REG - Riverstone Credit - Half-year Report & Unaudited Financial Statements
10/08/2023 07:00
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RNS Number : 8648I Riverstone Credit Opps. Inc PLC 10 August 2023
Riverstone Credit Opportunities Income Plc
Interim Report and Unaudited Interim Condensed Financial Statements
For the six months ended 30 June 2023
We lend to companies that build and operate the infrastructure used to
generate, transport, store and distribute both renewable and conventional
sources of energy, and companies that provide services to that infrastructure.
We also lend to companies seeking to facilitate the energy transition by
decarbonising the energy, industrial and agricultural sectors, building
sustainable infrastructure and reducing or sequestering carbon emissions.
We seek to ensure that our investments are having a positive impact on climate
change by structuring each deal as either a Green Loan or a
Sustainability-Linked Loan, documented using industry best practices.
Company number: 11874946
All capitalised terms are defined in the list of defined terms below unless
separately defined.
Riverstone Credit Opportunities Income Plc is an externally managed
closed-ended investment company listed on the London Stock Exchange.
The Company's Ordinary Shares were admitted to the Specialist Fund Segment of
the London Stock Exchange plc's Main Market and incorporated and registered on
11 March 2019 in England and Wales with an unlimited life.
INVESTMENT MANAGER
The Company's Investment Manager is Riverstone Investment Group LLC, which is
controlled by affiliates of Riverstone Holdings LLC ("Riverstone").
Riverstone was founded in 2000 and is currently one of the world's largest and
most experienced investment firms focused on energy, power, infrastructure and
decarbonisation. The firm has raised over $44 billion of capital and committed
approximately $44 billion to over 200+ investments in North America, South
America, Europe, Africa, Asia and Australia. Headquartered in New York,
Riverstone has built a global platform with additional offices located in
Menlo Park, Houston, London, Amsterdam and Mexico City. Since its founding,
the Firm has grown its presence significantly and currently employs over 90
professionals worldwide.
The registered office of the Company is 5th Floor, 20 Fenchurch Street,
London, England, EC3M 3BY.
Key Financials
2023 2022
NAV as at 30 June 2023 $97.59 $93.74
NAV per Share as at 30 June 2023 $1.07 $1.02
Market capitalisation as at 30 June 2023 $81.72 $76.90m
Share price at 30 June 2023 $0.90 $0.84
Total comprehensive income for period ended 30 June 2023 $3.7m $3.83m
EPS for the period ended 30 June 2023 4.02 cents 4.18 cents
Distribution per share with respect to the period ended 30 June 2023 4.00 cents 4.00 cents
All capitalised terms are defined in the list of defined terms below unless
separately defined.
Highlights
· The NAV at 30 June 2023 was $1.07 per share.
· Distributions of 4.00 cents per share approved with respect to
the period ended 30 June 2023.
· The Company is over 90% invested in the period ended 30 June
2023.
INVESTMENT OBJECTIVE
The Company seeks to generate consistent Shareholder returns predominantly in
the form of income
distributions, principally by making senior secured loans to energy-related
companies.
The Company lends to companies working to drive change and deliver solutions
across the energy sector, spanning renewable as well as conventional sources,
with a primary focus on infrastructure assets. The Company's aim is to build a
portfolio that generates an attractive and consistent risk adjusted return for
investors, as well as drive a positive action with regard to climate change by
structuring loans as Green Loans or Sustainability-Linked Loans.
INVESTMENT POLICY
The Company seeks to achieve its investment objective through investing
primarily in a diversified portfolio of direct loans to companies that build
and operate the infrastructure used to generate, transport, store and
distribute both renewable and conventional sources of energy, and companies
that provide services to that infrastructure. We also lend to companies
seeking to facilitate the energy transition by decarbonising the energy,
industrial and agricultural sectors, building sustainable infrastructure and
reducing or sequestering carbon emissions. We seek to ensure that our
investments are having a positive impact on climate change by structuring each
deal as either a Green Loan or a Sustainability-Linked Loan, documented using
industry best practices.
Further details on the Company's investment strategy, investment restrictions
and distribution policy are outlined in the Company's Annual Report for the
year ended 31 December 2022.
Chairman's Statement
Overview
On behalf of the Board, I would like to thank our shareholders for their
ongoing support as we continue to pursue our strategy of building shareholder
value and income through exposure to a high quality portfolio of loans in the
energy transition sector.
We are pleased with the financial performance of the Company and the
beneficial impact its loans are having on the journey towards greater
environmental sustainability in global infrastructure. During the first half
of 2023, the Company continued its strong performance from 2022, posting
excellent earnings for the period, and remains well positioned in the current
environment. The Company has delivered a NAV total return of 37.8% to
investors since inception in May 2019 and 27.57 cents of income. In the six
months ended June 30, 2023, our NAV total return was 4.1%, vs the AIC Debt -
Direct Lending peer group average of 3.7%.
The Company has a unique focus on short duration lending and the re-balancing
of the portfolio to energy-transition focused investments is now complete. As
of June 30, 2023, all of the loans in the portfolio and over 95% of the
Company's NAV were either Green Loans or Sustainability-Linked Loans, with the
only outliers being small equity positions or take-back instruments received
from previous loans. Therefore all loans in the Company's portfolio should
advance some form of decarbonisation or enhance sustainability across the
broader energy complex. A good example of this is the Company's loan to
Streamline Innovations in November 2021, upsized in May 2022, and refinanced
in June 2023. Streamline has over 40 treating plants in service or fabrication
with the capacity to eliminate the flaring of over 100 million pounds of toxic
sulphur dioxide per year and eliminate the production of over 50 million
gallons of hazardous waste per year.
A key strategic focus of the Company over the past year has been to put more
of its capital to work to optimise investor returns. The Investment Manager's
strategy of making senior-secured asset-based loans has certainly paid off in
terms of generating attractive results for shareholders - but it has also left
the Company underinvested at times, just as interest rates began to rise. A
concerted effort was made to alleviate this issue, while remaining faithful to
the Company's strategy, as well as preserving portfolio diversification and
counterparty quality. As an example, secondary purchases of the Hoover
Circular Solutions loan and Seawolf Water Resources loan (which included
preferred and common equity) helped deploy capital into compelling investments
very well known to the Investment Manager and consistent with the Company's
overall strategy. Furthermore, in December the Company's SPVs entered into a
$15 million Revolving Credit Facility ("RCF") which allows the Company's SPVs
the potential to be over 100% invested while still retaining the necessary
liquidity to meet ongoing expenses and future obligations under delay-draw
loan commitments. These investments, combined with rising underlying rates,
should serve to support earnings capacity for the overall portfolio, while
maintaining the potential to grow distributions.
Going forward, the Company will remain focused on continuing to execute its
stated strategy, taking advantage of a wide range of energy transition
investment opportunities, enhanced by a strong energy market and supportive
interest rate environment. We will continue to seek to improve investor
awareness of the Company's strategy and track record, with the ambition of
attracting further new investors.
Key Developments
RCOI's NAV has remained stable during the turbulent macro period under review,
with a current NAV per share of $1.07 (31 December 2022: $1.08).
In the first half of 2023, the Company remained extremely well positioned with
a focus on infrastructure spending and decarbonisation combined with a rising
rate environment forming tailwinds for the Company's strategy. Furthermore,
the re-balancing of the portfolio to accredited energy-transition focused
investments through green or sustainability linked structures has been
completed. There was one refinancing of an existing investment made by the
Company for Streamline Innovations.
RCOI committed $9.9m to Streamline Innovations to refinance the Company's
investment in leading environmentally-advanced treatment solutions for the
removal of hydrogen sulphide (H2S) from natural gas, renewable fuels,
wastewater, and industrial processes.
The original term loan for Streamline Innovations was fully realised in June
2023 with a 23.6 per cent gross IRR and an 18.5 per cent net IRR and 1.29x
gross MOIC and 1.23x net MOIC respectively.
Based on the current portfolio commitments, as well as the addition of the RCF
in Q4 2022, the Company is nearly fully invested as of 30 June 2023.
We have a highly attractive pipeline of investment opportunities, focused on
energy infrastructure, infrastructure services and energy transition
opportunities.
Performance
The Company reported a profit of $3.7 million for the period ended 30 June
2023, resulting from income received from the investment portfolio and changes
in the portfolio's valuations. The Net Asset Value ("NAV") of the Company
remained stable and ended the period at $1.07 per share. The Company has paid
distributions of 5.0 cents per share to investors as of June 30, 2023,
comfortably achieving our stated distributions target. The Company has now
delivered NAV total returns of 37.8% to investors since inception in May 2019
(4.1% year to date return) and 27.57 cents of income.
The current unrealised portfolio remains profitable at an average 1.16x Gross
MOIC and 1.09x Net MOIC. Characteristics of RCOI's investment strategy,
particularly the focus on a conservative LTV, diversified sub-sectors and
end-user base, as well as structured incentives for early repayment, have
helped mitigate negative portfolio impact from the broader market
fluctuations.
RCOI has executed 25 direct investments and participated in two secondary
investments since inception and cumulatively invested $251 million of capital
since the IPO in May 2019. The Company has now realised a total of 17
investments and have delivered for the Company an average gross IRR of 17.3
per cent and net IRR of 13.2 per cent.
Outlook
The Board is pleased with our diversified and dynamic portfolio of investments
and the pipeline of new opportunities. Our focus on decarbonising energy
infrastructure and infrastructure services will continue, with the current
portfolio already making a positive impact. We are finding that businesses at
the forefront of energy transition view our first lien, short-duration,
floating rate product as being highly attractive and a good fit for their
development plans.
We are keenly aware of the persistent discount at which the shares trade, and
that the Board does not believe reflect the value of the portfolio. We are
also cognisant of the forthcoming realisation opportunity in May 2024 and are
working assiduously with the manager on a number of initiatives to reduce the
discount including active asset management and proactive and frequent
engagement
with equity market participants. As always, the Board and the manager remain
vigilantly focused on optimising the portfolio to ensure long-term value
creation for our shareholders.
We look forward to a promising second half of 2023 and thank you again for
your support.
