opportunity brought about by the convergence of two
market phenomena, namely the consistent growing demand for sources
of energy and the concurrent need for the global infrastructure
industry to meet global "net-zero" targets.
The realisation made in the period has resulted in additional
liquidity to deploy into the energy infrastructure and
infrastructure pipeline of opportunities. As the commodity market
overall remains strong, we are well positioned to continue to
provide stable cashflows and an attractive yield. We will therefore
continue to target similar investment opportunities through our
Green Loans and Sustainability-Linked Loans with sustainability
performance targets. Additionally, despite the recent increase in
inflation and rise in interest rates, our floating rate loans are
all based on SOFR with floors and don't decline in value as
interest rates are likely to rise.
Based on the current unfunded commitments, recent deal activity,
and potential new investment opportunities, we anticipate
continuing to provide attractive returns and consistent yield in
the portfolio.
BUSINESS REVIEW
GOING CONCERN
The Company's cash balance at 30 June 2023 was $1.2 million,
plus cash balances held at the SPVs of $2.8 million. The Company
currently has existing liabilities of $0.6 million, plus a
distribution payable of $1.8 million with respect to the quarter
ended 30 June 2023 and any foreseeable expenses for the period to
31 December 2024, being a period of 16 months from approval of the
financial statements.
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 2023 were $5.0m, leaving the remaining $10m 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 an LTV Ratio above the
Covenant LTV of 22% 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 of the SPVs,
Riverstone International Credit L.P. and Riverstone International
Credit-Direct L.P. At 30 June 2023, the SPVs were compliant with
the Covenant LTV and the full amount of the undrawn commitment is
available. The SPVs also entered into a money market capital fund
with JP Morgan, earning about 5% interest annually. The balance at
30 June 2023 was $4.6 million. Additionally, the operating expenses
of the trust are budgeted to be between $3.0 million and $3.5
million during the period of assessment including taxes and
interest expense from the RCF. Based on the high end of this range,
it would take the Company approximately two and a half years to run
out of cash.
The cash and cash equivalents balances of the Company's SPVs are
comprised of cash and money market fixed deposits and the risk of
default on the counterparties cash and deposits is considered
extremely low. Due to this the Directors believe there is no
material going concern risk. The major cash outflows of the
Company's SPVs are expected to be the payment of distributions and
expenses, share repurchases and the acquisition of new assets, all
of which are discretionary. The first continuation vote for the
Company will be proposed at the AGM of the Company to be held in
2027, on the eighth anniversary of admission.
The Directors and Investment Manager expect that proceeds from
loan interest repayments and realisation of investments will enable
the Company to continue to pay quarterly distributions for the
foreseeable future.
The conflict between Ukraine and Russia has caused severe
disruptions in the global economies and capital markets. This is
expected to continue to materially and adversely impact the
performance of the global economy, the Company's operations and
investments in the future and particularly in respect of inflation
rates. Given the on-going nature of the conflict between Ukraine
and Russia, it is currently not possible to determine the potential
scale and scope of the ultimate effects on the global economy,
capital markets, and the Company's operations and investments. As
the situation continues to evolve, the Company will continue to
monitor the conflict.
The Directors and Investment Manager are actively monitoring
this situation and their potential effect on the Company and its
underlying investments. In particular, they have considered the
following key potential impacts:
-- unavailability of key personnel at the Investment Manager or
the Administrator or key service providers of the SPVs;
-- increased volatility in the fair value of investments;
-- disruptions to business activities of the underlying investments; and
-- recoverability of income and principal and allowance for expected credit losses.
In considering the above key potential impacts of the conflict
between Ukraine and Russia on the Company and its underlying
investments, the Investment Manager has assessed these with
reference to the mitigation measures in place. At the Company
level, the key personnel at the Investment Manager and
Administrator have successfully implemented business continuity
plans to ensure business disruption is minimised, including remote
working, and all staff are continuing to assume their day-to-day
responsibilities. At the underlying investment level, there are
various risk mitigation plans in place, to ensure business
activities are maintained as far as possible.
As further detailed in note 4 to the financial statements, the
Investment Manager uses a third-party valuation provider to perform
a full independent valuation of the underlying investments. The
Investment Manager has also assessed the recoverability of income
due from the underlying investee companies and has no material
concerns. Additionally, the Investment Manager and Directors have
considered the cash flow forecast and a reverse stress test to
determine the term over which the Company can remain viable given
its current resources.
