Circular, NAV update and potential issue of equity
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA.
This announcement has been determined to contain inside information.
This announcement is an advertisement and not a prospectus. This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United States or in any other jurisdiction. Neither this announcement nor any part of it shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.
The Renewables Infrastructure Group Limited (the "Company" or "TRIG")
Publication of Circular, NAV update and potential further issue of equity
22 October 2018
The Board of TRIG announces that it has today published a circular (the Circular) convening a general meeting to be held on Friday, 9 November 2018 (the Extraordinary General Meeting) in order to seek shareholder authority to issue new ordinary shares in the capital of the Company (new Ordinary Shares) on a non-pre-emptive basis in the future.
Introduction
At the annual general meeting of the Company held on 10 May 2018 (the 2018 AGM), the Board was granted the authority to allot up to 101,568,473 Ordinary Shares on a non pre-emptive basis, such authority representing 10 per cent. of its then issued ordinary share capital (the AGM Tap Authority). Since the 2018 AGM the Company has, through a number of tap issues, utilised most of the AGM Tap Authority and, at present, the Company can only issue approximately a further 19.1 million Ordinary Shares on a non pre-emptive basis. Although the Company intends to renew the AGM Tap Authority at the 2019 AGM, the Company does not currently have sufficient authority to implement any further meaningful share issuances prior to such date.
The Company currently has drawings on its Revolving Acquisition Facility of £71 million following acquisitions made earlier in the year. In addition, the Company has a strong pipeline of further attractive investment opportunities under consideration, as well as investment commitments to complete construction of the Solwaybank wind farm of £43 million of which £7 million falls due before the end of 2018.
As a result, the Company is therefore proposing to convene the Extraordinary General Meeting to seek approval from Shareholders to dis-apply pre-emption rights over an additional approximately 52.75 million Ordinary Shares (amounting to 4.8 per cent. of the Company's ordinary issued share capital as at today's date) in order for the Company to carry out future non pre-emptive share issues. For the avoidance of doubt, any share issuance would only be undertaken at a premium to the prevailing estimated NAV per Ordinary Share.
Background
As noted above, since the grant of the AGM Tap Authority, the Company has undertaken a number of tap issues, raising approximately £88.4million of gross proceeds. All the net proceeds of such tap issues have been applied towards repaying amounts drawn under the Company's revolving acquisition facility with Royal Bank of Scotland plc, National Australia Bank Limited and ING Bank N.V (the Revolving Acquisition Facility) which has been used to acquire assets for the Portfolio.
The Revolving Acquisition Facility helps maintain the Company's flexibility to acquire further investments prior to raising new capital, thus avoiding cash drag on Shareholders' investment returns. The Board believes it is in the interests of the Company and Shareholders as a whole to have the ability to issue further Ordinary Shares to reduce the amount currently drawn under the Revolving Acquisition Facility in view of the Company's pipeline of potential investment opportunities.
Although drawings under the Revolving Acquisition Facility amount to £71 million as at today's date, under the remaining AGM Tap Authority the Company is only able to issue approximately a further 19.1 million Ordinary Shares on a non pre-emptive basis.
If the Company were not to supplement the AGM Tap Authority prior to the 2019 AGM, this would reduce its capacity to fund further acquisitions under the Revolving Acquisition Facility where it identifies assets that are suitable for acquisition in accordance with the Company's investment policy.
The Company's existing portfolio and pipeline
The Company was launched in July 2013, when 300 million Ordinary Shares were admitted to trading on the Main Market of the London Stock Exchange and the net proceeds of the IPO were invested in a portfolio of 18 fully operational onshore wind and solar energy generation assets in the UK, France and Ireland with aggregate generating capacity of approximately 256 MW. Since the IPO, the Company's portfolio has grown significantly and now comprises 61 operating renewable energy infrastructure projects in onshore and offshore wind, solar PV and battery storage in the UK, France and Ireland, with approximately 938 MW of aggregate generating capacity.
In addition to the repayment of the Revolving Acquisition Facility, which is £71 million drawn, the Company has investment commitments to complete the construction of the Solwaybank wind farm project of £43 million, of which £7 million is due during the current quarter. The Company also has a healthy pipeline of further investment opportunities, and is in advanced, exclusive discussions in respect of the acquisition of wind farms in France and the Nordic region. The pipeline includes the previously announced acquisition of an equity interest in the 229.1MW Ersträsk onshore wind farm located in Piteå, Sweden which is expected to reach financial close before the year end.
The Placing
Subject to Shareholder approval of the Resolution at the Extraordinary General Meeting and prevailing market conditions, should the Board decide to undertake a further issue of up to 71.8 million new Ordinary Shares (being the aggregate of the balance of the AGM Tap Authority and the New Tap Authority as defined below) (the Placing), the net proceeds of the Placing would be applied towards repaying the amount drawn under the Revolving Acquisition Facility. The Company intends to announce at that time the placing price, the terms and conditions of the Placing and its expected closing date, through a Regulatory Information Service.
Application will be made for the admission of the new Ordinary Shares to be issued pursuant to the Placing to the premium segment of the Official List of the UK Listing Authority and to trading on the London Stock Exchange's main market for listed securities.
Net Asset Value as at 30 September 2018
The Company has estimated a NAV per Ordinary Share as at 30 September 2018 of 107.8 pence (the September 2018 NAV). This compares to a NAV of 105.2 pence per Ordinary Share as at 30 June 2018 (the June 2018 NAV).
The NAV estimation considers revisions to power price forecasts, production levels and foreign exchange movements in the quarter. The increase in the NAV is predominately driven by changes in forecast power prices. Since 30 June 2018, a number of power price forecasts for the markets relevant to the Portfolio, including the GB market, which the Managers consult, have been revised upwards.