Reuben Jeffery, III
Chairman
9 August 2023
Investment Manager's Report
ABOUT THE INVESTMENT MANAGER
Appointed in May 2019, the Investment Manager, an affiliate of Riverstone,
seeks to generate consistent shareholder returns predominantly in the form of
income distributions principally by making Green and Sustainability-Linked,
senior secured loans to energy transition businesses. Loans are classified as
Green Loans when they support environmentally sustainable economic activity
and Sustainability-Linked Loans when they contain sustainability performance
targets or other equivalent metrics to be monitored. RCOI lends to companies
working to drive change and deliver better solutions across the energy sector,
spanning renewable as well as conventional sources, with a primary focus on
infrastructure assets. The Company's aim is to build a portfolio that
generates an attractive and consistent risk-adjusted return for investors, as
well as drive positive impact regarding climate change by structuring loans as
Green Loans or Sustainability-Linked Loans.
The Company will seek to achieve its investment objective predominantly
through investing in a diversified portfolio of direct and indirect
investments in loans, notes, bonds, and other debt instruments, including
convertible debt, issued by Borrowers operating in the energy sector.
Riverstone's investment professionals have a unique combination of industry
knowledge, financial expertise, and operating capabilities. The Company also
benefits from the guidance and input provided by non-Riverstone credit team
members of Riverstone's credit investment committee who are involved in the
Company's investment process. The Company believes that Riverstone's global
network of deep relationships with management teams, investment banks and
other intermediaries in the energy sector leads to enhanced sourcing and deal
origination opportunities for the Company.
INVESTMENT STRATEGY
The Investment Manager seeks to leverage the wider Riverstone platform to
enhance its investment strategy through the opportunities presented and the
synergies gained from being part of one the largest dedicated energy focused
private equity firms.
The key elements of the Investment Manager's investment strategy in relation
to the Company's SPVs are summarised below.
INVESTMENT PORTFOLIO SUMMARY
The Investment Manager has reviewed numerous opportunities within the
Investment Guidelines since RCOI's admission. As of 30 June 2023, the Company
holds ten direct investments across energy infrastructure & infrastructure
services and energy transition assets as further discussed below. In addition,
RCOI holds the warrants of one investment where the loan was fully realised.
One refinancing occurred during the period ended 30 June 2023. The Investment
Manager continues to maintain a strong pipeline of investment opportunities
and expects to make further commitments across the infrastructure,
infrastructure services and energy transition sectors. RCOI will receive an
allocation of new investments in accordance with the limitations illustrated
in the Company's Investment Restrictions. The determination of what percentage
received will be pro rata to the available capital for all of the RCP funds
that are eligible to participate in the investment.
In the descriptions that follow, yield to maturity is inclusive of all upfront
fees, original issue discounts, drawn spreads and prepayment penalties through
the stated maturity of the loan. Most loans have incentives to be called
early. A portion of the loans have a "payment-in-kind" feature for drawn
coupons for a limited time period. Similarly, some of the loans have a
"delayed-draw" feature that allows the borrower to call capital over time, but
always with a hard deadline. Loans that are committed are loans with signed
definitive documentation where a structuring fee and/or original issue
discount have been earned and the Company earns an undrawn spread. Loans that
are invested are signed with definitive documentation and, where a structuring
fee and/or original issue
discount have been earned, the Company has funded the loan to the Borrower and
the Company is earning a drawn coupon.
Riverstone expects that every loan it makes will advance the cause of energy
transition one way or another. For new green energy infrastructure, or
conversion of older assets to a more sustainable use, we will make Green
Loans. For existing hydrocarbon related businesses, we will make
Sustainability-Linked Loans that tie loan economics to meeting specific
sustainability performance targets. Both structures will be based on LSTA
guidelines and be subject to third party independent opinion from Sustainable
Fitch.
Seawolf Water Resources - RCOI participated in a Sustainability-Linked
secondary investment in a stapled bundle of private securities in Seawolf
Water Resources ("Seawolf"), a privately held water infrastructure services
company with operations primarily in Loving County, TX and southern New
Mexico. The investment includes a first lien term loan along with preferred
stock and common equity, collectively at a significant discount to market
value.
The investment by RCOI closed on 26 September 2022, and has a maturity of
March 31, 2026, and an estimated all-in yield to maturity on the loan of 10.6
percent to RCOI. The preferred stock and common equity are perpetual in nature
but benefit from excess cash returned to the shareholders from time to time.
Across the term loan, preferred stock, and common equity, RCOI has committed a
total of $9.0 million, reflecting 9.6 per cent of RCOI's overall commitments
The original total loan size was $84.2 million.
Use of proceeds was to assist in operations in water infrastructure services
across Loving County, Texas, and southern New Mexico.
Epic Propane - RCOI amended and extended its investment in EPIC Propane, a
sponsor-backed infrastructure company that provides propane purity offtake
transportation to the Gulf Coast export market. EPIC Propane is part of the
broader EPIC Midstream system that includes over 1,695 miles of crude oil and
natural gas liquids pipelines, collectively referred to as "EPIC".
The amendment closed in September 2022, and the loan's maturity was extended
to September 2026 and the optional prepayment feature was amended to add a
two-year make-whole provision. RCOI has realised c. $1m profits from the
extension. All other material economic terms remain the same. As part of the
amendment, the loan was converted to a Sustainability-Linked Loan and all of
the economics associated with the original transaction were realised,
including the exit premium.
In conjunction with the amendment, RCOI's allocation to the loan was reduced
from $14.8m to $13.9m in order to comply with the Company's diversification
policies.
As of 30 June 2023, the full remaining commitment of $13.9 million has been
invested, reflecting 14.8 percent of RCOI's overall commitments. The original
total loan size from the refinance was $77.0 million.
Hoover Circular Solutions - RCOI upsized and refinanced its investment in a
Sustainability-Linked first lien term loan for Hoover CS, a leading provider
of sustainable packaging and fleet management solutions, that is paving the
way for customers across the chemical, refining and general industrial-end
markets to move away from single-use containers. Sustainable Fitch, a division
of Fitch Group focused on ESG, provided a Second Party Opinion ("SPO") on the
loan.
At closing on 30 November 2022, all of the Borrower's outstanding debt was
refinanced by the new $160 million Sustainability-Linked, first lien term loan
due November 2026.
As part of the new deal allocations, RCOI's commitment was further upsized to
$13.7 million, and the expected returns are in line with the initial
investment.
As of 30 June 2023, the full remaining commitment of $13.7 million has been
invested, reflecting 14.7 per cent of RCOI's overall commitments. The original
total loan size from the refinance was $160.0 million.
Clean Energy Fuels Corp. - RCOI participated in, and obtained an SPO from
Sustainable Fitch on, a new four-year $150 million Sustainability-Linked first
lien term loan (the "Term Loan") to Clean Energy Fuels Corp. ("Clean Energy
Fuels" or "CLNE"), the largest provider of clean fuel for the transportation
market.
At close on 22 December 2022, RCOI committed $13.9 million. The first lien
floating rate term loan has a maturity of 22 December 2026 with an all-in
yield to maturity of c.12 percent for RCOI on a fully drawn basis.
As of 30 June 2023, the full remaining commitment of $13.9 million has been
invested, reflecting 14.8 per cent of RCOI's overall commitments. The original
total loan size was $150.0 million.
Max Midstream - RCOI participated in, and obtained an SPO from Sustainable
Fitch on, a new $28.6 million Sustainability-Linked, first lien term loan (the
"Term Loan") to a subsidiary of Max Energy Industrial Holdings US LLC ("Max"),
which is developing the first carbon-neutral crude oil export terminal on the
Gulf Coast of Texas, which it believes will lead to increased market share as
crude consumers globally seek to reduce their overall carbon footprint. At
close on 30 December 2022, RCOI committed $5.0 million.
As of 30 June 2023, the full remaining commitment of $5.0 million has been
invested, reflecting 5.3 per cent of RCOI's overall commitments. The original
total loan size was $28.3 million.
Harland & Wolff - RCOI participated in a $70.0 million first lien Green
Term Loan to this LSE listed infrastructure operator engaged in the
development and operation of strategic maritime assets across the United
Kingdom.
At closing on 9 March 2022, $11.8 million was committed by RCOI and $7.9
million was funded for RCOI's portion of the $23.1 million drawn at close for
the $35.0 million committed facility tranche. The first lien term loan has a
maturity of December 2024 and an estimated all-in yield to maturity of 13.2
percent for RCOI on a fully-drawn basis. Proceeds from the term loan will be
utilised to fund working capital and capital expenditures associated with the
fabrication of wind turbine generator jackets for the NG Offshore Wind
Project, to repay existing indebtedness, to fund an interest reserve account,
and to pay transaction fees & expenses. The Company will also grant
Riverstone detachable warrants over new ordinary shares in the Company
("Warrants") as part of this transaction. A total of 17.2 million warrants
will be issued to Riverstone, of which 5.1 million warrants are for RCOI,
representing 27.0 per cent of the Company's outstanding warrants.
The term loan has been structured as a Green Loan following the Green Loan
Principles published by the LMA, APLMA, and LSTA and a Sustainability-Linked
Loan with performance indicators focused on social responsibility. Harland
& Wolff is incentivised to upscale its group-wide apprenticeship programme
to benefit the local communities in which it operates. Harland & Wolff
plans to build on its success to date and seeks further contracts within the
renewables and "green maritime" sectors, such as fabrication contracts for
offshore wind and hydrogen projects, new vessel builds, retrofits with
sustainability credentials and other such contracts that would promote the UK
Government's agenda to achieving Net Zero by 2050.
In October and December 2022, RCOI participated in $15.0 million and $7.2
million upsizes of the investment, respectively, bringing RCOI's total
commitment to $14.6m.
As of 30 June 2023, the full remaining commitment of $14.6 million has been
invested, reflecting 15.6 per cent of RCOI's overall commitments. The original
total loan size was $100.0 million including the recent upsizes.
