Triple Point Energy Transition has published a circular convening a meeting to approve its managed wind down proposals.
Approval will be sought from Shareholders for:
- the proposed change to the investment objective and investment policy to facilitate the managed wind-down of the company and orderly realisation of its assets;
- the conditional disposal by TENT Holdings of the Field Debt Facility to Triple Point Leasing Limited;
- the conditional disposal by TENT Holdings of the LED Facility to Boxed Light Services Limited for onward assignment by Boxed to Triple Point Leasing Limited;
- the associated amendments to the investment management agreement, which include keeping the existing 0.9% of NAV management fee AND the introduction of a “success fee” (see below)
The Field sale will allow the company to repay its revolving credit facility. This was debt financing for a subsidiary of Virmati Energy Ltd to fund the building a portfolio of four geographically diverse battery energy storage systems in the UK. The total committed Field debt facility was for an amount of £45,647,428, carrying a fixed interest rate. On 26 September 2023, the amount of the facility was reduced to £37m. To date, approximately £15.6m has been drawn under the facility, and TENT Holdings is committed to deploying the remaining balance of the loan (being an amount equal to £21,356,615), by 31 March 2024. The amount outstanding on the company’s revolving credit facility is £8m.
The board wants to pay off the revolving credit facility regardless of whether the managed wind down is approved. It believes the Field sale should take place irrespective of whether or not the new investment policy is approved by shareholders.
TENT Holdings provided senior debt financing to Harvest, Glasshouse and Spark Steam, which are each combined heat and power (CHP) businesses that provide heat and power to tomato grower APS Salads. Since 30 September 2023, the aged debtors of Harvest, Glasshouse and Spark Steam have increased, although repayments have been made to the group in October 2023 in line with the agreed loan repayment schedule since the last reporting date. The next repayment date is in July 2024. APS Salads has a highly seasonal revenue profile with income received corresponding with the growing season.
The success fee
The success fee is aimed at incentivising the investment manager to continue to work on the tail of the portfolio and achieve the best return for shareholders. The fee will be payable upon the completion of the disposal of the group’s final investment (or when shareholders approve winding up the company or appointing a receiver or administrator over any of the assets).
If the manager achieves:
- 80% – 84.9% of the carrying value of the assets, it gets a success fee of 0.80%
- For 85% – 89.9% of carrying value, it’s 0.90%,
- and for 90% and above, it’s 1.00%
[this seems particularly unambitious to us, we are not sure that any reward should be due for getting back less than the current carrying value]
A minimum fee (normal fee plus success fee) of £1.1m is payable to the manager, with any shortfall being payable at the end. The aggregate fee will be capped at £1.351m, which reflects the maximum fee the manager is currently expected to receive under the existing fee arrangements. If the company is taken over or merged before the managed wind down process is complete, the company shall pay the maximum fee of £1.351m, less the cumulative total of any fees that have been paid to the manager prior to the takeover bid or merger transaction becoming wholly unconditional.
The investment management agreement will automatically terminate on 20 October 2025, if it is not terminated before then in accordance with its terms.
In order to save costs during the process, the company is intending to provide half-yearly (rather than quarterly) NAV updates.
TENT : Triple Point Energy Transition publishes wind down proposals