REG - Atrato Onsite Energy - Proposed Disposal of the Portfolio
03/10/2024 07:00
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RNS Number : 7372G Atrato Onsite Energy PLC 03 October 2024
Atrato Onsite Energy plc
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INDIRECTLY, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
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JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATON FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW
BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. ON THE
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
FOR IMMEDIATE RELEASE
3 October 2024
Atrato Onsite Energy plc
Proposed Disposal of the Portfolio, Return of Capital and Notice of General
Meeting for the Change of Investment Objective and Policy
The Board of Atrato Onsite Energy plc (the "Company") is pleased to announce
that the Company has entered into a conditional agreement for the sale
(the "Disposal") of the entirety of its portfolio of solar assets
(the "Portfolio") to a joint venture vehicle owned by Brookfield and RAIM
Apollo (as defined below), at a Headline Price of £218.7 million (as defined
below). 1 The Company's Pro-forma Portfolio Valuation (as defined below) is
£224.1 million 2 .
Completion of the Disposal is outside the scope of the Company's existing
investment objective and policy, and is therefore conditional upon Shareholder
approval of a new investment objective and policy for the Company (together
with the Disposal, the "Proposals"). Following the change of investment
objective and policy and Completion of the Disposal, the Board intends to seek
Shareholder approval for the voluntary liquidation of the Company with a view
to distributing the Company's net assets to Shareholders as soon as reasonably
practicable. It is anticipated that the liquidators will be in a position to
make an initial distribution of substantially all of the net assets of the
Company in February 2025, being approximately two months after the expected
date of liquidation/delisting.
As described further below, the Board determined that a sale of the Portfolio
was the best means of maximising Shareholder value against a backdrop of
persistently wide share price discounts in the investment trust sector, the
subscale nature of the Company and consistent shareholder feedback to sell the
Portfolio.
Key Highlights
· 100 per cent. cash consideration with no financing conditions (100
per cent. equity financed)
· In considering the merits of the Disposal, the Directors have taken
into account both the Headline Price for the Portfolio and the Estimated Net
Assets per Ordinary Share of 80.0 pence, which represents:
o a premium of approximately 25.0 per cent. to the closing price of 64.0
pence per Ordinary Share on 2 October 2024 (being the latest practicable date
prior to the publication of this announcement); and
o a premium of approximately 19.6 per cent. to the three-month volume
weighted average price of 66.9 pence per Ordinary Share as at 2 October 2024
(being the latest practicable date prior to the publication of this
announcement)
· The Company's latest portfolio valuation was calculated as at 31
March 2024 (coinciding with the Locked Box Date), resulting in a 31 March 2024
NAV of 90.0 pence per Ordinary Share. The Company subsequently made two
quarterly dividend payments totalling 2.74 pence per Ordinary Share. The
Estimated Net Assets per Ordinary Share inclusive of these dividends equates
to 82.7 pence per Ordinary Share, which represents:
o a discount of approximately 8.1 per cent. to the 31 March 2024 NAV of 90.0
pence per Ordinary Share
Juliet Davenport, Chair of the Company, commented: "The Board was very
pleased with the interest shown in the Company. After a detailed analysis, the
Board determined that a sale of the Portfolio to the Consortium was the best
means of maximising Shareholder value against a backdrop of persistently wide
share price discounts in the investment trust sector, the subscale nature of
the Company and consistent Shareholder feedback to sell the Portfolio.
Therefore, the Board unanimously considers the Proposals to be in the best
interests of the Company and its Shareholders as a whole and unanimously
recommends that Shareholders vote in favour of the change of investment
objective and policy resolution at the General Meeting."
Steve Windsor, Investment Adviser of the Company, commented: "We are pleased
to be able to deliver a liquidity event for Shareholders as well as the
opportunity for the ROOF team to benefit from the backing of one of the
largest global infrastructure investors. While it is disappointing that the
team will be leaving Atrato after four years, we wish them all the best as
they continue to grow one of the UK's leading C&I solar businesses."
Gurpreet Gujral, Investment Adviser of the Company, commented: "I would like
to express my gratitude for the support shown by our Shareholders since IPO.
Your belief in our vision of delivering clean and economic energy directly to
our C&I customers has been instrumental in making the Company the success
it is today. I look forward to continuing the journey with all our valued
customers - both present and future."
The sale will be effected through the disposal by the Company of the entire
issued share capital of Atrato Onsite Energy Holdco Limited (the "Target"),
being the entity that acts as the holding company for the entirety of the
Portfolio, to the Purchaser at a locked box date of 31 March 2024 (the "Locked
Box Date") (being the date of the latest portfolio valuation).
The Company has received written approval from the Financial Conduct Authority
to adopt the new investment objective and policy described above and set out
in Appendix 6 and, accordingly, in accordance with the UK Listing Rules,
Shareholder approval is now being sought for approval of the new investment
objective and investment policy. Completion of the Disposal is therefore
conditional upon the approval of the Resolution at the General Meeting.
Accordingly, a circular will be sent to Shareholders (the "Circular") by 4
October 2024 containing further details of the Disposal and convening a
general meeting of the Company (the "General Meeting") at which the
Resolution to approve the revised investment objective and policy will be
proposed to Shareholders. The General Meeting is to be held at the offices of
Stifel Nicolaus Europe Limited, 4th Floor, 150 Cheapside, London EC2V 6ET at
3:30 p.m. on 22 October 2024. Further details of the Resolution will be
provided in the Circular.
The Circular and the Notice of General Meeting will be available for viewing
on the Company's website at https://atratorenewables.com/ by 4 October 2024.
The Circular and the Notice of General Meeting will also be submitted to the
National Storage Mechanism of the Financial Conduct Authority and will be
available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
Background to the Disposal
In arriving at their recommendation, the Directors have factored in, and
remain confident that, the Company's high-quality portfolio, investment
management platform and extensive pipeline provide a foundation for continued
growth and sustainable risk-adjusted returns. However, the Directors believe
that neither these attributes nor the attractive underlying UK C&I solar
sector dynamics, have been reflected in the current share price, with a
significant de-rating experienced over the last year exacerbated by the higher
interest rate environment. As a consequence of the Ordinary Shares trading at
a material and persistent discount to the NAV over the last year, the Company
has not been able to issue new shares in order to achieve more meaningful
scale and greater liquidity due to the material NAV dilution that would result
as a consequence of issuing shares at a discount to NAV. As a result, access
to growth capital to pursue its extensive pipeline of around £400 million
into more accretive investments, such as installation projects, has been
severely constrained. Consequently, the Company is restricted in undertaking
these growth activities and in its ability to make new investments.
Furthermore, the subscale nature of the Company within the alternatives UK
investment trust universe has resulted in a lack of buyers in the secondary
market whose demand could, otherwise, re-rate the Company's shares and provide
trading liquidity.
Consequently, whilst the Directors remain confident in the standalone
prospects for the Company, it was against this backdrop that the Directors
received an unsolicited offer for the Portfolio from the Consortium on 13
March 2024. Following a period of negotiations, the Directors believe the
offer provides an opportunity for all Shareholders to realise a clean cash
exit at a premium to the Company's share price as at 2 October 2024 (being the
latest practicable date prior to the publication of this announcement). In
addition, the Directors believe that the certainty of execution and
acceleration of value crystallisation, whilst eliminating the associated
uncertainties, is beneficial to Shareholders and is in excess of the
reasonable medium-term prospects for the Company on a standalone basis.
In addition to the financial terms of the Disposal, the Board recognises that
the Company's portfolio and growth is an important contributor to the UK's net
zero ambitions. The Board views the Consortium as a suitable custodian of the
Company's assets from the perspective of all stakeholders, taking into account
Brookfield's proven track record, standing in the renewable power and climate
transition space and ESG values. In particular, the Disposal provides
continuity to the Company's corporate, industrial and residential partners
with the stated intention that individuals from the Investment Adviser will
continue to help manage and scale the Portfolio.
Having regard to all of the above factors, and after detailed negotiations,
the Board has determined that the Proposals are in the best interests of the
Company and its Shareholders as a whole. The Board was pleased with the
interest shown in the Company by the Consortium, and after in-depth
consideration of the offer and consistent Shareholder feedback to sell the
portfolio, the Board concluded that realising the Company's assets and putting
the Company in a position to return cash to Shareholders represented the best
means of maximising Shareholder value.
Information on the Portfolio
The Portfolio has been assembled by the Investment Adviser since the Company's
initial public offering on 23 November 2021. The key individuals at the
Investment Adviser responsible for the Portfolio are Gurpreet Gujral and
Gustaf Schuler. As at the Latest Practicable Date:
· the Company had committed or deployed funding into UK solar
technology across 51 projects with a combined capacity of 204 MW, across 14
offtakers
· the Portfolio is 100 per cent. operational assets
· 93 per cent. of annual revenue was contracted under PPAs or subsidies
with (i) 91 per cent. of revenue subject to inflation or fixed uplifts and
(ii) 48 per cent. of revenue subject to uncapped annual RPI or CPI uplifts
· the Portfolio has a 14.2 year average unexpired contract revenue term
· weighted average remaining asset life of the Portfolio of around 26
years
For the financial year ended 30 September 2023, the Target generated profit of
£2.3 million 3 and during the period from 1 October 2023 to 31 August 2024,
the Target generated profit of £2.6 million 4 .
The Company's latest portfolio valuation was as at 31 March 2024, which was
verified by its independent valuer. Since 31 March 2024, the Company has made
further investments (held at cost) which were funded through a combination of
cash and further drawdown on the Revolving Credit Facility. The Company's
pro-forma Portfolio valuation was £224.1 million(( 5 )) as at the Latest
Practicable Date (the "Pro-forma Portfolio Valuation").
Information on the Consortium
Phoenix UK Bidco Limited (the "Purchaser"), is a newly incorporated company
which is indirectly owned by a joint venture vehicle of BGTF Proton Holdings
Limited ("Brookfield"), an affiliate of Brookfield Asset Management Ltd (NYSE:
BAM, TSX:BAM), and Apollo Power Ltd ("RAIM Apollo", together with Brookfield,
the "Consortium"), an affiliate company of Real Assets Investment Management
Ltd ("RAIM"), established for the purposes of the acquisition of the
Portfolio. The Purchaser will on Completion be indirectly owned 66.67 per
cent. by Brookfield and 33.33 per cent. by RAIM Apollo.
Brookfield
· BGTF Proton Holdings Limited is an affiliate of Brookfield Asset
Management Ltd. (NYSE: BAM, TSX: BAM), a leading global alternative asset
manager with approximately US$1 trillion in assets under management, operating
in over 30 countries on five continents across the globe and is one of the
world's largest investors in renewable power and climate transition assets,
with c.34,000 MW of generating capacity across a portfolio of hydro, wind,
solar, distributable energy and sustainable solutions. Brookfield Asset
Management Ltd. has over 7,500 power generating facilities and c.7,700 MW of
generating capacity from solar operations
RAIM Apollo
· Apollo Power Ltd is an affiliate of RAIM, a specialist infrastructure
and energy investment manager headquartered in London, UK. It is focused on
originating and actively managing differentiated investment opportunities on
behalf of institutional investors. RAIM invests in and advises on
opportunities across a broad range of sectors, including renewable energy,
social infrastructure and transportation. Since establishment in 2019, RAIM
has successfully transacted and managed equity investments in excess of €750
million
The Consortium and the Investment Adviser have agreed the terms of an
arrangement under which the Investment Adviser (including its affiliates) have
entered into a non-compete agreement with the Purchaser and shall also be
entitled to a share of economics, once certain criteria have been met, upon a
future exit of the business. The employment of certain employees of the
Investment Adviser (the "Management Team") will automatically transfer to an
affiliate of the Purchaser on Completion. It is expected that the Investment
Adviser will provide limited transitional services to the Portfolio following
completion of the Disposal.