Streamline Innovations - RCOI amended and extended its investment in
Streamline Innovations, a leader in environmentally-advanced treatment
solutions for the removal of hydrogen sulphide (H2S) from natural gas,
renewable fuels, wastewater, and industrial processes. The facility was
structured as a Green Loan with Sustainable Fitch providing a Second Party
Opinion ("SPO"). The SPO verifies the facility's alignment to the LSTA Green
Loan Principles with the transaction being compliant with the four pillars of
the LSTA Green Loan Principles and aligned with the LSTA category of pollution
and prevention.
During Q2 2023, the Company amended and extended its investment in Streamline
Innovations and realised c. $2.0 million of profits at closing of the
amendment and extension resulting in a 24 percent gross IRR (19 percent net
IRR) and a 1.3x gross MOIC (1.2x net MOIC) of the initial investment in
Streamline Innovations. As part of this amendment and extension closing, the
facility was upsized to $55.0 million, the maturity was extended to December
2026, and economic terms were adjusted for an estimated all-in yield to
maturity of 13 percent to RCOI. RCOI's allocation to the loan was $9.9
million.
As of 30 June 2023, $3.5 million of the $9.9 million commitment has been
invested, reflecting 10.6 per cent of RCOI's overall commitments. The original
total loan size from the refinance was $55.0 million.
Blackbuck Resources - RCOI participated in a $50.0 million first lien
delayed-draw Sustainability-Linked Term Loan to the sponsor-backed water
infrastructure company focused on providing E&P operators with a one-stop
shop for all things related to water management, including treatment,
gathering, recycling, storage and disposal. At closing on 30 June 2021, $9.9
million was committed by RCOI. The first lien term loan has a maturity of June
2024 and an estimated all-in yield to maturity of 11.9% for RCOI on a
fully-drawn basis.
The term loan was RCP and RCOI's first investment documented as a
"Sustainability-Linked Loan" per LSTA guidelines, with pricing step-ups tied
to meeting specific sustainability performance targets ("SPTs") set by the
Company's board. For Blackbuck, the SPTs were related to the number of
truckloads of water (and the resulting emissions) that could be removed from
the highways from their activities. RCP and RCOI intend to use similar
lending structures for qualifying companies going forward. The use of proceeds
was primarily to refinance existing indebtedness and growth capex.
In June 2022, the loan was upsized $7.0 million bringing the total facility to
$57.0 million. The proceeds, along with incremental equity, will be used to
fund growth capex associated with new contracts.
Sustainable Fitch, a division of Fitch Group focused on ESG, provided a Second
Party Opinion ("SPO") on the Sustainability-Linked Loan to Blackbuck. The SPO
considers the loan to be aligned with the five pillars of the LSTA
Sustainability-Linked Loan Principles.
On 31 March 2023, the remaining available commitment was terminated as per the
availability period termination on the credit agreement.
As of 30 June 2023, the full remaining commitment of $10.5 million has been
invested, reflecting 11.2 per cent of RCOI's overall commitments. The original
total loan size was $55.0 million inclusive of recent termination of the $2.0
million unfunded portion of the upsize.
Imperium3 New York, Inc - RCOI participated in a $63.0 million first lien
delayed-draw term loan to this lithium-ion battery company that will
commercialise high performing lithium-ion batteries by developing a
large-scale manufacturing facility in Endicott, NY. In addition to having a
first lien on the manufacturing assets, the credit facility is supported by
two parent guarantors: Charge CCCV ("C4V"), which is a research and
development company based in Binghamton, New York with patented discoveries in
battery composition, and Magnis Energy Technologies Limited ("Magnis") (ASX:
MNS). Once producing at scale, the company will be the first U.S. battery cell
supplier not captive to an original equipment manufacturer and supply various
underserved industrial end-markets.
At closing on 16 April 2021, $6.8 million was committed by RCOI and $5.4
million was drawn at closing. Following the close 20% of the funded investment
was sold to a third party. The first lien term loan has a maturity of April
2025 and an estimated all-in yield to maturity of 22.1% for RCOI on a
fully-drawn basis. The yield is made up of upfront fees, a drawn coupon and
exit fees that are higher than the average in the rest of the portfolio.
The use of proceeds was primarily to construct the manufacturing facility.
In April 2022, the Company fully refinanced this loan with a new source of
financing, resulting in a 32.5 percent realised IRR and 1.25x realised MOIC.
Additionally, the Company will retain our non-dilutable equity Warrants which
provides meaningful upside to this investment.
Caliber Midstream - RCOI participated in a $10.0 million upsize of RCP's
commitment to a $65.0 million first lien Holdco term loan for a sponsor-backed
Bakken focused midstream company that provides crude oil and natural gas
gathering and processing, produced water transportation and disposal, and
freshwater sourcing and transportation. RCP closed the initial $65.0 million
financing in June 2018. The term loan upsize closed in August 2019.
At closing, $3.4 million was committed by RCOI. The first lien HoldCo term
loan had a maturity of June 2022 and an all-in expected yield to maturity of
11.8% on a fully drawn basis.
Use of proceeds, combined with an Opco RCF draw, was to fund an acquisition.
In March 2021, Caliber Midstream Partners' ("OpCo") largest customer, Nine
Point Energy, terminated their midstream contract with Caliber and
subsequently filed for Chapter 11 bankruptcy. In April 2021, RCOI and other
RCP affiliates purchased a small allocation of the OpCo RCF with a maturity in
June 2023. In May 2021, RCP and other HoldCo Lenders completed a
recapitalisation of Caliber resulting in HoldCo Term Loan Lenders receiving
substantially all of the equity in HoldCo.
In March 2022, the Company and OpCo lender closed the restructuring with the
OpCo lenders receiving approximately 100% of the equity. Following the
restructuring, new management was hired, a new contract was executed and there
remains increased focus on cost cutting initiatives and new revenue
opportunities. In June 2023, the Priority Liquidity Facility was moved to a
new entity, Caliber MidCo LLC.
As of 30 June 2023, the full $4.0 million commitment has been invested,
reflecting 0.7% of RCOI's overall commitments post restructuring. The original
total loan size for the Opco RCF and HoldCo were $129.4 million and $35.1
million, respectively.
SUBSEQUENT EVENTS AND OUTLOOK
In aggregate, one investment was realised during the first half of 2023, as
part of a successful refinancing. The Investment Manager continues to believe
that this is a market where patience and a disciplined approach to investing
are likely to be well rewarded, and to create real value for shareholders.
The backdrop for the broader energy sector remains strong, continuing the
trend seen in 2022. Given our focus on energy infrastructure, infrastructure
services and energy transition assets, RCOI is ideally poised to continue to
take advantage of the investment opportunity brought about by the convergence
of two market phenomena, namely the consistent growing demand for sources of
energy and the concurrent need for the global infrastructure industry to meet
global "net-zero" targets.
The realisation made in the period has resulted in additional liquidity to
deploy into the energy infrastructure and infrastructure pipeline of
opportunities. As the commodity market overall remains strong, we are well
positioned to continue to provide stable cashflows and an attractive yield. We
will therefore continue to target similar investment opportunities through our
Green Loans and Sustainability-Linked Loans with sustainability performance
targets. Additionally, despite the recent increase in inflation and rise in
interest rates, our floating rate loans are all based on SOFR with floors and
don't decline in value as interest rates are likely to rise.
Based on the current unfunded commitments, recent deal activity, and potential
new investment opportunities, we anticipate continuing to provide attractive
returns and consistent yield in the portfolio.
BUSINESS REVIEW
GOING CONCERN
The Company's cash balance at 30 June 2023 was $1.2 million, plus cash
balances held at the SPVs of $2.8 million. The Company currently has existing
liabilities of $0.6 million, plus a distribution payable of $1.8 million with
respect to the quarter ended 30 June 2023 and any foreseeable expenses for the
period to 31 December 2024, being a period of 16 months from approval of the
financial statements.
During 2022, the SPVs entered into a RCF Agreement for $15.0 million with BC
Partners. The SPV borrowings from the facility at 30 June 2023 were $5.0m,
leaving the remaining $10m million undrawn commitment for future borrowings.
The guarantors are the Company, Riverstone Credit Opportunities Income
Partners - Direct L.L.C., a Delaware limited liability company and Riverstone
Credit Opportunities Income Partners L.L.C., a Delaware limited liability
company. The SPVs are required to maintain an LTV Ratio above the Covenant LTV
of 22% at each borrowing request date. The LTV Ratio is calculated as the
total outstanding principal and accrued interest on the facility divided by
the aggregate NAV of the SPVs, Riverstone International Credit L.P. and
Riverstone International Credit-Direct L.P. At 30 June 2023, the SPVs were
compliant with the Covenant LTV and the full amount of the undrawn commitment
is available. The SPVs also entered into a money market capital fund with JP
Morgan, earning about 5% interest annually. The balance at 30 June 2023 was
$4.6 million. Additionally, the operating expenses of the trust are budgeted
to be between $3.0 million and $3.5 million during the period of assessment
including taxes and interest expense from the RCF. Based on the high end of
this range, it would take the Company approximately two and a half years to
run out of cash.
The cash and cash equivalents balances of the Company's SPVs are comprised of
cash and money market fixed deposits and the risk of default on the
counterparties cash and deposits is considered extremely low. Due to this the
Directors believe there is no material going concern risk. The major cash
outflows of the Company's SPVs are expected to be the payment of distributions
and expenses, share repurchases and the acquisition of new assets, all of
which are discretionary. The first continuation vote for the Company will be
proposed at the AGM of the Company to be held in 2027, on the eighth
anniversary of admission.
The Directors and Investment Manager expect that proceeds from loan interest
repayments and realisation of investments will enable the Company to continue
to pay quarterly distributions for the foreseeable future.
The conflict between Ukraine and Russia has caused severe disruptions in the
global economies and capital markets. This is expected to continue to
materially and adversely impact the performance of the global economy, the
Company's operations and investments in the future and particularly in respect
of inflation rates. Given the on-going nature of the conflict between Ukraine
and Russia, it is currently not possible to determine the potential scale and
scope of the ultimate effects on the global economy, capital markets, and the
Company's operations and investments. As the situation continues to evolve,
the Company will continue to monitor the conflict.
