A couple of million seem to have disappeared in fees, etc.
But it's still nice to see confirmation of a significant % of the share price now being cash in hand.
I'm surprised there's no mention whatsoever of a planned distribution to shareholders. |
"...Accordingly, after prepayment of the RCF and the payment of expenses and other liabilities relating to the Disposal, the retained Group is expected to have estimated cash balances of approximately US$10.7 million..."
which is 6p per share. |
I cant sell down here. With cash about a third of market cap its difficult to see the downside case. Remember the NAV has already been heavily written down. |
Only had a few; but decided to ditch them last week. Too many known unknowns.
Prefer the simplicity of REITs; esp. the wind-down of ASLI. Been a slow burn but most likely will return 15%-20% by end '25. |
Yeah, $10m of cash vs. $10m on the RCF would make all of the difference for me too. One of the first lessons of my former boss was "RCFs are to be committed, not actually drawn..." so it's something I always double-check.
It doesn't help much that most of the news on this IT is found under the USD share listing and this thread is on the sterling equivalent.
Good luck too... One of the things that might end up being my downfall is thinking that I know more than the stock market about investments in the power / renewables space... |
Hi Craig,
Thanks for your post. It appears I had missed that the RCF's were not fully drawn and therefore my maths was out.
On that basis I would probably have stayed in the trade albeit having closed it I'm glad to have moved on and won't be buying back.
As for GSF, good luck with that one too. I'm not touching that one either. I made 10% or so on it last year but I count myself lucky to have got out. |
Could be rose-tinded glasses - wouldn't be the first time - and I don't ever mind being tested on my assumptions / numbers. But my calculations based on the RNS's in December after the asset sale (and the tax credit from the ECHO portfolio) were...
" Net cash proceeds of $34.5m from asset sale.
RCF balance outstanding is $32.5m, with $12.7m cash on the balance sheet.
So... RCF is paid off and company has $14.7m of cash. That's about 10 cents per share of cash.
Maybe there are more advisory fees, etc. to be paid out of that cash. "
Having worked in power project finance for many years, I'm not even remotely concerned about Beacon having a non-recourse loan attached because banks only lend on a non-recourse basis these days when there's enough fixed revenue to cover debt service. (if you follow GSF, you might know that California requires electricity retailers to have guaranteed access to capacity and pay for it) But I have no particular insight into that particular asset to be sure... |
Hi Craig,
I'm minded to say you have rose tinted glasses on here, but I would say that as I've sold out.
Whether the following is any help or not I'm not sure.
As far as I can figure:
30/6 Last update
GAV 168.8 128.0
Debt 79.0 54.7
NAV 89.8 73.3
The Beacon debt matures in May 2026 and is SOFR+1.25%. There's no way it will roll at that. I think you'd be looking at SOFR+3% so say 7.75% will all the fees.
There's $10m left on the RCF and I'm going to guess that's about the same
As far as I can figure any more production/technical problems and the asset based will get eaten into really quickly given the gearing. |
CC,
I understand your pain and concern. I believe that AVI are still willing buyers though, especially for a bit of volume...
The fund manager has said repeatedly that it wants to exit the business - and it just lost the key person managing RNEW. So it's not really a surprise that they chose to terminate and not necessarily linked to the fee reduction.
I'm surprised your concern about gearing, now that the RCF should be paid off and the Beacon project finance should be covered by substantial fixed revenues.
But you're quite right that we'll need the two remaining sales to go well in order to see a return on our investment, and that the constant technical problems aren't helpful. |
 An interesting RNS today.
It's not a good look when the fund manager resigns a couple of weeks after the fee structure is changed from NAV to market cap.
I am guessing but it looks to me like the market cap fee structure was forced on the manager by the Board and after review the fund manager has decided "why bother"
The market cap is currently around £33m based on $0.30 per share which would give the fund manager $333k a year to run the fund. I would suggest that's not worth the bother.
I sold all my shares on Monday. All 655k of them. I was surprised about the prices I got and how willing the market makers were to take them off me. It suggested they had a large buyer in the background.
Whirlwind - no debt
Beacon - $45m no recourse debt
RCF - about $10m
From the interim report. The inverters should not be failing and suggests another low quality installation.
The Beacon 2 and Beacon 5 solar assets also faced issues
during H1 2024. Beacon 2 underperformed by 18.7%, mainly due
to issues with inverters, with a thermal event in March 2024
causing an oil leak in an inverter. Beacon 5 underperformed by
12.9%, with inverters also experiencing faults in early May.
Repairs for these inverters are pending and an insurance claim is
being investigated for lost production and property damage at
Beacon 2."
It took me a long while to reach a decision to sell and I had been praying for a rise in the share price to come to sell into, which never came.
I took a decent loss on them, but the gearing has been nagging away at me for ages. I do not know if it was the right or wrong decision to sell but based on this morning's RNS I would have been selling this morning anyway and praying the MM's were willing to take them off me.
GLA. Either I've made a mistake and you can have all my shares cheap or there's more pain to come. The only positive I can find is that Brett Miller is on the Board and he is very able to make the same decisions the fund manager can, except I suspect that means a bunch of external fees. |
Investors are sometimes more concerned with project debt than hold co debt and I think that is often about face thinking. The top level debt comes off of our returns directly, whilst project debt is already accounted for in the cash distributions heading up to the top level. It is more effective to have debt at that level unless one is going full tax avoidance and lending money down to the project level. The RCF on the other hand directly effects the viability of the hold co so getting a sale away with a haircut to take that off the agenda is a good thing.