Based on the assessment outlined above, including the various
risk mitigation measures in place, the Directors do not consider
that the effects of the conflict between Ukraine and Russia to have
created a material uncertainty over the assessment of the Company
as a going concern.
In making their assessment, the Directors have considered the
potential impact on the Company's ability to continue as a going
concern, as a result of the upcoming Realisation Election in May
2024. There are a range of possible outcomes of the Realisation
Election, one of which is the eventual liquidation of the Company,
allowing for the maturation of the investment portfolio. As more
than 60% of the current investment portfolio is not due to mature
until 2026, the requirement to realise the investments and wind
down the activity of the Company would not fall within the going
concern assessment period. The Directors are therefore satisfied
that the upcoming Realisation Election does not create a material
uncertainty with respect to the Company's ability to continue as a
going concern for the 16 month period to 31 December 2024.
On the basis of this review, and after making due enquiries to
the Investment Manager, the Directors have a reasonable expectation
that the Company has adequate resources to continue in operational
existence for the period to 31 December 2024, being the period of
assessment covered by the Directors and 16 months from approval of
the financial statements. Accordingly, they continue to adopt the
going concern basis in preparing the financial statements.
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 and by carrying out due
diligence work on potential targets before entering into any
investments.
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.
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. The principal risks are consistent with
those set out in the 2022 Annual Report.
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. 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.
To mitigate this risk, the Investment Manager closely monitors and
identifies the reasons for significant fluctuations, and considers
the Company's share repurchase programme when applicable and in the
interests of Shareholders.
2. The ability of the Company to meet the target distribution
will depend on the Investment Manager's ability to find investments
that generate sufficient and consistent yield to support the Target
Distribution. The Investment Manager will identify and manage
suitable investments in accordance with the Investment Policy,
market conditions and the economic environment. To mitigate this
risk, the Company's Investment Policy and investment restrictions
enable the Company to build a diversified energy portfolio that
should deliver returns that are in line with the Target
Distribution range.
3. The ability of the Company to achieve its investment
objectives is dependent on the Investment Manager sourcing and
making appropriate investments for the Company. Investment returns
will depend upon the Investment Manager's ability to source and
make successful investments on behalf of the Company. To mitigate
this risk, the Investment Manager believes sourcing investments is
one of its competitive advantages. The Investment Manager is well
resourced and has access to the wider skills and expertise at
Riverstone whose personnel have years of experience in the global
energy sector.
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 implements monitoring and quality control
procedures to mitigate the occurrence of any violation of
safety/health and environmental laws. The Investment Manager has a
clear ESG policy which is implemented and reviewed by the
Board.
5. The Company's investment objective requires it to invest in
loans that are likely to be both illiquid and scarce. If there is
an adverse change in the underlying credit, then the ability of
RCOI to recover value may be impaired. To mitigate this risk, the
Company primarily originates shorter duration senior secured loans
with protective provisions. In some instances the loans incentivise
early repayment.
6. 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.
7. 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 and cyber security due diligence is performed on
each potential borrower.
8. 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.
9. 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.
10. 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.
11. 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.