Principal terms of the Disposal
· On 2 October 2024, the Company entered into a sale and purchase
agreement with the Purchaser (the "Sale Agreement"), pursuant to which the
Company has agreed, on the terms and subject to the conditions set out in the
Sale Agreement, to sell the Target to the Purchaser
· The Sale Agreement contains certain warranties, covenants,
undertakings and indemnities given by the Company and the Purchaser which are
customary for a transaction of this nature
· The consideration is an amount determined by the Company and Purchaser by
reference to the Consortium's Headline Valuation of the Company's portfolio of
solar assets as at 31 March 2024 6 (#_ftn6) and increased on a pound for
pound basis by (i) amounts drawn down under the Revolving Credit Facility; and
(ii) a portion of the Company's cash, in each case invested by the Target in
further investments (including costs) and/or used for the purposes of
financing future investments, in each case since 31 March 2024 (the "Headline
Price"), and subject to certain customary adjustments, as set out in more
detail in Appendix 5 under the heading "Sale Agreement"
· Completion of the Disposal is conditional upon the satisfaction (or
waiver where applicable of the following Conditions) (i) the passing of the
Resolution at the General Meeting and (ii) the Noteholders Consent having been
obtained
· The Board expects that, subject to the satisfaction and/or waiver
(where applicable) of the Conditions, Completion will occur in early to
mid-November 2024. The expected timetable of principal events for the Disposal
is set out below
The Sale Agreement contains certain deal protection provisions (together, the
"Deal Protection Provisions") which subject to the limited exceptions set out
below:
· prevent the Company from:
o soliciting interest from or engaging or negotiating with any third party
in respect of any Alternative Proposal (beyond rejecting the approach or
seeking clarification of its terms);
o sharing confidential information with a third party in connection with any
Alternative Proposal;
o postponing, adjourning or cancelling the General Meeting or amending the
Resolution; or
o changing or withdrawing the Recommendation; and
· in the event the Company or any third party makes an announcement via
a Regulatory Investment Service in relation to the Disposal or any Alternative
Proposal, require the Company to promptly restate the Recommendation
If a third party notifies the Company or announces publicly that it is
considering making a Cash Offer prior to Shareholders passing the Resolution
at the General Meeting and the Board considers (acting reasonably) that the
approach may lead to a Superior Cash Offer, the Company may engage with the
third party provided that: (i) it must decide whether to engage with the third
party within four Business Days of the date of first approach; and (ii) if it
decides to engage with the third party, it must notify the Purchaser that an
approach has been made. In these circumstances:
· the restrictions on engaging, negotiating and sharing confidential
information with that third party in connection with the possible Cash Offer
will fall away, and the Company will be permitted to adjourn or postpone the
General Meeting on one occasion only by up to seven calendar days from the
date of first approach by the third party; and
· the Purchaser will have a right to terminate the Sale Agreement at
any time up to the day prior to the General Meeting.
If a third party makes a Cash Offer prior to Shareholders passing the
Resolution at the General Meeting which in the Board's reasonable opinion is a
Superior Cash Offer, then the Board will be entitled to withdraw the
Recommendation and the Deal Protection Provisions will cease to apply. In such
circumstances, unless the Company promptly restates the Recommendation and
rejects the Cash Offer, a break fee equal to one per cent. of the Company's
market capitalisation as at close of business on the last Business Day prior
to the date of this announcement (being approximately £0.96 million) will be
payable by the Company to the Purchaser:
· on the Cash Offer being declared wholly unconditional,
or, if implemented by way of a scheme of arrangement, becoming effective; or
· in the event the Cash Offer lapses or is withdrawn, on
the later of the Longstop Date and five Business Days after such lapse or
withdrawal.
The Purchaser will also be entitled (at its option) to payment of the Break
Fee if the Recommendation is changed or withdrawn in any other circumstances
as an alternative to pursuing remedies for breach of the Deal Protection
Provisions.
The Company is also obliged to reject any Alternative Approach following
Shareholders passing the Resolution at the General Meeting.
Financial effects of the Disposal on the Company
· The Portfolio comprises the entire business of the Company. After taking
into account the net proceeds from the Disposal, the Company's known
liabilities, service provider termination costs, estimated advisory and
transaction costs, and estimated net interest income, the Company expects to
have Estimated Net Assets of approximately £120.0 million, equivalent to 80.0
pence per Ordinary Share
· Following the 31 March 2024 Locked Box Date and latest portfolio
valuation date, the Company has made two quarterly dividend payments equalling
2.74 pence per share in aggregate
· The Estimated Net Assets per Ordinary Share of 80.0 pence
represents:
o a 25.0 per cent. premium to the Ordinary Share price of 64.0 pence as at
the Latest Practicable Date; and
o a 19.6 per cent. premium to the volume weighted average price of 66.9
pence per Ordinary Share for the three-month period to the Latest Practicable
Date
· The Estimated Net Assets per Ordinary Share, inclusive of the two
dividends paid since 31 March 2024, equates to 82.7 pence per Ordinary Share
representing:
o a discount of approximately 8.1 per cent. to the 31 March 2024 NAV of 90.0
pence per Ordinary Share
· The Investment Adviser will provide limited transitional services to the
Portfolio, and otherwise, the Consortium will take over the management of all
the assets within the Portfolio immediately upon Completion. The Company will
not, therefore, incur costs in implementing transitional services arrangements
in respect of the Portfolio going forward
· In anticipation of Completion and the proposed liquidation of the
Company, the Company has served notice of termination on certain key service
providers or agreed with certain key service providers, being the AIFM, the
Investment Adviser, and Company Secretary that the provision of such services
will cease on the Company entering into a voluntary liquidation
Use of net cash reserves
· If the Disposal becomes unconditional and proceeds to Completion,
it is the intention of the Board to seek Shareholder approval for the
voluntary liquidation of the Company with a view to distributing the Company's
net assets to the Shareholders as soon as reasonably practicable. It is
anticipated that the liquidators will be in a position to make an initial
distribution of substantially all of the net assets of the Company in February
2025, being approximately two months after the expected date of
liquidation/delisting). This timeline is to allow (a) the liquidators to
comply with their obligation to give all actual and/or contingent creditors of
the Company notice of the liquidation and the requirement to submit claims to
the liquidators by a last proving date, which must be a minimum period of 21
days from the date of the notice; and (b) the liquidators to adjudicate and
pay (if accepted) and/or reserve sufficient funds to pay any claims received.
The Company also anticipates paying at least one further dividend in the
period between Completion and the Company entering into liquidation.
· The Board intends to hold the proceeds of the Disposal in gilts,
money market instruments and/or interest bearing current accounts prior to the
voluntary liquidation of the Company
Investment Trust Status and Listing
· The Company intends to maintain its investment trust status and
listing in the period immediately prior to the Company's voluntary
liquidation. Maintaining the listing would allow Shareholders to continue to
trade Ordinary Shares during the intervening period. In order to maintain its
investment trust status, the Company anticipates paying at least one further
dividend in the period between Completion and the Company entering into
liquidation
Irrevocable undertakings
· The Company has received irrevocable undertakings to vote in favour
of the Resolution from the Directors and certain key individuals at the
Investment Adviser in respect of, in aggregate, 2,096,457 Ordinary Shares,
representing approximately 1.40 per cent. of the Company's issued Ordinary
Share capital as at 2 October 2024.
General Meeting
· The Disposal is conditional on the passing of the Resolution at the
General Meeting. Notice of the General Meeting, which will be held at the
offices of Stifel Nicolaus Europe Limited, 4th Floor, 150 Cheapside, London
EC2V 6ET at 3:30 p.m. on 22 October 2024, will be set out in the Circular,
which is expected to be published by 4 October 2024
· The General Meeting is being held for the purposes of considering and,
if thought fit, passing the Resolution. The Resolution seeks Shareholder
approval for a revised investment objective and policy (the full text of which
is set out in Appendix 6). The Resolution will be proposed as an ordinary
resolution, requiring a majority of votes cast to be in favour for the
Resolution to be passed
· In the event that the Resolution is not passed and, as a result, the
Disposal does not proceed, the Company will be liable to pay its own abort
costs, which are expected to be approximately £1.4 million
Recommendation
· The Board considers that the Proposals and the passing of the
Resolution are in the best interests of the Company and its Shareholders as a
whole. Accordingly, the Board unanimously recommends that Shareholders vote in
favour of the Resolution to be proposed at the General Meeting, as the
Directors intend to do in respect of their own beneficial holdings, which, in
aggregate, amount to 72,980 Ordinary Shares, representing approximately 0.05
per cent. of the Company's issued Ordinary Share capital as at 2 October 2024
Expected timetable of principal events
The expected timetable of principal events in relation to the Proposals is as
follows:
Event
Announcement of the Proposals 3 October 2024
Publication of the Circular and the Notice of General 4 October 2024
Meeting
Latest time and date for receipt of proxy appointments (whether 3:30 p.m. on 18 October 2024
online, via a CREST Proxy Instruction, via Proxymity or by a hard copy Form
of Proxy) in respect of the General Meeting
Record time and date for entitlement to vote at the General 6:00 p.m. on 18 October 2024
Meeting
General Meeting 3:30 p.m. on 22 October 2024
Expected effective date of the change of the investment objective and policy 22 October 2024
Publication of the results of the General Meeting As soon as practicable after the conclusion of the General Meeting
Anticipated Completion Date (subject to the Conditions being satisfied or Early to mid-November 2024
waived)
Longstop Date 8 January 2025 (or such other date as agreed between the Company and the
Purchaser)
Notes:
1) All references to time in the expected timetable set out above and in
this announcement are to London (UK) time, unless otherwise stated.
2) The expected timetable set out above and referred to throughout this
announcement may be subject to change. If any of the above times and/or dates
should change, the new times and/or dates will be announced to Shareholders
through a Regulatory Information Service.
3) The timing of Completion is dependent upon, amongst other things, the
Conditions being satisfied or waived, and if there is any delay in the
Conditions (including the passing of the Resolution) being satisfied or
waived, the Anticipated Completion Date may change. If Completion does not
occur by the Longstop Date, the Disposal shall not take place.
Stifel Nicolaus Europe Limited is acting as Sole Financial Adviser and
Corporate Broker to the Company. Gowling WLG (UK) LLP is acting as Legal
Adviser to the Company.
Defined terms used in this announcement shall, unless the context requires
otherwise, have the meanings ascribed to them in the body of this announcement
and Appendix 7.
For further information, please contact:
Stifel Nicolaus Europe Limited (Sole Financial Adviser +44 0207 710 7600
and Corporate Broker)
Mark Young
Rajpal Padam
Madison Kominski
Andrew Yeo
Greenhouse Communications atrato@greenhouse.agency (mailto:atrato@greenhouse.agency)
Jessie Wilson +44 0776 354 0629
Notes to Editors
Atrato Onsite Energy plc (LSE: ROOF) is an investment company specialising in
clean energy generation with 100% carbon traceability. The Company focuses on
UK solar, helping its clients achieve net zero and reduce their energy bills.
The Company aims to provide investors with attractive capital growth and long
dated, index-linked income, targeting a 5% dividend yield and a NAV total
return of 8 - 10%((1)). Its shares were admitted to trading on the premium
segment of the Main Market of the London Stock Exchange on 23 November 2021.
Atrato Partners Limited is the Company's Investment Adviser.
The Company's LEI is 213800IE1PPREDIIZB62.
(1) The targets set out above are targets only and not profit forecasts.
There can be no assurance that these targets will be met.
IMPORTANT NOTICE
This announcement contains inside information as stipulated under the Market
Abuse Regulation (EU) No.596/2014 (incorporated into UK law by virtue of the
European Union (Withdrawal) Act 2018 as amended by virtue of the Market Abuse
(Amendment) (EU Exit) Regulations 2019/310). Upon the publication of this
announcement via a Regulatory Information Service, this inside information
will be considered to be in the public domain.
