Portfolio Update

RNS Number : 0524R

Renewables Infrastructure Grp (The)

24 June 2015

 



THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA.

This announcement is an advertisement 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 the prospectus published by The Renewables Infrastructure Group Limited (the "Company") in connection with the Company's share issuance programme pursuant to which the proposed placing of the New Ordinary Shares (the "Placing") is being made and the admission of the New Ordinary Shares to the premium segment of the Official List of the Financial Conduct Authority and to trading on London Stock Exchange plc's main market for listed securities. The prospectus published in connection with the Company's share issuance programme pursuant to which the Placing is being made comprises the registration document, securities note and summary published by the Company on 1 December 2014, (as supplemented by the first supplementary prospectus dated 3 March 2015 and the second supplementary prospectus expected to be published today) (the "Prospectus"). 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. 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.

24 June 2015

The Renewables Infrastructure Group Limited
("TRIG" or the "Company" and, together with the holding company subsidiaries, the "Group" - a London-listed investment company advised by InfraRed Capital Partners as investment manager and Renewable Energy Systems as operations manager)

Investment in a Portfolio of Six UK Wind Farms Alongside Fred. Olsen Renewables

·      TRIG to invest £246 million in a portfolio of six operating onshore wind farm projects in Scotland, with 433 MW of generating capacity in aggregate, alongside Fred. Olsen Renewables Limited (the "Acquisition")

·      Increasing TRIG's portfolio net generating capacity by 48% to 658MW

·      Acquisition includes a 49% equity interest and 100% of a mezzanine-level loan

·      Initially funded from TRIG's cash balances and a draw-down of an expanded acquisition facility with Royal Bank of Scotland plc and National Australia Bank Limited

·      TRIG subsequently undertaking an institutional placing under its existing Share Issuance Programme to be completed in July to partially repay the acquisition facility

Richard Crawford, Director - Infrastructure at InfraRed Capital Partners, Investment Manager to TRIG said: "We are delighted to announce this major investment by TRIG and to be partnering with Fred. Olsen Renewables, a leading developer of UK and Nordic wind energy projects, who has developed these six high quality operational wind farms. This is a major expansion in the size of TRIG's business, increasing the portfolio by approximately half and bringing further advantages of scale and project diversification to TRIG's investors."

---

The Acquisition

Following the announcement by TRIG on 19 June, the Board of TRIG is pleased to announce that agreement has been reached between the Company and Fred. Olsen Renewables Limited ("FORL") on terms for the investment by the Group alongside FORL in a portfolio of six operating onshore wind farm projects in Scotland, UK.

The Acquisition comprises the purchase of a 49% equity interest in a portfolio holding company, Fred. Olsen Wind Limited ("FOWL"), which wholly owns six operating onshore wind farm project companies spread over four different locations in Scotland, together with the provision by the Group of 100% of a mezzanine-level loan (fully amortising by January 2021) which will provide TRIG with cash flows ranking in priority to cash flows available to the shareholders in FOWL. The total consideration for the Acquisition is approximately £246 million, subject to certain performance-based value adjustments. The Acquisition is in line with TRIG's published investment policy.

The Acquisition is being initially funded from the Group's cash balances and from the Group's acquisition facility with Royal Bank of Scotland plc and National Australia Bank Limited ("Acquisition Facility") which has been extended for the purposes of the Acquisition. Immediately following completion of the Acquisition, the total drawn under the Acquisition Facility will be £204m, which is within the applicable borrowing limit of 30% of Portfolio Value as set out in the Company's published investment policy. The Acquisition Facility was undrawn before the Acquisition. The expiry date of the extended Acquisition Facility remains 28 February 2017, but balances above £180 million are to be repaid within 12 months of drawdown and the remainder by the existing expiry date.  Consistent with the approach adopted on previous uses of the Acquisition Facility, the Company intends to repay sums drawn down under the Acquisition Facility from the proceeds of equity issues, initially through one or more placings under the Share Issuance Programme launched on 1 December 2014 under which 142.5m shares remain available for issuance.

In connection with the Acquisition, the Company confirms its intention to proceed with an institutional placing of New Ordinary Shares (the "Placing") pursuant to a further tranche of the Company's Share Issuance Programme to be completed in July 2015. Details of the Placing will be announced shortly.

The following is a summary of the key data for the six projects (the "Projects") comprising the Acquisition, which have an aggregate generating capacity of 433MW:-

Project	Crystal Rig 1	Rothes 1	Paul's Hill	Crystal Rig 2	Rothes 2	Mid Hill
Location	East Lothian, Scotland	Moray, Scotland	Moray, Scotland	East Lothian, Scotland	Moray, Scotland	Aberdeen-shire, Scotland
Commercial Operation Date (COD)	Oct 2003	May 2005	May 2006	June 2010	June 2013	Jun/Nov 2014
Turbines	25 x Nordex 2.5MW N80	22x Siemens 2.3MW	28 x Siemens 2.3MW	60 x Siemens 2.3MW	18 x Siemens 2.3MW	33 x Siemens 2.3MW
Generating Capacity (MWs)	62.5	50.6	64.4	138.0	41.4	75.9
ROCs per MWh	1.0	1.0	1.0	1.0	1.0	0.9
PPA counterparty and expiry	e.on May 2020	e.on January 2020	e.on January 2021	EdF July 2017	Statkraft March 2027	Statkraft March 2027

All of the Projects are assumed to have 25-year operating lives following their respective Commercial Operation Dates ("COD"), although extensions of life may be possible and all of the Projects have the potential to be repowered subject to appropriate planning consent and agreement with landowners. The shareholders have agreed a framework agreement for any such repowering under which development works would be undertaken by FORL. All the Projects benefit from the UK's Renewable Obligation (20 years from COD) incentive programme and are accredited with 1.0 ROC / MWh except for Mid Hill which receives 0.9 ROC / MWh.