On behalf of the Board
Reuben Jeffery, III
Chairman
9 August 2023
Independent Review Report
to Riverstone Credit Opportunities Income Plc
Conclusion
We have been engaged by Riverstone Credit Opportunities Income
Plc ('the Company') to review the condensed set of financial
statements in the Interim Report for the six months ended 30 June
2023 which comprises the Condensed Statement of Financial Position,
the Condensed Statement of Comprehensive Income, the Condensed
Statement of Changes in Equity, the Condensed Statement of Cash
Flows and related notes 1 to 15. We have read the other information
contained in the Interim Report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Interim Report for the six months ended 30 June 2023 is not
prepared, in all material respects, in accordance with UK-adopted
International Accounting Standard 34 and the Disclosure Guidance
and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" (ISRE) issued by the Financial Reporting Council. A review
of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the
Company are prepared in accordance with UK-adopted international
accounting standards. The condensed set of financial statements
included in this Interim Report has been prepared in accordance
with UK-adopted International Accounting Standard 34, "Interim
Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of Conclusion
section of this report, nothing has come to our attention to
suggest that management have inappropriately adopted the going
concern basis of accounting or that management have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the Interim Report
in accordance with the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
In preparing the Interim Report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the company or to cease operations, or
have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the Interim Report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Mike Gaylor
Ernst & Young LLP
London
9 August 2023
condensed Statement of Financial Position
As at 30 June 2023
31 December
30 June 2023 2022
Note $'000 $'000
-----
Non-current assets
Investments at fair value through
profit or loss 4 96,263 94,570
----------------------------------- ----- -------------- ------------
96,263 94,570
Current assets
Loan interest receivable 4 - 1,263
Dividends receivable 4 612 3,451
Trade and other receivables 6 182 124
Cash and cash equivalents 1,186 957
----------------------------------- ----- ------------
1,980 5,795
Current liabilities
Trade and other payables 7 (655) (1,889)
----------------------------------- ----- -------------- ------------
Net current assets 1,325 3,906
Net assets 97,588 98,476
----------------------------------- ----- -------------- ------------
Equity
Share capital 8 908 908
Capital redemption reserve 8 92 92
Other distributable reserves 8 90,528 90,528
Retained earnings 6,060 6,948
Total Shareholders' funds 97,588 98,476
----------------------------------- ----- -------------- ------------
Number of Shares in issue at
year end 90,805,237 90,805,237
Net assets per share (cents) 12 107.47 108.45
----------------------------------- ----- -------------- ------------
The interim condensed financial statements were approved and
authorised for issue by the Board of Directors on 9 August 2023 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 2023 (Unaudited)
For the six months For the six months
ended ended
30 June 2023 30 June 2022
Note Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
--------------- ----- ------------------------------------------------------ ---------------------------------- -------- ------------------------------------------ ----------------------------------- --------
Investment
gain/(loss)
Change in fair
value
of
investments
at fair
value through
profit
or loss 4 - 306 306 - 167 167
--------------- ----- ------------------------------------------------------ ---------------------------------- -------- ------------------------------------------ ----------------------------------- --------
- 306 306 - 167 167
Income
Investment
income 4 4,328 - 4,328 4,837 - 4,837
--------------- ----- ------------------------------------------------------ ---------------------------------- -------- ------------------------------------------ ----------------------------------- --------
4,328 - 4,328 4,837 - 4,837
Expenses
Directors'
fees and
expenses 14 (80) - (80) (94) - (94)
Other
operating
expenses (532) - (532) (530) - (530)
Profit share 10 (388) - (388) (559) - (559)
Total expenses (1,000) - (1,000) (1,183) - (1,183)
Operating
profit for
the year 3,328 306 3,634 3,654 167 3,821
Finance income
Interest
income 19 - 19 7 - 7
--------------- ----- ------------------------------------------------------ ---------------------------------- -------- ------------------------------------------ ----------------------------------- --------
Total finance
income 19 - 19 7 - 7
Profit for the
year
before tax 3,347 306 3,653 3,661 167 3,828
Tax 11 - - - - - -
--------------- ----- ------------------------------------------------------ ---------------------------------- -------- ------------------------------------------ ----------------------------------- --------
Profit for the
year
after tax 3,347 306 3,653 3,661 167 3,828
Profit and
total
comprehensive
income for
the year 3,347 306 3,653 3,661 167 3,828
Profit and
total
comprehensive
income
attributable
to:
Equity holders
of the
Company 3,347 306 3,653 3,661 167 3,828
Earnings per
share
--------------- ----- ------------------------------------------------------ ---------------------------------- -------- ------------------------------------------ ----------------------------------- --------
Basic and
diluted
earnings
per Share
(cents) 12 3.68 0.34 4.02 4.00 0.18 4.18
--------------- ----- ------------------------------------------------------ ---------------------------------- -------- ------------------------------------------ ----------------------------------- --------
All 'Revenue' and 'Capital' items in the above statement derive
from continuing operations. No operations were acquired or
discontinued in the period.
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.
All capitalised terms are defined in the list of defined terms
below unless separately defined.
