On 31 May 2016, Ecofin Water & Power Opportunities plc published a circular and notice of general meeting to be held on 24 June 2016 at which the Company’s shareholders would vote on the continuation of the Company. The circular contained details of a proposed scheme of reconstruction of EWPO under section 110 of the Insolvency Act, 1986 (as amended) that the board of directors of EWPO would seek to implement subject to the passing of the Continuation Vote.
The Continuation Vote was passed by EWPO Shareholders on 24 June 2016 and, as such, the Board intends to put forward the Reconstruction Proposals pursuant to which EWPO Shareholders will be:
- issued with shares in Ecofin Global Utilities and Infrastructure Trust plc, a newly incorporated investment trust that would invest in listed global utilities and infrastructure equities and which additionally may hold, to a limited extent, related fixed-income securities;
- issued with shares in EF Realisation Company Limited a newly incorporated Guernsey closed-ended investment company that would hold the illiquid assets currently owned by the Company; and
- offered a cash exit for up to 35 per cent. of the Company’s net assets less the cost of the Reconstruction Proposals.
The Company also indicated its intention to offer the opportunity for ZDP Shareholders to roll over their investment in ZDP Shares into Ecofin Global Shares pursuant to a scheme of reconstruction to be undertaken by EW&PO Finance plc, a wholly-owned subsidiary of the Company, the issuer of the ZDP Shares.
In light of the maturity of the ZDP Shares on 31 July 2016 and the passing of the Continuation Vote, the Subsidiary has today published a circular that will be posted to ZDP Shareholders. It is expected that a circular in connection with the proposed scheme of reconstruction of EWPO will be sent to the EWPO Shareholders on or around 27 July 2016.
Subsidiary Scheme
Under the terms of the Subsidiary Scheme, conditional on the passing of the Subsidiary Scheme Resolutions at the Subsidiary Scheme Meetings, Qualifying ZDP Shareholders will be given the opportunity to roll over all or part of their investment in the ZDP Shares into Ecofin Global Shares.
Those ZDP Shareholders who elect to roll over their investment pursuant to the Subsidiary Scheme will have the value attributable to their holdings of ZDP Shares rolled over into Ecofin Global Shares at the Ecofin Global Issue Price (as defined below) on the EWPO Scheme Effective Date.
The “Ecofin Global Issue Price” will be calculated on the basis of the value of the Ecofin Global Rollover Fund divided by the total number of Ecofin Global Shares to be issued to EWPO Shareholders pursuant to the EWPO Scheme.
The issue of Ecofin Global Shares to Qualifying ZDP Shareholders who make an election to roll over under the Subsidiary Scheme will only become effective if the EWPO Scheme becomes unconditional and effective in accordance with its terms. In the event that the EWPO Scheme does not become effective, the elections to roll over under the Subsidiary Scheme will not be implemented. In these circumstances, Qualifying ZDP Shareholders who have made an election to roll over will instead have all of their ZDP Shares redeemed and will be paid the Final Capital Entitlement in respect of their entire holding of ZDP Shares.
Benefits of the Subsidiary Scheme
The Directors consider that the Subsidiary Scheme should have the following benefits for ZDP Shareholders as compared to their current position:
- ZDP Shareholders who may be subject to UK capital gains tax or corporation tax on chargeable gains should be able to roll over their investment into Ecofin Global and thereby continue to receive investment returns without triggering an immediate liability to UK capital gains tax or corporation tax;
- The roll-over into Ecofin Global will provide those Qualifying ZDP Shareholders who elect for the Rollover Option with: (i) exposure to a portfolio of listed, liquid investments in the utilities and infrastructure sectors that will not be co-joined with the illiquid assets currently held by EWPO; (ii) shares in a company with a clean and simple capital structure consisting of only shares and flexible bank debt; and (iii) an attractive yield at a time of record low interest rates; and
- The Subsidiary Scheme will not impact the timeframe for ZDP Shareholders to receive their Final Capital Entitlement in cash if they do not wish to roll over into Ecofin Global.
ECWO : Ecofin reconstruction proposals update