Acquisition of UK Wind Turbines & Issue of Equity

RNS Number : 3811D

Bluefield Solar Income Fund Limited

28 June 2021

 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY EEA STATE (OTHER THAN ANY MEMBER STATE OF THE EEA WHERE THE COMPANY'S SECURITIES MAY BE LEGALLY MARKETED) OR IN ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. PLEASE SEE THE SECTION ENTITLED "IMPORTANT NOTICE" TOWARDS THE END OF THIS ANNOUNCEMENT.  

This announcement is an advertisement for the purposes of the Prospectus Regulation Rules of the UK Financial Conduct Authority (the "FCA") and not a prospectus. Investors should not purchase or subscribe for any transferable securities referred to in this announcement except on the basis of information contained in a prospectus to be published by Bluefield Solar Income Fund Limited (the "Company") shortly (the "Prospectus") and not in reliance on this announcement. Approval of the Prospectus by the FCA should not be understood as an endorsement of the securities that are the subject of the Prospectus. Potential investors should read the Prospectus and in particular the risk factors set out therein before making an investment decision in order to fully understand the potential risks and rewards associated with the decision to invest in the Company's securities. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation or recommendation to purchase, sell or subscribe for any securities or investments of any description, or a recommendation regarding the issue or the provision of investment advice by any party. Copies of the Prospectus, subject to certain access restrictions, will be available shortly for viewing at the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website (www.bluefieldsif.com).

This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United States or in any other jurisdiction in which the same would be unlawful. Neither this announcement nor any part of it shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.

28 June 2021

Bluefield Solar Income Fund Limited

("Bluefield Solar" or the " Company")

Acquisition of UK onshore wind turbine portfolio and proposed issue of equity

Maiden wind technology acquisition; attractive and differentiated small to medium scale turbines; adding geographic and generational diversification to UK solar focus

· Conditional acquisition of 109 small scale UK onshore wind turbines for approximately £60 million

· Opportunity to increase investment by a further £35 million to re-power 17 turbines in Northern Ireland

· Highly regulated revenue stream with total revenues from the acquisition over 90% subsidised

· Strong geographic diversification across England (62), Northern Ireland (29), Scotland (11) and Wales (7)

· Placing, open offer and offer for subscription to raise gross proceeds of up to approximately £100 million planned to fund the acquisition with a prospectus and timetable to be published shortly

Bluefield Solar (LON: BSIF) is a UK income fund focused on acquiring and managing UK-based renewable energy and storage projects to generate stable, long term dividends for its shareholders whilst furthering the decarbonisation of the energy system. It is pleased to announce that it has entered into a conditional sale and purchase agreement to acquire a portfolio of 109 small scale onshore wind turbines located in the UK (the "Wind Portfolio") for an aggregate consideration of approximately £60 million (including working capital) from Arena Capital Partners Limited, a large-scale owner-operator of small to medium scale wind turbines (the "Wind Portfolio Acquisition"). The sale and purchase agreement is conditional upon the Company obtaining the necessary financing to complete the Wind Portfolio Acquisition.

The Wind Portfolio Acquisition, which is unlevered, is expected to be accretive to the Company's target dividend. In addition, the acquisition has been structured to provide the Company with the opportunity to re-power 17 of the wind turbines comprised within the Wind Portfolio. Each of these 17 wind turbines is located in Northern Ireland and the ability of the Company to re-power such turbines is conditional upon each turbine respectively receiving the necessary planning, regulatory and construction consents, which have already been received in respect of five of the wind turbines. In the event that all 17 turbines were to be re-powered, the generation of the Wind Portfolio is expected to increase by approximately 40 per cent. and would result in a very positive increase to the level of renewable energy the Wind Portfolio currently delivers. By completing the re-powering of all 17 turbines, there is the potential for the Company to further invest approximately £35 million in the Wind Portfolio. As such, the total potential investment in the Wind Portfolio could increase to approximately £95 million.

Following the widening of the Company's investment mandate in July 2020 to permit the Company to make investments in wind opportunities, the Wind Portfolio Acquisition represents an excellent strategic fit for the Company. Completion of the Wind Portfolio Acquisition would immediately provide the Company with a very diverse geographical presence in the UK onshore wind market with projects across England (62), Northern Ireland (29), Scotland (11) and Wales (7).

In addition to geographic diversity, another very attractive feature of the Wind Portfolio Acquisition is the highly regulated revenue stream which the Wind Portfolio benefits from. This is driven from the fact that the projects within England, Scotland and Wales are all FIT accredited, whilst those in Northern Ireland have been accredited under its Renewable Obligation Scheme ("RO Scheme") with a tariff of four Renewable Obligation Certificates ("ROC"). The projects benefit from subsidies for 20 years from accreditation and so last until 2034-2037.  As a result of these accreditations, total revenue from the Wind Portfolio is over 90 per cent. subsidised. The remaining revenue, being less than 10 per cent. of income, is received from power sales which is sold under 15-year power purchase agreements with Power NI that have optionality of either receiving a floating or fixed price for power.