Condensed Statement of Changes in Equity
For the six months ended 30 June 2023 (Unaudited)
Capital Other
Share redemption distributable Retained
capital reserve reserve earnings Total
For the six months ended $'000 $'000 $'000 $'000 $'000
30 June 2023 Note
--------------------------------- ----- --------- ------------ --------------- ---------- --------
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
--------------------------------- ----- --------- ------------ --------------- ---------- --------
Following the IPO of the Company, the share premium account was
cancelled by a court order dated 16 July 2019. The amount standing
to the credit of the share premium account of the Company, less any
issue expenses set off against the share premium account, was
cancelled and credited to create the other distributable reserve
account. 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 $3,775k and distributions made, the total
distributable reserves as at 30 June 2023 were $ 92,813k .
Capital Other
redemption distributable
Share capital reserve reserve Retained earnings Total
For the six months $'000 $'000 $'000 $'000 $'000
ended 30 June 2022 Note
------------------------ ----- -------------- ------------------ ----------------- ------------------ --------
Opening net assets
attributable to
Shareholders 915 85 91,179 1,121 93,300
Total comprehensive
income for the period - - - 3,828 3,828
Interim distributions
paid in the period 13 - - - (3,386) (3,386)
Closing net assets
attributable to
Shareholders 915 85 91,179 1,563 93,742
------------------------ ----- -------------- ------------------ ----------------- ------------------ --------
After taking account of cumulative unrealised gains of $308k and
distributions made, the total reserves distributable by way of a
distribution as at 30 June 2022 were $93,050k.
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 2023 (Unaudited)
For the
six months
For the six ended
months ended 30 June
Note 30 June 2023 2022
$'000 $'000
-------------------------------------------- ----- -------------- ------------
Cash flows from operating activities
Operating profit for the financial
period 3,634 3,821
Adjustments for:
Movement in fair value of investments 4 (306) (167)
Investment income per Statement of
Comprehensive Income 4 (4,328) (4,837)
Bank interest received in cash 30 3
Loan interest received 4 2,605 2,778
Dividends received 4,436 1,550
Adjustments for Statement of Financial
Position movement:
Movement in payables (1,234) (52)
Movement in receivables (68) (111)
Net cash generated from operating
activities 4,769 2,985
Cash flows from financing activities
Distributions paid 13 (4,540) (3,386)
-------------- ------------
Net cash used in financing activities (4,540) (3,386)
Net movement in cash and cash equivalents
during the period 229 (401)
Cash and cash equivalents at the beginning
of the period 957 4,883
-------------------------------------------- ----- ------------
Cash and cash equivalents at the
end of the period 1,186 4,482
-------------------------------------------- ----- -------------- ------------
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 2023
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 UK-adopted International Accounting Standards (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 same accounting policies, presentation and methods of
computation are followed in these condensed financial statements as
were applied in the preparation of the Company's annual financial
statements for the year ended 31 December 2022. These accounting
policies will be applied in the Company's financial statements for
the year ended 31 December 2023.
The Company's annual financial statements have been 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 2022.
The Company's Annual Report for the year ended 31 December 2022
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
The Company's cash balance at 30 June 2023 was $1.2 million,
plus cash balances held at the SPVs of $2.8 million. The Company
currently has existing liabilities of $0.6 million, plus a
distribution payable of $1.8 million with respect to the quarter
ended 30 June 2023 and any foreseeable expenses for the period to
31 December 2024, being a period of 16 months from approval of the
financial statements.
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 2023 were $5.0m, leaving the remaining $10m 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% 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 of the SPVs,
Riverstone International Credit L.P. and Riverstone International
Credit-Direct L.P. At 30 June 2023, the SPVs were compliant with
the Covenant LTV and the full amount of the undrawn commitment is
available. The SPVs also entered into a money market capital fund
with JP Morgan, earning about 5% interest annually. The balance at
30 June 2023 was $4.6 million. Additionally, the operating expenses
of the trust are budgeted to be between $3.0 million and $3.5
million during the period of assessment including taxes and
interest expense from the SPV facility. Based on the high end of
this range, it would take the Company approximately two and a half
years to run out of cash. Additionally, the Investment Manager and
Directors have considered the cash flow forecast and a reverse
stress test to determine the term over which the Company can remain
viable given its current resources.
