THIS ANNOUNCEMENT, INCLUDING THE APPENDIX, IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, TO U.S. PERSONS, OR IN OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OR BREACH OF ANY APPLICABLE LAW. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.
THIS ANNOUNCEMENT HAS BEEN DETERMINED TO CONTAIN INSIDE INFORMATION.
This announcement does not constitute an offer to sell, or the solicitation of an offer to subscribe for, or to buy shares in any jurisdiction. This announcement is an advertisement and not a prospectus.
Foresight Solar Fund Limited
LEI: 213800VO4O83JVSSOX33
4 September 2018
Foresight Solar Fund Limited (the "Company")
Publication of Circular, and potential Acquisition and Placing
The board of directors of Foresight Solar Fund Limited (the "Board") is seeking authority to issue ordinary shares in the capital of the Company (the "Ordinary Shares") on a non pre-emptive basis to allow the Company to fund the acquisition of a portfolio of 10 ground-based, solar power assets in the UK with a total installed capacity of 72MW (the "Target Portfolio") for an aggregate consideration of £30.1 million (the "Acquisition"), to reduce the Company's gearing and to be in a position to raise additional capital when it identifies solar power assets that are suitable for acquisition in accordance with the Company's investment policy. The Board is therefore seeking shareholder approval to disapply the pre-emption rights on the issue of Ordinary Shares in the capital of the Company.
Accordingly, the Company expects to publish a Circular shortly convening a general meeting (the "General Meeting") to be held on a date to be confirmed in the Circular and announced shortly.
Unless otherwise defined, the terms used in this Announcement shall have the same meaning as set out in the Circular.
Background
As at today's date, the Company has no further shareholder issuance authority and the Group has drawn down, in aggregate, £420.3 million under its bank facilities (£315.2 million remains outstanding under its Term Loan Facilities and £105.0 million has been drawn under its Revolving Credit Facilities) (the "Bank Facilities"). The Group's gearing, calculated as borrowings as a percentage of the Group's Gross Asset Value was 41 per cent. as at 30 June 2018. The Group's gearing as of 30 June 2018 does not reflect the impact of the previous issue of Shares on 4 July 2018 nor the 114MW UK portfolio acquisition completed on 3 August 2018 in terms of the Group's Gross Asset Value and the outstanding balances under the Bank Facilities.
The Target Portfolio
The Company has secured exclusivity over the Target Portfolio of 10 operational solar assets in the UK with a total installed capacity of 72 MW. The assets have been in operation for a minimum period of two years and have received accreditation under the Renewable Obligation ("RO") scheme ranging from 1.4 to 1.3 ROCs/MWh. The average ROC accreditation banding of the Target Portfolio is 1.35 ROCs/MWh.
The equity interest in the Target Portfolio is proposed to be acquired for a consideration of approximately £30.1 million, including the economic benefit of all cashflows from 30 June 2018. The Target Portfolio will be acquired from funds managed by Foresight Group LLP.
The Target Portfolio currently has debt facilities in place totalling £62.1million, the majority of which is provided by the Royal Bank of Scotland. All of these debt facilities have been arranged on an asset by asset basis and do not benefit from cross-collateralisation. These existing debt facilities expire either on or before 30 September 2019 and it is the Company's intention to refinance the Target Portfolio before the end of June 2019.
Assuming completion of the Acquisition, the Company's solar portfolio will represent a total of 860 MW of installed capacity across 53 solar power assets.
The Placing
The Board announces, subject to the shareholder approvals described above, a placing of new Ordinary Shares to fund the Acquisition and reduce the Group's gearing by repaying some of the Company's existing Bank Facilities that have been drawn down to finance the acquisition of other assets in the Company's portfolio (the "Placing").
If Shareholders approve the proposed disapplication the statutory pre-emption rights on the issue of Ordinary Shares in the capital of the Company at the General Meeting, the Placing will commence shortly thereafter. The Company intends to announce at that time the placing price, the terms and conditions of the Placing and its expected closing date, through a Regulatory Information Service announcement.
Application will be made for the admission of the New Shares to the premium segment of the Official List of the UK Listing Authority and to trading on the London Stock Exchange's main market for listed securities.
The Placing is not conditional on the completion of the Acquisition and the Company reserves the right not to proceed with the Acquisition. Accordingly, there is no minimum size required for the Placing to proceed. In the event the Acquisition does not complete, the Company will use the net proceeds of the Placing to acquire further ground based solar power assets in accordance with the Company's investment policy and/or to reduce the Group's gearing by repaying some of the existing Bank Facilities that have been drawn down to finance the acquisition of other assets within the Company's portfolio. The maximum number of Shares that may be issued under the Placing is 53,994,250 Shares.