The Directors and Investment Manager are actively monitoring this situation
and their potential effect on the Company and its underlying investments. In
particular, they have considered the following key potential impacts:
· unavailability of key personnel at the Investment Manager or the
Administrator or key service providers of the SPVs;
· increased volatility in the fair value of investments;
· disruptions to business activities of the underlying investments;
and
· recoverability of income and principal and allowance for expected
credit losses.
In considering the above key potential impacts of the conflict between Ukraine
and Russia on the Company and its underlying investments, the Investment
Manager has assessed these with reference to the mitigation measures in place.
At the Company level, the key personnel at the Investment Manager and
Administrator have successfully implemented business continuity plans to
ensure business disruption is minimised, including remote working, and all
staff are continuing to assume their day-to-day responsibilities. At the
underlying investment level, there are various risk mitigation plans in place,
to ensure business activities are maintained as far as possible.
As further detailed in note 4 to the financial statements, the Investment
Manager uses a third-party valuation provider to perform a full independent
valuation of the underlying investments. The Investment Manager has also
assessed the recoverability of income due from the underlying investee
companies and has no material concerns. Additionally, the Investment Manager
and Directors have considered the cash flow forecast and a reverse stress test
to determine the term over which the Company can remain viable given its
current resources.
Based on the assessment outlined above, including the various risk mitigation
measures in place, the Directors do not consider that the effects of the
conflict between Ukraine and Russia to have created a material uncertainty
over the assessment of the Company as a going concern.
In making their assessment, the Directors have considered the potential impact
on the Company's ability to continue as a going concern, as a result of the
upcoming Realisation Election in May 2024. There are a range of possible
outcomes of the Realisation Election, one of which is the eventual liquidation
of the Company, allowing for the maturation of the investment portfolio. As
more than 60% of the current investment portfolio is not due to mature until
2026, the requirement to realise the investments and wind down the activity of
the Company would not fall within the going concern assessment period. The
Directors are therefore satisfied that the upcoming Realisation Election does
not create a material uncertainty with respect to the Company's ability to
continue as a going concern for the 16 month period to 31 December 2024.
On the basis of this review, and after making due enquiries to the Investment
Manager, the Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the period to 31
December 2024, being the period of assessment covered by the Directors and 16
months from approval of the financial statements. Accordingly, they continue
to adopt the going concern basis in preparing the financial statements.
PRINCIPAL RISKS AND UNCERTAINTIES
Under the FCA's Disclosure Guidance and Transparency Rules, the Directors are
required to identify those material risks to which the Company is exposed and
take appropriate steps to mitigate those risks. Risks relating to the Company
are disclosed in the Company's prospectus which is available on the Company's
website https://www.riverstonecoi.com (https://www.riverstonecoi.com) .
The Company's assets consist of investments, through SPVs, within the global
energy industry, with a particular focus on opportunities in the global
E&P and midstream energy sub-sectors. The Company also focuses on energy
transition, infrastructure and infrastructure services by structuring deals
as either a Green Loan or a Sustainability-Linked Loan. Its principal risks
are therefore related to market conditions in the energy sector in general,
but also the particular circumstances of the businesses in which it is
invested.
The Investment Manager seeks to mitigate these risks through active asset
management initiatives and by carrying out due diligence work on potential
targets before entering into any investments.
The Board thoroughly considers the process for identifying, evaluating and
managing any significant and emerging risks faced by the Company on an ongoing
basis and has performed a robust assessment of those risks, which are reported
and discussed at Board meetings.
The Board ensures that effective controls are in place to mitigate these risks
and that a satisfactory compliance regime exists to ensure all applicable
local and international laws and regulations are upheld. The principal risks
are consistent with those set out in the 2022 Annual Report.
For each material risk, the likelihood and consequences are identified,
management controls and frequency of monitoring are confirmed and results
reported and discussed at the quarterly Board meetings.
The key areas of risk faced by the Company and mitigating factors are
summarised below:
1. The Ordinary Shares may trade at a discount to NAV per Share for
reasons including but not limited to market conditions, liquidity concerns and
actual or expected Company performance. As such, there can be no guarantee
that attempts to mitigate such discount will be successful or that the use of
discount control mechanisms will be possible, advisable or adopted by the
Company. To mitigate this risk, the Investment Manager closely monitors and
identifies the reasons for significant fluctuations, and considers the
Company's share repurchase programme when applicable and in the interests of
Shareholders.
2. The ability of the Company to meet the target distribution will depend
on the Investment Manager's ability to find investments that generate
sufficient and consistent yield to support the Target Distribution. The
Investment Manager will identify and manage suitable investments in accordance
with the Investment Policy, market conditions and the economic environment. To
mitigate this risk, the Company's Investment Policy and investment
restrictions enable the Company to build a diversified energy portfolio that
should deliver returns that are in line with the Target Distribution range.
3. The ability of the Company to achieve its investment objectives is
dependent on the Investment Manager sourcing and making appropriate
investments for the Company. Investment returns will depend upon the
Investment Manager's ability to source and make successful investments on
behalf of the Company. To mitigate this risk, the Investment Manager believes
sourcing investments is one of its competitive advantages. The Investment
Manager is well resourced and has access to the wider skills and expertise at
Riverstone whose personnel have years of experience in the global energy
sector.
4. Environmental exposures and existing and proposed environmental
legislation and regulation may adversely affect the operations of Borrowers.
Delay or failure to satisfy any regulatory conditions or other applicable
requirements could prevent the Company from acquiring certain investments or
could hinder the operations of certain Borrowers. To mitigate this risk, The
Investment Manager implements monitoring and quality control procedures to
mitigate the occurrence of any violation of safety/health and environmental
laws. The Investment Manager has a clear ESG policy which is implemented and
reviewed by the Board.
5. The Company's investment objective requires it to invest in loans
that are likely to be both illiquid and scarce. If there is an adverse change
in the underlying credit, then the ability of RCOI to recover value may be
impaired. To mitigate this risk, the Company primarily originates shorter
duration senior secured loans with protective provisions. In some instances
the loans incentivise early repayment.
6. The valuations used to calculate the NAV on a quarterly basis will be
based on the Investment Manager's unaudited estimated fair market values of
the Company's investments and may be based on estimates which could be
inaccurate. To mitigate this risk, the Investment Manager has an extensive
valuation policy and also has engaged the independent valuation services of
Houlihan Lokey on a quarterly basis.
7. In today's global technological environment, the Company, its
investments and its engaged service providers are subject to risks associated
with cyber security. The effective operation of the Investment Manager and the
businesses of Borrowers are likely to be highly dependent on the availability
and operation of complex information and technological systems. To mitigate
this risk, The Audit and Risk Committee Chairman monitors cyber security risk
and best practices and cyber security due diligence is performed on each
potential borrower.
8. The Company may be exposed to fluctuations and volatility in commodity
prices through investments it makes, and adverse changes in global supply and
demand and prices for such commodities may adversely affect the business,
results of operations, and financial condition of the Company. To mitigate
this risk, the Investment Manager intends to create a diversified portfolio
across various energy subsectors, commodity exposures, technologies and
end-markets to provide natural synergies that aim to enhance the overall
stability of the portfolio.
9. The Company will only lend to Borrowers in the global energy sector and
such single industry concentration could affect the Company's ability to
generate returns. Adverse market
conditions in the energy sector may delay or prevent the Company from making
appropriate investments. To mitigate this risk, the Investment Manager intends
to create a diversified portfolio across various energy subsectors, commodity
exposures, technologies and end-markets to provide natural synergies that aim
to enhance the overall stability of the portfolio.
10. The performance of the Company may be affected by changes to interest
rates and credit spreads. To mitigate this risk, the Investment Manager
assesses credit risk and interest rate risk on an ongoing basis and closely
monitors each investment with the assistance of each respective management
team and the engaged service providers.
11. The Company relies on a third-party provider for the key operational tasks
of the Company. The failure of any service provider to carry out their duty
may have a detrimental effect on the operation of the Company. To mitigate
these risks the Board will review the internal control reports, and consider
business continuity arrangements of the Company.
The principal risks outlined above remain the most likely to affect the
Company in the second half of the year.
Directors' Responsibilities Statement
The Directors are responsible for preparing this Interim Report in accordance
with applicable law and regulations.
The Directors confirm that to the best of their knowledge:
· The unaudited interim condensed financial statements have been
prepared in accordance with UK-adopted IAS 34 Interim Financial Reporting; and
· The Chairman's Statement, Investment Manager's Report and the
notes to the condensed financial statements include a fair review of the
information required by:
i. DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being
an indication of important events that have occurred during the period and
their impact on the unaudited interim condensed financial statements; and a
description of the principal risks and uncertainties for the remaining six
months of the year; and
ii. DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the period and that have
materially affected the financial position and performance of the Company
during that period.
On behalf of the Board
Reuben Jeffery, III
Chairman
9 August 2023
Independent Review Report
to Riverstone Credit Opportunities Income Plc
Conclusion
We have been engaged by Riverstone Credit Opportunities Income Plc ('the
Company') to review the condensed set of financial statements in the Interim
Report for the six months ended 30 June 2023 which comprises the Condensed
Statement of Financial Position, the Condensed Statement of Comprehensive
Income, the Condensed Statement of Changes in Equity, the Condensed Statement
of Cash Flows and related notes 1 to 15. We have read the other information
contained in the Interim Report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the
condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the Interim Report
for the six months ended 30 June 2023 is not prepared, in all material
respects, in accordance with UK-adopted International Accounting Standard 34
and the Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 2, the annual financial statements of the Company are
prepared in accordance with UK-adopted international accounting standards. The
condensed set of financial statements included in this Interim Report has been
prepared in accordance with UK-adopted International Accounting Standard 34,
"Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the Interim Report in accordance
with the Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
In preparing the Interim Report, the directors are responsible for assessing
the company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the company or
to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the Interim Report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the company, for our work, for this report, or for the conclusions we
have formed.