After making enquiries, the Directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence to at least 31 December 2024, being a period
of assessment covered by the Directors and 16 months from the
approval of the condensed financial statements. In making this
assessment, they have considered the effect of the conflict between
Ukraine and Russia, and additional impact on the global market,
particularly in respect of inflation rates as outlined in the
Business Review, including the various risk mitigation measures in
place. The Directors have considered the potential impact on the
Company's ability to continue as a going concern, as a result of
the upcoming Realisation Election in May 2024.
There are a range of possible outcomes of the Realisation
Election, one of which is the eventual liquidation of the Company,
allowing for the maturation of the investment portfolio.
As more than 60% of the current investment portfolio is not due
to mature until 2026, the requirement to realise the investments
and wind down the activity of the Company would not fall within the
going concern assessment period. The Directors are therefore
satisfied that the upcoming Realisation Election does not create a
material uncertainty with respect to the Company's ability to
continue as a going concern for the 16 month period to 31 December
2024.
Accordingly, the Directors continue to adopt the going concern
basis in preparing the financial statements.
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.
Judgements include the assessment of the Company as an
Investment Entity as defined in IFRS 10 'Consolidated Financial
Statements' and the assessment of the SPVs as structured
entities.
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.
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 2022. 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 For the year ended
30 June 2023 31 December 2022
Loans Equity Total Loans Equity Total
$'000 $'000 $'000 $'000 $'000 $'000
---------------------------------------------- -------- -------- --------- ------------- ----------- -----------
Opening balance 59,397 35,173 94,570 60,049 27,076 87,125
Restructuring - - - 213 (213) -
Investment addition / (proceeds) - - - (865) 4,366 3,501
Loan interest receivable 1,388 - 1,388 - - -
Unrealised movement in fair value of
investments - 305 305 - 3,944 3,944
-------- -------- --------- ------------- ----------- -----------
60,785 35,478 96,263 59,397 35,173 94,570
---------------------------------------------- -------- -------- --------- ------------- ----------- -----------
The Company's investment in its SPVs comprises a loan investment
and an equity investment, as set out above. The SPVs subsequently
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 2023 was $
1.4 m and is included in investments at fair value through profit
and loss. Interest receivable on the loan investment at 31 December
2022 was $1.3m and was shown separately on the Statement of
Financial Position. 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 2023
was $0.6 m (31 December 2022: $3.5m). The total unfunded
commitments of the Company by its SPV investments as at 30 June
2023 is $ 6.4m (31 December 2022: $7.5m)
Reconciliation of investment income recognised in the period
For the six months ended For the six months ended
30 June 2023 30 June 2022
$'000 $'000
-------------------------------------------------- ------------------------- -------------------------
Movement in loan interest receivable at year end 125 (11)
Loan interest received as cash 2,605 2,778
Total loan interest recognised in the period 2,730 2,767
Dividend income 1,598 2,070
Total investment income recognised in the period 4,328 4,837
-------------------------------------------------- ------------------------- -------------------------
Fair value measurements
As disclosed on pages 66 and 67 of the Company's Annual Report
for the year ended 31 December 2022, 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 2023 (31 December 2022:
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.
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.
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 2023 Valuation Unobservable Range / weighted
Description $'000 technique input average
Adjusted net
SPV 96,263 asset value NAV 96,263
------------- ------------- ------------- ------------- --------------------
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
2023 are as shown below:
Sensitivity Effect on
Description Input used fair value
$'000
------------- -------------------------------- ------------ -----------
SPV Discount for lack of liquidity +/- 3% -/+ 2888
------------- -------------------------------- ------------ -----------
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 2023, the valuations of the
Company's investments, through its SPVs, are 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 2023.
Fair Value
Sensitivity
Investments at to a 100 bps
Fair Value as of increase in the
June 30,2023 Range Discount Rate
Valuation Unobservable (In Thousands)
Industry (In Thousands) technique(s) input(s) Low High
Discounted cash
Infrastructure 30,284 flow Discount Rate 6% 13% (522)
Recovery Approach EBITDA multiple 2.5x 7.5x
Discounted cash
Infrastructure 34,164 flow Discount Rate 8% 51% (537)
Option Pricing
Services Model Risk Free Rate 5% 5%
Latest round of NA NA NA
financing
------------------- -------------------- ------ ------ --------------------
Energy 14,837 Public comparables EBITDA multiple 11.0x 14.0x (401)
Transition Public comparables Revenue multiple 2.0x 2.5x
Discounted cash
flow Discount Rate 8% 10%
Discounted cash
Services 12,986 flow Discount Rate 6% 7% (1,089)
Public comparables EBITDA multiple 5.5x 6.5x
Waterfall Approach NA NA NA
$ 92,271 (a) $ (2,549)
=================== ====================
(a) The difference between the fair value of the SPVs of $ 96.3m
and the fair value of the underlying investments at 30 June 2023 is
due to cash and cash equivalent balances of $2.8m and residual
liabilities including the RCF of $6.8m, held within the SPVs.