Shareholder authority to allot shares on a non pre-emptive basis
As noted above, the Company has already used up all of the authority granted to it by Shareholders at its annual general meeting held in June 2018 to issue up to 10 per cent. of its issued share capital on a non pre-emptive basis. The disapplication of the pre-emption rights in respect of the issue of further Shares is required to be approved by the Ordinary Shareholders pursuant to the Company's articles of association, the Companies Law and Chapter 9 of the Listing Rules.
Since the implementation of the EU Prospectus Regulation in 2017, issuers such as the Company can issue up to (but not including) 20 per cent. of their securities already admitted to trading over a 12 month period without having to publish a prospectus.
The Board is therefore seeking shareholder authority at the General Meeting to issue up to 53,994,250 Ordinary Shares representing 10.9 per cent. of its ordinary share capital, on a non pre-emptive basis, being the Company's maximum remaining allowance within this 20 per cent limit. If Shareholders grant this authority at the General Meeting, the Directors will use it, in the first instance, to carry out the Placing. To the extent that it is not used entirely for the purposes of the Placing, the Directors intend to use any remaining authority to allow the Company to raise additional capital when it identifies solar power assets that are suitable for acquisition, in accordance with the Company's investment policy. If the authority sought for the Placing is not utilised in its entirety, the Directors undertake not to issue or sell more than 10.0 per cent. of the ordinary share capital of the Company on a non pre-emptive basis.
The ability to issue these Ordinary Shares under the Placing without the need for a pre-emptive offer, which would require the issue of a prospectus, enables Company to raise funds within the timeframe required for the Acquisition and in a cost-efficient manner.
In addition to the Target Portfolio, the Company has identified a further pipeline of attractive investment opportunities and wishes to be in a position to raise further funds using any remaining authority granted after the Placing (subject in this case to a limit of less than 10.0 per cent. of its ordinary share capital) to take advantage of such opportunities for the benefit of Shareholders. Investments in solar power assets, in accordance with the Company's investment policy, may require the Company to execute a transaction within a relatively short time frame. If Shareholders approve the Resolution at the General Meeting, the Company will be able to issue up to 53,994,250 Shares less any Shares issued under the Placing (subject in this case to a limit of up to 10.0 per cent. of its ordinary share capital) within the period from 22 September 2018 until 21 September 2019 or the conclusion of the annual general meeting in 2019 whichever is earlier. The Directors believe that having this ability gives the Company the potential to access capital within a relatively short time frame which is important to being able to acquire accretive investment opportunities whilst also mitigating the risk of cash drag on Shareholders' funds.
If such authority is granted by Shareholders, the Directors will only use the authority to issue Ordinary Shares on a non pre-emptive basis: (i) to meet demand from investors; and (ii) when the Directors believe that it is in the best interests of the Company and Shareholders to do so.
Any new Shares issued pursuant to the authority under the Resolution, under the Placing or any further share issue using the remaining authority, will be issued at not less than the NAV per Ordinary Share at the time of issue (as adjusted) plus a premium intended to cover, at least, the expenses of any such issue of new Ordinary Shares as determined by the Board at the time of each such issue. Thus any such issue will not be dilutive to existing Shareholders in terms of NAV per Ordinary Share.
The Ordinary Shares will be issued in registered form and may be held in certificated or uncertificated form. The Ordinary Shares issued will rank pari passu with the Ordinary Shares then in issue (save for any dividends or other distributions declared, made or paid by reference to a record date prior to the issue of the relevant Ordinary Shares).
The Benefits of the Proposals
The Board believes that the issue of Ordinary Shares pursuant to the Placing should provide the following benefits:
§ provide the Company with additional capital which would enable it to take advantage of the Acquisition;
§ further diversify the Company's portfolio through the Acquisition;
§ reduce the Company's gearing to the extent, if any, that the net proceeds of the Placing will be used to repay some of the Company's Bank Facilities;
§ diversify further the Shareholder register, potentially enhancing the liquidity in the market for the Company's Shares; and
§ allow the Company's operating costs to be spread across a larger capital base, which should help improve returns to investors through a reduction in the Ongoing Charges Ratio.
The Board further believes that being able to issue any remaining Shares under the authority of the Resolution after the Placing, through one or more further placings, will allow the Company to take advantage of investment opportunities that are in accordance with the Company's investment policy within relatively short timeframes and/or further reduce the Group's gearing; and maintain the Company's ability to issue Shares and enable the Company to manage better any premium at which the Shares trade to NAV.
Recommendation
The Board considers that the passing of the Resolution is in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolution at the General Meeting. The Directors intend to vote in favour of the Resolution in respect of their own beneficial holdings of Ordinary Shares (amounting to 93,954 Ordinary Shares, representing approximately 0.02 per cent. of the issued share capital of the Company) as at today's date.
All enquiries:
Foresight Group
Joanna Andrews [email protected] +44 (0)20 3762 6951
Stifel Nicolaus Europe Limited +44 (0)20 7710 7600
Mark Bloomfield
Neil Winward
Gaudi Le Roux
