AEET Aquila Energy Efficiency Trust Plc

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, NEW ZEALAND OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

19 April 2024

Aquila Energy Efficiency Trust PLC

(the "Company")

Proposed Tender Offer to purchase Ordinary Shares for up to £17.5 million
at a fixed price of 94.28 pence per Ordinary Share

Introduction 

On 6 March 2024, the Company announced that it intended to return value to Shareholders by way of a Tender Offer pursuant to which Qualifying Shareholders are invited to tender some of their Ordinary Shares. The Company is today publishing a circular (the "Circular") in respect of proposals that up to 18,561,732 Ordinary Shares may be purchased under the Tender Offer for a maximum aggregate cash consideration of £17.5 million and Qualifying Shareholders who participate in the Tender Offer will have a Basic Entitlement to tender approximately 18.6 per cent. of the Ordinary Shares held by them at the Record Date, rounded down to the nearest whole number, at a price of 94.28 pence per Ordinary Share.  Terms used in this announcement shall have the same meaning as set out in the Circular. 

Qualifying Shareholders may tender Ordinary Shares in excess of their Basic Entitlement up to the total number of Ordinary Shares held by each Qualifying Shareholder on the Record Date ("Excess Entitlement") and, to the extent that other Qualifying Shareholders do not tender any of their Ordinary Shares, or tender less than their Basic Entitlement, those Qualifying Shareholders may be able to tender such Excess Entitlement through the Tender Offer. However, if the Tender Offer is oversubscribed, the tender of any such Excess Entitlement will only be successful to the extent that other Shareholders have tendered less than their Basic Entitlement or tendered no Ordinary Shares and may be subject to scaling-down.

To the extent that Qualifying Shareholders tender for less than the total overall amount that may be returned to Shareholders pursuant to the Tender Offer, or where the Board decides not to proceed with the Tender Offer in accordance with terms of the Circular, the Board will consider alternative options regarding how best to return value to Shareholders, including by way of a share buy-back programme or by way of a distribution of dividends, taking into consideration the then prevailing market and economic conditions and other relevant factors at the relevant time.

The Company is seeking Shareholders' approval of the Tender Offer Resolution at a General Meeting to be held at 11.30 a.m. on 13 May 2024.

Tender Offer

Background and reasons for the Tender Offer 

Subject to the passing of the Tender Offer Resolution by Shareholders at the General Meeting as a special resolution, the Directors will give Qualifying Shareholders the opportunity to tender Ordinary Shares through the Tender Offer for cash. The Tender Offer Resolution will give the Directors authority to return up to 18,561,732 Ordinary Shares, at a price of 94.28 pence per Ordinary Share, for a maximum aggregate cash consideration of £17.5 million.

Following the IPO of the Company in 2021, the Company deployed the funds raised into various investments and 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 mbH (the "Investment Adviser") has, where possible, renegotiated some of the existing commitments, so as to reduce the amount of further investment required by the Company.  As a consequence, at 31 December 2023, the Company and its immediate investment holding entities had contractual legal obligations in relation to existing investments (the "Unfunded Commitments") equivalent to approximately £5.58 million (translating Euro obligations at €1.1535:£1 and including an allowance for external transaction costs). Between 31 December 2023 and 31 March 2024, £0.51 million of those Unfunded Commitments have been added to existing investments. 

Following the Company's annual general meeting ("AGM") held in June 2023, the Company's portfolio is being managed in accordance with the "Managed Run-Off Resolution" as approved by shareholders at that AGM.

The Company's cash and cash equivalents as at 31 March 2024 were £28.72 million (with cash in Euro accounts converted at €1.1697:£1 and exclusive of the £2.5 million 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), it is important to maintain a cash buffer to ensure the Company can continue to meet its liabilities and commitments. The Board of Directors of the Company 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. 

As announced on 6 March 2024, as and when sufficient cash has been accumulated, the Board's current intention is there will be further tender offers to shareholders.