5. Unconsolidated subsidiaries
The following table shows subsidiaries of the Company. As the
Company is regarded as an Investment Entity as referred in note 3,
these subsidiaries have not been consolidated in the preparation of
the financial statements:
Ownership interest as at 30 Ownership interest as at 31
Investment Place of business June 2023 December 2022
------------------------------ ------------------- ------------------------------ ------------------------------
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.
The amounts invested in the Company's unconsolidated
subsidiaries during the period and their carrying value at 30 June
2023 are as outlined in note 4 comprising:
30 June 2023 31 December 2022
Riverstone Riverstone Riverstone Riverstone
International International International International
Credit Corp. Credit L.P. Total Credit Corp. Credit L.P. Total
$'000 $'000 $'000 $'000 $'000 $'000
------------------ ----------------- ----------------- ------- ----------------- ------------------ ---------
Opening balance at
1 January 89,384 5,186 94,570 86,805 320 87,125
Loan interest
receivable 1,388 - 1,388 - - -
Restructure of
investments - - - 309 (309) -
Investment
additions - - - 11,439 12,693 24,132
Investment
realisations - - - (12,692) (7,939) (20,631)
Movement in fair
value 288 17 305 3,523 421 3,944
Closing balance at
30 June/31
December 91,060 5,203 96,263 89,384 5,186 94,570
=================== ================= ================= ======= ================= ================== =========
The Company intends to fund further underlying investments
through its unconsolidated subsidiaries.
During 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. At 30 June 2023, $5 million (31 December 2022: $5m) of the
senior secured RCF was drawn at close and the remaining $10 million
(31 December 2022: $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 2023 the SPVs borrowed $5 million (31 December 2022:
$5 million), in the six months to the period ended 30 June 2023 the
SPVs incurred $0.2 million (31 December 2022: $0.3 million) in fees
and $0.3 million (31 December 2022: $0.1 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
2023 borrowings was SOFR plus 6.50% (31 December 2022: 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.
6. Trade and other receivables
30 June 2023 31 December 2022
$'000 $'000
-------------------------- -------------- -----------------
Prepayments 160 76
VAT receivable 17 33
Bank interest receivable 5 15
-----------------
182 124
7. Trade and other payables
30 June 2023 31 December 2022
$'000 $'000
---------------------- -------------- -----------------
Profit share payable 394 1,685
Other payables 261 204
655 1,889
8. Share capital and reserves
Number of shares Capital redemption Other distributable
Date issued Share capital reserve reserves Total
---------------- ----------------------- -------------- ---------------------- ---------------------- --------
GBP GBP'000 GBP'000 GBP'000 GBP'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 issued share capital comprises
90,805,237 Ordinary Shares (31 December 2022: 90,805,237) and 1 E
Share (31 December 2022: 1). 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.
9. Audit fees
For the six months ended For the six months ended
30 June 2023 30 June 2022
$'000 $'000
--------------------------------------------------- ------------------------- -------------------------
Fees to the Company's Auditor
for audit of the statutory financial statements 117 103
for other audit related services 14 24
131 127
Other operating expenses include fees payable to the Company's
Auditor of $ 131k (30 June 2022: $127k).
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 (June
2022: $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 72 of the Company's Annual Report for the year ended 31
December 2022.
Amounts charged as Profit Share during the period were $ 388k
(30 June 2022: $559k).
