ThomasLloyd Group Limited (TLG), the manager of ThomasLloyd Energy Impact Trust (TLEI) has issued a statement refuting a number of allegations made by TLEI’s board in regards to TLG’s recommendation that shareholders vote for continuation in the upcoming vote. In contrast, TLEI’s board is suggesting shareholders vote against continuation. TLG, through its affiliates, is the beneficial owner of approximately 15% of the issued share capital of TLEI. It says that it has issued its statement in its capacity as a shareholder (rather than investment manager).
Key takeaways are as follows:
- TLG says that it vigorously refutes the allegations made by TLEI’s board against it in announcements released on both 12 July 2023 and 31 July 2023. It also says that, given its confidentiality restrictions, it has written privately to TLEI’s board explaining why these allegations are untrue.
- TLG says that it notes that TLEI’s board recommended to shareholders on 31 July 2023 to vote against the continuation resolution and that, under the articles, a vote against continuation will require the board to propose the reconstruction, reorganisation or winding up (i.e. winding down) of TLEI to TLEI shareholders by Christmas Eve, 24 December 2023. TLG also says that it believes that voting against the continuation resolution would immediately and permanently destroy shareholder value in TLEI.
- TLG says that it was surprised that TLEI’s board chose to suspend the company’s shares on 25 April 2023. The reason given was material uncertainty regarding the fair value of certain of its assets and liabilities, in particular regarding the 200MW construction-ready asset owned by SolarArise in India where price rises in relation to the components and construction costs of the 200 MW plant indicated that additional equity was likely to be required.
- TLG thinks that TLEI’s board ought to have known that the component and construction costs were continuing to evolve, that input prices, being construction and solar panel prices in March/April 2023 were falling and were expected to continue to fall and that an impairment of the asset while monitoring the situation was the most sensible, practicable and prudent approach.
- TLG comments that the RUMS Project accounted for less than 5% of TLEI’s last reported net asset value at 30 September 2022, the last publicly reported NAV prior to the suspension, adjusting for the capital raise in November 2022. It is TLG’s view that at such a modest level it was open to TLEI to temporarily write the value of the RUMS Project down to nil pending review following an anticipated fall in component and construction costs and given the completion date of the project could be up to 12 months in the future. This would have allowed the 2022 accounts to have been published on time, which would have avoided the need to suspend TLEI’s shares in its view.
- The investment manager refutes all of the allegations made by the TLEI board, including that its conduct has resulted in the delay in finalising the 2022 Accounts and audit. TLG says that it has been informed by TLEI’s investment manager that the manager has engaged and co-operated with the TLEI board, the independent valuation expert, TLEI’s auditor and all the other specialists and experts engaged by the TLEI board transparently in relation to the relevant workstreams, and will continue to do so. TLEI’s investment manager says that, given its confidentiality restrictions, it is not able to provide a detailed rebuttal of the TLEI board’s allegations in public and also believes this would not be in the best interests of shareholders.
- TLG says that it no longer has confidence in the current TLEI board. It has requisitioned another general meeting of TLEI shareholders to consider resolutions for the removal of the current TLEI board and their replacement by a new board.