ThomasLloyd Energy Impact Trust (TLEI) has just announced a temporary suspension to the listing of its ordinary shares, halting its trading.
While preparing its annual results the trust was made aware of material uncertainty in the fair value of its investment in SolarArise, a Delhi-based renewable energy platform . The issue relates to a 200MW construction-ready asset owned by SolarArise where price rises in relation to the components and construction costs of the plant indicate that additional equity is likely to be required in order to construct the project, potentially decreasing the project returns and its commercial viability. In addition, the TLEI team wishes to undertake further work to assess the quantum of certain of its liabilities.
Given the additional work required by TLEI’s auditors, it has not been able to finalise its 2022 accounts, and is unlikely to meet the deadline for their publication, 28 April 2023. Given this, the trust has determined that suspension of its listing and trading to be the best path forward, taking effect on 7:55 am on 24 April. TLEI is seeking to publish its 2022 accounts as soon as practicable and intends to request a restoration of the listing of its ordinary shares at that time.
QD view: [“This brings a whole new meaning to Monday blues, as share suspensions are immensely frustrating for any shareholder. There is no subtlety about the disappointment we have in TLEI, as it will be another blow to investor confidence in the private asset space, especially when one considers that this is the second time a trust has suspended in the recent months, following Home REIT’s debacle. It is disappointing that the valuation issues were not picked up earlier by the TLEI team. The obvious question is where does the blame lie for this, with TLEI’s investment manager’s processes or with SolarArise? In any case, questions need to be answered, especially if there has been some failure in corporate governance. TLEI was also one of the few investment trusts that traded on a premium prior to its suspension, which will only compound frustrations. It will likely take some time for the board and investment team to rebuild confidence in the trust, especially if this incident casts doubt over the rest of TLEI’s holdings. We also wonder when this issue came to light, whether the auditors picked it up first when reviewing the accounts, or if TLEI knew about it since their September valuation and it was only brought to light by the auditors, with the latter being a far more serious result.”]