TIDMBSIF
RNS Number : 5039A
Bluefield Solar Income Fund Limited
08 June 2016
8 June 2016
BLUEFIELD SOLAR INCOME FUND LIMITED
(the "Company")
Proposed Amendment to Investment Policy and Notice of
Extraordinary General Meeting
Introduction
The Board today announced that it is seeking approval from
Shareholders for an amendment to the Company's investment policy
(the Proposal). The amendment, if approved, will enable the Group
to incur long term structural debt at the holding company level
whereas the existing investment policy envisages that the Group
will only use short term debt at the holding company level.
Shareholders should note that the proposed amendment will not
increase the overall limit on borrowings set out in the existing
investment policy and in all cases the combined short term and long
term leverage will not exceed 50 per cent. of the Company's Gross
Asset Value at the time of drawdown.
As the Proposal involves a material amendment to the Company's
existing investment policy, the approval of the Shareholders is
required in accordance with the Listing Rules and the Proposal is
therefore conditional on the passing of the Resolution, which will
be proposed at the Extraordinary General Meeting of the Company as
an ordinary resolution. The proposed amendment of the investment
policy has been approved in principle by the FCA in accordance with
the Listing Rules.
Background to and reasons for the Proposal
As explained in the Placing Programme Prospectus published by
the Company on the 26 October 2015, the Investment Adviser was
exploring a large number of both primary and secondary project
opportunities, the acquisitions of a number of which were completed
utilising the amended and restated Acquisition Facility, upon which
it intends to enter into exclusivity arrangements, subject to
securing availability of sufficient funding. To realise the
acquisition of the pipeline assets, the Company intends to utilise
the Acquisition Facility as a short term financing measure, with
the intention that it would be replaced by long term structural
debt (subject to Shareholders' approval of the Proposal), as well
as further equity, with a target long term leverage of 25-35 per
cent. of Gross Asset Value. In all cases, the combined short term
and long term leverage of the Group and the SPVs in which it
invests will not exceed 50 per cent. of Gross Asset Value at the
time of drawdown (this being the limit on Aggregate Group Debt set
out in the Company's existing investment policy).
The Directors believe, as advised by the Investment Adviser,
that the introduction of long term structural debt at holding
company level, in conjunction with an acquisition facility, will
have the following benefits:
-- the Company may, in combination with the targeted long term
structural leverage of 25 to 30 per cent. of GAV (which will not
exceed 50 per. cent. of GAV), achieve, overall, a more favourable
debt package, with particular reference to the interest rate and
covenants on the long term debt;
-- these favourable terms, in respect of the long term debt, may
be locked in over a longer period thereby providing a better match
of the debt servicing costs with the cashflows from, and life of,
the underlying assets;
-- by having a significant element of the overall gearing of the
Group provided through long term debt, any refinancing risk
associated with an acquisition facility will be reduced;
-- reducing the amount of debt at SPV level relative to overall
debt may reduce the risk that any cashflow will be locked at SPV
level, with a corresponding reduction of risk to the Group's
revenue and dividend targets; and
-- the use of long term structural debt at the holding company
level will provide greater transparency to shareholders as to the
capital structure of the Company and the cost of debt that it has
incurred.
Shareholders should note, however, that it may not be possible
to refinance any long term debt either: (i) during the duration of
the debt should better terms become available in the market; or
(ii) on maturity of the debt when the balance of any debt
outstanding will become repayable. In addition, any long term debt
will be secured over the Company's portfolio as a whole rather than
over any specific asset within the portfolio (on a basis that
limits the recourse to other assets within the portfolio).
