Aquila Energy Efficiency Trust (AEET) has published details of a tender offer under which up to 18.6% of its issued share capital may be repurchased at 94.28p per share, up to a maximum consideration of £17.5m. AEET is publishing a circular which we would suggest that shareholders read. AEET is seeking shareholders’ approval for the tender offer to proceed at a general meeting to be held at 11.30 a.m. on 13 May 2024.
Background and reasons for the tender offer
Following AEET’s IPO in 2021, the funds raised were deployed into various investments and AEET entered into contractual commitments to make further investments. Since the date of the continuation vote in February 2023, which did not pass, no new investment commitments have been made and Aquila Capital Investmentgesellschaft GmbH (AEET’s investment adviser) has, where possible, renegotiated some of the existing commitments, so as to reduce the amount of further investment required by AEET.
As at 31 December 2023, AEET and its immediate investment holding entities had contractual legal obligations in relation to existing investments (unfunded commitments) equivalent to approximately £5.58m (translating Euro obligations at €1.1535:£1 and including an allowance for external transaction costs). Between 31 December 2023 and 31 March 2024, £0.51m of those unfunded commitments have been added to existing investments. Following its AGM in June 2023, AEET’s portfolio has been managed in accordance with the “Managed Run-Off Resolution”.
AEET’s cash and cash equivalents as at 31 March 2024 were £28.72m (with cash in Euro accounts converted at €1.1697:£1 and exclusive of the £2.5m of cash held as collateral for the Company’s existing currency hedges held in line with its strategy). Given the uncertain nature of the timing of returns of certain of the Company’s investments, combined with upcoming cash requirements for Unfunded Commitments (referred to above), AEET’s board says that it is important to maintain a cash buffer to ensure AEET can continue to meet its liabilities and commitments. AEET’s board considers the tender offer to be beneficial to the shareholders as a whole, including, among other reasons, in that:
- the Tender Offer is available to all Qualifying Shareholders regardless of the size of their holding;
- the Tender Price represents a premium of 65.4 per cent. to the Company’s Ordinary Shares closing price of 57.00 pence on 18 April 2024 (being the Latest Practicable Date);
- the Tender Offer provides Qualifying Shareholders who wish to reduce their holdings of Ordinary Shares with an opportunity to do so at a price which reflects the Company’s last published net asset value per share;
- the Tender Offer enables Ordinary Shares to be sold free of commissions or charges that would otherwise be payable if Qualifying Shareholders were to sell their Ordinary Shares through their broker; and
- the Tender Offer permits Shareholders who wish to retain their current investment in the Company and their Ordinary Shares to do so, as no Shareholder is required to participate in the Tender Offer, and thus providing Shareholders with flexibility.