The Projects are being purchased with long-term project financing in place totalling approximately £330 million (or approximately 44% of the Projects' enterprise value). Approximately £198 million of the project financing has been provided pursuant to a portfolio financing comprising Crystal Rig I and II, Paul's Hill and Rothes I and the balance of approximately £132 million has been provided pursuant to a portfolio financing comprising Rothes II and Mid Hill. The project financing amortises in various tranches up to 2027.

Operational, maintenance and management services to the Projects are expected to be provided by Fred. Olsen Renewables AS and its related company Natural Power Services Limited ("NPSL") on arms-length market terms upon expiry of existing contracts for the sites not already contracted to FORAS and/or NPSL. Renewable Energy Systems Limited, TRIG's operations manager, will represent TRIG on the board of the project companies and provide portfolio-level advice to TRIG in relation to the Projects. FORL will continue to be invested in all the Projects, retaining a 51% interest in FOWL. As a significant minority equity partner to FORL in the Projects, TRIG will have shareholder rights appropriate for investments of this nature in addition to the board representation.

The Chairman of TRIG, Helen Mahy, is also a non-executive Director of Bonheur ASA and Ganger Rolf ASA, which together indirectly own a 100% interest in FORL. As a result of this, Ms. Mahy has been excluded, wherever appropriate, from discussions in relation to the Acquisition both at TRIG and at FORL and has not played any role either in the evaluation of or in decisions made by TRIG or FORL in relation to the Acquisition.

Impact on TRIG

The Acquisition increases TRIG's portfolio net generating capacity (pro rata to equity interests) by 48% to approximately 658MW (gross capacity: 879MW).

The Acquisition does not change the target interim dividend of 3.08p per Ordinary Share in relation to the six months to 30 June 2015 or the Company's stated dividend growth policy as set out in the Prospectus. Following the Acquisition, the target cash dividend cover for the Company for the next 5 years remains unchanged.

The Company's estimated NAV per Ordinary Share as at 31 May 2015 was 101.9p. As at 31 December 2014, portfolio-level gearing was 35%. Following the Acquisition, portfolio-level gearing is expected to rise a further 3%, which is within the 50% limit set out in the Company's investment policy.

For the purposes of estimating the above unaudited NAV per Ordinary Share as at 31 May 2015, the portfolio valuation assumptions adopted by the Investment Manager at 31 May 2015 are unchanged from those adopted as at 31 December 2014. While the Investment Manager will adopt updated valuation assumptions for the portfolio valuation as at 30 June 2015, estimations performed by the Investment Manager indicate that the impact of changes to those assumptions will offset each other such that if those assumptions were adopted as at 31 May 2015 they would result in a materially similar valuation to that reported above. These changes in valuation are expected to include some downward movement from a softening in forecast power price assumptions and some upward movement from a tightening of discount rates and from favourable weather.

Following the Acquisition, TRIG's portfolio will be comprised of 36 projects with approximately 74% of the projects by value being onshore wind and 26% being solar PV. InfraRed Capital Partners, as Investment Manager to TRIG, is reviewing further opportunities as the Company continues to adopt an approach of investing selectively in projects across proven technologies and jurisdictions committed to renewables which best meet the target returns for investors, as set out in Prospectus, as well as providing benefits of diversity, scale and efficiency.

Enquiries

InfraRed Capital Partners Limited                              [phone]
Richard Crawford
Matt Dimond

Tulchan Communications                                           [phone]
Martha Walsh
Camilla Cunningham

Canaccord Genuity Limited                                         [phone]
Andrew Zychowski
Lucy Lewis

Jefferies International Limited                                    [phone]
Gary Gould
Stuart Klein

NOTES TO EDITORS:

TRIG

TRIG is a leading renewable energy infrastructure company delivering long-term, stable dividends from a diversified portfolio of onshore wind and solar photovoltaic projects in the UK and Northern Europe. The Company is seeking to provide investors with long-term, stable dividends, while preserving the capital value of its investment portfolio through re-investment of surplus cash flows after payment of dividends. TRIG is targeting an aggregate dividend of 6.16 pence per Ordinary Share for the period from 1 July 2014 to 30 June 2015 and aims to increase this dividend in line with inflation over the medium term.

TRIG is invested in a portfolio of 36 projects in the UK, France and the Republic of Ireland. The Group is seeking further suitable investment opportunities which fit its stated Investment Policy.