Together with The Royal Bank of Scotland plc and Investec Bank
plc, the "Long Term Debt Advisers" to the HoldCo, the Investment
Adviser has commenced, as requested by the Board, the work required
in order to introduce long term structural debt. As at the date of
this announcement, this work has progressed well. The Long Term
Debt Advisers issued an indicative teaser to potential lenders,
following from which indications were received from multiple
leading debt providers in both the size required and at the coupon
rates prevailing in the infrastructure sector for debt of this
nature. Together with the Long Term Debt Advisers, the Investment
Adviser has identified and recommended a short list of potential
lenders with whom a formal due diligence and bidding process has
been initiated. That process is anticipated to progress
substantially over the next few months.
The proposed amendment of the investment policy set out at the
end of this announcement has been approved in principle by the FCA
in accordance with the Listing Rules.
Extraordinary General Meeting
The Proposal is conditional on the approval by Shareholders of
the Resolution to be put to Shareholders at the Extraordinary
General Meeting, which has been convened for 1 July 2016 at 10:00
a.m.
The Resolution will be proposed as an ordinary resolution of the
Company, requiring the approval of a simple majority of the votes
recorded and will, if passed, amend the investment policy of the
Company so as to enable the Group to incur long term structural
debt at the holding company level.
All Shareholders are entitled to attend, speak and vote at the
Extraordinary General Meeting and to appoint a proxy or corporate
representative to exercise that right.
Recommendation
The Board considers that the Proposal and the Resolution are in
the best interests of the Company and Shareholders as a whole.
Accordingly, the Board unanimously recommends that Shareholders
vote in favour of the Resolution, as all of the Directors intend to
do in respect of their own beneficial holdings of Ordinary Shares
which amount in aggregate to 1,144,653] Ordinary Shares
(representing approximately 0.37 per cent, of the existing issued
ordinary share capital of the Company).
Investment Policy
If the Resolution is passed at the EGM, the full text of the
Company's amended investment policy will be as set out below. The
only section that will be amended if the Investment Policy
Resolution is passed relates to the ability of the Group to incur
both short term and long term structural debt at the holding
company level. This amendment is underlined in the text below.
"Investment objective
The Company seeks to provide Shareholders with an attractive
return, principally in the form of quarterly income distributions,
by investing in a portfolio of large scale UK based solar energy
infrastructure assets.
The Company and its Board have set a target of growing dividends
from a 7p per Ordinary Share base level for 2014/15 by RPI and this
would lead to a target dividend for the Company's third financial
year in 2015/16 of 7.07p. However, as a result of good operational
performance in 2014/15 the Board declared an increased dividend of
7.25p for that financial year, and subject to operating performance
in the current year being within its expectations the Board intends
to maintain that level of dividend. Subject to maintaining
prudential level of reserves, the Company intends to distribute
cash generated in order to optimise Shareholders' returns and
expects to achieve its target returns without recourse to
reinvestment of spare cash flows.
Investment policy
The Group invests in a diversified portfolio of solar energy
assets, each located within the UK, with a focus on utility scale
assets and portfolios on greenfield, industrial and/or commercial
sites. The Group targets long life solar energy infrastructure,
expected to generate stable renewable energy output over a 25 year
asset life.
Individual solar assets or portfolios of solar assets are held
within SPVs into which the Group invests through equity and/or debt
instruments. The Group typically seeks legal and operational
control through direct or indirect stakes of up to 100 per cent. in
such SPVs, but may participate in joint ventures or minority
interests where this approach enables the Group to gain exposure to
assets within the Company's investment policy which the Group would
not otherwise be able to acquire on a wholly-owned basis.
The Group may make use of non-recourse finance at the SPV level
to provide leverage for specific solar energy infrastructure assets
or portfolios provided that at the time of entering into (or
acquiring) any new financing, total non-recourse financing within
the portfolio will not exceed 50 per cent. of the prevailing Gross
Asset Value. In addition, the Group may, at holding company level,
make use of both short term debt finance and long term structural
debt to facilitate the acquisition of investments, but such short
term holding company level debt (when taken together with the SPV
finance noted above) will also be limited so as not to exceed 50
per cent. of the Gross Asset Value.