The person responsible for arranging release of this announcement on behalf of
Atrato Onsite Energy plc is Christopher Fearon, Investor Relations Director at
Atrato Group.
The Disposal is classified as a "significant transaction" under Listing Rule 7
under each of the gross assets and consideration class tests. The Company is
therefore required to make this significant transaction notification pursuant
to Listing Rule 7.3.1R. Further information relating to the Disposal, as
required by the new Listing Rule 7 is set out in the Appendices 1 to 5 to this
announcement.
This announcement is not intended to and does not constitute an offer to sell
or the solicitation of an offer to subscribe for or buy or an invitation to
purchase or subscribe for any securities or the solicitation of any vote in
any jurisdiction. Shareholders are advised to carefully read the Circular once
it has been published.
The release, publication or distribution of this announcement in jurisdictions
outside the United Kingdom may be restricted by law and therefore persons into
whose possession this announcement comes should inform themselves about, and
observe such restrictions. Any failure to comply with such restrictions may
constitute a violation of the securities law of any such jurisdiction.
Stifel Nicolaus Europe Limited ("Stifel") which is authorised and regulated in
the United Kingdom by the Financial Conduct Authority, is acting as sole
financial adviser and corporate broker exclusively for Atrato Onsite Energy
plc and no one else in connection with the matters set out in this
announcement and will not regard any other person as its client in relation to
the matters set out in this announcement and will not be responsible to anyone
other than Atrato Onsite Energy plc for providing the protections afforded to
clients of Stifel, nor for providing advice in relation to any matter referred
to herein.
Apart from the responsibilities and liabilities, if any, which may be imposed
upon Stifel by FSMA or the regulatory regime established thereunder, neither
Stifel nor any of its associates or affiliates (nor their respective
directors, officers, employees or agents) accepts any responsibility
whatsoever or makes any representation or warranty, express or implied,
concerning the contents of this announcement, including its accuracy,
completeness or verification, or concerning any other statement made or
purported to be made by it or them, or on its or their behalf, the Company or
the Directors in connection with the Company or the Proposals, and nothing in
this announcement is, or shall be relied upon as a promise or representation
in this respect, whether as to the past or future. Stifel and its associates
and affiliates (and their respective directors, officers, employees or agents)
accordingly disclaim, to the fullest extent permitted by law, all and any
responsibility and liability whether arising in tort, contract or otherwise
(save as referred to herein) which it or they might otherwise have in respect
of this announcement or any such statement.
Market and industry information
Certain information in this announcement has been sourced from third parties.
All information contained in this announcement that has been sourced from
third parties has been accurately reproduced and, as far as the Company is
aware and is able to ascertain from information published by the relevant
third party, no facts have been omitted that would render the reproduced
information inaccurate or misleading.
All references to market data, industry statistics and forecasts and other
information in this announcement consist of estimates based on data and
reports compiled by industry professionals, organisations, analysts, publicly
available information or the Company's own knowledge of the relevant markets.
Market data and statistics are not necessarily reflective of actual market
conditions. Such statistics are based on market research, which itself is
based on sampling and subjective judgements by both the researchers and the
respondents, including judgements about what types of products and
transactions should be included in the relevant market. In addition, the value
of comparisons of statistics for different markets is limited by many factors,
including that: (i) the markets may be defined differently; (ii) the
underlying information may be gathered by different methods; and (iii)
different assumptions may be applied in compiling the data. Accordingly, any
market statistics included in this announcement should be viewed with caution.
Information regarding forward-looking statements
This announcement contains statements which are, or may be deemed to be,
"forward-looking statements" which are prospective in nature. All statements
other than statements of historical fact are forward-looking statements. They
are based on intentions, beliefs and/or current expectations and projections
about future events, and are therefore subject to risks and uncertainties
which could cause actual results to differ materially from the future results
expressed or implied by the forward-looking statements. Often, but not always,
forward-looking statements can be identified by the use of a date in the
future or forward-looking words such as "plans", "expects", "is expected", "is
subject to", "budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", "believes", "targets", "aims", "projects" or words or terms of
similar substance or the negative of those terms, as well as variations of
such words and phrases or statements that certain actions, events or results
"may", "could", "should", "would", "might" or "will" be taken, occur or be
achieved. Such statements are qualified in their entirety by the inherent
risks and uncertainties surrounding future expectations or events that are
beyond the Company's control. Forward-looking statements include statements
regarding the intentions, beliefs or current expectations of the Company
concerning, without limitation, the business, results of operations, financial
condition, liquidity, prospects, growth and strategies of the Company.
Such forward-looking statements involve known and unknown risks and
uncertainties that could significantly affect expected results and are based
on certain key assumptions. Many factors may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. Important factors that could cause the actual
results, performance or achievements of the Company to differ materially from
the expectations of the Company include, amongst other things, general
business and economic conditions globally, industry and market trends,
competition, changes in government and changes in law, regulation and policy,
including in relation to taxation, interest rates, the impact of any
acquisitions or similar transactions, IT system and technology failures,
political and economic uncertainty and other factors. Such forward-looking
statements should therefore be construed in the light of such factors.
Neither the Company nor any of its Directors, officers or advisers provides
any representation, assurance or guarantee that the occurrence of the events
expressed or implied in any forward-looking statements in this announcement
will actually occur. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
Forward-looking statements contained in this announcement apply only as at the
date of this announcement. Other than in accordance with its legal or
regulatory obligations (including under the Listing Rules, the Disclosure
Guidance and Transparency Rules and UK MAR) the Company is not under any
obligation and the Company expressly disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. The information in this announcement
is subject to change without notice.
Websites
Neither the contents of the Company's, the AIFM's or the Investment Adviser's
website nor any website accessible by hyperlinks on the Company's, the AIFM's
or the Investment Adviser's website is incorporated in, or forms part of, this
announcement.
No profit forecast or estimate
No statement in this announcement is intended as a profit forecast or profit
estimate for any period and no statement in this announcement should be
interpreted to mean that earnings, earnings per Ordinary Share or income,
cashflow from operations or free cashflow for the Company or the Target Group,
as appropriate, for the current or future financial years would necessarily
match or exceed the historical published earnings, earnings per Ordinary Share
or income, cashflow from operations or free cashflow for the Company or the
Target Group, as appropriate.
Presentation of financial information
References to "£", "pounds Sterling", "Sterling", "p" and "pence" are to the
lawful currency of the United Kingdom.
References to "US$" are to the lawful currency of the United States.
Rounding
Certain data in this announcement, including financial, statistical and
operating information have been rounded, and, as a result of this rounding,
the totals of data presented in this announcement may vary slightly from the
actual arithmetic totals of such data. In certain instances, the sum of the
numbers in a column or row in tables contained in this announcement may not
conform exactly to the total figure given for that row or column. Percentages
in tables may have been rounded and accordingly may not add up to 100 per
cent. or to the precise sum of the totals expressed in such tables.
Appendix 1 - Risks Factors
Risks relating to the Disposal
· The Disposal may be delayed or may not proceed to Completion
Completion of the Disposal is conditional upon the satisfaction or waiver (as
applicable) of the Conditions on or before the Longstop Date, after which
either the Company or the Purchaser may terminate the Sale Agreement. Whilst
the Company and the Purchaser have obligations in relation to the satisfaction
of these Conditions, there can be no assurance that the requisite approval
from Shareholders or the other Condition will be satisfied or waived (to the
extent it is capable of being waived). Further, there can be no assurance that
the satisfaction of these Conditions will not be delayed due to factors
outside the control of the Company and/or the Purchaser. The Disposal may,
therefore, be delayed or not complete at all. Additionally, if Completion is
deferred more than once because a party fails to satisfy its Completion
obligations, then the other party could become entitled to terminate the Sale
Agreement. The Purchaser may terminate the Sale Agreement prior to Completion
without liability on its part upon any of the following events:
o a breach by the Company of any of the fundamental warranties, relating
to (i) title to the Target's shares, (ii) power and authority of the Company,
(iii) the ownership of the Target Group and (iv) the solvency of the Company
and the Target Group, if they were repeated on Completion; or
o a material breach of certain agreed pre-completion undertakings; or
o a catastrophic event which has the effect of extinguishing 10 per cent.
of the generating capacity of the projects owned by the Target Group; or
o where the security created by the RCF Security Documents has been
enforced or the debt has been accelerated, or mandatory prepayment demanded
under the Revolving Credit Facility Agreement.
In addition, the Purchaser may terminate the Sale Agreement at any time up to
the day prior to the General Meeting where a third party has notified the
Company or announced publicly that it is considering making a Cash Offer and
the Board has decided to engage with such third party where it considers
(acting reasonably) that the approach may lead to a Superior Cash Offer.
If the Disposal does not proceed to Completion, the Company will not receive
the net proceeds from the Disposal. Additionally, any delay in completing the
Disposal may result in the accrual of additional costs without any of the
potential benefits of the Disposal having been achieved.
· The Company may incur liability under the Sale Agreement
The Sale Agreement contains certain customary warranties and indemnities given
by the Company in favour of the Purchaser. The Purchaser has undertaken due
diligence in connection with the Disposal and the Company has disclosed
matters against the warranties and has taken steps to minimise the risk of
liability under these provisions. In addition, the Purchaser has obtained
warranty and indemnity insurance in respect of the warranties and tax covenant
under the Sale Agreement. Although the liability of the Company under the
warranties and tax covenant is limited to £1 under the Sale Agreement, claims
other than in respect of the warranties or tax covenant given by the Company
would not be covered by this £1 cap and, following Completion, the Company
retains liability in respect of any other non-warranty and non-tax covenant
claims, subject to customary liability caps.
Any liability to make a payment arising from a successful claim by the
Purchaser under the Sale Agreement could have a material adverse effect on the
Company's financial condition and impact on the amount and timing of any
distributions of the sale proceeds.
· Third party interference with the Disposal
As the Company is listed, it is exposed to potential approaches from third
parties seeking to instigate a public takeover of the Company prior to the
date of the General Meeting. The Company might also be approached by a third
party seeking to make a more favourable offer for the Target Group than that
of the Purchaser prior to the date of the General Meeting. The Sale Agreement
contains certain Deal Protection Provisions which limit the action the Company
can take in connection with any Alternative Proposal, including the Company's
ability to engage with any third party in respect of an Alternative Proposal,
as detailed under the heading "Sale Agreement" in Appendix 5.
In circumstances where the Company engages with a third party in respect of a
possible Cash Offer where permitted under the Deal Protection Provisions, this
will give rise to a right for the Purchaser to terminate the Sale Agreement at
any time up to the day prior to the General Meeting.
Further, in circumstances where a third party makes a Cash Offer prior to
satisfaction of the Shareholder Approval Condition then, unless the Company
promptly restates the Recommendation and rejects the Cash Offer, a break fee
equal to one per cent. of the Company's market capitalisation as at close of
business on the last Business Day prior to the date of announcement of the
Disposal (being approximately £0.96 million) will become payable as detailed
under the heading "Sale Agreement" in Appendix 5.
If the Company were to terminate the Sale Agreement other than in accordance
with its terms, or were to otherwise breach the terms of the Sale Agreement,
the Company may be found liable to pay damages to the Purchaser in respect of
the loss it has suffered as a result of such termination or breach.
Alternatively, at a court's discretion, the Company may be ordered to perform
its obligations under the Sale Agreement if such performance remained
possible. In addition, where the breach amounted to the change or withdrawal
of the Recommendation otherwise than as permitted under the Sale Agreement,
the Purchaser will be entitled (at its option) to payment of the Break Fee as
an alternative to pursuing remedies for breach of contract. There can be no
certainty as to the amount of any damages that the Company may be required to
pay, although such damages typically seek to provide redress to a party as if
the breached contract had been properly performed.
