REG - US Solar Fund PLC US Solar Fund - USFP - Fixed-Price Tender Offer, Dividend & Refinancing

Us Solar FundAnnouncement

24/04/2024 07:00

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RNS Number : 7662L  US Solar Fund PLC  24 April 2024

24 April 2024

 

US SOLAR FUND PLC

('USF', the 'Company')

 

FIXED-PRICE TENDER OFFER, INTERIM 2024 DIVIDEND POLICy AND REFINANCING PLANS

 

Further to the Company's 2023 Annual Report and previous announcements 1 , the
Company is pleased to confirm its intentions in respect of a return of capital
via a fixed price tender offer, revisions to the dividend policy and  the
outcome of its refinancing analysis.

FIXED-PRICE TENDER OFFER

USF intends to undertake a fixed-price tender offer, at a price of $0.764 per
share (equivalent to the 31 December 2023 NAV of $0.78 per share, less 2% for
the costs of administering the tender offer). Shareholders may choose to
tender for sale some or all of their shares, subject to an upper limit of $19
million 2  being returned to shareholders.

The terms of the proposed tender offer will be set out in a circular to be
issued in the next week, which will be subject to a special resolution of
shareholders at a General Meeting to be scheduled for 21 May 2024, which is
the same date as the Company's Annual General Meeting.

INTERIM 2024 DIVIDEND POLICy

In light of the proposed return of capital outlined above, and in order to
improve operational cash dividend coverage during the remainder of the year,
the Board has decided it is prudent to reduce the target dividend for 2024 to
$0.0225/share ($0.0566/share in 2023). The Board will revise the dividend
target for 2025 in light of any improvement in the coverage as a result of
successfully completing a refinancing.

REFINANCING PLANS

As set out in USF's Annual Report 2023, operational cash dividend coverage 3 
stood at 0.50x for 2023. To improve operational cash dividend coverage and
financial returns to shareholders by reducing near term debt amortisation, the
Board has undertaken an exercise to explore likely terms for a refinancing of
the senior debt facilities.

This exercise has now concluded, and the Board intends to carry out a
potential refinance through the long-dated financing available in the US
private debt markets. The Company's investment manager will progress this
process which would require the Company to obtain an investment grade rating.

Based on the indicative terms received from potential lenders and brokers, the
Board believes that  the US private debt market could provide an attractive
source of debt capital which is well-matched to the long dated, fixed nominal
contracted payments, paid by Investment Grade Counterparties, that comprise
USF's revenues.

If successful, expected outcomes of the refinancing may include additional
capital becoming available to return to shareholders. This capital could
include any refinancing proceeds not used to repay existing facilities, the
release of the cash which currently supports a letter of credit and any
proceeds from breaking the interest rate derivatives associated with the
current debt facilities. A successful refinancing is likely to result in an
increase in operational cash dividend coverage for 2025 and beyond.

Subject to market conditions, the Board expects the overall process to be
concluded in Q4 2024.

 

 

For further information, please contact:

 

 US Solar Fund                      +44 20 7939 0550

 Meredith Frost (Amber)
 Cavendish Capital Markets Limited  +44 20 7397 8900

 Tunga Chigovanyika

 James King

 Will Talkington

 KL Communications                  +44 20 3382 6644

 Charles Gorman

 Charlotte Francis

 Patrick Lodge

About US Solar Fund plc

US Solar Fund plc, established in 2019, listed on the premium segment of the
London Stock Exchange in April 2019. The Company's investment objective is to
provide investors with attractive and sustainable dividends with an element of
capital growth by owning and operating solar power assets in North America and
other OECD countries in the Americas.

The solar power assets that the Company acquires or constructs are expected to
have an asset life of at least 30 years and generate stable and uncorrelated
cashflows by selling electricity to creditworthy offtakers under long-term
power purchase agreements (or PPAs). The Company's portfolio currently
consists of 41 operational solar projects with a total capacity of 443MWDC,
all located in the United States.

Further information on the Company can be found on its website at
http://www.ussolarfund.co.uk (http://www.ussolarfund.co.uk) .

 

About Amber Infrastructure Group

Amber Infrastructure (Amber) is an international infrastructure specialist,
focused on investment origination, development, asset management and in
Europe, fund management. Amber's core business focuses on infrastructure
assets across the public, transport, energy, digital and demographic
infrastructure sectors that support the lives of people, homes and businesses
internationally.

Among other funds, Amber Infrastructure advises International Public
Partnerships, a FTSE 250-listed Company with a market cap of approximately
£2.5 billion and 15-year track record of long-term investment in
infrastructure assets globally. Amber is headquartered in London with offices
in Europe, North America and Australia and employs c.180 infrastructure
professionals. Amber has had a strategic partnership with the Hunt Group of
Companies in the US since 2015. Learn more at www.amberinfrastructure.com.

 1  Please see RNS announcements on 25 March 2024, 18 March 2024, 10 July 2023
and 26 June 2023 for further background.

 2  This upper limit of $19 million represents the balance of the Mount Signal
2 (MS2) sale proceeds available for distribution (total sale proceeds were
$53.2m including the $1m option fee received by the Company). The Company has
to date applied the MS2 sale proceeds to the full repayment of the revolving
credit facility ($4.5m), tax equity buyouts completed in December 2023
(approximately $3.2m), 2023 dividend and intermediary costs (approximately
$12m) and to provide cash collateral to comply with the rating requirements of
an offtaker (approximately $10m). The Company has also reserved funds for tax
equity buyouts to be completed in 2025 ($2.7m) and made provision for minimum
cash balances (approximately $1m).

 3  As presented in the 2023 Annual Report, Operational cash dividend coverage
excludes certain components to reflect the coverage from operational revenue
generation in the period.

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