Foresight Solar Fund Ltd proposed placing of Ordinary Shares and NAV Announcement

Foresight Solar Fund Ltd has announced its intention to raise a target amount in excess of GBP34 million (US$43.22 million) by way of a placing of new ordinary shares of no par value in the Company. The placing will be conducted under the Company’s shareholder authorities granted at the EGM to issue up to 53,994,250 Ordinary Shares on a non-pre-emptive basis.

The Company also announces its unaudited NAV as at 31 August 2018 of GBP523.4 million (US$665.3 million) (30 June 2018: GBP473.1 million [US$601.4]), resulting in an NAV of 105.8 pence per existing Ordinary Share (30 June 2018: 105.2 pence).

The issue price of the New Shares will be 107.5 pence per New Share (the "Placing Price"). The Placing Price represents a premium to the 31 August 2018 NAV of approximately 1.6 percent and a discount of approximately 4.0 percent to the closing share price prior to the announcement of 4 September of 112.0 pence. The Placing Price is greater than the total of the latest unaudited NAV plus the estimated costs of the Placing and is therefore expected to be accretive to the NAV attributable to existing shareholder.

As previously announced on 4 September 2018, the Company has secured exclusivity over a portfolio of 10 operational solar assets in the UK with a total installed capacity of 72 MW. Following due diligence and discussions with the vendor, the Company has agreed, subject to contract, to proceed with the acquisition of nine of the 10 assets, which represents 65.7 MW.

In addition, as announced earlier on 6 August 2018, the Company had retained exclusivity over a portfolio of three operational assets that it had previously identified with a total installed capacity of 20 MW. Following the completion of due diligence on these assets, the Company has agreed, subject to contract, to proceed with the acquisition of two of the three assets representing 15.2 MW.

In total, the 11 operational assets that the Company intends to acquire represents 80.9 MW and are all located in the UK. The equity interest of the 11 operational assets to be purchased is proposed to be acquired for a consideration of approximately GBP34 million (US$43.22 million) (the “Acquisition”), including the economic benefit of all cash flows from 31 March 2018. The assets will be acquired from funds managed by Foresight Group LLP.  

The assets subject to the Acquisition currently have debt facilities in place totaling GBP69.8 million (US$88.7 million), the majority of which is provided by the Royal Bank of Scotland. All of these debt facilities have been arranged on an asset by asset basis and do not benefit from cross-collateralization. These existing debt facilities expire either on or before 30 September 2019 and it is the Company's intention to refinance these facilities before the end of June 2019. 

The Company aims to use the Placing proceeds to fund the Acquisition and reduce the Group's gearing by repaying some of the Company's existing Bank Facilities that have been drawn down. The Placing is not conditional on the completion of the Acquisition and the Company reserves the right not to proceed with the Acquisition. Accordingly, there is no minimum size required for the Placing to proceed. In the event the Acquisition does not complete, the Company will use the net proceeds of the Placing to acquire further ground based solar power assets in accordance with the Company's investment policy and/or to reduce the Group's gearing by repaying some of the existing Bank Facilities.  The maximum number of Ordinary Shares that may be issued under the Placing is 53,994,250 Ordinary Shares.

Assuming completion of the Acquisition, the Company's solar portfolio will represent a total of 869 MW of installed capacity across 54 solar power assets which is expected to further drive efficiencies of scale in terms of ongoing operational costs.

Stifel Nicolaus Europe Limited is acting as financial adviser and sole bookrunner to the Company. The Placing will be non pre-emptive and shall commence immediately following this announcement.

The increase in NAV to 105.8 pence per existing Ordinary Share is mainly attributable to an upward revision of the forward-looking power price assumptions since the date of the last NAV publication at 30 June 2018 and the positive impact of the 114 MW portfolio acquisition announced on 6 August 2018. 

Relative to the 30 June 2018 NAV, the 31 August NAV has been reduced by the payment of the first interim dividend for 2018 of 1.64 pence per Ordinary Share but includes further accrued income for the period from 30 June 2018 until 31 August 2018. The Company's equity discount rate used to value its UK assets remains unchanged at 7.0% unlevered and 7.75% for levered assets. The levered discount rate for the Australian portfolio remains unchanged at 8.5%. The Gross Asset Value including Company and subsidiaries as at 31 August 2018 was £909.0 million (30 June 2018: GBP749.0 million [US$952 million]).

The Company's total outstanding debt as of 31 August 2018 was GBP421.5 million (US$535.8 million), including long-term debt of GBP316.5 million (US$402 million) and Revolving Credit Facilities of GBP105 million (US$133.47 million).

For the avoidance of doubt, Qualified Investors who participate in the Placing will be entitled to the dividend of 1.64 pence per Share in respect of the second interim dividend for 2018, for the quarter to 30 June 2018 which was declared on 21 August 2018, to be paid on 23 November 2018, with an ex-dividend date of 8 November 2018 and a record date of 9 November 2018.

The Company remains on target to deliver an annual dividend of 6.58 pence per Share for the year ending 31 December 2018.