· Costs and expenses related to the Disposal could exceed amounts
currently estimated
Whilst the Board believes it has appropriate arrangements in place to manage
the expected costs and expenses in relation to the Disposal, including
post-Completion costs, there can be no assurance that the costs and expenses
will not exceed the amounts currently estimated. There may also be further
additional and unforeseen expenses incurred in connection with the Disposal
either due to delays or otherwise. Such costs and expenses may adversely
affect the Estimated Net Assets that the Company expects to have (if approved
in due course by Shareholders) at the date of liquidation of the Company and
the amount available for distribution.
Risks relating to the Company arising in connection with the Disposal
· Loss of Consideration
If the Disposal does not complete, the Company will not receive the
consideration from the Disposal and, consequently, the transaction costs
incurred by the Company in connection with the Disposal that are not
contingent on Completion occurring would not be offset by such consideration.
In the event that Completion does not occur, the Company will be liable to pay
its own abort costs and, in certain specified circumstances, the Company may
also be liable to pay the Break Fee, as detailed above. In addition, the
market's perception of a failed transaction could result in a negative impact
on the market price of the Ordinary Shares and the Company's financial
condition, results of operations and prospects.
· Loss of Shareholder value
The Board believes that the Disposal is in the best interests of Shareholders
and the Company taken as a whole and that the Disposal currently provides the
best opportunity to realise an attractive and certain value for the Portfolio.
If the Disposal does not complete, the subsequent value of the Portfolio may
be lower than can be realised by way of the Disposal. This could result in the
financial position of the Company being materially different to the position
it would have been in if the Disposal had completed.
· No assurance of a future sale
If the Disposal does not complete, there can be no assurance that the Company
would be able to realise the assets comprising the Portfolio (either
individually, in parcels or as a whole) at a later date, at an improved, or
equivalent, or favourable valuation or at all.
· Potentially disruptive effect on the Company
To preserve Shareholder value in the event the Disposal does not complete, the
Board and Investment Adviser may be required to allocate additional time and
cost to the ongoing assessment of how best to maximise Shareholder value in
the medium term. This may limit the management and financial resources
available to manage the Portfolio and adversely affect the Company's financial
condition and results of operations.
· The announcement of the Disposal may have a disruptive effect on the
operation of the Target Group
The Sale Agreement requires the Company to procure that each member of the
Target Group continues its business in the ordinary course prior to
Completion. The Company is reliant on the skills and expertise of certain
individuals at the Company's third-party service providers, in particular the
Investment Adviser, in order to maintain effective management of the
Portfolio. The announcement of the Disposal may negatively impact the
performance of such individuals at the Company's key service providers. Such
outcome may impact the Company's financial position and prospects in the event
that Completion does not occur.
· Pre-Completion changes in the Portfolio
During the period from the signing of the Sale Agreement to Completion, events
or developments may occur, including changes in the investment performance and
outlook of the Portfolio, or external market factors, that could make the
terms of the Sale Agreement less attractive for the Company. Subject to the
satisfaction or waiver of the Conditions (to the extent they are capable of
being waived) before the Longstop Date, the Company would be obliged to
complete the Disposal notwithstanding such events or developments. This may
have an adverse impact on the value the Company is able to realise for
Shareholders.
Risks relating to the change of investment objective and policy
· No Guarantee of returns
There can be no guarantee that the change to the Company's investment
objective and policy will provide the returns, or realise the value, described
in this Circular. Whilst proceeds of the Disposal will be held in gilts, money
market instruments and/or interest bearing current accounts, which are
historically less volatile than other investments, there can be no guarantee
that they will provide a positive return to the scale anticipated by the
Company and therefore the amount returned to Shareholders may be impacted.
· No ability to make further investments where the Disposal does
not proceed to Completion
If Shareholders vote in favour of the Resolution to change the investment
objective and policy and the Disposal does not proceed to Completion, the
Company would not be able to continue making investments in accordance with
its current investment objective and policy and would be required to seek
Shareholder approval and incur additional costs to further amend its
investment objective and policy to do so.
· No guarantee of retaining investment trust status
As an approved investment trust for the purposes of Chapter 4, Part 24 of the
Corporation Tax Act 2010, the Company is not currently subject to UK
corporation tax on its chargeable gains. Approved investment trust status is
available on an accounting period by accounting period basis and requires that
the Company satisfies a number of conditions throughout the relevant
accounting period. The fact that the Company may come to hold the proceeds of
the Disposal in gilts, money market instruments and/or interest bearing
current accounts as it seeks to achieve its revised investment objective of
realising its assets and returning cash to Shareholders may mean that it fails
to satisfy these conditions. In any accounting period in which the Company
fails to satisfy any of the conditions which it is required to satisfy in
order to maintain its approved investment trust status, any chargeable gains
which the Company makes in that accounting period, which are not offset by tax
losses, may become subject to UK corporation tax, which could materially
reduce the amount of value available to be returned to Shareholders.
Existing material risks to the Company that will be impacted by the Disposal
The Company's operations will be materially less diversified and, therefore,
materially more susceptible to specific risks.
· The Portfolio comprises the entire business of the Company. After
Completion, the Company and will have no other assets and the Board intends to
seek Shareholder approval for the voluntary liquidation of the Company.
Following the Disposal and prior to the Company entering into voluntary
liquidation, the Company expects to hold gilts, money market instruments
and/or cash and to have no other assets. Weak performance of gilts, money
market instruments and/or cash, whether as a result of interest rate movements
and/ or inflation, or otherwise, will have a proportionately greater adverse
impact on the financial condition and valuation of the Company and a greater
risk of Ordinary Share price volatility following the Disposal than would have
been the case prior to the Disposal.
· Inability to realise Shareholder value
If the Disposal becomes unconditional, it is the intention of the Board to
seek Shareholder approval for the voluntary liquidation of the Company with a
view to distributing the Company's net assets to the Shareholders as soon as
reasonably practicable. It is anticipated that the liquidators will be in a
position to make an initial distribution of substantially all of the net
assets of the Company in February 2025, being approximately two months after
the expected date of liquidation/delisting). This timeline is to allow (a) the
liquidators to comply with their obligation to give all actual and/or
contingent creditors of the Company notice of the liquidation and the
requirement to submit claims to the liquidators by a last proving date, which
must be a minimum period of 21 days from the date of the notice; and (b) the
liquidators to adjudicate and pay (if accepted) and/or reserve sufficient
funds to pay any claims received. The Company also anticipates paying at least
one further dividend in the period between Completion and the Company entering
into liquidation. Although the Company is targeting a voluntary liquidation in
December 2024, the timing and quantum of the distribution of substantially all
the Company's net assets cannot be guaranteed and may be adversely impacted by
the level of the Company's liabilities and any claims made against the Company
by the Purchaser pursuant to the Sale Agreement or any other creditors. In the
event that Shareholders do not vote in favour of the Company entering into
voluntary liquidation, the Board would reassess the options available to the
Company to realise Shareholder value at that time, and there can be no
certainty that such options would result in the Company realising Shareholder
value in the near term.
In addition, in the event that the value of the Portfolio increases following
Completion, there is no guarantee that the anticipated return of value to
Shareholders will provide a better return to Shareholders than if the
Portfolio had been retained by the Company.
· The market price of the Ordinary Shares may go down as well as up
and may not reflect the value of the underlying assets
Shareholders should be aware that the value of an investment in the Company
may go down as well as up and can be highly volatile and may not reflect the
NAV per Ordinary Share. The price at which the Ordinary Shares may be quoted
and the price which Shareholders may realise for their Ordinary Shares will be
influenced by a large number of factors, some specific to the Company and its
operations and some which may affect its industry, other comparable companies
or publicly traded companies as a whole. The price of the Company's Ordinary
Shares is ultimately determined by the interaction of supply and demand for
Ordinary Shares in the market as well as the NAV per Ordinary Share and other
measures of performance, such as underlying earnings. The price per Ordinary
Share can therefore fluctuate and may represent a discount to the NAV per
Ordinary Share or the expected multiple of earnings. This discount itself is
variable as conditions for supply and demand change. This can mean that the
price per Ordinary Share may go down as well as up and the price per Ordinary
Share can fall when the NAV per Ordinary Share and/or other Company specific
performance measures rise, or vice versa. There is no guarantee that the
market price of the Ordinary Shares will fully reflect their underlying NAV or
other measures of performance. Investors may, therefore, realise less than, or
lose all of, their investment.
· Certain investors wanting exposure to the Portfolio may sell their
Ordinary Shares as a result of the Disposal. However, similarly, certain
investors wanting to capitalise on the Estimated Net Assets may seek to
acquire Ordinary Shares and this may impact liquidity in the Ordinary Shares
and the market price of the Ordinary Shares. The market sentiment in relation
to the Disposal will be one such factor and this, together with other factors
including the actual or anticipated fluctuations in the financial performance
of the Company's competitors, market fluctuations, and legislative or
regulatory changes in the industry or those affecting investment trusts
generally, could lead to the market price of the Ordinary Shares going up or
down and not reflecting the NAV per Ordinary Share. Changes in the market
price of the Ordinary Shares will not alter the consideration payable by the
Purchaser.
Appendix 2 - Related Party Transactions
In consideration of the additional services provided by the Directors in
relation to the Proposals, additional fees of c.£65,000 in aggregate will be
paid to the Directors, equivalent to six months' total fees each.
Appendix 3 - Legal and Arbitration Proceedings
The Company
There are no governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which the Company is
aware) which may have, or have had, during the 12 months prior to the date of
this announcement, a significant effect on the Company's financial position
or profitability.
The Target Group
There are no governmental, legal or arbitration proceedings (including any
such proceedings which are pending or threatened of which the Company is
aware) which may have, or have had, during the 12 months prior to the date of
this announcement, a significant effect on the financial position or
profitability of the Target Group.
Appendix 4 - Significant Change Statement
The Company
There has been no significant change in the financial or trading position or
the financial performance of the Company since 31 March 2024, being the date
to which the last published financial information relating to the Company was
prepared.
Appendix 5 - Material Contracts
The Company
Save as disclosed in Appendix 5, no contracts have been entered into (other
than contracts entered into in the ordinary course of business) by the
Company, either: (a) within the two years immediately preceding the date of
this announcement which are or may be material to the Company; or (b) at any
time, which contain any provision under which the Company has any obligation
or entitlement which is or may be material to the Company as at the date of
this announcement.
Sale Agreement
Parties and structure
The Sale Agreement was entered into on 2 October 2024 between the Company and
the Purchaser. Pursuant to the terms of the Sale Agreement, the Purchaser has
agreed, subject to the satisfaction or waiver of the Conditions, to acquire
the entire issued share capital the Target.
Conditions to Completion
Completion of the Disposal is conditional upon the satisfaction (or waiver,
where applicable) of the following Conditions:
· the Shareholder Approval Condition; and
· the Noteholders Consent Condition
Completion shall take place on the date falling twelve Business Days following
the date on which the last Condition is satisfied or waived (as applicable) or
such other date as agreed by the parties to the Sale Agreement, which is
expected to be in early to mid-November 2024 (the "Anticipated Completion
Date").
If the Conditions are not satisfied or waived (to the extent they are capable
of being waived) before close of business on the Longstop Date, the Sale
Agreement may be terminated by either the Company or the Purchaser in
accordance with its terms.
Purchase Price
The aggregate price for the entire issued share capital of the Target payable
on Completion (being the Purchase Price) shall be an amount equal to:
· the Headline Price; less
· the Agreed Deduction Amount; plus
· the Investment Adviser Fee Amount; plus
· the D&O Insurance Amount; plus
· an amount equal to 5 per cent. per annum (accruing on a daily
basis and calculated pro-rata on the basis of a 365-day year) on the aggregate
of the Headline Price, minus the Agreed Deduction Amount, plus the Shareholder
Loan Amount (being the equity value of the Portfolio), plus the Investment
Adviser Fee Amount calculated from (and including) 1 October 2024 up to (and
including) the Completion Date.
