SQN Asset Finance Income Fund Ltd Anaerobic Digestion Assets (2893A)
20 Gennaio 2020 - 9:26AM
UK Regulatory
TIDMSQN
RNS Number : 2893A
SQN Asset Finance Income Fund Ltd
20 January 2020
20 January 2020
SQN Asset Finance Income Fund Limited
Anaerobic Digestion Assets
SQN Asset Finance Income Fund Limited (the "Company") has
invested in a total of 15 Anaerobic Digestion ("AD") plants since
its launch. Four have subsequently been exited profitably and 11
remain in the ordinary share portfolio.
At the time of the publication of the Annual Report and Accounts
for the year ended 30 June 2019, which were released on 30
September 2019, the Company reported all of the AD plants had
completed construction and that six were in the ramp-up phase which
often involves continuous refinement until the plants reach optimum
output. As reported in the results, this process has proven to take
longer than anticipated and occasionally requires additional
capital which can affect the overall economics of the investments.
This led the Company to make an impairment at that time of GBP3.2
million across two of these AD plants.
In preparation for the review of the interim accounts for the
six months ended 31 December 2019, the Company is undertaking a
review of the models and projections supporting the carrying values
of the AD plants. Three of the AD plants have not yet reached
targeted operational capacity. A further three AD plants are
performing at or above the targeted operational capacity but
feedstock costs have been higher than originally anticipated.
As a result, the Investment Manager has undertaken an assessment
of the valuation of these assets. Given the large number of
variables and the high degree of sensitivity of each of those
variables when modelled over the more than 20 year lives of the
assets, the range of potential values is large. If the range of
values were to be accepted and deemed appropriate for purposes of
the interim accounts, a potential impairment of between 4.6 pence
to 13.2 pence per ordinary share would have to be recorded. Given
the wide range of potential values, and in the interests of prudent
risk management, the Board intends to appoint a third-party valuer
to provide an independent assessment of the valuation of these
assets, which will then be reflected in the 31 December 2019 net
asset value ("NAV"). The six assets, in aggregate, had a valuation
of GBP127.7 million, as at 30 November 2019.
The C share portfolio has no exposure to AD assets.
In light of this ongoing assessment, the publication of the 31
December 2019 NAV for the ordinary shares is expected to be delayed
and a further update will be released as soon as possible. The 31
December 2019 NAV for the C shares is expected to be announced
later this week.
The Investment Manager will continue to work with the asset
operators to achieve optimisation of each of the AD plants with the
intention of monetising these assets in due course, together with
the five AD plants operating in-line with expectations. It should
be noted that the four AD plants that have been exited to date have
achieved yields of between 11% and 20%, the highest return being on
an investment that went into default and required a complicated
workout.
The Company has a triennial continuation vote, with the next
vote to be held at its AGM this year and the Board intends to
consult with shareholders in due course.
This announcement contains Inside Information as defined under
the Market Abuse Regulation (EU) No. 596/2014.
LEI: 2138007S3YRY3IUU4W39
For further information please contact:
SQN Capital Management, LLC
Jeremiah Silkowski
Neil Roberts 01932 575 888
Winterflood Securities Limited 020 3100 0000
Neil Langford
Chris Mills
Buchanan
Charles Ryland
Henry Wilson 020 7466 5000
This information is provided by RNS, the news service of the
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contact rns@lseg.com or visit www.rns.com.
END
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