Mike Gaylor
Ernst & Young LLP
London
9 August 2023
condensed Statement of Financial Position
As at 30 June 2023
30 June 2023 31 December 2022
Note $'000 $'000
Non-current assets
Investments at fair value through profit or loss 4 96,263 94,570
96,263 94,570
Current assets
Loan interest receivable 4 - 1,263
Dividends receivable 4 612 3,451
Trade and other receivables 6 182 124
Cash and cash equivalents 1,186 957
1,980 5,795
Current liabilities
Trade and other payables 7 (655) (1,889)
Net current assets 1,325 3,906
Net assets 97,588 98,476
Equity
Share capital 8 908 908
Capital redemption reserve 8 92 92
Other distributable reserves 8 90,528 90,528
Retained earnings 6,060 6,948
Total Shareholders' funds 97,588 98,476
Number of Shares in issue at year end 90,805,237 90,805,237
Net assets per share (cents) 12 107.47 108.45
The interim condensed financial statements were approved and authorised for
issue by the Board of Directors on 9 August 2023 and signed on its behalf by:
Reuben Jeffery,
III
Emma Davies
Chairman
Director
The accompanying notes below form an integral part of these interim condensed
financial statements.
Condensed Statement of Comprehensive Income
For the six months ended 30 June 2023 (Unaudited)
For the six months ended For the six months ended
30 June 2023
30 June 2022
Note Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
Investment gain/(loss)
Change in fair value of investments at fair value through profit or loss 4 - 306 306 - 167 167
- 306 306 - 167 167
Income
Investment income 4 4,328 - 4,328 4,837 - 4,837
4,328 - 4,328 4,837 - 4,837
Expenses
Directors' fees and expenses 14 (80) - (80) (94) - (94)
Other operating expenses (532) - (532) (530) - (530)
Profit share 10 (388) - (388) (559) - (559)
Total expenses (1,000) - (1,000) (1,183) - (1,183)
Operating profit for the year 3,328 306 3,634 3,654 167 3,821
Finance income
Interest income 19 - 19 7 - 7
Total finance income 19 - 19 7 - 7
Profit for the year before tax 3,347 306 3,653 3,661 167 3,828
Tax 11 - - - - - -
Profit for the year after tax 3,347 306 3,653 3,661 167 3,828
Profit and total comprehensive income for the year 3,347 306 3,653 3,661 167 3,828
Profit and total comprehensive income attributable to:
Equity holders of the Company 3,347 306 3,653 3,661 167 3,828
Earnings per share
Basic and diluted earnings per Share (cents) 12 0.34 4.02 0.18 4.18
3.68 4.00
All 'Revenue' and 'Capital' items in the above statement derive from
continuing operations. No operations were acquired or discontinued in the
period.
The 'Total' column of this statement is the profit and loss account of the
Company and the 'Revenue' and 'Capital' columns represent supplementary
information prepared under guidance issued by the Association of Investment
Companies. Profit / (loss) for the period after tax also represents Total
Comprehensive Income.
The accompanying notes below form an integral part of these interim condensed
financial statements.
All capitalised terms are defined in the list of defined terms below unless
separately defined.
Condensed Statement of Changes in Equity
For the six months ended 30 June 2023 (Unaudited)
Share capital Capital redemption reserve Other distributable reserve Retained earnings Total
For the six months ended 30 June 2023 Note $'000 $'000 $'000 $'000 $'000
Opening net assets attributable to Shareholders 908 92 90,528 6,948 98,476
Total comprehensive income for the year - - - 3,653 3,653
Distributions paid in the year 13 - - - (4,541) (4,541)
Closing net assets attributable to Shareholders 908 92 90,528 6,060 97,588
Following the IPO of the Company, the share premium account was cancelled by a
court order dated 16 July 2019. The amount standing to the credit of the share
premium account of the Company, less any issue expenses set off against the
share premium account, was cancelled and credited to create the other
distributable reserve account. This may be applied in any manner in which the
Company's profits available for distribution are able to be applied, as
determined in accordance with the Companies Act 2006.
The Company's total distributable reserves comprise its other distributable
reserve and retained earnings, excluding unrealised movement of its
investments. After taking account of cumulative unrealised gains of $3,775k
and distributions made, the total distributable reserves as at 30 June 2023
were $92,813k.
Share capital Capital redemption reserve Other distributable reserve Retained earnings Total
For the six months ended 30 June 2022 Note $'000 $'000 $'000 $'000 $'000
Opening net assets attributable to Shareholders 915 85 91,179 1,121 93,300
Total comprehensive income for the period - - - 3,828 3,828
Interim distributions paid in the period 13 - - - (3,386) (3,386)
Closing net assets attributable to Shareholders 915 85 91,179 1,563 93,742
After taking account of cumulative unrealised gains of $308k and distributions
made, the total reserves distributable by way of a distribution as at 30 June
2022 were $93,050k.
The accompanying notes below form an integral part of these interim condensed
financial statements.
Condensed Statement of Cash Flows
For the six months ended 30 June 2023 (Unaudited)
Note For the six months ended For the six months ended
30 June 2023
30 June 2022
$'000 $'000
Cash flows from operating activities
Operating profit for the financial period 3,634 3,821
Adjustments for:
Movement in fair value of investments 4 (306) (167)
Investment income per Statement of Comprehensive Income 4 (4,328) (4,837)
Bank interest received in cash 30 3
Loan interest received 4 2,605 2,778
Dividends received 4,436 1,550
Adjustments for Statement of Financial Position movement:
Movement in payables (1,234) (52)
Movement in receivables (68) (111)
Net cash generated from operating activities 4,769 2,985
Cash flows from financing activities
Distributions paid 13 (4,540) (3,386)
Net cash used in financing activities (4,540) (3,386)
Net movement in cash and cash equivalents during the period 229 (401)
Cash and cash equivalents at the beginning of the period 957 4,883
Cash and cash equivalents at the end of the period 1,186 4,482
The accompanying notes below form an integral part of these interim condensed
financial statements.
Notes to the Unaudited Interim Condensed Financial Statements
For the six months ended 30 June 2023
1. General Information
The Company was incorporated and registered in England and Wales on 11 March
2019 with registered number 11874946 as a public company limited by shares
under the Companies Act 2006
(the ''Act''). The principal legislation under which the Company operates is
the Act. The Directors intend, at all times, to conduct the affairs of the
Company so as to enable it to qualify as an investment trust for the purposes
of section 1158 of the Corporation Tax Act 2010, as amended.
2. Basis of preparation
The condensed financial statements have been prepared in accordance with
UK-adopted International Accounting Standards (IAS) 34 Interim Financial
Reporting, and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority. Where presentational guidance set out
in the AIC SORP, 2022 edition, is consistent with the requirements of
UK-adopted IAS, the Directors have sought to prepare the condensed financial
statements on a basis compliant with the recommendations of the AIC SORP. In
particular, supplementary information which analyses the Statement of
Comprehensive Income between items of a revenue and capital nature has been
presented alongside the total Statement of Comprehensive Income.
The same accounting policies, presentation and methods of computation are
followed in these condensed financial statements as were applied in the
preparation of the Company's annual financial statements for the year ended 31
December 2022. These accounting policies will be applied in the Company's
financial statements for the year ended 31 December 2023.
The Company's annual financial statements have been prepared on the historic
cost basis, as modified for the measurement of certain financial instruments
at fair value through profit or loss and in accordance with UK-adopted IAS and
with those parts of the Companies Act 2006 applicable to companies under
UK-adopted IAS.
These condensed financial statements do not constitute statutory accounts as
defined in section 434 of the Companies act and do not include all information
and disclosures required in an Annual Report. They should be read in
conjunction with the Company's Annual Report for the year ended 31 December
2022.
The Company's Annual Report for the year ended 31 December 2022 included an
unqualified audit report that did not reference any matters by way of emphasis
and did not contain any statements under sections 498 (2) and (3) of the
Companies Act 2006. A copy of this annual report has been delivered to the
Registrar of Companies.
Going concern
The Company's cash balance at 30 June 2023 was $1.2 million, plus cash
balances held at the SPVs of $2.8 million. The Company currently has existing
liabilities of $0.6 million, plus a distribution payable of $1.8 million with
respect to the quarter ended 30 June 2023 and any foreseeable expenses for the
period to 31 December 2024, being a period of 16 months from approval of the
financial statements.
During 2022, the SPVs entered into a RCF Agreement for $15.0 million with BC
Partners. The SPV borrowings from the facility at 30 June 2023 were $5.0m,
leaving the remaining $10m million undrawn commitment for future borrowings.
The guarantors are the Company, Riverstone Credit Opportunities Income
Partners - Direct L.L.C., a Delaware limited liability company and Riverstone
Credit Opportunities Income Partners L.L.C., a Delaware limited liability
company. The SPVs are required to maintain a LTV Ratio above the Covenant
LTV of 22% at each borrowing request date. The LTV Ratio is calculated as the
total outstanding principal and accrued interest on the facility divided by
the aggregate NAV of the SPVs, Riverstone International Credit L.P. and
Riverstone International Credit-Direct L.P. At 30 June 2023, the SPVs were
compliant with the Covenant LTV and the full amount of the undrawn commitment
is available. The SPVs also entered into a money market capital fund with JP
Morgan, earning about 5% interest annually. The balance at 30 June 2023 was
$4.6 million. Additionally, the operating expenses of the trust are budgeted
to be between $3.0 million and $3.5 million during the period of assessment
including taxes and interest expense from the SPV facility. Based on the high
end of this range, it would take the Company approximately two and a half
years to run out of cash. Additionally, the Investment Manager and Directors
have considered the cash flow forecast and a reverse stress test to determine
the term over which the Company can remain viable given its current resources.
After making enquiries, the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence to at
least 31 December 2024, being a period of assessment covered by the Directors
and 16 months from the approval of the condensed financial statements. In
making this assessment, they have considered the effect of the conflict
between Ukraine and Russia, and additional impact on the global market,
particularly in respect of inflation rates as outlined in the Business Review,
including the various risk mitigation measures in place. The Directors have
considered the potential impact on the Company's ability to continue as a
going concern, as a result of the upcoming Realisation Election in May 2024.
There are a range of possible outcomes of the Realisation Election, one of
which is the eventual liquidation of the Company, allowing for the maturation
of the investment portfolio.