Principal Terms of the Tender Offer

Subject to the terms and conditions contained in the Circular, Stifel will implement the Tender Offer by acquiring, as principal, the successfully tendered Ordinary Shares at the Tender Price. Ordinary Shares purchased by Stifel pursuant to the Tender Offer will be purchased by Stifel in on-market purchases in accordance with the provisions of the Act and the rules of the London Stock Exchange and the FCA. Immediately following completion of the Tender Offer, Stifel shall sell such Ordinary Shares to the Company, at a price per Ordinary Share equal to the Tender Price, pursuant to the Repurchase Agreement. Purchases of Ordinary Shares by the Company pursuant to the Repurchase Agreement will also be on-market purchases in accordance with the provisions of the Act and the rules of the London Stock Exchange and the FCA. All of the Ordinary Shares purchased by the Company pursuant to the Repurchase Agreement in connection with the Tender Offer will be cancelled. Qualifying Shareholders must consider carefully all of the information contained in the Circular as well as their personal circumstances when deciding whether to participate in the Tender Offer.

The maximum number of Ordinary Shares that may be purchased under the Tender Offer, being up to 18,561,732 Ordinary Shares, will equate to approximately 18.6 per cent. of the Issued Ordinary Share Capital at the Tender Offer Record Date, for a maximum aggregate cash consideration of £17.5 million ("Maximum Tendered Ordinary Shares"). As at 18 April 2024, being the Latest Practicable Date, there are 100,000,000 Ordinary Shares in issue with no Ordinary Shares being held in treasury.

If the Maximum Tendered Ordinary Shares are repurchased by the Company for cancellation pursuant to the Tender Offer, the total number of Ordinary Shares of the Company in issue following such cancellation will be 81,438,268 Ordinary Shares. Successfully tendered Ordinary Shares will be cancelled and will not rank for any future dividends.

How to Participate in the Tender Offer

Qualifying Shareholders are not obliged to tender any Ordinary Shares if they do not wish to do so. If no action is taken by Qualifying Shareholders, there will be no change to the number of Ordinary Shares that they hold and they will receive no cash as a result of the Tender Offer.

Each Qualifying Shareholder who wishes to participate in the Tender Offer is entitled to submit a tender to sell some or all of their Ordinary Shares.

The total number of Ordinary Shares tendered by any Qualifying Shareholder should not exceed the total number of Ordinary Shares registered in the name of that Qualifying Shareholder at the Record Date. For example, a Qualifying Shareholder may decide to tender fifty per cent. (50%) of their Ordinary Shares, but if a Qualifying Shareholder returned a tender purporting to offer for sale more than one hundred per cent. (100%) of their Ordinary Shares, they would be deemed to have tendered only the number of Ordinary Shares actually owned by that Shareholder on the Record Date, with the tender in respect of any additional Ordinary Shares being deemed invalid.

The Tender Offer will open on 19 April 2024. The Tender Offer will close at 1.00 p.m. on 10 May 2024 and tenders received after that time will not be accepted (unless the Closing Date is extended by the Company in accordance with the Tender Offer).

Tender Forms which have been, or are deemed to be, validly and properly completed (for Ordinary Shares held in certificated form) and submitted to Computershare Investor Services PLC acting as Receiving Agent and TTE Instructions which have settled (for Ordinary Shares held in uncertificated form) will become irrevocable and cannot be withdrawn at or after 1.00 p.m. on 10 May 2024.

Purchase of Ordinary Shares

Successfully tendered Ordinary Shares will be purchased from Qualifying Shareholders by Stifel (acting as principal), free of commission and dealing charges.

Following the purchase of any Ordinary Shares from Qualifying Shareholders by Stifel such Ordinary Shares will be repurchased by the Company from Stifel pursuant to the terms of the Repurchase Agreement and subsequently will be cancelled by the Company. Any rights of Qualifying Shareholders who do not participate in the Tender Offer will be unaffected by the Tender Offer.

All Shareholders who tender Ordinary Shares will receive the Tender Price, subject, where applicable, to the scaling-down arrangements described in the Circular.

If more than the overall limit of Ordinary Shares that may be repurchased pursuant to the Tender Offer are validly tendered by Qualifying Shareholders and the Tender Offer is therefore oversubscribed, acceptances of validly tendered Ordinary Shares will be scaled-down to determine the extent to which individual tenders are accepted. Accordingly, where scaling-down applies, beyond a Qualifying Shareholder's Basic Entitlement, there is no guarantee that all of the Ordinary Shares which are tendered by Qualifying Shareholders will be accepted for purchase.