I must now have a closer look. |
My view is that the Board were under some pressure to get the RCF down because the likely interest rate on rolling it would have been high.
The RCF having now been managed down a small number of no real consequence the Board are in a much better place to sell the remaining assets for what they are worth.
(Plus with the RCF all but gone there's no point in selling stuff way below the already marked down NAV - there's a point at which the trust might as well just keep them and keep taking the revenue stream. the costs of running an IT in this would be not large in percentage terms) |
You beat me to it frazboy.
I might be too bullish to read it with skepticism, but it certainly assuages my fears that the investment manager will just give away the other assets to be done with it. I might even go so far as to believe that the Board has more confidence in the NAVs of the two remaining assets.
I have a lot of faith in AVI - as one of the major shareholders - to defend their interests and ours, though, and to find a Plan B if the proposed sale prices are poor. |
This part of today's announcement requires a bit of thought. What if major shareholders say no!? 'The Board also wishes to announce that should the Managed Wind-Down be approved by shareholders it will not enter into an agreement to sell any of the remaining assets (beyond the DG Portfolio) at a significant discount to their current carrying values as included in the Company's balance sheet as at 30 June 2024, without prior consultation with major shareholders.' |
"Best assets" has a lot to do with the technology. An onshore windfarm can have better wind years and poorer wind years, but it is well-understood. So it simply boils down to the offtaker of the power and the discount rate.
Beacon is a standard photovoltaic solar farm selling the power to the city of Los Angeles. There's no reason to apply a harsh discount to its current valuation. The asset also supports project finance because there is a substantial fixed element of the revenue stream.
It's when you start putting solar panels on the roofs of dozens of warehouses, etc. and call it "distributed solar" where you start straying away from something that is easily understood and straightforward to value. (as the ultimate sales price showed)
Anyhow, I think that applying a discount / margin-of-error to the original purchase price of the remaining assets gives enough room for upside here. But my main worry is that the investment manager simply wants to get out of the business and might not drive a hard bargain on the remaining asset sales. |
Its real guesswork at the end of the day fraz. These were the solar assets that the rats were eating. We just have to hope the remainder is more accurately valued.
They had written the NAV down to 49.5p (from 62.5p) when the managed wind-down was announced in September. So they had already lopped a lot off before this disposal. We are now down to 42p so I'm thinking how much lower can it go. |
Had a bit of a dive into this one. My main observations/concerns are:
The EV headroom (the share price upside) is about $29m. This is the declared NAV less what the market is attributing to the assets less cash.
Beacon 2 & 5 (the remaining solar) has $45m of project debt, so if a sale goes ahead at, say, a 20% discount to EV then, that would be approximately a $15m adjustment to NAV. Clearly this depends on the relative valuations of the wind and solar assets - I've simply assumed that each is worth around $29m (the fact that the EV headroom is also $29m is coincidence) after adjusting for debt. I don't think the windfarm is carrying debt.
The performance of the windfarm has been poor even allowing for the June 2023 tornado.
Discount rates are still rising, I think (functionally dependent on the risk free rate).
There was that rather awkward $4m discrepancy of unexplained costs in the sale of the distributed solar assets: "The net proceeds of the Disposal (after deduction of tax liabilities and other costs, including the costs of the Disposal) are expected to be approximately US$34.5 million.". Shouldn't these have been included in the reported NAV (e.g. the reported NAV should have been lower)?
Anyway, I take the point that the best assets may have been left for last but can anyone justify that with any data? Might be tempted if there's some rule of thumb for sales value as function of energy produced? I don't know of one hence why I'm asking! |
"craigso20 Dec '24 - 08:49 - 54 of 57
10 cents of cash - assuming that it's unencumbered and available for shareholders - leaves you paying 20 cents for a windfarm and a solar farm that the company thinks is worth 43 cents."
10 cents = 8p cash (that's per share, not the total). That's a third of the market cap so its hard to see much downside from here.
My original assumption was just to knock 30% of the 50p NAV. No science behind that just thought it was a big enough number to account for them overestimating the NAV! I think that may turn out to be about right although hopefully craigso is right in that they've disposed of the more rubbish stuff first and the rest is more accurately valued. And the company should also still be generating cash. So a possible 40%-50% upside from here imo. |
I promise that's my last top-up. lol
If only my crystal ball wasn't broken, or I would have sold at 40 cents and bought it all back at 30 cents. |
You need to check RNEW. 125k and 225k buys yesterday. |
You say a couple of sizeable trades? Don't see them listed under Trades! |
10 cents of cash - assuming that it's unencumbered and available for shareholders - leaves you paying 20 cents for a windfarm and a solar farm that the company thinks is worth 43 cents.
With the announcement of key personnel leaving the investment manager, though, who is still around that is incentivised to actually sell these 2 assets for 35-45 cents per share equivalent? If I had a decent answer to that question I'd load up even further...
Keep an eye on the RNS feed though. There were a couple of sizable trades yesterday. If that's AVI or MIGO adding to their positions, that would provide some additional comfort. |
Now on offer at 30.7c - so took a few @ 24.4p |
I held Ecofin Power and Water for a while, they just aren't a very good asset manager. |
craigso - now on offer at 33c equivalent. No cash, so could only buy 10k at a smidgeon under 26p. Will take on more at that level when I've sold something. |
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