As more than 60% of the current investment portfolio is not due to mature
until 2026, the requirement to realise the investments and wind down the
activity of the Company would not fall within the going concern assessment
period. The Directors are therefore satisfied that the upcoming Realisation
Election does not create a material uncertainty with respect to the Company's
ability to continue as a going concern for the 16 month period to 31 December
2024.
Accordingly, the Directors continue to adopt the going concern basis in
preparing the financial statements.
Segmental Reporting
The chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been
identified as the Board of Directors, as a whole. The key measure of
performance used by the Board to assess the Company's performance and to
allocate resources is the Company's Net Asset Value, as calculated under
UK-adopted IAS, and therefore no reconciliation is required between the
measure of profit or loss used by the Board and that contained in the Interim
Report.
For management purposes, the Company is organised into one main operating
segment, which invests through its SPVs in a diversified portfolio of debt
instruments, issued by Borrowers operating in the energy sector. All of the
Company's current income is derived from within the United States.
All of the Company's non-current assets are located in the United States. Due
to the Company's nature, it has no customers.
Seasonal and Cyclical Variations
The Company's results do not vary as a result of seasonal activity.
3. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expenses.
Judgements, estimates and assumptions are continually evaluated and are based
on management experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
Judgements include the assessment of the Company as an Investment Entity as
defined in IFRS 10 'Consolidated Financial Statements' and the assessment of
the SPVs as structured entities.
Estimates and assumptions that are significant to the financial statements
include the valuation of the investments as detailed in note 4 and the
potential impact of climate change.
Further details of these judgements, estimates and assumptions made by the
Directors are given in the annual financial statements for the year ended 31
December 2022. During the interim period there has been no change to the
judgements, estimates and assumptions outlined in the annual report.
4. Investments at fair value through profit or loss
Reconciliation of Level 3 fair value measurements of financial assets
For the six months ended For the year ended
30 June 2023
31 December 2022
Loans Equity Total Loans Equity Total
$'000 $'000 $'000 $'000 $'000 $'000
Opening balance 59,397 35,173 94,570 60,049 27,076 87,125
Restructuring - - - 213 (213) -
Investment addition / (proceeds) - - - (865) 4,366 3,501
Loan interest receivable 1,388 - 1,388 - - -
Unrealised movement in fair value of investments - 305 305 - 3,944 3,944
60,785 35,478 96,263 59,397 35,173 94,570
The Company's investment in its SPVs comprises a loan investment and an equity
investment, as set out above. The SPVs subsequently invest in a diversified
portfolio of direct and indirect investments in loans, notes, bonds and other
debt instruments.
Interest receivable on the loan investment at 30 June 2023 was $1.4m and is
included in investments at fair value through profit and loss. Interest
receivable on the loan investment at 31 December 2022 was $1.3m and was shown
separately on the Statement of Financial Position. The unrealised movement in
fair value of investments was shown in the Change in fair value of investments
at fair value through profit or loss in the Condensed Statement of
Comprehensive Income.
The dividend receivable on the equity investment at 30 June 2023 was $0.6m (31
December 2022: $3.5m). The total unfunded commitments of the Company by its
SPV investments as at 30 June 2023 is $6.4m (31 December 2022: $7.5m)
Reconciliation of investment income recognised in the period
For the six months ended For the six months ended
30 June 2023
30 June 2022
$'000 $'000
Movement in loan interest receivable at year end 125 (11)
Loan interest received as cash 2,605 2,778
Total loan interest recognised in the period 2,730 2,767
Dividend income 1,598 2,070
Total investment income recognised in the period 4,328 4,837
Fair value measurements
As disclosed on pages 66 and 67 of the Company's Annual Report for the year
ended 31 December 2022, IFRS 13 "Fair Value Measurement" requires disclosure
of fair value measurement by level. The level of fair value hierarchy within
the financial assets or financial liabilities ranges from level 1 to level 3
and is determined on the basis of the lowest level input that is significant
to the fair value measurement.
The fair value of the Company's investments are ultimately determined by the
fair values of the underlying investments. Due to the nature of the
investments, they are always expected to be classified as level 3 as the
investments are not traded and contain unobservable inputs. There have been no
transfers between levels during the six months ended 30 June 2023 (31 December
2022: none).
Valuation methodology and process
The Directors base the fair value of investment in the SPVs on the fair value
of their assets and liabilities, adjusted if necessary, to reflect liquidity,
future commitments, and other specific factors of the SPVs and Investment
Manager. This is based on the components within the SPVs, principally the
value of the SPVs' investments, in addition to cash and short-term money
market fixed deposits. Any fluctuation in the value of the SPVs' investments
held will directly impact on the value of the Company's investment in the
SPVs.
The SPVs' investments are valued using a third-party valuation provider to
perform a full independent valuation of the underlying investments. This
includes the third-party valuation provider selecting the valuation
methodology and/or comparable companies; identifying the cash flows and
appropriate discount rate utilised in a yield analysis; and providing a final
value range to the Investment Manager. The valuation adviser independently
values the assets and provides analyses to support the methodology in addition
to presenting calculations used to generate the output. The Investment
Manager's assessment of fair value of investments held by the SPVs is
determined in accordance with IPEV Valuation Guidelines. When valuing the
SPVs' investments, the Investment Manager reviews information provided by the
underlying investee companies and other business partners and applies IPEV
methodologies, to estimate a fair value as at the date of the Statement of
Financial Position.
Initially, acquisitions are valued at fair value, which is normally the
transaction price. Subsequently, and as appropriate, the Investment Manager
values the investments on a quarterly basis using common industry valuation
techniques, including comparable public market valuation, comparable merger
and acquisition transaction valuation and discounted cash flow valuation. The
techniques used in determining the fair value of the Company's investments
through its SPVs are selected on an investment by investment basis so as to
maximise the use of market based observable inputs. These techniques also
reflect the impact of primary and transition risks on the portfolio, although
the impact of the risks are minimal as the maximum investment period is seven
years. Due to the illiquid and subjective nature of the Company's underlying
investments, the Investment Manager uses a third-party valuation provider to
perform a full independent valuation of the underlying investments.
Quantitative information of significant unobservable inputs - Level 3 - SPV
30 June 2023 Valuation Unobservable Range / weighted
Description $'000 technique input average
SPV 96,263 Adjusted net asset value NAV 96,263
The Directors believe that it is appropriate to measure the SPVs at their
adjusted net asset value, incorporating a valuation of the underlying
investments which has taken into account risks to fair value, inclusive of
liquidity discounts, through appropriate discount rates.
Sensitivity analysis to significant changes in unobservable inputs within
Level 3 hierarchy
The significant unobservable inputs used in the fair value measurement
categorised within Level 3 of the fair value hierarchy together with a
quantitative sensitivity analysis as at 30 June 2023 are as shown below:
Sensitivity Effect on
Description Input used fair value
$'000
SPV Discount for lack of liquidity +/- 3% -/+ 2888
The Company's valuation policy is compliant with both UK-adopted IAS and IPEV
Valuation Guidelines and is applied consistently. As the Company's investments
are generally not publicly quoted, valuations require meaningful judgment to
establish a range of values, and the ultimate value at which an investment is
realised may differ from its most recent valuation and the difference may be
significant.
For the period ended 30 June 2023, the valuations of the Company's
investments, through its SPVs, are detailed in the Investment Manager's
Report.
The below table shows fair value sensitivities to a 100 BPS increase in the
discount rate and 0.5x multiple decrease used for each industry as at 30 June
2023.
Investments at Fair Value as of June 30,2023 Range Fair Value Sensitivity
to a 100 bps increase in the Discount Rate
Industry (In Thousands) Valuation technique(s) Unobservable input(s) Low High (In Thousands)
Infrastructure 30,284 Discounted cash flow Discount Rate 6% 13% (522)
Recovery Approach EBITDA multiple 2.5x 7.5x
Infrastructure 34,164 Discounted cash flow Discount Rate 8% 51% (537)
Services Option Pricing Model Risk Free Rate 5% 5%
Latest round of financing NA NA NA
Energy 14,837 Public comparables EBITDA multiple 11.0x 14.0x (401)
Transition Public comparables Revenue multiple 2.0x 2.5x
Discounted cash flow Discount Rate 8% 10%
Services 12,986 Discounted cash flow Discount Rate 6% 7% (1,089)
Public comparables EBITDA multiple 5.5x 6.5x
Waterfall Approach NA NA NA
$ 92,271((a)) $ (2,549)
((a)) The difference between the fair value of the SPVs of $96.3m and the fair
value of the underlying investments at 30 June 2023 is due to cash and cash
equivalent balances of $2.8m and residual liabilities including the RCF of
$6.8m, held within the SPVs.
5. Unconsolidated subsidiaries
The following table shows subsidiaries of the Company. As the Company is
regarded as an Investment Entity as referred in note 3, these subsidiaries
have not been consolidated in the preparation of the financial statements:
Investment Place of business Ownership interest as at 30 June 2023 Ownership interest as at 31 December 2022
Held directly
Riverstone International Credit Corp. USA 100% 100%
Riverstone International Credit L.P. USA 100% 100%
Held indirectly
Riverstone International Credit - Direct L.P. USA 100% 100%
The registered office of the above subsidiaries is c/o The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware
19801.
The amounts invested in the Company's unconsolidated subsidiaries during the
period and their carrying value at 30 June 2023 are as outlined in note 4
comprising:
30 June 2023 31 December 2022
Riverstone International Credit Corp. Riverstone International Credit L.P. Total Riverstone International Credit Corp. Riverstone International Credit L.P. Total
$'000 $'000 $'000 $'000 $'000 $'000
Opening balance at 1 January 89,384 5,186 94,570 86,805 320 87,125
Loan interest receivable 1,388 - 1,388 - - -
Restructure of investments - - - 309 (309) -
Investment additions - - - 11,439 12,693 24,132
Investment realisations - - - (12,692) (7,939) (20,631)
Movement in fair value 288 17 305 3,523 421 3,944
Closing balance at 30 June/31 December 91,060 5,203 96,263 89,384 5,186 94,570
The Company intends to fund further underlying investments through its
unconsolidated subsidiaries.
