US Solar (USF ) has slashed its dividend target by 60% and offered a $19m (£15m) return of capital to shareholders, with the prospect of more to come if the sub-scale £126m renewables fund survives a discontinuation vote next month.

The dollar-based investment trust, which appointed fund manager Amber Infrastructure at the end of last year, announced on Wednesday that it had cut its dividend target to $0.225 from $0.556 per share for the 2025 financial year after the payout was only half covered by earnings last year.

In compensation, the board is launching a tender offer allowing investors to sell some shares at $0.764, a 2% discount to their net asset value (NAV) of $0.78 at 31 December. Given the dollar USF and sterling (USP) shares both trade on 39% discounts below NAV, this is likely to be taken up, although it only represents 7% of assets.

More capital could be released as the company plans to refinance its debts with cheaper long-term loans in the US debt market with the aim of restoring earnings cover to the dividend and buying back shares if there is surplus cash.

Stifel analyst Iain Scouller hoped that the board would refrain from taking out long-term loans before next month’s discontinuation vote which, as a special resolution, requires 75% support to pass.

Scouller said there could be substantial support for a wind-up given value investors Weiss and Metage own more than 21% of the shares.

 ‘Based on past experience, it seems reasonable to expect them to look for some form of exit mechanism,’ Scouller said. 

US Solar shares have fallen 34% in the past year and have been yielding 12% in anticipation of a dividend cut.