The Purchase Price has been agreed on the basis of a "locked box" closing
mechanism using a set of unaudited management accounts of the Target Group
drawn up as at the Locked Box Date. Accordingly, the Sale Agreement contains
certain customary provisions which apply from the period from the Locked Box
Date to Completion to compensate the Purchaser against unapproved value being
transferred from the Target Group to the Company in that period, subject to
certain customary time limitations.
As the Purchaser is a new vehicle, the Consortium has made available credit
support to fund the Purchase Price and repayment of the amounts outstanding
under the Revolving Credit Facility and Shareholder Loan Agreements at
Completion in the form of an equity commitment letter from entities with funds
available/appropriate covenant strength.
Pre-Completion Undertakings
The Company has given customary undertakings in relation to the period between
the signing of the Sale Agreement and Completion, including to procure the
Target Group operates in the ordinary and usual course of business, subject to
certain agreed upon and customary exceptions or with the prior written consent
of the Purchaser.
Deal Protection Provisions and Break Fee
The Sale Agreement contains certain deal protection provisions (together, the
"Deal Protection Provisions") which subject to the limited exceptions set out
below:
· prevent the Company from: (i) soliciting interest from or
engaging or negotiating with any third party in respect of any Alternative
Proposal (beyond rejecting the approach or seeking clarification of its
terms); (ii) sharing confidential information with a third party in connection
with any Alternative Proposal; (iii) postponing, adjourning or cancelling the
General Meeting or amending the Resolution; or (iv) changing or withdrawing
the Recommendation; and
· in the event the Company or any third party makes an announcement
via a Regulatory Investment Service in relation to the Disposal or any
Alternative Proposal, require the Company to promptly restate the
Recommendation.
If a third party notifies the Company or announces publicly that it is
considering making a Cash Offer prior to satisfaction of the Shareholder
Approval Condition and the Board considers (acting reasonably) that the
approach may lead to a Superior Cash Offer, the Company may engage with the
third party provided that: (i) it must decide whether to engage with the third
party within four Business Days of the date of first approach; and (ii) if it
decides to engage with the third party, it must notify the Purchaser that an
approach has been made. In these circumstances:
· the restrictions on engaging, negotiating and sharing confidential
information with that third party in connection with the possible Cash Offer
will fall away, and the Company will be permitted to adjourn or postpone the
General Meeting on one occasion only by up to seven calendar days from the
date of first approach by the third party; and
· the Purchaser will have a right to terminate the Sale Agreement
at any time up to the day prior to the General Meeting.
If a third party makes a Cash Offer prior to satisfaction of the Shareholder
Approval Condition which in the Board's reasonable opinion is a Superior Cash
Offer, then the Board will be entitled to withdraw the Recommendation and the
Deal Protection Provisions will cease to apply. In such circumstances, unless
the Company promptly restates the Recommendation and rejects the Cash Offer, a
break fee equal to one per cent. of the Company's market capitalisation as at
close of business on the last Business Day prior to the date of announcement
of the Disposal (being approximately £0.96 million) will be payable by the
Company to the Purchaser:
· on the Cash Offer being declared wholly unconditional, or, if
implemented by way of a scheme of arrangement, becoming effective; or
· in the event the Cash Offer lapses or is withdrawn, on the
later of the Longstop Date and five Business Days after such lapse or
withdrawal.
The Purchaser will also be entitled (at its option) to payment of the Break
Fee if the Recommendation is changed or withdrawn in any other circumstances
as an alternative to pursuing remedies for breach of the Deal Protection
Provisions.
The Company is also obliged to reject any Alternative Approach following
satisfaction of the Shareholder Approval Condition.
Company Warranties, Undertakings, Covenants and Indemnities and Limitations on
Liability
The Company has given warranties to the Purchaser which are customary for a
transaction of this nature. These include, among other things, warranties in
respect of its capacity to enter into and perform the Sale Agreement, title to
the shares in the Target Group, the Locked Box Accounts and other accounting
and financial matters, transactions since the Locked Box Date, regulatory
matters, Target Group assets, insurance, material contracts, litigation,
insolvency, intellectual property, data protection, real estate matters,
environmental matters, anti-bribery and corruption, sanctions, competition and
taxation.
The Company has also given a customary tax covenant in favour of the
Purchaser, which covers any taxation in respect of the period prior to
Completion, subject to usual exclusions for a transaction of this nature.
The Sale Agreement contains certain customary financial limitations, time
limitations and other limitations and exclusions on the ability of the
Purchaser to claim against the Company for breach of the Sale Agreement, or
under the tax covenant. The total aggregate liability of the Company for
breach of the warranties or under the tax covenant will not exceed £1. The
total aggregate liability of the Company for all other claims under the Sale
Agreement will not exceed:
· in respect of claims notified to the Company on or before the
date falling ten weeks after the Completion Date, the Purchase Price, plus the
Shareholder Loan Amount; and
· in respect of claims notified to the Company after the date
falling ten weeks after the Completion Date, £1 million.
The Purchaser has procured warranty and indemnity insurance in respect of the
warranties and the tax covenant, such that the Purchaser's sole recourse for a
breach of the warranties or under the tax covenant (save in respect of fraud
or fraudulent misrepresentation) shall be under the warranty and indemnity
insurance policy.
The limitations on liability (and the obligation on the Purchaser to seek
recovery under the warranty and indemnity insurance policy) shall not apply in
the case of fraud or fraudulent misrepresentation by the Company.
Purchaser Warranties and Indemnities
The Purchaser has given warranties to the Company in respect of, among other
things, its power and authority to enter into the Sale Agreement and the other
documents being entered into in connection with the Sale Agreement.
The Company has entered into the following parent company guarantees and
credit support arrangements (the "Parent Company Guarantees") in respect of
the Target Group's obligations under the following agreements:
· guarantee dated 6 September 2022 between the Company, Amazon UK
Services Limited and Sonne Solar Limited, relating to a solar power purchase
agreement in connection with LCY2;
· guarantee dated 6 September 2022 between the Company, Amazon UK
Services Limited and Sonne Solar Limited, relating to a solar power purchase
agreement in connection with LTN4;
· guarantee dated 6 September 2022 between the Company, Amazon UK
Services Limited and Sonne Solar Limited, relating to a solar power purchase
agreement in connection with EDI4;
· guarantee dated 6 September 2022 between the Company, Amazon UK
Services Limited and Sonne Solar Limited, relating to a solar power purchase
agreement in connection with MAN2;
· guarantee dated 6 September 2022 between the Company, Amazon UK
Services Limited and Sonne Solar Limited, relating to a solar power purchase
agreement in connection with BHX2;
· guarantee dated 6 September 2022 between the Company, Amazon UK
Services Limited and Sonne Solar Limited, relating to a solar power purchase
agreement in connection with BHX3;
· guarantee dated 6 September 2022 between the Company, Amazon UK
Services Limited and Sonne Solar Limited, relating to a solar power purchase
agreement in connection with BHX4;
· guarantee dated 6 September 2022 between the Company, Tesco Stores
Limited and Sonne Solar Limited, relating to a framework power purchase
agreement dated 20 August 2018 between Tesco Stores Limited and Sonne Solar
Limited;
· guarantee dated 6 September 2022 between the Company, Tesco
Stores Limited and Sonne Solar Limited, relating to the site power purchase
agreements and related leases between Tesco Stores Limited and Sonne Solar
Limited;
· guarantee dated 18 July 2022 between the Company and Nissan
Motor Manufacturing (UK) Limited, relating to a (i) power purchase agreement
dated 12 October 2021 between Nissan Motor Manufacturing Limited and Hylton
Plantation Solar Farm Limited, and (ii) a lease dated 12 October 2021 between
the Company and Nissan Motor Manufacturing (UK) Limited; and
· as a party to the lease of the airspace above the roof of a
Tesco store at Thetford, dated 15 February 2023 between the Company (as
guarantor), Tesco Stores Limited (as landlord) and Sonne Solar Limited (as
tenant), together with a related licence to underlet and licence to alter.
The Company and the Purchaser have agreed to use reasonable endeavours to
procure the replacement of such Parent Company Guarantees before (but with
effect from) Completion and following Completion. The Purchaser has undertaken
to indemnify the Company in respect of all amounts payable by the Company
under the Parent Company Guarantees (and all costs and expenses that the
Company incurs in connection with the Parent Company Guarantees) after
Completion.
Termination
Either the Company or the Purchaser may terminate the Sale Agreement in the
event that:
· the Conditions are not satisfied or waived (to the extent they
are capable of being waived) on or before the Longstop Date; or
· Completion is deferred more than once because a party fails to
satisfy its Completion obligations.
The Purchaser may terminate the Sale Agreement prior to Completion without
liability on its part upon any of the following events:
· a breach by the Company of any of the fundamental warranties,
relating to (i) title to the Target's shares, (ii) power and authority of the
Company, (iii) the ownership of the Target Group and (iv) the solvency of the
Company and the Target Group, if they were repeated on Completion; or
· a material breach of certain agreed pre-completion
undertakings; or
· a catastrophic event which has the effect of extinguishing 10 per
cent. of the generating capacity of the projects owned by the Target Group; or
· where the security created by the RCF Security Documents has been
enforced or the debt has been accelerated, or mandatory prepayment demanded
under the Revolving Credit Facility Agreement.
In addition, the Purchaser may terminate the Sale Agreement at any time up to
the day prior to the General Meeting where a third party has notified the
Company or announced publicly that it is considering making a Cash Offer and
the Board has decided to engage with such third party where it considers
(acting reasonably) that the approach may lead to a Superior Cash Offer.
Governing Law and Jurisdiction
The Sale Agreement is governed by English law. The courts of England and Wales
have exclusive jurisdiction in relation to all disputes arising out of, or in
connection with, the Sale Agreement.
AIFM Agreement
The Company and the AIFM entered into the AIFM Agreement on 1 November 2021
pursuant to which the AIFM is appointed to act as the Company's alternative
investment fund manager, as defined in the UK AIFMD Laws and the EU AIFM
Directive.
Pursuant to the AIFM Agreement the AIFM is entitled to receive a fee which is
calculated on such basis and in such amount as agreed in writing from time to
time between the AIFM and the Company.
The AIFM Agreement is terminable by either the AIFM or the Company giving to
the other not less than 6 months' written notice. The AIFM Agreement may be
terminated earlier by either party with immediate effect in certain
circumstances, including if the other party shall go into liquidation or an
order shall be made or a resolution shall be passed to put the other party
into liquidation, or if the other party has committed a material breach of any
obligation under the AIFM Agreement, and in the case of a breach which is
capable of remedy fails to remedy it within 30 days.
The Company has given certain market standard indemnities in favour of the
AIFM in respect of the AIFM's potential losses in carrying on its
responsibilities under the AIFM Agreement. The maximum aggregate liability of
the AIFM under the AIFM Agreement is the lesser of £5 million or an amount
equal to ten times the annual fee payable to the AIFM.
The AIFM Agreement is governed by the laws of Guernsey.
In anticipation of Completion and the proposed voluntary liquidation of the
Company, the Company and the AIFM have agreed that the AIFM Agreement will
terminate on the Company entering into voluntary liquidation.
Investment Advisory Agreement
The Company, the Target, the AIFM and the Investment Adviser entered into an
investment advisory agreement on 1 November 2021 (as amended and restated from
time to time) pursuant to which the Investment Adviser is appointed to provide
certain services to the Company, the Target and the AIFM in relation to the
Company and its portfolio (the Company and the Investment Adviser being the
"Primary Parties"), including certain administrative services (including, but
not limited to, the calculation of the Company's NAV and the NAV per Ordinary
Share and the preparation of the Company's financial statements) (the
"Investment Advisory Agreement").