During 2022, the Company's SPVs entered a senior secured RCF agreement for
$15.0 million to enter into new commitments ahead of anticipated realisations,
enabling the Company to minimise the drag on returns of uninvested
capital. The borrowers as defined per the RCF agreement are Riverstone
International Credit - Direct L.P. and Riverstone International Credit L.P.,
and the guarantors are the Company, Riverstone Credit Opportunities Income
Partners - Direct L.L.C., a Delaware limited liability company and Riverstone
Credit Opportunities Income Partners L.L.C., a Delaware limited liability
company. At 30 June 2023, $5 million (31 December 2022: $5m) of the senior
secured RCF was drawn at close and the remaining $10 million (31 December
2022: $10m) undrawn commitment is available for future borrowings. Pursuant to
the RCF agreement, the interest rate per annum on each borrowing under the RCF
can be referenced to SOFR + 6.50% with a 100bps SOFR floor.
At 30 June 2023 the SPVs borrowed $5 million (31 December 2022: $5 million),
in the six months to the period ended 30 June 2023 the SPVs incurred $0.2
million (31 December 2022: $0.3 million) in fees and $0.3 million (31 December
2022: $0.1 million) in interest. Interest is recorded as an interest expense
at the SPV level and is also included in the SPVs' net asset value. The
interest rate on 2023 borrowings was SOFR plus 6.50% (31 December 2022:
6.50%).
There are no restrictions on the ability of the Company's unconsolidated
subsidiaries to transfer funds in the form of cash distributions or repayment
of loans.
6. Trade and other receivables
30 June 2023 31 December 2022
$'000 $'000
Prepayments 160 76
VAT receivable 17 33
Bank interest receivable 5 15
182 124
7. Trade and other payables
30 June 2023 31 December 2022
$'000 $'000
Profit share payable 394 1,685
Other payables 261 204
655 1,889
8. Share capital and reserves
Date Number of shares issued Share capital Capital redemption reserve Other distributable reserves Total
GBP £'000 £'000 £'000 £'000
1 January 2023 1 - - - -
30 June 2023 1 - - - -
USD $'000 $'000 $'000 $'000
1 January 2023 90,805,237 908 92 90,528 91,528
30 June 2023 90,805,237 908 92 90,528 91,528
As at 30 June 2023 the Company's issued share capital comprises 90,805,237
Ordinary Shares (31 December 2022: 90,805,237) and 1 E Share (31 December
2022: 1). Ordinary Shareholders are entitled to all distributions paid by the
Company and, on a winding up, provided the Company has satisfied all of its
liabilities, the Shareholders are entitled to all of the surplus assets of the
Company. E shares are non-redeemable shares and grant the registered holders
the right to receive notice of and to attend but, except where there are no
other shares of the Company in issue, not to speak or vote (either in person
or by proxy) at any general meeting of the Company.
9. Audit fees
For the six months ended For the six months ended
30 June 2023
30 June 2022
$'000 $'000
Fees to the Company's Auditor
for audit of the statutory financial statements 117 103
for other audit related services 14 24
131 127
Other operating expenses include fees payable to the Company's Auditor of
$131k (30 June 2022: $127k).
The fees payable to the Company's Auditor include estimated accruals
proportioned across the year for the audit of the statutory financial
statements and the fees for other audit related services were in relation to a
review of the Interim Report. There were $nil fees paid for other non-audit
services in the year (June 2022: $nil).
10. Profit Share
Under the Investment Management Agreement, the Investment Manager will not
charge any base or other ongoing management fees, but will be entitled to
reimbursement of reasonable expenses incurred by it in the performance of its
duties. The Investment Manager will receive from the Company, a Profit Share
based on the Company's income, as calculated for UK tax purposes and the
Company's Capital Account.
The Profit Share will be payable quarterly at the same time as the Company
pays its distributions, subject to an annual reconciliation in the last
quarter of each year, as disclosed on page 72 of the Company's Annual Report
for the year ended 31 December 2022.
Amounts charged as Profit Share during the period were $388k (30 June 2022:
$559k).
11. Tax
As an investment trust, the Company is exempt from UK corporation tax on
capital gains arising on the disposal of shares. Capital profits from its loan
relationships are exempt from UK tax where the profits are accounted for
through the Capital column of the Statement of Comprehensive Income, in
accordance with the AIC SORP.
The Company has made a streaming election to HMRC in respect of distributions
and is entitled to deduct interest distributions paid out of income profits
arising from its loan relationships in computing its UK corporation tax
liability.
Therefore, no tax liability has been recognised in the financial statements.
For the six months ended For the six months ended
30 June 2023
30 June 2022
Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
UK Corporation tax charge on profits for the year at 19%/25% (2022: 19%) - - - - - -
For the six months ended For the six months ended
30 June 2023
30 June 2022
Revenue Capital Total Revenue Capital Total
$'000 $'000 $'000 $'000 $'000 $'000
Return on ordinary activities before taxation 3,347 306 3,653 3,661 167 3,828
Profit / (loss) on ordinary activities multiplied by standard rate of 736 67 803 696 32 728
corporation tax in the UK of 19%/25% (2022: 19%)
Effects of:
Non-taxable investment (losses) / - (67) (67) - (32) (32)
gains on investments
Non-taxable dividend income (351) - (351) (394) - (394)
Tax deductible interest distributions (603) - (603) (302) - (302)
Taxable income from underlying partnership 37 - 37 - - -
Movement in deferred tax not recognised 181 181 - - -
Total tax charge - - - - - -
As at 30 June 2023 the Company has excess management expenses of $3,578,152
that are available to offset future taxable revenue. A deferred tax asset of
$894,538, measured at the substantively enacted standard corporation tax rate
of 25% has not been recognised in respect of these expenses since the
Directors believe that there will be no taxable profits in the future against
which the deferred tax asset can be offset.
Deferred tax is not provided on capital gains and losses arising on the
revaluation or disposal of investments because the Company meets (and intends
to continue to meet for the foreseeable future) the conditions for approval as
an Investment Trust company.
The UK corporation tax rate increased from 19% to 25% (for companies with
profits over £250,000) from 5 April 2023.
12. Earnings per share and Net assets per share
Earnings per share
For the six months ended For the six months ended
30 June 2023
30 June 2022
Revenue Capital Total Revenue Capital Total
Profit/(loss) attributable to equity holders of the Company - $'000 3,347 306 3,653 3,661 167 3,828
Weighted average number of Ordinary Shares in issue 90,805,237 91,545,383
Basic and diluted earnings and loss per Share from continuing operations in 3.68 0.34 4.02 4.00 0.18 4.18
the year (cents)
There are no dilutive shares in issue.
Net assets per share
30 June 2023 31 December 2022
Net assets - $'000 97,588 98,476
Number of Ordinary Shares issued 90,805,237 90,805,237
Net assets per Share (cents) 107.47 108.45
13. Distributions declared with respect to the period
Distribution per share Total distribution
Interim distributions paid during the period ended 30 June 2023 cents $'000
With respect to the quarter ended 31 December 2022 3.00 2,724
With respect to the quarter ended 31 March 2023 2.00 1,816
5.00 4,540
Distribution per share Total distribution
Interim distributions declared after 30 June 2023 and not accrued in the cents $'000
period
With respect to the quarter ended 30 June 2023 2.00 1,816
On 9 August 2023, the Board approved a distribution of 2.00 cents per share
with respect to the quarter ended 30 June 2023. The record date for the
distribution is 18 August 2023 and the payment date is 22 September 2023.
14. Related Party Transactions
Directors
The Company has three non-executive Directors. Directors' fees for the period
ended 30 June 2023 amounted to $75k (30 June 2022: $76k), of which $nil (31
December 2022: $nil) was outstanding at period end. Amounts paid to Directors
as reimbursement of travel and other incidental expenses during the period
amounted to $5.7k (30 June 2022 $3.4k), of which $nil (31 December 2022: $nil)
was outstanding at period end.
SPVs
In 2019, the Company provided a loan to the US Corp. which accrues interest at
9.27 percent. Any interest that is unable to be repaid at each quarter end is
capitalised and added to the loan balance. Total interest in relation to the
period was $2.7m (30 June 2022: $2.8m) of which $1.3m (30 June 2022: $2.8m)
was received in cash and $1.4m remained outstanding at the period end (31
December 2022: $1.3m outstanding). The balance on the loan investment at 30
June 2023 was $59.4m (31 December 2022: $59.4m).
During 2022, the SPVs entered into a RCF Agreement for $15.0 million with BC
Partners. The SPV borrowings from the facility at 30 June 2023 were $5 million
(31 December 2022: $5 million), leaving the remaining $10 million (31 December
2022: $10 million) undrawn commitment for future borrowings. The SPVs are
required to maintain a LTV Ratio above the Covenant LTV of 22% at each
borrowing request date. The LTV Ratio is calculated as the total outstanding
principal and accrued interest on the facility divided by the Aggregate NAV.
At 30 June 2023, the SPVs were compliant with the Covenant LTV and the full
amount of the undrawn commitment is available.
The Company's other investments in its SPVs are made via equity shareholdings
as disclosed in note 4.
Investment Manager
The Investment Manager is an affiliate of Riverstone and provides advice to
the Company on the origination and completion of new investments, the
management of the portfolio and on realisations, as well as on funding
requirements, subject to Board approval. For the provision of services under
the Investment Management Agreement, the Investment Manager earns a Profit
Share, as disclosed in note 12 and on page 72 of the Company's Annual Report
for the year ended 31 December 2022. The Investment Manager is entitled to
reimbursement of any reasonable expenses incurred in relation to management of
the Company and amounts reimbursed during the period were $26k (31 December
2022: $190k). Christopher Abbate, a partner of the IM and portfolio manager of
RCOI, purchased nil shares during the year (31 December 2022: 5k shares).
Jamie Brodsky, also a partner of the Investment Manager and portfolio manager
of RCOI, purchased nil shares during the period (31 December 2022: nil).
15. Subsequent events
With the exception of distributions declared and disclosed in note 13, there
are no other material subsequent events.