Beyond the attractive income producing aspects of the Wind Portfolio Acquisition, the highly regulated revenue stream is highly complementary to the Company's subsidy free ambitions and the management of merchant power prices in the new build opportunities which the Company is developing, and which are fundamental in supporting the UK government meeting its net zero targets.

Summary details of the Wind Portfolio are set out below:

Manufacturer	Output (kW)	Number of Turbines	Total output (kW)
WTN	250	14	3,500
Vestas	225	6	1,350
Endurance	225	16	3,600
Endurance	180	1	180
Endurance	55	72	3,960
Total		109	12,590

Proposed issue of equity

Portfolio acquisitions since 2016 have been funded from the Company's Revolving Credit Facility. The Revolving Credit Facility has enabled the Company to access shorter-term capital to execute on its acquisition pipeline. Drawdowns on the Revolving Credit Facility have then been typically followed by the issue of fresh equity to repay the drawings (most recently through a non-pre-emptive tap issue of 36.5 million new ordinary shares of no par value in the capital of the Company ("Ordinary Shares") in November 2020 which raised gross proceeds of approximately £45 million).

Whilst the Revolving Credit Facility was recently extended to 30 September 2022 it currently stands drawn at £90 million (out of the current limit of £100 million) following the acquisition of the Bradenstoke solar park in January 2021 and therefore there is insufficient headroom to fund the Wind Portfolio Acquisition or any further acquisition opportunities in the Company's investment pipeline.

Accordingly, the Company intends to publish a prospectus in support of an initial equity issue comprising an initial placing, open offer and offer for subscription (the "Initial Issue") and a subsequent placing programme. Under the Initial Issue the Company will seek to issue up to 84.7 million new Ordinary Shares ("New Ordinary Shares") at the Issue Price of 118 pence to raise gross proceeds of up to approximately £100 million.

It is intended that in the first instance, approximately 81.4 million New Ordinary Shares will be reserved for existing shareholders under the open offer under which those shareholders will be entitled to subscribe for one New Ordinary Share for every 5 Ordinary Shares held and the balance of the New Ordinary Shares available under the Initial Issue will be allocated to the initial placing, the offer for subscription and/or an excess application facility.

The directors of the Company have reserved the right, in consultation with Numis Securities Limited and Bluefield Partners LLP, the Company's Investment Adviser, to increase the size of the Initial Issue in the event that overall demand for the New Ordinary Shares exceeds the target size.  The maximum amount raised under the Initial Issue will not exceed £150 million.

The price at which the New Ordinary Shares will be issued pursuant to the Initial Issue represents a premium of approximately 8.1 per cent. to the last published Net Asset Value per Share as at 31 March 2021 (adjusted to reflect the payment of the second interim dividend of 2.0 pence per share which was paid to shareholders on the register as at 14 May 2021 and the expected third interim dividend of 2.0 pence per share as set out below) and a discount of approximately 3.3 per cent. to the closing share price on 25 June 2021. The New Ordinary Shares issued pursuant to the Initial Issue will not rank for the third quarterly interim dividend of 2 pence per Ordinary Share which is expected to be declared shortly and which will be payable to Shareholders on the register prior to the issue of any New Ordinary Shares pursuant to the Initial Issue. However, the New Ordinary Shares issued pursuant to the Initial Issue will rank for all dividends on New Ordinary Shares declared thereafter. Furthermore, the Company is pleased to reconfirm its guidance of a full year dividend of 8.00 pence per Ordinary Share for the financial year ending 30 June 2021 (2020: 7.90 pence).  This is expected to be covered by earnings and is post debt amortisation.

The Initial Issue will be conditional, inter alia, on shareholder approval to issue New Ordinary Shares pursuant to the Initial Issue and subsequent placings under the placing programme.

The initial placing will commence and the open offer and offer for subscription will both open on the date of publication of the prospectus and are all expected to close around mid-July 2021. Full details of the timetable, the notice of extraordinary general meeting seeking the necessary shareholder approval and the prospectus are expected to be published shortly.

Commenting on the Wind Portfolio Acquisition, John Rennocks, Chairman of Bluefield Solar, said:

"Following the mandate change approved in 2020, allowing the Company to invest in wind and other renewable energy sources and a careful review of the best available opportunities, the board is pleased to announce the Company's first investment in non-solar assets. We view the acquisition as highly complementary to the existing portfolio in respect of energy generation profile, geographic location and the high levels of regulated revenue are accretive to the Company's dividend targets."