The Investment Advisory Agreement shall continue in force for an initial
period of 5 years from 23 November 2021, the date of the Company's initial
public offering (the "Initial Term"). Following the Initial Term, the
Investment Advisory Agreement will continue in full force and effect unless
and until terminated by either of the Primary Parties on not less than 12
months' notice to the other Primary Party and the AIFM. The Investment
Advisory Agreement may be immediately terminated by either of the Primary
Parties in certain circumstances, such as insolvency of the other Primary
Party or material breach by the other Primary Party which is not remedied.
The Company has agreed to indemnify the Investment Adviser for losses that the
Investment Adviser may incur in the performance of its duties pursuant to the
Investment Advisory Agreement or otherwise in connection with the Company's
activities that are not attributable to, among other things, a material breach
of the Investment Advisory Agreement by, or the negligence, fraud, or wilful
misconduct of, the Investment Adviser (in each case as finally determined in a
decision on the merits in any action, suit or proceeding, or on a formal
admission). The indemnity is customary for agreements of this nature. The
Investment Adviser's maximum liability under the Investment Advisory Agreement
is limited to £10 million.
Pursuant to the Investment Advisory Agreement, the Investment Adviser is
entitled (i) to an annual fee payable quarterly in arrears in respect of
accounting and administration services of £50,000 plus a percentage of the
Adjusted NAV depending on the size of the Adjusted NAV (ranging from 0.015 to
0.02 per cent.) and (ii) monthly and semi-annual managements fees, which
equate to an annual management fee of 0.95 per cent. of the Adjusted NAV up to
and including £500 million and an annual management fee of 0.75 per cent. of
the Adjusted NAV above £500 million (with the semi-annual management fees
payable each year representing 25 per cent. of the total annual management
fees payable to the Investment Adviser).
In the event that a Third Party Offer becomes unconditional and, as a result,
the right to cast a majority of the votes which may ordinarily be cast on a
poll at a general meeting of the Company has or will become vested in a third
party offeror (and/or any persons acting in concert with it) and, following
such Third Party Offer becoming unconditional, notice to terminate the
Investment Advisory Agreement is given by the Company, in addition to the fees
described above, the Investment Adviser shall be entitled to receive a fee
(the "Change of Control Fee") equal to the lower of:
· an amount equal to two years of monthly management fees and
semi-annual management fees (in each case by reference to the Adjusted NAV had
it been calculated by reference to the NAV as at the date of the last monthly
management fee and semi-annual management fee paid by the Company prior to the
termination of the Investment Advisory Agreement); and
· the amount (if any) by which the total Third Party Offer price for
the Ordinary Shares which are the subject of the Third Party Offer exceeds an
amount equal to 108 per cent. of the NAV for such Ordinary Shares on the date
the Third Party Offer is announced.
Payment of the Change of Control Fee shall be conditional on the annualised
NAV Total Return per Ordinary Share for the 3 years prior to the announcement
of the Third Party Offer or, if the Third Party Offer is announced prior to
the third anniversary of the Company's initial public offer, the annualised
NAV Total Return per Share for such shorter period, exceeding 8 per cent. An
equivalent provision for payment of a Change of Control Fee exists where the
Company disposes of all or substantially all of its assets (other than in an
orderly winding up or on the advice of the Investment Adviser) and returns the
proceeds of such disposal to Shareholders to the extent that the Company's NAV
is consequently reduced to less than £200 million. The Change of Control Fee
will not be payable as a result of the Disposal.
The Investment Advisory Agreement is governed by the laws of England.
The Target will cease to be a party to the Investment Advisory Agreement on
Completion. In anticipation of Completion and the proposed voluntary
liquidation of the Company, the parties to the Investment Advisory Agreement
have agreed that the Investment Advisory Agreement will terminate on the
Company entering into voluntary liquidation.
Company Secretarial Services Agreement
The Company is party to a company secretarial services agreement with the
Company Secretary dated 2 April 2024 (the "Company Secretarial Services
Agreement") pursuant to which the Company Secretary is appointed to perform
certain secretarial services to the Company and its subsidiaries.
The Company Secretarial Services Agreement shall continue in force for an
initial term of 18 months from 2 April 2024 (the "Initial Term"). The Company
Secretarial Services Agreement may be terminated so as to take effect at the
end of the Initial Term by the Company providing not less than 6 months' prior
written notice to the Company Secretary. Following the Initial Term, the
appointment shall continue in force until terminated by the Company or the
Company Secretary by giving the other party not less than 3 months' notice in
writing (or such shorter notice as the parties may agree). The Company
Secretarial Services Agreement may be terminated immediately by either party
in the case of certain specified circumstances, including material and
continuing breach or insolvency of the other party.
The Company Secretarial Services Agreement contains certain customary
indemnities by the Company in favour of the Company Secretary. The liability
of the Company Secretary is limited (i) in the first twelve months of the
agreement to an amount equal to four times the minimum fee payable in respect
of that period and thereafter (ii) to an amount equal to four times the
aggregate fees paid under the agreement in respect of the preceding year.
Under the terms of the Company Secretarial Services Agreement, the Company
Secretary is entitled to receive a company secretarial fee of £85,000 per
annum for the provision of certain company secretarial services to the
Company. The Company Secretary is entitled to additional fees for providing
company secretarial services to any subsidiaries of the Company and for
providing additional services to the Company which are outside the scope of
the company secretarial services covered by the company secretarial fees
referred to above.
The Company Secretarial Services Agreement is governed by the laws of England.
In anticipation of Completion and the proposed voluntary liquidation of the
Company, the Company and the Company Secretary have agreed that the Company
Secretarial Services Agreement will terminate on the Company entering into
voluntary liquidation.
Registrar Agreement
The Registrar Agreement dated 1 November 2021 between the Company and the
Registrar pursuant to which the Company appointed the Registrar as registrar
of the Company.
The Registrar Agreement is for an initial period of 3 years from 23 November
2021, the date of the Company's initial public offering, with automatic
renewal for successive 12 month periods unless and until terminated by either
party on not less than 6 months' notice. The agreement is also subject to
immediate termination on the occurrence of certain events, including material
and continuing breach or insolvency.
The Registrar contains certain customary undertakings and indemnities by the
Company in favour of the Registrar. The Registrar's liability is limited to
the lesser of £500,000 or an amount equal to five times the annual fee
payable under the agreement.
Under the terms of the Registrar Agreement, the Registrar is entitled to
customary fees.
The Registrar Agreement is governed by the laws of England.
Placing agreement in relation to the initial public offering of the Company
The placing agreement dated 30 October 2021 between the Company, the
Investment Adviser, the Directors, Alvarium Securities Limited and Dickson
Minto W.S., pursuant to which Alvarium Securities Limited agreed to use its
reasonable endeavours to procure subscribers for Ordinary Shares at the
Company's launch and/or C Shares pursuant to the placing programme launched at
the time of the Company's initial public offering.
In consideration for its services, Alvarium Securities Limited was paid a
commission by the Company in consideration for its services under the
agreement.
The Company, the Investment Adviser and the Directors gave warranties and
indemnities to Alvarium Securities Limited, which were customary for an
agreement of this nature.
The placing agreement is governed by English law.
Introductory services engagement letter
The introductory services engagement letter dated 1 November 2021 between the
Company and the Investment Adviser pursuant to which the Investment Adviser
agreed to use reasonable endeavours, as a non-exclusive independent marketer,
to introduce to the Company prospective investors which the Company and the
Investment Adviser agreed in writing that it may approach.
The Investment Adviser is paid a fixed fee for arranging meetings or a
commission of one per cent. of the aggregate subscription price for Ordinary
Shares for which prospective investors introduced by the Investment Adviser
subscribe (or such other commission as may be agreed between the Company and
the Investment Adviser in writing).
Payments to the Investment Adviser under the introductory services engagement
letter shall not, when aggregated with any other transaction or arrangement
entered into by the Investment Adviser or any of its associates (as defined in
the Listing Rules) with the Company or any of its subsidiaries in the 12 month
period before the date of such payment, exceed 4.99 per cent. on any of the
class tests set out in the Listing Rules.
The introductory services engagement letter contains customary indemnities in
favour of the Company.
The introductory services engagement letter is governed by English law.
Stifel financial advisory and sponsor services agreement
On 22 April 2024, the Company entered into a financial advisory and sponsor
services agreement on customary terms with Stifel pursuant to which Stifel
agreed to provide (i) financial advisory services in relation to the
Disposal, including advice on the merits and the terms of the Disposal and in
respect of any subsequent winding-up and de-listing of the Company and (ii)
sponsor services under the Listing Rules.
The agreement contains, amongst other things, certain customary obligations on
the Company, including that the Company agrees to comply with the Listing
Rules and to pay a fee to Stifel on the terms agreed between Stifel and the
Company.
The agreement contains certain customary warranties and indemnities from the
Company, together with provisions that enable Stifel to terminate the
agreement in certain circumstances, which is usual for an agreement of this
kind.
The agreement is governed by the laws of England.
The Target Group
Save as disclosed in this Appendix 5, no contracts have been entered into
(other than contracts entered into in the ordinary course of business) by the
Target Group, either: (a) within the two years immediately preceding the date
of this announcement which are or may be material to the Target Group; or (b)
at any time, which contain any provision under which the Target Group has any
obligation or entitlement which is or may be material to the Target Group as
at the date of this announcement.
Revolving Credit Facility Agreement
The Target is party to a facility agreement originally dated 1 September 2023
with National Westminster Bank plc (in various capacities, including as
lender) (as amended from time to time) (the "Revolving Credit Facility
Agreement") pursuant to which National Westminster Bank plc has made available
a secured, revolving credit facility of £30 million. The Revolving Credit
Facility Agreement includes a £20 million accordion facility, which has been
exercised in full and £14 million of which has been utilised by the Target.
Interest is payable at a rate of 1.30 per cent. per annum over SONIA. Any
outstanding amounts are to be repaid in full on the date falling 3 years after
'Financial Close' (which is the satisfaction of the conditions precedent to
initial utilisation), with an option for a 1 year extension. The Revolving
Credit Facility contains standard events of default and covenants for a
facility of this nature.
Security arrangements, in respect of the Revolving Credit Facility Agreement,
have been entered into by members of the Atrato Group, comprising (i) a
shareholder security agreement entered into by the Company, charging the
shares it holds in the Target, (ii) a subordination deed entered into by the
Company, subordinating any intercompany loans, (iii) debentures entered into
by the Target and (iv) debentures entered into by various members of the
Target Group and (v) a bank account agreement entered into by the Target and
National Westminster Bank plc (in various capacities).
£44 million is currently drawn under the Revolving Credit Facility.
The Revolving Credit Facility Agreement is governed by the laws of England.
The Revolving Credit Facility will be prepaid and cancelled on Completion.
ASG Note Purchase Agreement
A Shade Greener (F2) Ltd ("ASG") (as the company) and HGPE ASG Finance
Limited, HGPE ASG Limited and HGPE ASG Assetco Limited (each as obligors) are
party to a note purchase agreement dated 14 August 2019 (as amended pursuant
to an amendment agreement dated 24 October 2023) (the "ASG Note Purchase
Agreement"), pursuant to which ASG issued £30 million of secured fixed rate
notes to a number of subscribers. The notes are redeemed in part on a
bi-annual basis, with the final redemption date being 30 June 2036. The
interest payable on the notes is fixed at 2.07 per cent. per annum.
The agreement contains standard events of default and the obligors under the
agreement have provided standard representations and undertakings for an
agreement of this nature.
The ASG Note Purchase Agreement is secured by way of (i) a debenture entered
into by ASG and various other members of the Target Group and (ii) a
shareholder security agreement entered into by Rooftop Solar 2 Limited.
There remains approximately £24.2 million payable in respect of the notes
under the ASG Note Purchase Agreement as at the Latest Practicable Date.
The ASG Note Purchase Agreement is governed by the laws of England.
