TIDMTLEI TIDMTLEP
RNS Number : 2927J
ThomasLloyd Energy Impact Trust PLC
15 August 2023
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT MAY
CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE UK'S MARKET
ABUSE REGULATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, SUCH
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
LEI: 254900VC23329JCBR9G82
15 August 2023
ThomasLloyd Energy Impact Trust plc
(the " Company " )
Update re material new information
HIGHLIGHTS
-- New information has come to light under the protections of
the Company's whistleblowing policy revealing that ThomasLloyd
Global Asset Management (Americas) LLC (the "Investment Manager")
was aware of material information relating to the RUMS Project by
August 2022. It therefore appears that key information was withheld
from the Board, and misleading information given to it, over a
protracted period of time.
-- In its most recent communication, on 11 August 2023,
ThomasLloyd Group Limited ("TLG") makes a number of inaccurate and
misleading statements. The Board outlines certain of these below.
In particular, the Company's auditor has confirmed that no
timetable has been put forward by the Investment Manager with a
view to completing the Company's 2022 Annual Report and Accounts
(the "2022 Accounts") and audit by 30 September 2023.
-- Although TLG is portraying the continuation vote as a binary
outcome, it is not. Should the Continuation Resolution not be
passed, proposals for the future of the Company will be put to
shareholders in due course and may include a relaunch of the
Company.
-- The Board urges shareholders in the strongest terms to vote against the Continuation
Resolution.
RECEIPT OF MATERIAL NEW INFORMATION
The Board has been provided with confidential information under
the protections of the Company's whistleblowing policy, revealing
that concerns about the RUMS Project, and in particular substantial
increases in the costs and capital requirements associated with it,
were known by the Investment Manager by August 2022. These concerns
were not disclosed to the Board.
As set out in the Notice of Annual General Meeting dated 6 June
2023, the RUMS Project was originally bid for on the premise that
the overall project cash cost of US$78.4 million (INR 5,880
million) would be funded by debt of US$62.7 million (INR 4,700
million) and equity of US$15.7 million (INR 1,180 million), the
equity financing being funded entirely from existing cash resources
within SolarArise, the Company's Indian renewable energy platform,
and ongoing operating cash flow from SolarArise's operational solar
portfolio. Until February 2023, the Investment Manager gave no
indication to the Board that the equity financing would be required
to be funded other than entirely from within SolarArise.
The Company's understanding is now as follows:
-- At the end of August 2022, the SolarArise management team
provided a presentation to the Investment Manager's Investment
Committee (the "August 2022 Presentation"). The August 2022
Presentation stated that the RUMS Project economics had changed
significantly since the project bid. Project costs were said to
have increased to US$93.3 million, with the result that the equity
now required for the project was US$38.1 million, meaning a capital
call of US$31.9 million from SolarArise shareholders would be
required. The Company's share of this capital call would have
caused the Company to breach the country limit in its investment
policy. The August 2022 Presentation also said that the capital
call figure could increase by a further US$28.5 million if module
prices were to reach 30 cents.
-- At around the same time, a third party was asked by the
Investment Manager, without the knowledge of the Board, to gauge
interest from potential investors in taking over the RUMS Project.
The feedback from this exercise was that potential investors had
focussed on the project returns, owing to uncertainty around the
costs, and none had expressed interest in proceeding with the
project, leading the Investment Manager to conclude that this
option should not be pursued.
-- There were Audit and Risk Committee and Board meetings held
on 31 August 2022 but nothing was said by the Investment Manager
about any of this. The Company's cashflow forecasts to 31 December
2023 discussed at the meetings did not include any cash funding for
SolarArise. The minutes of the Audit and Risk Committee recorded
that the RUMS Project would not require funding from the
Company.
-- The Company understands that further work was carried out by
the Investment Manager and the SolarArise management team to assess
and test the numbers in the August 2022 Presentation. This resulted
in a further presentation being produced by the Investment Manager
in October 2022 (the "October 2022 Presentation"), which was shared
with senior management at the Investment Manager, showing project
costs ranging from US$91.9 million to US$99.8 million and that new
capital of up to US$38.5 million (or US$30.7 million on an
"aggressive case") would need to be injected into SolarArise. The
October 2022 Presentation noted that the IPO case had been that the
equity requirement was to be funded from cash resources within
SolarArise. The presentation went on to say that this equity would
need to be injected by December 2022.
-- The October 2022 Presentation was not disclosed to the Board.
The Board understands that an updated financial model was also
prepared. This was also not disclosed to the Board.
-- A number of the Investment Manager's employees pointed out to
its senior management team that this information should be provided
to the Board. It was not.
