TIDMECWO
RNS Number : 9305Y
Ecofin Water & Power Opps PLC
23 May 2016
ECOFIN WATER & POWER OPPORTUNITIES PLC
Continuation Vote and Reconstruction Proposals
On 19 February 2016, Ecofin Water & Power Opportunities plc
("EWPO" or the "Company") announced that, in advance of the
continuation vote due to be held before the end of June 2016 (the
"Continuation Vote"), the Board would be considering the structure
of the Company going forward including the investment policy,
capital structure and levels of gearing.
The Board is pleased to announce details of the reconstruction
proposals that, subject to shareholder consultation, it intends to
implement in the event that the Continuation Vote is passed (the
"Reconstruction Proposals").
Key Highlights of the Reconstruction Proposals
Subject to the passing of the Continuation Vote, the Company
intends to propose a scheme of reconstruction under section 110 of
the Insolvency Act 1986 (as amended) ("Scheme of Reconstruction")
with shareholders being:
(i) issued with ordinary shares in Ecofin Global Utilities and
Infrastructure Trust plc, a newly incorporated investment trust
that will focus on investing in global utilities and infrastructure
equities and, to a limited extent, related fixed income securities
("Ecofin Global");
(ii) issued with new ordinary shares in a newly incorporated
investment company that will hold the illiquid assets of the
Company ("EF Realisation"); and
(iii) offered a cash exit for up to 35 per cent. of the issued share capital of the Company.
Ecofin Global
-- Ecofin Global will, pursuant to the Scheme of Reconstruction,
hold the Company's liquid investments and will be admitted to the
premium segment of the Official List and to trading on the main
market of the London Stock Exchange.
-- Ecofin Global will focus solely on investing in utilities and
infrastructure investments (excluding social infrastructure).
-- Ecofin Global will have no ongoing exposure to unquoted
equity investments or early stage listed companies - and a greater
restriction on the level of investment in non-OECD countries.
-- Ecofin Global will have a flexible gearing policy with the
ability to borrow up to 25 per cent of net assets. There will be no
structural gearing.
-- The Board of Ecofin Global is expected to include the
majority of the existing directors of the Company.
-- Jean--Hugues de Lamaze, who has worked at Ecofin Limited (the
"Manager") for 8 years, will have sole responsibility for the
management of Ecofin Global's portfolio.
-- Ecofin Global will target an initial dividend yield of at
least 4 per cent on net assets using gearing and, if necessary,
reserves to augment the portfolio yield.
-- A further continuation vote will be held in 2019 and every five years thereafter.
-- The Board has agreed with the Manager that the management
fees on Ecofin Global will be charged on net assets only.
EF Realisation
-- All remaining unquoted equity investments and illiquid
assets, including Lonestar Resources Limited (the "Illiquid
Portfolio"), will, pursuant to the Scheme of Reconstruction, be
transferred to EF Realisation, a newly incorporated,
Guernsey-domiciled investment company to be admitted to trading on
the specialist fund segment of the main market of the London Stock
Exchange.
-- Based on the valuations as at 30 April 2016 the Illiquid
Portfolio represents approximately GBP44.3m representing 14.1 per
cent. of EWPO NAV.
-- There will be an orderly realisation of the assets held
within the Illiquid Portfolio over the course of a period of 24
months with the net proceeds distributed to EF Realisation
shareholders.
-- The Board of EF Realisation, which will be formed in due
course, will include at least one of the existing directors of the
Company.
-- There will be no base management fee for the management of EF
Realisation but the Manager will be eligible to receive a
performance fee of 15 per cent. of all cash returned to
shareholders over the Performance Fee Initial Value (as defined
below), subject to a compounding 10 per cent. hurdle and subject to
a cap.
-- The Performance Fee Initial Value will be, unless otherwise
determined by the Board, the aggregate of the initial value of each
asset calculated as the higher of: (i) the original cost price to
EWPO; or (ii) the current holding value (the aggregate of all such
valuations being the "Performance Fee Initial Value").
Cash Exit
-- In addition to the capital that will be returned to investors
via the run off of the illiquid assets shareholders will also be
offered an immediate cash exit as part of the Scheme of
Reconstruction for up to 35 per cent. of the issued share capital
of the Company (the "Cash Exit"). Based on the NAV as at 30 April
2016 this would equate to a cash return of up to GBP110m (less
costs).
-- Shareholders will be able to elect for their proportional
entitlement under the cash exit and to apply for more than their
proportional entitlement, satisfaction of which will depend on
other elections received.
The combination of the Cash Exit and the realisation of the
Illiquid Portfolio is expected to result in the return of
approximately GBP154.3m to ordinary shareholders (based on the net
asset value as at 30 April 2016), equal to 49.1 per cent of the net
assets of the Company as at 30 April 2016.
A circular in connection with the Continuation Vote will be sent
to shareholders in due course and will include further details of
the Reconstructions Proposals.
Commenting on the Reconstruction Proposals, Ian Barby, Chairman
of the Company, said:
"The Reconstruction Proposals create a new investment trust,
Ecofin Global Utilities and Infrastructure Trust plc, that will
provide exposure to a sector currently under-represented in the
investment company universe and one that will seek to provide a
strong yield to investors at a time when it is difficult to
identify assets that can provide a regular sustainable income at an
attractive level. The capital return through the realisation of the
Company's illiquid assets and the cash exit provides a balance of
liquidity for those shareholders seeking an exit while maintaining
sufficient scale in the ongoing entity for shareholders going
forward."
For further information, please contact:
Ecofin Water & Power Opportunities
plc
Ian Barby, Chairman 07710 305 052
BNP Paribas Secretarial Services
Limited
Nariman Ghandhi, Company Secretary 020 7410 5971
Winterflood Investment Trusts
Joe Winkley
James Moseley 020 3100 0000
Ecofin Limited
John Murray
Elspeth Dick 020 7451 2929
23 May 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
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