TIDMSEIT
RNS Number : 4615U
SDCL Energy Efficiency Income Tst
06 April 2021
06 April 2021
SDCL Energy Efficiency Income Trust plc
("SEEIT" or the "Company")
Acquisition of a US commercial district energy system
SDCL Energy Efficiency Income Trust plc, the first UK-listed
investment company of its kind to invest exclusively in the energy
efficiency sector, has agreed to acquire a 100% equity interest in
a commercial district energy system, RED-Rochester, LLC, ("RED")
from a fund managed by an affiliate of Stonepeak Infrastructure
Partners for an equity cash consideration of approximately $177
million.
RED is one of North America's largest district energy systems
with 117 MW of steam turbine generators plus boilers, chillers and
other equipment that provide exclusive utility services to
commercial and industrial customers within the 1,200 acre Eastman
Business Park, located in Rochester, New York. The park's origins
date back to 1891 when Kodak started manufacturing film and paper
in four newly constructed buildings and is now host to a
diversified base of commercial and industrial businesses including
manufacturing, chemicals, pharmaceuticals and food and
beverages.
As the exclusive provider of utility services to the park, RED
offers 16 on-site services including electricity, steam, chilled
water, wastewater, compressed air, nitrogen, lake water treatment,
industrial water distribution and high purity water distribution.
This "plug-and-play" set of utility services is a key attraction of
the park, providing simple integration for new customers and
allowing existing customers to expand their operations.
RED has over 100 commercial and industrial customers, typically
contracted on a 20-year fixed-term basis with automatic five or ten
year renewals, linked to their tenancy on the Eastman Business
Park. The contracts provide stable and predictable cash flows with
substantial mitigation against volatility in demand. Some two
thirds of the value of RED's offtake contracts are derived from
investment grade or equivalent counterparties(1) . RED's cost base
is relatively fixed, providing good visibility of cashflows.
Since 2016, RED has delivered 40+ energy efficiency projects
across its operations that have resulted in annual savings of over
$4 million and carbon savings of over 50%. Additionally, the
Investment Manager has identified a further pipeline of potentially
accretive energy efficiency initiatives that it believes can
deliver additional cost and carbon savings.
The acquisition will be funded from existing cash reserves and
RCF facilities , which includes the capital raised by SEEIT in the
equity fundraising in February. RED's existing project debt finance
facilities, which are equivalent to c.$83 million, will remain in
place. Completion of the acquisition is expected after satisfactory
conclusion of customary regulatory conditions and consents.
The investment is expected to achieve SEEIT's total returns
objectives and to further support its progressive dividend
policy.
Commenting on the acquisition, Jonathan Maxwell CEO and Founder
of Sustainable Development Capital LLP, said:
"SEEIT is acquiring an operational and established district
energy system that provides a range of essential and efficient
energy services and utilities to a diversified customer base on one
of the largest business parks in the United States of America. We
expect the project to make positive contributions to SEEIT's
earnings and cash flow. At the same time, the project offers the
potential for growth over the medium to long term through the
addition of new customers and the implementation of accretive
energy efficiency measures."
(1) Calculated as at the time of acquisition, derived from
analysis of counterparties reviewed by an independent third party,
utilising rating agency principles and methodology.
For Further Information
Sustainable Development Capital T: +44 (0) 20 7287 7700
LLP
Jonathan Maxwell
Eugene Kinghorn
Purvi Sapre
Keith Driver
Jefferies International Limited T: +44 (0) 20 7029 8000
Tom Yeadon
Gaudi Le Roux
Neil Winward
TB Cardew T: +44 (0) 20 7930 0777
Ed Orlebar M: +44 (0) 7738 724 630
Joe McGregor E: SEEIT@tbcardew.com
About SEEIT
SDCL Energy Efficiency Income Trust plc is the first UK listed
company of its kind to invest exclusively in the energy efficiency
sector. Its projects are primarily located in the UK, Europe and
North America and include, inter alia, a portfolio of cogeneration
assets in Spain, a portfolio of recycled energy and cogeneration
projects in the United States, a regulated gas distribution network
in Sweden and, most recently, a portfolio of commercial and
industrial solar and storage projects in the United States.
The Company aims to deliver shareholders value through its
investment in a diversified portfolio of energy efficiency projects
which are driven by the opportunity to deliver lower cost, cleaner
and more reliable energy solutions to end users of energy.
The Company is targeting an attractive total return for
shareholders of 7-8 per cent. per annum (net of fees and expenses
and by reference to the initial issue price of GBP1.00 per Ordinary
Share), with a stable dividend income, capital preservation and the
opportunity for capital growth. The Company is targeting a dividend
of 5.5p per share in respect of the financial year to 31 March
2021. SEEIT's last published NAV was 102.0p per share as at 30
September 2020.
Past performance cannot be relied on as a guide to future
performance.
Further information can be found on the Company's website at
www.seeitplc.com .
Investment Manager
SEEIT's investment manager is Sustainable Development Capital
LLP ("SDCL"), an investment firm established in 2007, with a proven
track record of investment in energy efficiency and decentralised
generation projects in the UK, Continental Europe, North America
and Asia.
SDCL is headquartered in London and also operates worldwide from
offices in New York, Dublin, Madrid, Hong Kong and Singapore. SDCL
is authorised and regulated in the UK by the Financial Conduct
Authority.
Further information can be found at www.sdclgroup.com .
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