Glossary of Capitalised Defined Terms
Administrator means Ocorian Administration (UK) Limited
AGM means Annual General Meeting
AIC means the Association of Investment Companies
AIC Code means the AIC Code of Corporate Governance
AIC SORP means the Statement of Recommended Practice issued by the AIC in
November 2014 and updated in January 2017 for the Financial Statements of
Investment Trust Companies and Venture Capital Trusts
Annual Report means the Company's yearly report and financial statements for
the year ending 31 December 2022
APLMA means Asia Pacific Loan Market Association
Auditor means Ernst & Young LLP or EY
Board means the Directors of the Company
Borrower means entities operating in the energy sector that issue loans,
notes, bonds, and other debt instruments including convertible debt
CA means the Companies Act 2006 which forms the primary source of UK company
law
Capital Amount means the amount of gross proceeds of the IPO, plus the net
proceeds of any future issues of Ordinary Shares, less any amounts expended by
the Company on share repurchases and redemptions or, following a Realisation
Election, attributable to Realisation Shares
Company or RCOI means Riverstone Credit Opportunities Income Plc and its
underlying SPVs
D&C means drilling and completion
D&I means Diversity and
Inclusion
Directors means the Directors of the Company
Distributable Income means the Company's income, as calculated for UK tax
purposes
DTR means the Disclosure Guidance and Transparency Rules sourcebook issued by
the Financial Conduct Authority
ESG means environmental, social and governance
ESG-ME means ESG Minimum Expectations
E&P means exploration and production
FCA means the UK Financial Conduct Authority (or its successor bodies)
Firm or Investment Manager means Riverstone Investment Group LLC
GHG means Greenhouse gases
GREEN LOAN means to align lending and environmental objectives. It refers to
any type of loan instrument made available exclusively to finance or
re-finance, in whole or in part, new and/or existing eligible Green Projects.
Green loans must align with the four components of the Green Loan Principles.
We strive to enhance the decarbonisation impact of our credit portfolio and
advance the energy transition infrastructure
GREEN LOAN PRINCIPLES means a clear framework of the characteristics of a
Green Loan with four core components 1. Use of Proceeds, 2. Process for the
Project Evaluation and Selection, 3. Management of Proceeds and 4. Reporting.
The Green Loan principles promote the development and integrity of the Green
Loan product through leading financial institutions active in the global loan
markets. Green Loan Principles (GLP) have been developed by an experienced
working party, consisting of representatives from leading financial
institutions active in the global syndicated loan markets, with a view to
promoting the development and integrity of the Green Loan product. The GLP
comprise voluntary recommended guidelines, to be applied by market
participants on a deal-by-deal basis depending on the underlying
characteristics of the transaction, which seek to promote integrity in the
development of the Green Loan market by clarifying the instances in which a
loan may be categorised as "green"
IAS means the international accounting standards
IFRS means the International Financial Reporting Standards, being the
principles-based accounting standards, interpretations and the framework by
that name issued by the International Accounting Standards Board, to the
extent they have been adopted by the UK
ILPA means Institutional Limited Partners Association
Investment Management Agreement means the Investment Management Agreement
entered between the Investment Manager and the Company
Investment Manager means Riverstone Investment Group LLC
IPCC means Intergovernmental Panel on Climate Change
IPEV Valuation Guidelines means the International Private Equity and Venture
Capital Valuation Guidelines
IPO means the initial public offering of shares by a private company to the
public
IRR means internal rate of return
ISSB means International Sustainability Standards Board
LCA means Life Cycle Analysis
LDPE means low-density polyethylene
Listing Rules means the listing rules made by the UK Listing Authority under
Section 73A of the Financial Services and Markets Act 2000
LMA means Loan Market Association
London Stock Exchange or LSE means London Stock Exchange plc
LSTA means Loan Syndications & Trading Association
LTV means loan to value ratio
Main Market means the main market of the London Stock Exchange
MOIC means multiple on invested capital
NAV or Net Asset Value means the value of the assets of the Company less its
liabilities as calculated in accordance with the Company's valuation policy
and expressed in US dollars
Ordinary Shares means ordinary shares of $0.01 in the capital of the Company
issued and designated as "Ordinary Shares" and having the rights, restrictions
and entitlements set out in the Company's articles of incorporation
Other Riverstone Funds means other Riverstone-sponsored, controlled or managed
entities, which are or may in the future be managed or advised by the
Investment Manager or one or more of its affiliates, excluding the SPV
Profit Share means the payments to which the Investment Manager is entitled in
the circumstances and as described in the notes to the financial statements
RBL means reserved base loan
RCP means Riverstone Credit Partners
RCOI mean Riverstone Credit Opportunities Income plc or the Company
Riverstone means Riverstone Holdings LLC.
Realisation Shares means realisation shares of US$0.01 in the capital of the
Company, as defined in the prospectus
SPV means any intermediate holding or investing entities that the Company may
establish from time to time for the purposes of efficient portfolio management
and to assist with tax planning generally and any subsidiary undertaking of
the Company from time to time
Specialist Fund Segment means the Specialist Fund Segment of the London Stock
Exchange's Main Market
Sustainability-Linked Loans means a loan with the aim to facilitate and
support environmentally and socially sustainable economic activity and growth.
We seek to enhance the decarbonisation impact of our credit portfolio and
enhance the energy transition infrastructure. Sustainability-Linked Loans
follow a set of Sustainability-Linked Loan Principles (SLLP) which were
originally published in 2019 and provide a framework to Sustainability-Linked
Loan structures. In order to promote the development of this product, and
underpin its integrity, the APLMA, LMA and LSTA considered it appropriate to
produce Guidance on the SLLP, to provide market practitioners with clarity on
their application and approach
Sustainability-Linked Loan Principles (SLLP) means principles originally
published in 2019 and provide a framework to Sustainability-Linked Loan
structures
TCFD means the Task Force on Climate-Related Financial Disclosures
Toolkit means the Riverstone ESG Toolkit
UK or United Kingdom means the United Kingdom of Great Britain and Northern
Ireland
UK Code means the UK Corporate Governance Code issued by the FRC
US or United States means the United States of America, its territories and
possessions, any state of the United States and the District of Columbia
US Corp. means Riverstone International Credit Corp.
Directors and General Information
Directors
Reuben Jeffery, III (Chairman) (appointed 2 April 2019)
Emma Davies (Audit and Risk Committee Chair) (appointed 2 April 2019)
Edward Cumming-Bruce (Nomination Committee Chair) (appointed 2 April 2019)
all independent and of the registered office below
Registered Office to 15 February 2023 Website: www.riverstonecoi.com
27-28 Eastcastle Street ISIN GB00BJHPS390
London Ticker RCOI
W1W 8DH Sedol BJHPS39
Registered Company Number 11874946
Registered Office from 16 February 2023
5th Floor Registrar
20 Fenchurch Street Link Asset Services
London The Registry
EC3M 3BY Central Square
29 Wellington Street
Investment Manager Leeds
Riverstone Investment Group LLC LS1 4DL
c/o The Corporation Trust Company
Corporation Trust Center Sole Bookrunner
1209 Orange Street J.P. Morgan Securities plc
Wilmington 25 Bank Street
Delaware 19801 Canary Wharf
London
Company Secretary and Administrator E14 5JP
Ocorian Administration (UK) Limited
5th Floor Receiving Agent
20 Fenchurch Street Link Asset Services
London Corporate Actions
EC3M 3BY The Registry
Central Square
Independent Auditor 29 Wellington Street
Ernst & Young LLP Leeds
25 Churchill Place LS1 4DL
London
E14 5EY Principal Banker and Custodian
J.P. Morgan Chase Bank, N.A.
Legal Adviser to the Company 270 Park Avenue
Hogan Lovells LLP New York
Atlantic House NY 10017-2014
50 Holborn Viaduct
Swiss supplement
ADDITIONAL INFORMATION FOR INVESTORS IN SWITZERLAND
This Swiss Supplement is supplemental to, forms part of and should be read in
conjunction with the interim report for the half year ended June 30, 2023 for
Riverstone Credit Opportunities Income Plc (the "Fund").
The Fund has appointed Société Générale as Swiss Representative and Paying
Agent. The Confidential Memorandum, the Articles of Association as well as the
annual report of the Fund can be obtained free of charge from the
representative in Switzerland, Société Générale, Paris, Zurich Branch,
Talacker 50, P.O. Box 5070, CH-8021 Zurich. The paying agent of the Fund in
Switzerland is Société Générale, Paris, Zurich Branch, Talacker 50, P.O.
Box 5070, CH-8021 Zurich. The Company may offer Shares only to qualified
investors in Switzerland. In respect of the Shares distributed in and from
Switzerland, the place of performance and jurisdiction is the registered
office of the Swiss Representative.
Cautionary Statement
The Chairman's Statement and Investment Manager's Report have been prepared
solely to provide additional information for Shareholders to assess the
Company's strategies and the potential for those strategies to succeed. These
should not be relied on by any other party or for any other purpose.
The Chairman's Statement and Investment Manager's Report may include
statements that are, or may be deemed to be, "forward-looking statements".
These forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes", "estimates",
"anticipates", "expects", "intends", "may", "will" or "should" or, in each
case, their negative or other variations or comparable terminology.
These forward-looking statements include all matters that are not historical
facts. They appear in a number of places throughout this document and include
statements regarding the intentions, beliefs or current expectations of the
Directors and the Investment Manager, concerning, amongst other things, the
investment objectives and investment policy, financing strategies, investment
performance, results of operations, financial condition, liquidity, prospects,
and distribution policy of the Company and the markets in which it invests.
By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not
occur in the future. Forward-looking statements are not guarantees of future
performance.
The Company's actual investment performance, results of operations, financial
condition, liquidity, distribution policy and the development of its financing
strategies may differ materially from the impression created by the
forward-looking statements contained in this document.
Subject to their legal and regulatory obligations, the Directors and the
Investment Manager expressly disclaim any obligations to update or revise any
forward-looking statement contained herein to reflect any change in
expectations with regard thereto or any change in events, conditions or
circumstances on which any statement is based.
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AnnouncementREG - Riverstone Credit - Final Results for the Year Ended 31 December 2023
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