Schroder BSC Social - Debt Investment in Community Energy Together Ltd
19/12/2023 07:01
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231219:nRSS2157Xa&default-theme=true
RNS Number : 2157X Schroder BSC Social Impact Trust 19 December 2023
19 December 2023
Schroder BSC Social Impact Trust plc
Debt Investment in Community Energy Together Limited
Related Party Transaction
The Board of Schroder BSC Social Impact Trust plc (the "Company"), which
provides a unique investment opportunity to address UK social challenges, is
pleased to announce a £3.6 million debt investment (the "Debt Investment")
in Community Energy Together Limited ("CETL"), a community renewable energy
project company, which will contribute to 'Just Transition to Net Zero', and
re-deploy capital returned to the Company from recent debt repayments and the
partial exit from RLPF1 announced in the Interim Report.
The Debt Investment is a direct junior loan to CETL ("Junior Loan"), alongside
two other junior lenders: Big Society Capital ("BSC"), the Company's portfolio
manager; and Power to Change ("PtC"). The senior lender is abrdn ("abrdn").
The security and loan agent for the Junior Loan is The Charity Bank Limited.
The Junior Loan has a five-year term and carries a fixed coupon of 7 per cent.
per annum plus payment-in-kind interest of 1.5 per cent. per annum in years
one to three and 2.5 per cent. per annum in years four to five.
Community Energy Together Limited
CETL is a partnership of five community organisations that have acquired seven
cross-collateralised solar farm assets across the UK. CETL has acquired these
assets from Community Owned Renewable Energy LLP ("CORE") by way of a
corporate restructuring. CORE was established in 2017 by BSC, PtC and Finance
Earth to acquire and optimise operational solar farms in England and Wales for
transfer to community ownership, whilst maximising positive impact within the
community.
CETL's portfolio consists of seven solar farms (3-7MW in size each) that
benefit from government backed subsidies (Feed in Tariff and Renewables
Obligations Certificate schemes), and the assets are funded on a
cross-collateralised basis for scale and risk-sharing.
In addition to economic value creation and renewable energy generation, any
surplus cash flow after covering costs and debt service obligations is
allocated towards community benefit funds. CETL is forecast to generate total
community benefit funds in the region of £20 million over the assets'
lifetime of 20-25 years.
BSC and PtC funded their original investment in CORE via a mix of senior debt
and equity. The senior debt was refinanced by abrdn in 2021, in a landmark
first institutional investment in community energy in the UK, which will be
transferred to CETL. The equity has been refinanced through a restructuring,
effective on 15 December 2023, via a £1.8 million community equity raise by
CETL and the provision of a £11.7 million junior loan to CETL from BSC (£6.0
million) and PtC (£5.7 million).
The intention is that the senior and junior loans will be repaid by surplus
cash flow generated by the portfolio over the term, in addition to further
community equity and bond issuance.
The Debt Investment has been made by way of transfer from BSC of £3.6 million
of the Junior Loan to the Company. BSC retains a £2.4m investment in the
Junior Loan.
The Debt Investment is strongly aligned with the Company's objectives:
· Strong return expectations, with immediate deployment and no cash
drag.
· Investment into an asset with government-backed, inflation-linked
cash flows.
· Private debt investment on a held-to-maturity basis with low
correlation to public markets.
· Diversified exposure to renewable energy assets with clear impact to
underserved local communities.
Commenting on the Debt Investment, Jeremy Rogers, CIO of Big Society Capital,
Portfolio Manager, Schroder BSC Social Impact Trust plc, said:
"There is a growing opportunity to invest in assets that can support
communities deliver on the Just Transition to Net Zero. Community Energy
Together Limited delivers local renewable energy alongside supporting local
projects such as in fuel poverty. The investment has been sourced through
BSC's platform and offers high quality financial and impact returns for
Company's shareholders, with projected local benefit of £20 million over the
assets' lifetime."
The Debt Investment is a smaller related party transaction for the purposes of
Listing Rule 11.1.10R and this announcement is therefore made in accordance
with Listing Rule 11.1.10R(2)(c).
For further information, please contact:
Schroders
Augustine Chipungu (Press) 0207 658 2016
Kerry Higgins Schroder Investment Management Limited, Company Secretary) 0207 658 6189
Big Society Capital Ehickinbotham@bigsocietycapital.com
Emma Hickinbotham,
Managing Director, Communications
Winterflood Securities Limited 020 3100 0000
Neil Langford
Ehickinbotham@bigsocietycapital.com
Winterflood Securities Limited
Neil Langford
020 3100 0000
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END STRDZMMZRRKGFZM