Ecofin US Renewables forced to accept cut-price sale of solar assets

Restructuring specialist Brett Miller helps board of subscale fund decide whether it should replace its fund manager or complete a wind-down on its own.

The managed wind-down of Ecofin US Renewables Infrastructure (RNEW ) is not going well after the £41m investment trust had to sell its US solar assets at a 26% discount to their already reduced valuation.

The subscale closed-end fund, which announced its wind-down and suspension of its dividend in September, accepted $38.4m (£30.2m) from a subsidiary of the True Green Capital Fund, accounting for 64% of the portfolio. The US private equity buyer also takes on $15.6m of debt.

The price is 26% less than the latest valuation of $51.9m, which was cut from $63.2m in June.

The company said the offer was the ‘best available’ given its sales adviser Marathon Capital Markets had been unable to secure an acceptable offer for the whole portfolio.

It is now ‘exploring the potential realisation’ of the remaining assets, comprising the Whirlwind Energy wind assets and its share of two solar assets.

The sale is expected to complete in the first quarter of next year though it is conditional on shareholder approval of the new wind-down investment policy. 

The fund, whose large 42.9% discount reflects the gap between the £71m net asset value of the portfolio and the £41m value ascribed by the market, will use the cash to pay down its revolving credit facility (RCF) in full. As of last week, $32.5m of the RCF was drawn and the group had cash of $12.7m.

Brett Miller, the restructuring specialist who joined the board in July, is helping the company decide whether it should appoint a new fund manager to replace Ecofin Advisers and complete the wind-down, or do so as a self-managed fund.

This follows Ecofin Advisors informing the board its group was refocusing its business away from renewables.

RNEW raised £125m at launch in 2020 with the promise of a target return of 7-7.5%, which it struggled to achieve. A tornado and a plague of rats added to its woes last year after the sector derated in response to rising interest rates and inflation. This resulted in disappointing share price performance, with the stock down 65% since launch.