REG - Foresight Envr - Portfolio Update - HH2E Administration

Foresight Environmental InfrastructureAnnouncement

08/11/2024 07:15

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RNS Number : 5115L  Foresight Environmental Infrastruct  08 November 2024

Foresight Environmental Infrastructure Limited

("FGEN" or the "Company")

 

Portfolio Update - HH2E Administration

 

 

FGEN made an initial investment into the green hydrogen sector in January 2023
and has since been working with management at its partner, HH2E AG ("HH2E"),
to progress the development of several green hydrogen production sites across
Germany.

 

The Company has invested a total of €22.3 million into HH2E (£19.3 million)
representing 2.6% of net asset value as at 30 June 2024.  The investment into
HH2E to date has principally been used to secure orders for long lead time
equipment and develop HH2E's first two green hydrogen sites at Lubmin and
Thierbach, which are now both at a stage of requiring further capital to fund
construction in line with the development consortium's original business plan.

 

HH2E has recently undertaken a process to source additional third-party
funding for ongoing development of the pipeline and construction of Lubmin,
the most progressed of the sites. However, due to the nascency of the green
hydrogen sector and challenging current global funding environment, the
process has not led to a financing partner being secured within the required
timeframe and at the required scale, and there is now material uncertainty
over whether adequate funding will be achieved.

 

FGEN, along with its investment manager, Foresight Group (the "Investment
Manager"), has given consideration to providing further funding to HH2E to
allow it to continue to meet its commitments and requirements under German
law. However, the Board does not believe that it is appropriate to do so at
this time, reflecting the Company's approach to portfolio construction, risk
and capital allocation in the context of the current market environment.

 

Therefore, without the guarantee of third-party funding and as required by
German insolvency law, HH2E management are expected to take the decision to
file a petition for insolvency and enter administration. The Board and the
Investment Manager are disappointed by this development, particularly given
the potential for green hydrogen to play an important role in decarbonising
heavy transport, industry, and other hard-to-abate sectors of the economy and
the opportunity that remains at Lubmin and Thierbach.

 

HH2E's administration process will focus on an outcome in the interests of all
creditors. FGEN is an indirect creditor via its shareholding in Foresight
Hydrogen HoldCo GmbH, which has provided shareholder loans to HH2E. Under
German insolvency law, shareholder loans are subordinated to other creditors
and as such it is expected that there will be no recovery of the invested
amount.

 

The outcome of the administration process is not yet known, but the Company
will update the market at the appropriate time.

 

The investment in HH2E is the only development-stage investment in the FGEN
portfolio. FGEN's dividend target for FY 2024/25 is 7.80p per share and the
Board reassert that target with expected dividend cover in the range 1.2-1.3x.
The Company will publish its interim results for the six months ended 30
September 2024, on Thursday 21 November 2024.

 

This announcement contains information that is inside information for the
purposes of the Market Abuse Regulation (EU) No. 596/2014.

 

For further information please contact:

 

 Foresight Group                                      +44(0)20 3667 8100

 Chris Tanner                                         institutionalir@foresightgroup.eu

 Edward Mountney

 Wilna de Villiers
 Winterflood Securities Limited                        +44(0)20 3100 0000

 Neil Langford

 SEC Newgate                                          +44 (0)20 3757 6882

 Elisabeth Cowell                                     FGEN@secnewgate.co.uk

 Alice Cho

 Harry Handyside

 Apex Fund and Corporate Services (Guernsey) Limited  +44(0)20 3530 3600

 Matt Lihou                                           FGEN@apexgroup.com

 Matt Falla

 

About FGEN

FGEN's investment policy is to invest in a diversified portfolio of
Environmental Infrastructure. Environmental Infrastructure is defined by the
Company as infrastructure assets, projects and asset-backed businesses that
utilise natural or waste resources or support more environmentally friendly
approaches to economic activity, support the transition to a low carbon
economy or which mitigate the effects of climate change. Such investments will
typically feature one or more of the following characteristics:

 

· long-term, predictable cash flows, which may be wholly or partially
inflation-linked cash flows;

· long-term contracts or stable and well-proven regulatory and legal
frameworks; or

· well-established technologies, and demonstrable operational performance.

 

FGEN's aim is to provide investors with a sustainable, progressive dividend
per share, paid quarterly and to preserve the capital value of the portfolio
over the long term on a real basis. The target dividend for the year to 31
March 2025 is 7.80 pence per share(1).

 

FGEN is an Article 9 fund under the EU Sustainable Finance Disclosure
Regulation and has a transparent and award winning approach to ESG.

 

Further details can be found on FGEN's website www.fgen.com
(http://www.fgen.com/)  and LinkedIn
(https://www.linkedin.com/showcase/foresight-environmental-infrastructure-limited)
 page.

 

LEI: 213800JWJN54TFBMBI68

 

((1)) These are targets only and not profit forecasts.  There can be no
assurance that these targets will be met or that the Company will make any
distributions at all.

 

 

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