No single investment in a solar energy infrastructure asset
(excluding any third party funding or debt financing in such asset)
will represent, on acquisition, more than 25 per cent. of the Net
Asset Value.
The portfolio provides diversified exposure through the
investment in not less than five individual solar energy
infrastructure assets. Diversification is achieved across various
factors such as grid connection points, individual landowners and
leases, providers of key components (such as PV panels and
inverters) and assets being located across various geographical
locations within the United Kingdom.
The Group aims to derive a significant portion of its targeted
return through a combination of the sale of Renewables Obligation
certificates and FiTs (or any such regulatory regimes that replace
them from time to time). Both such regimes are currently
underwritten by UK Government policy providing a level of
Renewables Obligation certificates or FiTs fixed for 20 years for
accredited projects and each regime currently benefits from an
annual RPI escalation. The Group also intends, where appropriate,
to enter into power purchase agreements with appropriate
counterparties, such as co-located industrial energy consumers or
wholesale energy purchasers.
Listing Rule investment restrictions
The Company currently complies with the investment restrictions
set out below and will continue to do so for so long as they remain
requirements of the Financial Conduct Authority:
-- neither the Company nor any of its subsidiaries will conduct
any trading activity which is significant in the context of the
Group as a whole;
-- the Company must, at all times, invest and manage its assets
in a way which is consistent with its objective of spreading
investment risk and in accordance with the published investment
policy; and
-- not more than 10 per cent. of the Gross Asset Value at the
time of investment is made will be invested in other closed-ended
investment funds which are listed on the Official List.
As required by the Listing Rules, any material change to the
investment policy of the Company will be made only with the prior
approval of the Financial Conduct Authority and Shareholders."
Further Information
Capitalised terms used but not defined in this announcement will
have the same meaning as set out in the Circular to shareholders
dated 8 June 2016.
A copy of the Circular has been submitted to the National
Storage Mechanism and will shortly be available for inspection at
www.morningstar.co.uk/uk/NSM. The Circular will also shortly be
available on the Company's website at www.bluefieldsif.com where
further information on the Company can also be found.
Enquiries:
James Armstrong / Mike Rand / Giovanni Terranova
Bluefield Partners LLP - Company Investment Adviser
Tel: +44 (0)20 7078 0020
Tod Davis / David Benda
Numis Securities Limited - Company Broker
Tel: +44 (0)20 7260 1000
Kevin Smith
Heritage International Fund Managers Limited - Company Secretary
& Administrator
Tel: +44 (0)1481 716000
Tom Karim
CNC
Tel: +44(0)20 3219 8820 / +44(0)7923 293 399
Note to editors
About Bluefield Solar Income Fund Limited
The Company is a Guernsey-registered investment company focusing
on large scale agricultural and industrial solar assets. It had an
initial public offering of shares on the main market of the London
Stock Exchange in July 2013 and currently has over 309 million
shares in issue.
BSIF seeks to provide shareholders with an attractive return,
principally in the form of income distributions, by investing in a
diversified portfolio of solar energy assets, each located within
the UK, with a focus on utility scale assets and portfolios on
greenfield, industrial and/or commercial sites. The Company intends
to pay quarterly distributions.
About Bluefield Partners LLP (Bluefield)
Bluefield was established in 2009 and is an investment adviser
to companies and funds investing in solar energy infrastructure. It
has a proven record in the selection, acquisition and supervision
of large scale energy and infrastructure assets in the UK and
Europe. The team has been involved in over GBP1.5 billion of solar
PV funds and/or transactions in both the UK and Europe since 2008,
including over GBP750m in the UK since December 2011.
Bluefield has led the acquisitions, and currently advises on
over 70 UK based solar PV assets that are agriculturally,
commercially or industrially situated. Based in its London office,
Bluefield's partners are supported by a dedicated and highly
experienced team of investment, legal and portfolio executives.
Bluefield was appointed Investment Adviser to the Company in
June 2013.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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