- Ends -

For further information:

Bluefield Partners LLP (Company Investment Adviser) James Armstrong / Neil Wood / Giovanni Terranova	Tel: [phone] www.bluefieldllp.com
Numis Securities Limited (Company Broker) Tod Davis / David Benda	Tel: [phone] www.numis.com
Ocorian (Company Secretary & Administrator) Kevin Smith	Tel: [phone] www.ocorian.com
Media enquiries: Buchanan (PR Adviser) Henry Harrison-Topham / Vicky Hayns / Henry Wilson	Tel: [phone] www.buchanan.uk.com [e-mail]

Notes to Editors

About Bluefield Solar

Bluefield Solar is a UK income fund focused on acquiring and managing UK-based renewable energy and storage projects to generate stable, long term dividends for its shareholders whilst furthering the decarbonisation of the energy system. Not less than 75% of the Company's gross assets will be invested into UK solar assets.  The Company can also invest up to 25% of its gross assets into wind, hydro and storage technologies. The majority of the Company's group's revenue streams are regulated and non-correlated to the UK energy market.  Bluefield Solar owns and operates one of the UK's largest, diversified portfolios of solar assets with a combined installed power capacity in excess of 613 MWp.

Further information can be viewed at www.bluefieldsif.com

LEI Code 2138004ATNLYEQKY4B30

About Bluefield Partners LLP

Bluefield Partners LLP was established in 2009 and is an investment adviser to companies and funds investing in renewable energy infrastructure.  It has a proven record in the selection, acquisition and supervision of large-scale energy assets in the UK and Europe.  The team has been involved in over £4 billion renewable funds and/or transactions in both the UK and Europe, including over £1 billion in the UK since December 2011.

Bluefield Partners LLP has led the acquisitions of, and currently advises on, over 100 UK based solar PV assets that are agriculturally, commercially or industrially situated.  Based in its London office, it is supported by a dedicated and experienced team of investment, legal and portfolio executives.  Bluefield Partners LLP was appointed Investment Adviser to Bluefield Solar in June 2013.

Important Notice

This announcement has been determined to contain inside information for the purposes of the UK version of the market abuse regulation (EU) No.596/2014 .

This announcement is an advertisement and does not constitute a prospectus and investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in the Prospectus to be published by the Company and not in reliance on this announcement. Copies of the Prospectus may, subject to certain access restrictions, be obtained from the registered office of the Company and at the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website, www.bluefieldsif.com . Neither the content of the Company's website, nor the content on any website accessible from hyperlinks on its website for any other website, is incorporated into, or forms part of, this announcement nor, unless previously published by means of an RIS announcement, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase investments of any description or a recommendation regarding the issue or the provision of investment advice by any party. No information set out in this announcement is intended to form the basis of any contract of sale, investment decision or any decision to purchase shares in the Company. Approval of the prospectus by the FCA should not be understood as an endorsement of the securities that are the subject of the Prospectus. Potential investors are recommended to read the Prospectus before making an investment decision in order to fully understand the potential risks and rewards associated with a decision to invest in the Company's securities.

The contents of this announcement, which has been prepared by and is the sole responsibility of the Company, have been approved by Numis Securities Limited ("Numis") solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000, as amended.

Numis, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company in connection with the arrangements described in this announcement (the "Proposals") and will not regard any other person (whether or not a recipient of this announcement or the Prospectus) as its client in relation to the Proposals and the other arrangements referred to in the Prospectus  and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice to any such person in connection with the Proposals, the contents of this document or any other matter referred to in this document. Nothing in this paragraph shall serve to exclude or limit any responsibilities which Numis may have under the Financial Services and Markets Act 2000, as amended, or the regulatory regime established thereunder.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States (as defined below). This announcement is not an offer of securities for sale into the United States. The new shares to be offered by the Prospectus (the "New Shares") have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act " ), or with any securities regulatory authority of any State or other jurisdiction of the United States (as defined below) and accordingly may not be offered, sold or transferred within the United States of America, its territories or possessions, any State of the United States or the District of Columbia (the "United States " ) except pursuant to an exemption from, or in a transaction not subject to, registration under the U.S. Securities Act and in compliance with the securities laws of any State or other jurisdiction of the United States. No public offering of securities is being made in the United States.

The proposed issue of New Shares will be made (i) outside the United States in reliance on the exemption from the registration requirements of the U.S. Securities Act provided by Regulation S and (ii) to persons located inside the United States or to U.S. Persons (as defined in Regulation S under the U.S. Securities Act)  that are ''qualified institutional buyers'' (as the term is defined in Rule 144A under the U.S. Securities Act) that are also ''qualified purchasers'' within the meaning of section 2(A)(51) of the U.S. Investment Company Act (as defined below) in reliance on an exemption from registration provided by section 4(A)(2) under the U.S. Securities Act and that have signed a US investor letter in a form satisfactory to the Company and Numis.