Basic Entitlement

Tenders in respect of approximately 18.6 per cent. of the Issued Ordinary Share Capital at the Tender Offer Record Date will be accepted in full at the Tender Price and will not be scaled down even if the Tender Offer is oversubscribed. This percentage is known as the "Basic Entitlement". This percentage assumes that valid tenders up to, or in excess of, the Maximum Tendered Ordinary Shares have been submitted by Qualifying Shareholders and accepted by the Company. If the Company revises the aggregate value of the Tender Offer to less than the maximum amount of £17.5 million (and, therefore, less than the Maximum Tendered Ordinary Shares), then the Basic Entitlement percentage shall be proportionately scaled-down in accordance with the Circular.

Qualifying Shareholders may tender such number of Ordinary Shares in excess of their Basic Entitlement up to the total number of Ordinary Shares held by each Qualifying Shareholder on the Record Date and, to the extent that other Qualifying Shareholders do not tender any of their Ordinary Shares, or tender less than their Basic Entitlement, those Qualifying Shareholders may be able to tender such Excess Entitlement through the Tender Offer.

However, if the Tender Offer is oversubscribed, the tender of any such Excess Entitlement will only be successful to the extent that other Shareholders have tendered less than their Basic Entitlement or tendered no Ordinary Shares and may be subject to scaling-down. For this purpose, Qualifying Shareholders should note that the term "oversubscribed" means that the number of Ordinary Shares validly tendered pursuant to the Tender Offer either: (i) exceeds the Maximum Tendered Ordinary Shares that may be repurchased by Stifel (acting as principal) pursuant to the Tender Offer; or (ii) where the Company has (pursuant to the terms of the Circular) exercised its discretion to accept valid tenders in an amount that is less than the aforesaid overall limit, exceeds such number of Ordinary Shares that the Company has determined that it will accept pursuant to the Tender Offer which is less than such overall limit.

Circumstances in which the Tender Offer may not proceed

There is no guarantee that the Tender Offer will take place. The Tender Offer is conditional on the passing of the Tender Offer Resolution as set out in the Notice of General Meeting and on the satisfaction of the other Tender Conditions specified in the Circular.

The Company has reserved the right at any time prior to the announcement of the results of the Tender Offer, with the prior consent of Stifel, to extend the period during which the Tender Offer is open and/or vary the aggregate value of the Tender Offer, based on economic or market conditions and/or other factors, subject to compliance with applicable legal and regulatory requirements. The Company has also reserved the right, in certain circumstances, to require Stifel not to proceed with the Tender Offer. Any such decision will be announced by the Company through a Regulatory Information Service.

To the extent that Qualifying Shareholders tender for significantly less than the total amount that may be returned to Shareholders pursuant to the Tender Offer, or where the Company decides not to proceed with the Tender Offer, the Company will consider alternative options regarding how best to return value to Shareholders, including by way of a share buy-back programme or by way of distribution of dividends, taking into consideration the then prevailing market conditions and other relevant factors at the relevant time.

General Meeting to approve the Tender Offer Resolution

The Tender Offer requires the approval by Shareholders of the Tender Offer Resolution at a General Meeting of the Company. For this purpose, the Company is convening the General Meeting for 11.30 a.m. on 13 May 2024 to consider and, if thought fit, pass the Tender Offer Resolution to authorise and to approve the terms under which the Tender Offer will be effected.

The Tender Offer Resolution must be passed on a poll by at least seventy-five per cent. (75%) of those Shareholders present in person or by proxy and entitled to vote at the General Meeting. The Company will not purchase Ordinary Shares pursuant to the Tender Offer unless the Tender Offer Resolution is duly passed.

Taxation

A summary of the taxation consequences of the Tender Offer for UK resident Shareholders is set out in ‎the Circular.

Shareholders are strongly advised to obtain independent tax advice regarding their own tax position.