Further details can be found on TRIG's website at www.trig-ltd.com  or  www.trig-ltd.com/video

Fred. Olsen Renewables

FORL is a wholly owned subsidiary of Fred. Olsen Renewables AS (FORAS), which is itself wholly owned by Bonheur ASA and Ganger Rolf ASA. FORAS is responsible for the development and operation of onshore wind power assets, with a primary focus on the UK and Scandinavia. FORL is responsible for the UK-based onshore renewable energy activities of the FORAS group. The FORAS group has developed and installed over 500MW of onshore wind generating capacity over the last 15 years and has a large development pipeline. FORL's main office is in London, UK, and FORAS' main office is located in Oslo.

InfraRed

TRIG's Investment Manager is InfraRed Capital Partners ("InfraRed").

InfraRed is a leading global investment manager focused on infrastructure and real estate. It operates worldwide from offices in London, Hong Kong, New York, Paris, Seoul and Sydney. With over 100 professionals it manages in excess of USD 8 billion of equity capital in multiple private and listed funds, primarily for institutional investors across the globe.

Since its inception over 25 years ago, InfraRed has launched 15 funds, including two companies listed on the London Stock Exchange: HICL Infrastructure Company Limited and The Renewables Infrastructure Group Limited. To date, six of these funds have been realised.

InfraRed has a long and successful proven track record in sourcing, structuring, acquiring, managing and financing infrastructure equity investments. Its history stretches back over 15 years to a time when it advised the UK government on its Public Private Partnership (PPP) programme. Since then, InfraRed has been responsible for over 160 infrastructure equity investments across various sectors including accommodation, education, government, health, renewables and transportation.

Since 2006, InfraRed has been actively participating in the secondary infrastructure markets, expanding its long-standing presence in the development infrastructure market.  It currently manages over 150 infrastructure assets and its renewable energy portfolio has a generation capacity of more than 700 MW.  InfraRed has c. USD 5 billion of equity invested in infrastructure projects around the globe.

InfraRed is authorised and regulated by the Financial Conduct Authority.

RES

The Operations Manager of the Group is Renewable Energy Systems Limited ("RES").

RES is one of the world's leading renewable energy companies with extensive experience in developing, financing, constructing and operating renewable energy infrastructure projects globally across a wide range of low carbon technologies including both onshore and offshore wind and solar, as well as enabling technologies such as energy storage and demand-side management.

RES has been at the forefront of wind energy development for over 30 years.  Since incorporation, RES has developed and/or constructed more than 140 individual wind farms and PV parks around the world with a combined capacity of over 9,000 MW.

In recognition of extraordinary business success in growing revenues from international markets, RES was awarded its second Queen's Award for Enterprise in 2013, this time for International Trade. Today, projects developed and/or built by RES are contributing to meeting the needs of a rapidly-evolving energy market and, in doing so, are actively contributing to a more sustainable world.

RES's global headcount totals over 1,200 staff based in fourteen countries across five continents.

Important Information

This document is not for release, publication or distribution (directly or indirectly) in or into the United States, Canada, Australia, Japan, the Republic of South Africa or to any "US person" as defined in Regulation S under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or into any other jurisdiction where applicable laws prohibit its release, distribution or publication. It does not constitute an offer of securities for sale anywhere in the world, including in or into the United States, Canada, Australia, Japan or the Republic of South Africa. No recipient may distribute, or make available, this document (directly or indirectly) to any other person. Recipients of this document in jurisdictions outside the UK should inform themselves about and observe any applicable legal requirements in their jurisdictions. In particular, the distribution of this document may in certain jurisdictions be restricted by law.

The Company's Ordinary Shares have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and, subject to certain exceptions, may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons. The Company will not be registered as an "investment company" under the U.S. Investment Company Act of 1940, as amended, and investors will not be entitled to the benefits of that Act. In addition, relevant clearances have not been, and will not be, obtained from the securities commission (or equivalent) of any province of Australia, Canada, Japan or the Republic of South Africa and, accordingly, unless an exemption under any relevant legislation or regulations is applicable, none of the Ordinary Shares may be offered, sold, renounced, transferred or delivered, directly or indirectly, in Australia, Canada, Japan or the Republic of South Africa.

Each of InfraRed Capital Partners Limited ("InfraRed"), Canaccord Genuity Limited ("Canaccord Genuity") and Jefferies International Limited ("Jefferies") is authorised and regulated by the UK Financial Conduct Authority. None of InfraRed, Canaccord Genuity or Jefferies is acting as adviser to any recipient of this document or will be responsible to any recipient of the document for providing the protections afforded to clients of any of them or for providing advice in connection with this document or any of the matters referred to herein.

This document is an advertisement and not a prospectus and investors must only subscribe for or purchase the securities referred to in this document on the basis of information contained in the Prospectus (as defined above) and not in reliance on this document. This document does not contain sufficient information to support an investment decision and investors should ensure that they obtain all available relevant information before making any investment. This document does not constitute and may not be construed as an offer to sell, or an invitation to purchase, investments of any description, nor as a recommendation regarding the possible offering or the provision of investment advice by any party.

Ends

 

END

 

 

PFULIFFRRDISFIE