Asian Energy Impact updates ahead of wind-up resolution later today

Asian Energy Impact (AEIT) has provided an update ahead of its General Meeting later today (Friday 14 June 2024) at which shareholders will be asked to vote on a resolution to wind-up the trust.

RUMS project construction update

Construction of the 200MW solar project that forms part of the Rewa Ultra Mega Solar Park (the RUMS Project) within the SolarArise India Projects Private Limited (SolarArise) portfolio commenced in November 2023. As previously announced, the expected date to commence commissioning is late June 2024 and the planned additional funding of US$4.5m has been injected into the project.

AEIT says that the commissioning date for the RUMS Project remains wholly dependent on the landowner of finishing the construction of the transmission line and other infrastructure required for commissioning, which is not yet complete. Following initial commissioning, there will be a ramp-up period, following which full operational revenues are expected.

AEIT’s board says that, based on the latest estimates, there is forecast to be a short-term working capital shortfall of around US$1.2m in the first financial year of operations through to 31 March 2025, which may require additional funding from AEIT in the short term. It adds that additional shortfalls could arise due to interest rate increases or delays in revenue receipts but that any shortfalls are expected, in the first instance, to be funded from operational cashflows within the SolarArise portfolio, subject to remaining in compliance with existing debt and lender requirements.

Contingency for possible shortfalls has been ringfenced by the trust until any asset sales are complete when calculating the initial distribution to shareholders, in order to protect the value achievable in any sales process which will ultimately be delivered back to shareholders. As at 13 June 2024, US$41.7m had been drawn under the US$54.9m project finance facility for construction of the RUMS project.

AEIT’s cash balances

At 13 June 2024, AEIT had cash balances of US$33.1m and held US$1.8m cash in its UK subsidiary, AEIT Holdings Limited. This is net of the US$5.6m received from NISPI and US$6.5m outgoing into SolarArise, being the US$4.5m additional funding for the RUMS project and an additional US$2.0m to fund short-term working capital requirements for SolarArise management fees and holding company expenses.

This funding, which does not include any provisions for the forecasted RUMS project shortfalls, had already been captured as part of the announced 31 March 2024 net asset value (NAV) and is therefore NAV neutral, exclusive of any additional interest payable for the RUMS project. As at 31 March 2024, NAV was US$80.2m, and NAV per share was 45.6 cents.

A further US$0.4m of payments, including VAT, are expected to be paid by 30 June 2024 to settle AEIT’s known liabilities. AEIT has future expected receivables relating to VAT amounting to US$2.4m. Expected ongoing running costs including management fees are in the region of US$0.3m per month.

Initial distribution to shareholders post-liquidation

AEIT says that if the wind-up resolution is passed, as previously announced, the initial distribution of cash to shareholders is currently estimated to be in the region of US$20m (equivalent to 11.4 cents per share), with the actual amount to be determined at the time of the initial distribution to shareholders. The liquidators would expect to make an initial distribution of cash to shareholders by the end of July 2024.

Orderly realisation of AEIT’s assets

AEIT’s board says the plans for commencing the process to sell the trust’s investments are well advanced and it is encouraged by the unsolicited expressions of interest received since announcing its intention to recommend a realisation strategy on 11 April 2024.