Procedure for tendering Ordinary Shares

Only those Qualifying Shareholders who hold their Ordinary Shares in certificated form and who wish to participate in the Tender Offer should complete and return a Tender Form. Those Qualifying Shareholders who hold their Ordinary Shares in uncertificated form and who wish to tender Ordinary Shares do not need to complete or return a Tender Form.

Qualifying Shareholders who wish to tender Ordinary Shares and hold their Ordinary Shares in certificated form should complete the Tender Form in accordance with the instructions set out therein, and return the completed Tender Form to the Receiving Agent at Computershare Investor Services PLC, Corporate Actions Projects, Bristol, BS99 6AH so as to be received as soon as possible and, in any event, by no later than for 1.00 p.m. on 10 May 2024. Qualifying Shareholders should at the same time return the share certificate(s) and/or other document(s) of title in respect of any Ordinary Shares tendered which are in certificated form.

Qualifying Shareholders who wish to tender Ordinary Shares and who hold their Ordinary Shares in uncertificated form (that is, in CREST) should submit the appropriate TTE Instruction in CREST as set out in the Circular so as to be received as soon as possible and, in any event by no later than 1.00 p.m. on 10 May 2024.

Shareholders should note that, once tendered, Ordinary Shares may not be sold, transferred, charged or otherwise disposed of other than in accordance with the Tender Offer.

Validity of Tender Forms or TTE Instructions

Tender Forms or TTE Instructions which are received by the Receiving Agent after 1.00 p.m. on 10 May 2024 or which at that time are incorrectly completed or not accompanied by all relevant documents or instructions may be rejected and returned to relevant Shareholders or their appointed agents, together with any accompanying share certificate(s) and/or other document(s) of title.

Stifel reserves the right to treat as valid Tender Forms or TTE Instructions which are not entirely in order and which are not accompanied (in the case of Ordinary Shares held in certificated form) by the relevant share certificate(s) and/or other document(s) of title or a satisfactory indemnity in lieu thereof and shall be entitled (at their sole discretion) to accept late Tender Forms or TTE Instructions.

Notification of interests

Under the Articles of association of the Company and applicable law, Shareholders are required to notify the Company of their interests in Ordinary Shares. Following the Company's purchase of Ordinary Shares from Stifel pursuant to the terms of the Repurchase Agreement, and regardless of whether a Shareholder tenders any or all of their Ordinary Shares pursuant to the terms of the Tender Offer, the number of Ordinary Shares in which a Shareholder is interested when taken as a percentage of the Company's aggregate Issued Ordinary Share Capital as a whole may change, which may give rise to an obligation under the Disclosure and Transparency Rules on the part of such Shareholder to notify the Company of their interest in Ordinary Shares as soon as possible and in any case within two trading days of becoming aware, or being deemed to have become aware, of such change.

Board intentions to tender Ordinary Shares

Each of the Directors who are also Shareholders have confirmed that they intend to tender a portion of their current individual beneficial holding of Ordinary Shares equal to their Basic Entitlement through the Tender Offer.

The Circular will today be posted to the shareholders and is also available on the Company website, https://www.aquila-energy-efficiency-trust.com. A copy of the Circular will also be filed and available for inspection at the National Storage Mechanism https://data.fca.org.uk/#/nsm/nationalstoragemechanism shortly.

Expected Timetable

For further information, please contact:

The Company's LEI is 213800AJ3TY3OJCQQC53

This announcement is not for publication or distribution, directly or indirectly, in or into, or from the United States or any other jurisdiction where to do so would violate the laws in that jurisdiction. This announcement does not constitute or form part of any offer to purchase, or invitation to sell, Ordinary Shares in the United State or any jurisdiction in which such offer or invitation is unlawful. Any failure to comply with these restrictions or requirements may constitute a violation of the securities or other laws of such jurisdiction.

This announcement may contain "forward-looking statements" with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of the Company. As a result, the actual future financial condition, performance and results of the Company may differ materially from the plans, goals and expectations set forth in any forward-looking statements. Any forward-looking statements made in this announcement by or on behalf of the Company speak only as of the date they are made. The information contained in this announcement is subject to change without notice and except as required by applicable law or regulation, the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statements are based.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into or forms part of this announcement.