-- By the time of a Board meeting on 5 December 2022 (the
"December Board Meeting"), a report on the RUMS Project had been
prepared for the Board by the Investment Manager, but it did not
mention the above issues surrounding the impact of increased costs
and the capital injection needed. It simply said that final costs
would be revised when EPC and module contracts were finalised:
"Overall Project costs - At the time of bidding (July 2021) the
total equity required for the project was estimated at INR 1176
million of the total project cost of INR 5880 million, with the
remainder to be financed by project debt. The final total project
cost will be revised when the EPC and module contracts are
finalised at the end of March for EPC/ middle of 2023 for
modules".
-- Further, the minutes of the December Board Meeting record the
following: "The Board queried whether SolarArise held sufficient
cash to fund the RUMS Project, and was advised that cash had
increased due to increased receivables collections and it was
expected that the remainder would be made up from ongoing cash
flows in SolarArise". These statements, which were given as part of
the Investment Manager's update, were clearly wrong.
-- By February 2023, models prepared by the Investment Manager,
and not shared with the Board, were still showing project costs at
similar levels to those as at August 2022. The Board had by this
stage finally been informed that SolarArise would require a capital
injection from the Company, although the amount to be funded was
said to still be under discussion. There was a suggestion from the
Investment Manager that the amount might be US$15 million.
-- At the beginning of May 2023, at the request of TLG's new
Chief Investment Officer, an internal report was prepared on behalf
of the Investment Manager to establish the timeline of when
information on the RUMS Project was known within the Investment
Manager and when it was provided to the Board, setting out the
above matters (and more). This report, which was shared with the
Investment Manager's senior management team, was not provided or
even mentioned to the Board, despite this being a key workstream
that the Board had asked the Investment Manager to progress as a
matter of urgency to enable progress to be made on the 2022
Accounts and audit.
-- On 5 June 2023 Michael Sieg, the Chief Executive Officer of
TLG, communicated to the Board in writing that the Investment
Manager only became aware that the RUMS Project was not
commercially viable in April 2023 having recently completed its
full review in partnership with the Board.
In conclusion, it is now apparent that, as early as August 2022,
the Investment Manager knew that the costs of the RUMS Project had
increased significantly such that a significant capital injection
into SolarArise would be needed. In the Board's view, at that point
it would have been apparent that the RUMS Project would not be
commercially viable. The Investment Manager was told these matters
by SolarArise, and when it did its own work to check, this was
confirmed in its own reports. Furthermore, the scale of the capital
injection required would have meant that a key restriction in the
Company's investment policy would have been breached. However, the
Board was not told of these issues at the time. In fact, at the
December Board Meeting, the Board was told that no additional
equity was required. It was not until February 2023 that it was
suggested that any sort of capital injection from the Company would
be needed. This all suggests that a deliberate decision was made by
the Investment Manager not to inform the Board.
By the time the Board was finally told in mid-April 2023 of the
scale of the RUMS Project costs, the amount of equity required and
its commercial unviability, it was too late. The delay in full
disclosure to the Board, including with regard to potential
non-completion liabilities, resulted in material financial
uncertainty such that the 2022 Accounts and resulting audit could
not be completed by 30 April 2023 and trading in the shares had to
be suspended, despite TLG's claims otherwise in its announcement on
11 August 2023, as referred to further below.
In light of the above, and whilst the Board continues to
investigate these matters urgently, it appears that key information
was withheld from it, and misleading information given to it, over
a protracted period of time. In this regard and generally the
Company is reserving all of its rights.
CORRECTION OF INACCURATE STATEMENTS MADE BY TLG
Whilst the Board takes issue with a number of misleading and
inaccurate statements made in TLG's announcement of 11 August 2023,
it believes it is most important to highlight the following.
2022 Accounts and audit
In its announcement of 11 August 2023, TLG made certain
statements regarding the Company's financial reporting procedures
and subsequent completion of the 2022 Accounts and resulting audit.
These include statements that: (i) the Board had the option in late
April 2023 to temporarily write down the value of the RUMS Project
to nil to allow the 2022 Accounts to be published on time and
thereby avoid the suspension of trading in the Company's shares;
(ii) the Investment Manager would aim to publish the 2022 Accounts
and the interim report to 30 June 2023 (the "2023 Interim Report")
by no later than 30 September 2023; and (iii) the Continuation
Resolution passing would be a critical and significant step towards
getting the 2022 Accounts published and therefore the Suspension
lifted.
The Company did not have the option to temporarily write down
the value of the RUMS Project to nil to enable the 2022 Accounts to
be published and thereby avoid the Suspension. The Board and the
Company's auditor, Deloitte LLP ("Deloitte"), agreed over the
weekend of 22/23 April 2023 that there would not have been
sufficient time before 30 April 2023 to assess the impact of the
new information presented with regard to the RUMS Project on the
2022 Accounts, nor for the financial implications to be thoroughly
audited by Deloitte such that the quality of the 2022 Accounts and
audit process could be maintained. Over the same weekend and having
taken advice from the Company's lawyers and corporate brokers, the
Board concluded that the new information created a material
uncertainty regarding the fair value of the Company's assets and
liabilities and, following discussion with the FCA, trading in the
Company's shares was suspended on 25 April 2023. Even if the
Suspension had not occurred on 25 April 2023, it would have
occurred on 2 May 2023 due to the Company being unable to meet its
regulatory obligation to publish the 2022 Accounts by 30 April
2023.
