Aquila European Renewables (AERI) chair Robert Naylor has added to his growing list of grievances against Aquila Capital after the investment company had to stump up €700,000 (£597,000) to bail out a wind power project in Finland and accused the site’s technical manager of missing out on valuable government support.

Naylor said this was the second time the £55m fund in wind-down has had to provide additional capital to the Olhava asset in northern Finland after it breached lending agreements. Last year it had to provide a €500,000 “equity cure“.

He said the latest injection of capital would enable Olhava to meet loan repayments due in December and June next year. 

This was the fourth covenant breach by Olhava which continues not to make distributions to the company, he said, although the site had been able to relax a production limitation strategy adopted last year when it sought to reduce the impact of grid balancing costs. 

This should increase potential production and revenues while remaining exposed to market power prices. However, he claimed the technical and commercial manager (TCM) responsible for Olhava had failed to apply for feed-in-tariff support and missed out on €660,000 of support in the second quarter of 2023. 

The TCM had offered to pay only the minimum €37,000 under its contract, which AERI’s board and Naylor, fund manager of investment company activist Achilles (AIC), considered inadequate.

“The board is considering seeking redress from the TCM in respect of this matter. This raises a question as to whether Aquila Capital exercised adequate oversight of the TCM in this regard,” said AERI.

Meanwhile, in Spain, AERI’s wholly-owned Albeniz subsidiary was “similarly cash constrained”. Cross-collateralisation of debt meant there were no distributions from it and the fund’s two other solar projects in Spain. 

“Taken together with the position at Olhava, this means that distributable cash flow to the company, is now significantly constrained.” 

Naylor said fund manager Aquila Capital continued to earn substantial management fees on all these assets. In light of the recurring need for shareholder support, the board questioned Olhava’s €14.6m valuation of Olhava at its last financial year-end, which had fallen from €23.1m in the previous year. 

Stating the board was “extremely dissatisfied”, Naylor added: “We are pursuing every option available to us to protect shareholder value and will hold Aquila Capital, and Commerzbank as its parent, to account.”

AERI entered managed wind-down in September 2024. Its shares slipped 3.2% to 16 euro cents today close to a 15 cent low in May. The shares have lost two thirds of their value in five years.

Our view

Matthew Read, senior QuotedData analyst, said: “This latest update from Aquila European Renewables just adds to the board’s sense of frustration with Aquila Capital. Olhava has now breached its covenants four times, required two equity cures and is still unable to distribute cash, and it has now emerged that the fund missed out on a €660,000 feed-in tariff payment because the technical and commercial manager didn’t submit the application properly. In addition, the board’s challenge to Olhava’s valuation suggests that more write-downs could follow. With Albeniz, Tiza and Greco also unable to make distributions, AERI’s cash flows that it can distribute are becoming increasingly constrained. Once the board’s previously announced concerns are factored in as well, it’s not difficult to see why the board is unhappy.”

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