HGPE Steel Note Purchase Agreement
HGPE Steel Limited ("HGPE Steel") (as the company) and HGPE Steel Nominee
Limited, Empower Community Solar LLP, A Share Greener (F8) LLP and HGPE ASG2
Assetco LLP (each as obligors) are party to a note purchase agreement dated 14
August 2019 (as amended pursuant to an amendment agreement dated 24 October
2023) (the "HGPE Steel Note Purchase Agreement"), pursuant to which HGPE Steel
issued £27.5 million of secured fixed rate notes to a number of subscribers.
The notes are redeemable in part on a bi-annual basis, with the final
redemption date being 30 June 2033. The interest payable on the notes is fixed
at 1.99 per cent. per annum.
The agreement contains standard events of default and the obligors under the
agreement have provided standard representations and undertakings for an
agreement of this nature.
The HGPE Steel Note Purchase Agreement is secured by way of (i) a debenture
entered into by HGPE Steel and various other members of the Target Group and
(ii) a shareholder security agreement entered into by Rooftop Solar 2 Limited.
There remains approximately £20.0 million payable in respect of the notes
under the HGPE Steel Note Purchase Agreement as at the Latest Practicable
Date.
The HGPE Steel Note Purchase Agreement is governed by the laws of England.
Management Services Agreement
The Target is party to a management services agreement dated 2 August 2022
with Vector Renewables UK Ltd ("Vector") (the "Management Services
Agreement"), pursuant to which Vector provides a range of services to a number
of subsidiary project companies of the Target and the corresponding projects
including, but not limited to asset management services, technical analysis
and operations and maintenance management services.
The Management Services Agreement shall continue for an initial term of 3
years (the "Initial Term"), with the agreement automatically renewing for
further 3-year periods unless either party serves the other with a termination
notice at least 6 months in advance of the end of the relevant term. The
agreement is also subject to immediate termination on the occurrence of
certain events, including material and continuing breach or insolvency.
Vector is entitled to receive payment of a fee of £25,000 per annum during
the Initial Term, payable quarterly, with such fee after the Initial Term
being based upon the MW capacity of specific projects (subject to price floors
and caps). Vector is also entitled to additional fees outside those listed
above in relation to services which are outside the scope of the services
covered by the fees referred to above.
The Management Services Agreement includes customary indemnities given by both
the Target and Vector. Liability is limited to two times the amount of the
fees paid by the Target under the Management Services Agreement.
The Management Services Agreement is governed by the laws of England and
Wales.
Appendix 6 - Revised Investment Objective and Policy
Investment Objective
The investment objective of the Company is to realise all of its existing
assets and to return cash to Shareholders.
Investment Policy
The Company may not make any new investments, save that:
· investments may be made to honour commitments under existing
contractual arrangements; and
· further investments may be made into the Company's existing
portfolio in order to protect or enhance an asset's realisable value.
The net proceeds from realisations will be used to repay borrowings and make
returns of capital to Shareholders (net of provisions for the Company's costs
and expenses) in such manner as the Board considers appropriate.
Any cash received by the Company as part of the realisation process will be
held by the Company as cash on deposit and/or in liquid cash equivalent
securities (including direct investments in UK treasuries and/or gilts, funds
holding such investments, money market or cash funds and/or short-dated
corporate bonds or funds that invest in such bonds) pending its return to
Shareholders.
Gearing policy
The Company may continue to make use of medium and long-term external debt
(including at the SPV level) of up to 40 per cent. of the Company's Gross
Asset Value immediately following drawdown of the financing and assessed on a
look-through basis.
In addition, the Company and/or its subsidiaries may continue to make use of
short-term debt (being typically for a term of no more than 12 months), such
as revolving credit facilities. Such short-term debt shall not exceed 20 per
cent. of the Company's Gross Asset Value immediately following drawdown of the
financing and assessed on a look-through basis.
Hedging policy
The Company may enter into hedging arrangements in respect of interest rates
and/or power prices. The Company will not undertake any speculative hedging
transactions and hedging transactions shall be limited to those which are
necessary or desirable for the purposes of efficiently managing the Company's
investments and protecting or enhancing returns therefrom. The Company may
make use of currency hedging where investments are made in currencies other
than pounds Sterling with the objective of reducing the Company's exposure to
fluctuations in exchange rates.
Changes to and compliance with the investment policy
The Company will at all times invest and manage its assets in accordance with
its published investment policy. Material changes to the Company's investment
policy may only be made in accordance with the prior approval of the
Shareholders by way of ordinary resolution and the prior approval of the FCA
in accordance with the UK Listing Rules. Non-material changes to the
investment policy must be approved by the Board, taking into account advice
from the AIFM and the Investment Adviser where appropriate. In the event of a
breach of the investment policy, including the investment restrictions set out
above, the AIFM shall inform the Board upon becoming aware of such breach and
if the Board considers the breach to be material, notification will be made to
a Regulatory Information Service.
Appendix 7 - Definitions
The following definitions apply throughout this announcement unless the
context requires otherwise.
Adjusted NAV (i) in relation to the monthly management fee payable under the Investment
Advisory Agreement, the last published NAV (subject to adjustment for material
changes); and (ii) in relation to the semi-annual management fee payable under
the Investment Advisory Agreement, the published NAV relating to the last day
of the six month period to which the semi-annual management fee relates
Agreed Deduction Amount the Shareholder Loan Amount, the ASG Debt Amount, the W&I Insurance
Amount, the RCF Pay-Off Amount, the RCF Adjustment Amount and the Notified
Leakage Amount
AIFM JTC Global AIFM Solutions Limited, a limited liability company incorporated in
Guernsey with company number 62964 and having its registered office at Ground
Floor, Dorey Court, Admiral Park, St. Peter Port, Guernsey, GY1 2HT
AIFM Agreement the management agreement entered into between the Company and the AIFM on 1
November 2021, as amended and supplemented from time to time
Alternative Proposal any approach from (or on behalf of) any person (or any adviser to any person)
in respect of any alternative proposal to the Disposal, including but not
limited to: (i) any restructuring or merger involving the Company or any of
its business; (ii) the acquisition of any of the Company's assets or
subsidiaries (including any shares in the Target); and/or (iii) the
acquisition or issue of any of the Company's shares
Announcement this announcement published by the Company in respect of the Proposals
Anticipated Completion Date the date falling twelve Business Days following the date on which the last
Condition is satisfied or waived (as applicable) or such other date as agreed
by the parties to the Sale Agreement, which is expected to be in early to
mid-November 2024
ASG A Shade Greener (F2) Ltd
ASG Debt Amount £45,722,491.92
ASG Debt Documents the ASG Note Purchase Agreement (and related security documents) and HGPE
Steel Note Purchase Agreement (and related security documents)
ASG Note Purchase Agreement the note purchase agreement dated 14 August 2019 (as amended pursuant to an
amendment agreement dated 24 October 2023) to which ASG (as the company) and
HGPE ASG Finance Limited, HGPE ASG Limited and HGPE ASG Assetco Limited (each
as obligors) are party
Atrato Group the Company and any subsidiaries of the Company from time to time, including
the Target (but following Completion of the Disposal shall comprise the
Company only), and "member of the Atrato Group" shall be construed accordingly
Board the board of Directors of the Company
Brookfield BGTF Proton Holdings Limited, a private limited company incorporated in
England and Wales with company number 13700221 having its registered office at
Level 25, 1 Canada Square, London, England, E14 5AA
Break Fee a break fee equal to one per cent. of the Company's market capitalisation as
at close of business on the last Business Day prior to the date of
announcement of the Disposal (being approximately £0.96 million)
Business Day a day (other than a Saturday or Sunday or public holiday in England and Wales)
on which banks are open in London for general commercial business
Cash Offer an Alternative Proposal which is, or would be if made, a firm cash offer for
the entire issued share capital of the Company (where relevant, other than
such shares as are already held by the offeror or its associates) under Rule
2.7 of the Takeover Code
Change of Control Fee the conditional change of control fee payable by the Company to the Investment
Adviser in the event of a change of control of the Company, pursuant to the
Investment Advisory Agreement
Circular the circular to be published by the Company on or around 4 October 2024 in
relation to the Disposal and the Proposals
Companies Act the Companies Act 2006, as amended from time to time
Company Atrato Onsite Energy plc, a public limited company incorporated in England and
Wales with registered number 13624999 and having its registered office at The
Scalpel, 18(th) Floor, 52 Lime Street, London, United Kingdom, EC3M 7AF
Company Secretarial Services Agreement the company secretarial services agreement entered into between the Company
and the Company Secretary dated 2 April 2024
Company Secretary Hanway Advisory Limited, a private limited company incorporated in England and
Wales with registered number 11178874 and having its registered office at The
Scalpel, 18(th) Floor, 52 Lime Street, London, United Kingdom, EC3M 7AF
Completion completion of the Disposal in accordance with the provisions of the Sale
Agreement
Completion Date the date of completion of the Disposal
Conditions the Shareholder Approval Condition and the Noteholders Consent Condition
Consortium Brookfield and RAIM Apollo
Consortium's Headline Valuation the Consortium's valuation of the Company's portfolio of solar assets as at 31
March 2024 of £197 million 7 (#_ftn7)
C&I corporate and industrial
CPI the consumer price index compiled by the Office for National Statistics
CREST the UK-based system for the paperless settlement of trades in listed
securities and the holding of uncertificated listed securities operated by
Euroclear in accordance with the Uncertificated Securities Regulations 2001
(SI 2001/3755), as amended from time to time
CREST Manual the manual published by Euroclear describing the CREST system, as amended from
time to time
CREST Proxy Instruction a proxy appointment or instruction made using CREST, authenticated in
accordance with Euroclear's specifications and containing the information set
out in the CREST Manual
D&O Insurance Amount an amount equal to 50 per cent. of the policy premium payable (plus tax and
broker fees) to place on risk the directors' and officers' run-off insurance
cover for the six years following Completion
Deal Protection Provisions the deal protection provisions contained within the Sale Agreement (as
summarised in Appendix 5 of this announcement)
Directors the directors of the Company from time to time
Disclosure Guidance and Transparency Rules the Disclosure Guidance and Transparency Rules made by the FCA for the
purposes of Part VI of FSMA
Disposal the conditional agreement for the sale of the Company's entire portfolio of
solar assets
Estimated Net Assets the net assets available for distribution to Shareholders after taking into
account the net proceeds from the Disposal, the Company's known liabilities,
service provider termination costs, estimated advisory and transaction costs,
and estimated net interest income
Estimated Net Assets per Ordinary Share the Estimated Net Assets divided by the number of Ordinary Shares in issue
EU AIFM Delegated Regulation the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012
supplementing Directive 2011/61/EU of the European Parliament and of the
Council with regard to exemptions, general operating conditions, depositaries,
leverage, transparency and supervision
EU AIFM Directive Directive 2011/61/EU of the European Parliament and of the Council of 8 June
2011 on Alternative Investment Fund Managers and amending Directives
2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No
1095/2010, and the EU AIFM Delegated Regulation
EU Market Abuse Regulation Regulation (EU) No 596/2014 of the European Parliament and of the Council of
16 April 2014 on market abuse and repealing the Directive of the European
Parliament and of the Council of 28 January 2003 and Commission Directives
2003/124/EC, 2003/ 125/EC and 2004/72/EC
Euroclear Euroclear UK & International Limited, a private limited company
incorporated in England and Wales with registered number 02878738 and having