The power price forecasts continue to assume a slight reduction in real power prices from the current level until the early 2020s followed by real growth thereafter, but with the earlier years of the forecasts starting from a higher base than the power price projections adopted in the June 2018 NAV. The cost of both gas and carbon, key drivers of UK and European wholesale electricity prices, have increased during the year. Wind speeds which were beneath long-term averages during the first half of the year have continued at lower than average levels during Q3, although solar irradiation has been higher. However, the Company continues to achieve strong wholesale electricity prices in the spot markets mitigating lower generation. No change in the valuation discount rate has been made.
Shareholder authority to allot Ordinary Shares on a non pre-emptive basis
Under the AGM Tap Authority, the Company only has authority remaining to issue up to approximately a further 19.1 million Ordinary Shares on a non pre-emptive basis . The disapplication of pre-emption rights in respect of the issue of further Ordinary Shares is required to be approved by Shareholders pursuant to the Articles and Chapter 9 of the Listing Rules.
Since the implementation of the EU Prospectus Regulation in 2017, issuers such as the Company can issue up to (but not exceeding) 20 per cent. of the securities already admitted to trading over a 12 month period without having to publish a prospectus (the 20 per cent. prospectus limit).
The Board is therefore seeking Shareholder authority at the Extraordinary General Meeting to issue up to 52,753,778 Ordinary Shares (the New Tap Authority), which would represent 4.8 per cent. of its ordinary share capital as at today's date, on a non pre-emptive basis. If the Resolution is approved, the Company would be able to issue up to 71,867,850 new Ordinary Shares on a non pre-emptive basis under the New Tap Authority and the remaining AGM Tap Authority, being the maximum number permitted in accordance with the 20 per cent. prospectus limit without having to incur the cost of publishing a new prospectus.
If Shareholders grant the New Tap Authority at the Extraordinary General Meeting, the Directors intend to use it, in addition to the remaining AGM Tap Authority, in the first instance to carry out the Placing. To the extent that the New Tap Authority is not used entirely for the purposes of the Placing, the Directors intend to use any remaining authority to raise funds for investment in accordance with the Company's investment policy and/or towards repaying amounts for the time being drawn down under the Revolving Acquisition Facility.
Any Ordinary Shares issued pursuant to the Tap Authorities (whether under the Placing or otherwise) will be issued at not less than the NAV per Ordinary Share (cum income) at the time of the relevant issue plus a premium intended to cover, at least, the expenses of any such issue of new Ordinary Shares as determined by the Board at the time of each such issue. Thus, any such issue will not be dilutive to existing Shareholders in terms of NAV per Ordinary Share.
Both the Tap Authorities will expire at the conclusion of the 2019 AGM and it is presently intended that a resolution for the renewal of the AGM Tap Authority will be proposed at the next and each succeeding annual general meeting of the Company (expected to be held in May 2019).
The Ordinary Shares issued pursuant to the Tap Authorities will be issued in registered form and may be held in certificated or uncertificated form. Such Ordinary Shares issued will rank pari passu with the Ordinary Shares then in issue (save for any dividends or other distributions declared, made or paid by reference to a record date prior to the issue of the relevant Ordinary Shares).
Benefits of the Proposal
The Directors believe that the Proposal will have the following benefits for the Company and Shareholders:
· it will enable the Company to repay amounts currently drawn down under the Revolving Acquisition Facility, thereby providing the Company with additional capacity under its Revolving Acquisition Facility to take advantage of the Company's attractive pipeline of investment opportunities;
· having a greater number of Ordinary Shares in issue is likely to provide Shareholders with increased secondary market liquidity;
· the acquisition of additional renewable energy assets, whether through recycling debt drawn down under the Revolving Acquisition Facility or through direct investment of the proceeds of the Placing or any subsequent share issues, will further grow and diversify the Group's portfolio;
· increasing the size of the Company will help to make the Company more attractive to a wider investor base;
· the Company's fixed running costs will be spread across a larger equity capital base, thereby further reducing the Company's on-going expenses per Ordinary Share; and
· the Company has a tiered management fee which reduces from 1 per cent. of the Adjusted Portfolio Value to 0.8 per cent. of the Adjusted Portfolio Value in excess of £1 billion. In the event that the Tap Authorities are substantially used, the Company's fixed ongoing expenses per Ordinary Share will accordingly be further reduced.
Publication of Circular
The Circular will shortly be available for viewing on the Company's website at www.trig-ltd.com and on the National Storage Mechanism at www.morningstar.co.uk/uk/NSM
Capitalised terms shall have the meanings attributed to them in the Circular unless otherwise defined in this announcement.
LEI: 213800N06Q7Q7HMOMT20
Enquiries:
InfraRed Capital Partners Limited +44 (0) 20 7484 1800
Richard Crawford
Phil George
Francesca Collins
Canaccord Genuity Limited +44 (0) 20 7523 8000
Lucy Lewis
Andrew Zychowski
Denis Flanagan
Liberum Capital Limited +44 (0) 20 3100 2000
Chris Clarke
Gillian Martin
Louis Davies
Tulchan Communications +44 (0) 20 7353 4200
Martin Pengelley
Important Information
Canaccord Genuity Limited and Liberum Capital Limited are each authorised and regulated by the Financial Conduct Authority, are each acting only for the Company in connection with the matters described in this announcement and are not acting for or advising any other person, or treating any other person as their respective clients, in relation thereto and will not be responsible for providing the regulatory protection afforded to their respective clients or advice to any other person in relation to the matters contained herein.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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