The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "U.S. Investment Company Act " ) and investors will not be entitled to the benefits of the U.S. Investment Company Act.

This announcement does not constitute an offer to sell or issue or a solicitation of an offer to buy or subscribe for New Shares in any jurisdiction including, without limitation, the United States, Australia, Canada, Japan or South Africa or any member state of the EEA (as defined below) (other than any member state of the EEA where the Company's securities may be lawfully marketed) or any other jurisdiction in which such offer or solicitation is or may be unlawful (an "Excluded Territory"). This announcement and the information contained herein are not for publication or distribution, directly or indirectly, to persons in an Excluded Territory unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction.

No application to market the New Shares has been made by the Company under the relevant private placement regimes in any member state of the European Economic Area (the "EEA") other than the Republic of Ireland, Luxembourg and the Netherlands. No marketing of New Shares in any member state of the EEA other than the United Kingdom, the Republic of Ireland, Luxembourg and the Netherlands will be undertaken by the Company save to the extent that such marketing is permitted by Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010, and the EU AIFM Delegated Regulation the AIFM Directive as implemented in the relevant member state of the EEA.

The distribution of this announcement, and/or the issue of New Shares in certain jurisdictions may be restricted by law and/or regulation. No action has been taken by the Company, Numis or any of their respective affiliates as defined in Rule 501(b) under the U.S. Securities Act (as applicable in the context used, "Affiliates") that would permit an offer of the New Shares or possession or distribution of this announcement or any other publicity material relating to the New Shares in any jurisdiction where action for that purpose is required (other than the United Kingdom, the Republic of Ireland, Luxembourg and the Netherlands). Persons receiving this announcement are required to inform themselves about and to observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

The information in this announcement is for background purposes only and does not purport to be full or complete. None of the Company, Bluefield Partners LLP (the "Investment Adviser"), Numis or any of their respective affiliates accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith. Apart from the liabilities and responsibilities (if any) which may be imposed on Numis and the Investment Adviser by the Financial Services and Markets Act 2000, as amended, or the regulatory regime established thereunder, the Company, the Investment Adviser and Numis and their respective affiliates accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.

This announcement includes 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", "forecasts", "projects", "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. All forward-looking statements address matters that involve risks and uncertainties and are not guarantees of future performance. Accordingly, there are or will be important factors that could cause the Company's actual results of operations, performance or achievement or industry results to differ materially from those indicated in these statements. Any forward-looking statements in this announcement reflect the Company's current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the Company's operations, results of operations, growth strategy and liquidity. Given these uncertainties, prospective investors are cautioned not to place any undue reliance on such forward-looking statements. These forward-looking statements apply only as of the date of this announcement. The Company, the Investment Adviser and Numis expressly disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, as amended, the Prospectus Regulation Rules of the FCA, UK MAR or other applicable laws, regulations or rules.

The value of securities in the Company and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements.  When you sell your investment you may get back less than you originally invested. Figures refer to past performance and past performance is not a reliable indicator of future results. Returns may increase or decrease as a result of currency fluctuations.

Terms used but not defined in this announcement shall have the meaning given to them in the Prospectus, unless the context otherwise requires.

Information to distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("Directive 2014/65/EU " ); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing Directive 2014/65/EU; (c) local implementing measures; and/or (d) (where applicable to UK investors or UK firms) the relevant provisions of the UK MiFID Laws (including the FCA's Product Intervention and Governance Sourcebook ("PROD " )) (together the "MiFID II Product Governance Requirements " ), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any ''manufacturer'' (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the New Shares have been subject to a product approval process, which has determined that such New Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in PROD; and (ii) eligible for distribution through all distribution channels as are permitted by PROD for each type of investors (the "Target Market Assessment " ).

Notwithstanding the Target Market Assessment, distributors should note that: the price of the New Shares may decline and investors could lose all or part of their investment; the New Shares offer no guaranteed income and no capital protection; and an investment in the New Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Proposals. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Numis will only procure investors through the Initial Placing or any Subsequent Placing who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of the UK MiFID Laws and/or EU MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the New Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the New Shares and determining appropriate distribution channels.

PRIIPs Regulation

In accordance with the UK version of the EU PRIIPs Regulation (1286/2014) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended (the "UK PRIIPs Laws"), a key information document in respect of an investment in the ordinary shares of the Company has been prepared by the Company and is available to investors at www.bluefieldsif.com. If you are distributing any class of shares in the Company, it is your responsibility to ensure that the relevant key information document is provided to any clients that are "retail clients".

 

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