its registered office at 33 Cannon Street, London EC4M 5SB, the operator of
CREST
ESG environmental, social and governance
FCA or Financial Conduct Authority the Financial Conduct Authority of the UK, its predecessors or its successors
from time to time, including, as applicable, in its capacity as the competent
authority for the purposes of Part VI of FSMA
FSMA the Financial Services and Markets Act 2000, as amended from time to time
General Meeting the general meeting of the Company to be held at the offices of Stifel
Nicolaus Europe Limited, 4th Floor, 150 Cheapside, London EC2V 6ET at 3:30
p.m. on 22 October 2024 (or any adjournment thereof), notice of which is set
out in the Notice of General Meeting
Gross Asset Value the total value of the assets of the Atrato Group as determined by the
Directors in their absolute discretion in accordance with the accounting
policies adopted by the Directors
Headline Price the Consortium's Headline Valuation of the Company's portfolio of solar assets
as at 31 March 2024 8 (#_ftn8) and increased on a pound for pound basis by
(i) amounts drawn down under the Revolving Credit Facility; and (ii) a portion
of the Company's cash, in each case invested by the Target in further
investments (including costs) and/or used for the purposes of financing future
investments, in each case since 31 March 2024
Holders the holder of notes pursuant to the ASG Debt Documents
HGPE Steel HGPE Steel Limited, a private limited company incorporated in England and
Wales with registered number 08863455 and having its registered office at
6(th) Floor Capital Tower, 91 Waterloo Road, London, SE1 8RT
HGPE Steel Note Purchase Agreement the note purchase agreement entered into between HGPE Steel, HGPE Steel
Nominee Limited, Empower Community Solar LLP, A Shade Greener (F8) LLP and
HGPE ASG2 Assetco LLP (as obligors) dated 14 August 2019 (as amended on 24
October 2023)
Investment Adviser Atrato Partners Limited, a private limited company incorporated in England and
Wales with registered number 10533101 and having its registered office at c/o
Hillier Hopkins, First Floor, Radius House, 51 Clarendon Road, Watford, United
Kingdom, WD17 1HP
Investment Adviser Fee Amount an amount equal to (a) a daily rate amount of £3,399.00 of Investment Adviser
fees multiplied by (b) the number of days calculated from (but excluding) the
Locked Box Date to (and including) the Completion Date
Investment Advisory Agreement the investment advisory agreement entered into between the Company, the
Target, the AIFM and the Investment Adviser on 1 November 2021, as amended and
supplemented from time to time
Latest Practicable Date 2 October 2024 (being the latest practicable date prior to the publication of
this announcement)
Listing Rules the UK Listing Rules made by the FCA for the purposes of Part VI of FSMA, as
amended from time to time
Locked Box Accounts the unaudited quarterly management accounts for the period to the Locked Box
Date for the Target and certain members of the Atrato Group
Locked Box Date 31 March 2024
London Stock Exchange London Stock Exchange plc, a public limited company incorporated in England
and Wales with registered number 02075721 and having its registered office at
10 Paternoster Square, London EC4M 7LS
Longstop Date 8 January 2025 or such later date as may be agreed by the Company and the
Purchaser
Management Services Agreement a management services agreement entered into between the Target and Vector
dated 2 August 2022
Management Team certain employees of the Investment Adviser who will automatically transfer to
an affiliate of the Purchaser on Completion
MW Megawatt
NAV or Net Asset Value the value, as at any date, of the assets of the Company after deduction of all
its liabilities, before deducting dividends that have been declared but not
paid as at the relevant date, determined in accordance with the accounting
policies adopted by the Company from time to time
NAV per Ordinary Share or Net Asset Value per Ordinary Share at any time the Net Asset Value attributable to the Ordinary Shares divided by
the number of Ordinary Shares in issue (other than Ordinary Shares held in
treasury) at the date of calculation
NAV Total Return per Ordinary Share for any period, (A + B) / C expressed as a percentage where:
· A is (i) the NAV per Ordinary Share at the end of such period
less (ii) the NAV per Ordinary Share at the start of such period;
· B is the amount of any capital or income distributions (e.g.
dividends) made per Ordinary Share during the period with all such
distributions deemed to have been reinvested in the Ordinary Shares as at the
closing market price for such Ordinary Shares on the ex-dividend or settlement
date of the relevant distribution; and
· C is the NAV per Ordinary Share at the time of the Company's
initial public offering
Noteholders Consent obtaining either:
a) written confirmation from the Holders, that the Disposal will
unconditionally constitute a 'Permitted Change of Control' pursuant to the ASG
Debt Documents; or
b) written confirmation from the Holders that the Disposal will, subject
to certain conditions being satisfied constitute a 'Permitted Change of
Control' and the Company producing to the Purchaser evidence that all the
conditions have been satisfied in full; or
c) written confirmation from the Holders that they consent to the
Disposal and waive any redemption rights pursuant to the ASG Debt Documents
Noteholders Consent Condition the Noteholders Consent having been obtained
Notice of General Meeting the notice of the General Meeting which will be set out in the Circular
Notified Leakage Amount the amount of any "known" or "notified" leakage items
Ordinary Shares or Shares the ordinary shares of 1 penny each in the capital of the Company
Parent Company Guarantees the parent company guarantees and credit support arrangements in respect of
the Target Group's obligations listed in Appendix 5
Portfolio the whole portfolio of solar assets, owned by the Atrato Group that the
Purchaser has agreed, subject to the satisfaction or waiver, as applicable, of
the Conditions, to acquire through the Disposal pursuant to the Sale Agreement
PPA power purchase agreement
Primary Parties the Company and the Investment Adviser
Pro-forma Portfolio Valuation £224.1 million(( 9 (#_ftn9) )) as at the Latest Practicable Date
Proposals the proposed change of investment objective and policy and the Disposal
Purchaser Phoenix UK Bidco Limited, a private company incorporated in England and Wales
with registered number 15955970 having its registered office at Level 25 One
Canada Square, Canary Wharf, London, United Kingdom, E14 5AA
Purchase Price the aggregate price for the entire issued share capital of the Target payable
on Completion
RAIM Real Assets Investment Management Ltd, a private company incorporated in
England and Wales with registered number 12583330 having its registered office
at 16 Stratford Place, London, England, W1C 1BF
RAIM Apollo Apollo Power Ltd, a private company incorporated in England and Wales with
registered number 15237718 having its registered office at 16 Stratford Place,
London, England, W1C 1BF
RCF Adjustment Amount an amount equal to all principal (but not interest) repaid or prepaid (as
applicable) under the Revolving Credit Facility Agreement in the period from
(but excluding) the Locked Box Date to (and including) the Completion Date,
but excluding the payment of the RCF Pay-Off Amount
RCF Pay-Off Amount the amount required to discharge all amounts of principal and interest owed by
the Target under the Revolving Credit Facility Agreement as at Completion
RCF Security Documents the security documents entered into by, inter alios, the Company and the
Target charging their assets in connection with the Revolving Credit Facility
Revolving Credit Facility Agreement the revolving credit facility agreement entered into between the Target and
National Westminster Bank plc (in various capacities, including as lender)
dated 1 September 2023
Recommendation the unanimous Board recommendation that the Proposals and the passing of the
Resolution are in the best interests of the Company and the Shareholders as a
whole
Registrar Link Group, a private limited company incorporated in England and Wales with
registered number 2605568 and having its registered office at Central Square,
29 Wellington Street, Leeds, LS1 4DL
Registrar Agreement the registrar agreement entered into between the Company and the Registrar on
1 November 2021
Regulatory Information Service the regulatory information service provided by the London Stock Exchange
Resolution the ordinary resolution to be proposed at the General Meeting to approve the
change to the Company's investment objective and policy, as set out in the
Notice of General Meeting
Revolving Credit Facility the £30 million revolving credit facility, with a £20 million accordion
facility option, available to be utilised by the Target pursuant to the
Revolving Credit Facility Agreement
Rooftop Solar 2 Inter-Company Loan the £30.7 million intercompany loan advanced by the Company from time to time
to Rooftop Solar 2 Limited pursuant to the intercompany loan agreement between
the Company (as lender) and Rooftop Solar 2 Limited (as borrower) dated 24
October 2023 (as amended from time to time)
RPI the Retail Price Index compiled by the Office for National Statistics
Sale Agreement the sale and purchase agreement dated 2 October 2024 entered into between the
Company and the Purchaser in connection with the Disposal
Shareholder Approval Condition the passing of the Resolution by the Shareholders at the General Meeting
Shareholders holders of Ordinary Shares from time to time
Shareholder Loan Agreements collectively the:
a) Target Inter-Company Loan; and
b) the Rooftop Solar 2 Inter-Company Loan.
Shareholder Loan Amount all amounts outstanding, together will all accrued but unpaid and/or rolled-up
interest under the Shareholder Loan Agreements as at Completion
SONIA the Sterling Overnight Index Average
Stifel Stifel Nicolaus Europe Limited, a private limited company incorporated in
England and Wales with company number 03719559 and having its registered
office at 4(th) Floor, 150 Cheapside, London, United Kingdom, EC2V 6ET
Superior Cash Offer a Cash Offer on superior terms to the Disposal
Takeover Code The City Code on Takeovers and Mergers
Target Atrato Onsite Energy Holdco Limited, a private limited company incorporated in
England and Wales with company number 13659533 and having its registered
office at The Scalpel, 18(th) Floor, 52 Lime Street, London, United Kingdom,
EC3M 7AF
Target Group the Target and any subsidiaries of the Target from time to time
Target Inter-Company Loan the £125 million intercompany loan advanced by the Company from time to time
to the Target pursuant to the intercompany loan agreement between the Company
(as lender) and the Target (as borrower) dated 9 August 2022 (as amended from
time to time)
UK or United Kingdom the United Kingdom of Great Britain and Northern Ireland
UK AIFMD Laws a) the Alternative Investment Fund Managers Regulations 2013
(SI 2013/1773) and any other implementing measure which operated to transpose
the EU AIFM Directive into UK law before 31 January 2020 (as amended from time
to time including by the Alternative Investment Fund Managers (Amendment) (EU
Exit) Regulations 2019 (SI 2019/328)); and
b) the UK versions of the EU AIFM Delegated Regulation and any
other delegated regulations in respect of the EU AIFM Directive, each being
part of UK law by virtue of the European Union (Withdrawal) Act 2018, as
further amended and supplemented from time to time including by the
Alternative Investment Fund Managers (Amendment) (EU Exit) Regulations 2019
(SI 2019/328), the Technical Standards (Alternative Investment Funds
Management Directive) (EU Exit) Instrument 2019 (FCA 2019/37) and the Exiting
the European Union: Specialist Sourcebooks (Amendments)
UK MAR the UK version of the EU Market Abuse Regulation which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended and
supplemented from time to time including by the Market Abuse (Amendment) (EU
Exit) Regulations 2019
US, USA or United States the United States of America, its territories and possessions, any state of
the United States of America and the District of Columbia
Vector Vector Renewables UK Ltd
W&I Insurance Amount the buy-side warranty and indemnity insurance policy entered into on or around
the date of the Sale Agreement between the Purchaser and the W&I Provider,
to include standalone title to shares coverage
W&I Insurance Policy the buy-side warranty and indemnity insurance policy entered into on or around
the date of the Sale Agreement between the Purchaser and the W&I Provider,
to include standalone title to shares coverage
W&I Provider Acquinex Limited, for and on behalf of the underwriters listed in W&I
Insurance Policy
1 Gross of project-level debt and the amount drawn down under the Revolving
Credit Facility.
2 Gross of project-level debt and the amount drawn down under the Revolving
Credit Facility.
3 The profit figure for the financial year ended 30 September 2023 has been
audited.
4 The profit figure for the period commencing on 1 October 2023 and ending
on 31 August 2024 is unaudited.
5 Gross of project-level debt and the amount drawn down under the Revolving
Credit Facility.
6 Gross of project-level debt and the amount drawn down under the Revolving
Credit Facility.
7 Gross of project-level debt and the amount drawn under the Revolving
Credit Facility.
8 Gross of project-level debt and the amount drawn under the Revolving
Credit Facility.
9 Gross of project-level debt and the amount drawn down under the Revolving
Credit Facility.
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