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 For the six months ended
30 June 2023 30 June 2022
Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
-------------------------------------------------------- ---------- --------- ------ ---------- --------- ------
UK Corporation tax charge on profits for the year at - - - - - -
19%/25% (2022: 19%)
-------------------------------------------------------- ---------- --------- ------ ---------- --------- ------
For the six months ended For the six months ended
30 June 2023 30 June 2022
Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
-------------------------------------------------------- ---------- --------- ------ ---------- --------- ------
Return on ordinary activities before taxation 3,347 306 3,653 3,661 167 3,828
Profit / (loss) on ordinary activities multiplied by
standard rate of corporation tax in the
UK of 19%/25% (2022: 19%) 736 67 803 696 32 728
Effects of:
Non-taxable investment (losses) /
gains on investments - (67) (67) - (32) (32)
Non-taxable dividend income (351) - (351) (394) - (394)
Tax deductible interest distributions (603) - (603) (302) - (302)
Taxable income from underlying partnership 37 - 37 - - -
Movement in deferred tax not recognised 181 181 - - -
Total tax charge - - - - - -
As at 30 June 2023 the Company has excess management expenses of
$3,578,152 that are available to offset future taxable revenue. A
deferred tax asset of $894,538, 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.
The UK corporation tax rate increased from 19% to 25% (for
companies with profits over GBP250,000) from 5 April 2023.
12. Earnings per share and Net assets per share
Earnings per share
For the six months
For the six months ended ended
30 June 2023 30 June 2022
Revenue Capital Total Revenue Capital Total
---------------------------- ------------ -------- ----------- ------------------ ---------- -----------
Profit/(loss) attributable
to equity holders
of the Company - $'000 3,347 306 3,653 3,661 167 3,828
Weighted average number
of Ordinary Shares
in issue 90,805,237 91,545,383
---------------------------- ------------ -------- ----------- ----------------------- ----- -----------
Basic and diluted
earnings and loss
per Share from continuing
operations in the
year (cents) 3.68 0.34 4.02 4.00 0.18 4.18
---------------------------- ------------ -------- ----------- ----------------------- ----- -----------
There are no dilutive shares in issue.
Net assets per share
30 June 2023 31 December 2022
---------------------------------- -------------- -----------------
Net assets - $'000 97,588 98,476
Number of Ordinary Shares issued 90,805,237 90,805,237
----------------------------------- -------------- -----------------
Net assets per Share (cents) 107.47 108.45
----------------------------------- -------------- -----------------
13. Distributions declared with respect to the period
Distribution per share Total distribution
Interim distributions paid during the period ended 30 June 2023 cents $'000
--------------------------------------------------------------------- ----------------------- -------------------
With respect to the quarter ended 31 December 2022 3.00 2,724
With respect to the quarter ended 31 March 2023 2.00 1,816
5.00 4,540
--------------------------------------------------------------------- ----------------------- -------------------
Distribution per share Total distribution
Interim distributions declared after 30 June 2023 and not accrued in cents $'000
the period
--------------------------------------------------------------------- ----------------------- -------------------
With respect to the quarter ended 30 June 2023 2.00 1,816
---------------------------------------------------------------------- ----------------------- -------------------
On 9 August 2023 , the Board approved a distribution of 2.00
cents per share with respect to the quarter ended 30 June 2023. The
record date for the distribution is 18 August 2023 and the payment
date is 22 September 2023.
14. Related Party Transactions
Directors
The Company has three non-executive Directors. Directors' fees
for the period ended 30 June 2023 amounted to $ 75k (30 June 2022:
$76k), of which $ nil (31 December 2022: $nil) was outstanding at
period end. Amounts paid to Directors as reimbursement of travel
and other incidental expenses during the period amounted to $5.7k
(30 June 2022 $3.4k), of which $nil (31 December 2022: $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 2022: $2.8m) of which $1.3m (30 June 2022: $2.8m) was received
in cash and $ 1.4m remained outstanding at the period end (31
December 2022: $1.3m outstanding). The balance on the loan
investment at 30 June 2023 was $ 59.4m (31 December 2022:
$59.4m).
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 2023 were $5 million (31 December 2022: $5 million),
leaving the remaining $10 million (31 December 2022: $10 million)
undrawn commitment for future borrowings. The SPVs are required to
maintain a LTV Ratio above the Covenant LTV of 22% 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 2023, 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 page 72 of the Company's Annual
Report for the year ended 31 December 2022. 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 $26k (31 December 2022: $190k). Christopher Abbate,
a partner of the IM and portfolio manager of RCOI, purchased nil
shares during the year (31 December 2022: 5k shares). Jamie
Brodsky, also a partner of the Investment Manager and portfolio
manager of RCOI, purchased nil shares during the period (31
December 2022: nil).