Deloitte has confirmed to the Board that no timetable has been
put forward by the Investment Manager with a view to completing the
2022 Accounts and audit by 30 September 2023.
Based on the information it currently has, Deloitte has
confirmed that finalising the audit of the 2022 Accounts by 30
September 2023 is unlikely to be achievable while maintaining the
quality of the 2022 Accounts and audit.
It is incorrect for TLG to imply that the passing of the
Continuation Resolution is a necessary step towards getting the
2022 Accounts published and the suspension lifted. In the event
that the Continuation Resolution is not passed, the 2022 Accounts
would still be prepared on a going concern basis but with enhanced
disclosure on both the basis of preparation and material
uncertainty pending the outcome of the Board's proposals to be put
to shareholders regarding the Company's future.
Impact of Continuation Resolution
In its announcement of 11 August 2023, TLG seeks to represent
the vote on the Continuation Resolution as a binary choice between
securing a bright future for the Company or its permanent winding
up. As set out in the Company's announcement of 31 July 2023, if
the Continuation Resolution is not passed, the Board will bring
forward proposals for the future of the Company for consideration
by shareholders in accordance with the Company's articles of
association, which may include a relaunch of the Company. As
required by the Company's articles of association, these proposals
regarding the Company's future will be put to shareholders for
their approval within four months of the date of the vote on the
Continuation Resolution being held.
NEXT STEPS
The Board recognises that, in the event the Continuation
Resolution is not passed, the Company will require continuing
support to protect shareholder value, complete the 2022 Accounts
and audit and develop proposals to put to shareholders regarding
the Company's future.
The Board is, therefore, preparing contingency plans to be
implemented in the event that the Continuation Resolution is not
passed (bearing in mind also that the Company would have the right,
in the event that the Continuation Resolution is not passed, to
terminate its investment management agreement with the Investment
Manager summarily). The Board's immediate priorities in those
circumstances will include:
-- finalising the 2022 Accounts and 2023 Interim Report;
-- managing the existing operating portfolio and ensuring
suitable local management and governance structures are in
place;
-- re-evaluating the status of the RUMS Project and recommending a way forward;
-- reviewing strategic options and consulting with shareholders; and
-- putting proposals to shareholders for formal approval in due course.
REQUISITIONED GENERAL MEETING AND ADJOURNED GENERAL MEETING (THE
"MEETINGS")
As announced on 31 July 2023 and described in detail in the
circular posted to shareholders on that date, the Company has
convened the Meetings to be held on 24 August 2023 to vote on three
resolutions including, at each of the Meetings, a resolution on the
continuation of the Company. The Board's recommendations to
shareholders regarding the resolutions are unchanged and in light
of the new information set out in this announcement the Board urges
shareholders in the strongest terms to vote against the
Continuation Resolution.
Sue Inglis, Chair of ThomasLloyd Energy Impact Trust plc, said:
"The Board is shocked and angry to discover that highly material
information appears to have been withheld from it over an extended
period of time. Furthermore, statements made in ThomasLloyd Group's
announcement on 11 August 2023 continue to misrepresent the
Company's circumstances and the steps the Board is taking in the
interests of the Company's independent shareholders. The Board
therefore believes it is imperative that shareholders vote against
the Continuation Resolution."
Further announcements will be made as and when appropriate.
Capitalised terms used in this announcement shall, unless
otherwise defined, have the same meanings as set out in the
circular to shareholders dated 31 July 2023.
The person responsible for arranging the release of this
announcement on behalf of the Company is Uloma Adighibe of JTC (UK)
Limited, the Company Secretary.
Enquiries:
ThomasLloyd Energy Impact Trust plc Tel: +4 4 (0)20 3757 1892
Sue Inglis, Chair
Shore Capital (Joint Corporate Broker) Tel: +44 (0)20 7408 4050
Robert Finlay / Rose Ramsden (Corporate)
Adam Gill / Matthew Kinkead / William Sanderson (Sales)
Fiona Conroy (Corporate Broking)
Peel Hunt LLP (Joint Corporate Broker) Tel: +44 (0)20 7418 8900
Luke Simpson / Huw Jeremy (Investment Banking Division)
Alex Howe / Richard Harris / Michael Bateman / Ed Welsby (Sales)
Smith Square Partners LLP Tel: +44 (0)20 3696 7260
(Financial Adviser to the Company)
John Craven / Douglas Gilmour
Camarco (PR Adviser) Tel: +44 (0)20 3757 4982
Louise Dolan / Eddie Livingstone-Learmonth / Phoebe Pugh thomaslloyd@camarco.co.uk
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END
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August 15, 2023 02:00 ET (06:00 GMT)
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