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
CA means the Companies Act 2006 which forms the primary source
of UK company law
Capital Amount means the amount of gross proceeds of the IPO,
plus the net proceeds of any future issues of Ordinary Shares, less
any amounts expended by the Company on share repurchases and
redemptions or, following a Realisation Election, attributable to
Realisation Shares
Company or RCOI means Riverstone Credit Opportunities Income Plc
and its underlying SPVs
D&C means drilling and completion
D&I means Diversity and Inclusion
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
ESG-ME means ESG Minimum Expectations
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"
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
ILPA means Institutional Limited Partners Association
Investment Management Agreement means the Investment Management
Agreement entered between the Investment Manager and the
Company
Investment Manager means Riverstone Investment Group LLC
IPCC means Intergovernmental Panel on Climate Change
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
ISSB means International Sustainability Standards Board
LCA means Life Cycle Analysis
LDPE means low-density polyethylene
Listing Rules means the listing rules made by the UK Listing
Authority under Section 73A of the Financial Services and Markets
Act 2000
LMA means Loan Market Association
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
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
Other Riverstone Funds means other Riverstone-sponsored,
controlled or managed entities, which are or may in the future be
managed or advised by the Investment Manager or one or more of its
affiliates, excluding the SPV
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
RBL means reserved base loan
RCP means Riverstone Credit Partners
RCOI mean Riverstone Credit Opportunities Income plc or the
Company
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
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
Sustainability-Linked Loans 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
TCFD means the Task Force on Climate-Related Financial
Disclosures
Toolkit means the Riverstone ESG Toolkit
UK or United Kingdom means the United Kingdom of Great Britain
and Northern Ireland
UK Code means the UK Corporate Governance Code issued by the
FRC
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.
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 Website: www.riverstonecoi.com
2023 ISIN GB00BJHPS390
27-28 Eastcastle Street Ticker RCOI
London Sedol BJHPS39
W1W 8DH Registered Company Number
11874946
Registered Office from 16 February
2023 Registrar
5th Floor Link Asset Services
20 Fenchurch Street The Registry
London Central Square
EC3M 3BY 29 Wellington Street
Leeds
Investment Manager LS1 4DL
Riverstone Investment Group LLC
c/o The Corporation Trust Company Sole Bookrunner
Corporation Trust Center J.P. Morgan Securities plc
1209 Orange Street 25 Bank Street
Wilmington Canary Wharf
Delaware 19801 London
E14 5JP
Company Secretary and Administrator
Ocorian Administration (UK) Limited Receiving Agent
5th Floor Link Asset Services
20 Fenchurch Street Corporate Actions
London The Registry
EC3M 3BY Central Square
29 Wellington Street
Independent Auditor Leeds
Ernst & Young LLP LS1 4DL
25 Churchill Place
London Principal Banker and Custodian
E14 5EY J.P. Morgan Chase Bank, N.A.
270 Park Avenue
Legal Adviser to the Company New York
Hogan Lovells LLP NY 10017-2014
Atlantic House
50 Holborn Viaduct
Swiss supplement
ADDITIONAL INFORMATION FOR INVESTORS IN SWITZERLAND
This Swiss Supplement is supplemental to, forms part of and
should be read in conjunction with the interim report for the half
year ended June 30, 2023 for Riverstone Credit Opportunities Income
Plc (the "Fund").
The Fund has appointed Société Générale as Swiss Representative
and Paying Agent. The Confidential Memorandum, the Articles of
Association as well as the annual report of the Fund can be
obtained free of charge from the representative in Switzerland,
Société Générale, Paris, Zurich Branch, Talacker 50, P.O. Box 5070,
CH-8021 Zurich. The paying agent of the Fund in Switzerland is
Société Générale, Paris, Zurich Branch, Talacker 50, P.O. Box 5070,
CH-8021 Zurich. The Company may offer Shares only to qualified
investors in Switzerland. In respect of the Shares distributed in
and from Switzerland, the place of performance and jurisdiction is
the registered office of the Swiss Representative.
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.
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END
IR DBGDIBDGDGXC
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