Thomaslloyd $ Regulatory News (TLEI)

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT MAY CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE UK'S MARKET ABUSE REGULATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, SUCH INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

LEI: 254900VC23329JCBR9G82

15 August 2023

ThomasLloyd Energy Impact Trust plc

(the "Company")

Update re material new information

HIGHLIGHTS

· New information has come to light under the protections of the Company's whistleblowing policy revealing that ThomasLloyd Global Asset Management (Americas) LLC (the "Investment Manager") was aware of material information relating to the RUMS Project by August 2022. It therefore appears that key information was withheld from the Board, and misleading information given to it, over a protracted period of time.

· In its most recent communication, on 11 August 2023, ThomasLloyd Group Limited ("TLG") makes a number of inaccurate and misleading statements. The Board outlines certain of these below. In particular, the Company's auditor has confirmed that no timetable has been put forward by the Investment Manager with a view to completing the Company's 2022 Annual Report and Accounts (the "2022 Accounts") and audit by 30 September 2023.

· Although TLG is portraying the continuation vote as a binary outcome, it is not. Should the Continuation Resolution not be passed, proposals for the future of the Company will be put to shareholders in due course and may include a relaunch of the Company.

· The Board urges shareholders in the strongest terms to vote against the ContinuationResolution.

RECEIPT OF MATERIAL NEW INFORMATION

The Board has been provided with confidential information under the protections of the Company's whistleblowing policy, revealing that concerns about the RUMS Project, and in particular substantial increases in the costs and capital requirements associated with it, were known by the Investment Manager by August 2022. These concerns were not disclosed to the Board.

As set out in the Notice of Annual General Meeting dated 6 June 2023, the RUMS Project was originally bid for on the premise that the overall project cash cost of US$78.4 million (INR 5,880 million) would be funded by debt of US$62.7 million (INR 4,700 million) and equity of US$15.7 million (INR 1,180 million), the equity financing being funded entirely from existing cash resources within SolarArise, the Company's Indian renewable energy platform, and ongoing operating cash flow from SolarArise's operational solar portfolio. Until February 2023, the Investment Manager gave no indication to the Board that the equity financing would be required to be funded other than entirely from within SolarArise.

The Company's understanding is now as follows:

· At the end of August 2022, the SolarArise management team provided a presentation to the Investment Manager's Investment Committee (the "August 2022 Presentation"). The August 2022 Presentation stated that the RUMS Project economics had changed significantly since the project bid. Project costs were said to have increased to US$93.3 million, with the result that the equity now required for the project was US$38.1 million, meaning a capital call of US$31.9 million from SolarArise shareholders would be required. The Company's share of this capital call would have caused the Company to breach the country limit in its investment policy. The August 2022 Presentation also said that the capital call figure could increase by a further US$28.5 million if module prices were to reach 30 cents.

· At around the same time, a third party was asked by the Investment Manager, without the knowledge of the Board, to gauge interest from potential investors in taking over the RUMS Project. The feedback from this exercise was that potential investors had focussed on the project returns, owing to uncertainty around the costs, and none had expressed interest in proceeding with the project, leading the Investment Manager to conclude that this option should not be pursued.

· There were Audit and Risk Committee and Board meetings held on 31 August 2022 but nothing was said by the Investment Manager about any of this. The Company's cashflow forecasts to 31 December 2023 discussed at the meetings did not include any cash funding for SolarArise. The minutes of the Audit and Risk Committee recorded that the RUMS Project would not require funding from the Company.

· The Company understands that further work was carried out by the Investment Manager and the SolarArise management team to assess and test the numbers in the August 2022 Presentation. This resulted in a further presentation being produced by the Investment Manager in October 2022 (the "October 2022 Presentation"), which was shared with senior management at the Investment Manager, showing project costs ranging from US$91.9 million to US$99.8 million and that new capital of up to US$38.5 million (or US$30.7 million on an "aggressive case") would need to be injected into SolarArise. The October 2022 Presentation noted that the IPO case had been that the equity requirement was to be funded from cash resources within SolarArise. The presentation went on to say that this equity would need to be injected by December 2022.

· The October 2022 Presentation was not disclosed to the Board. The Board understands that an updated financial model was also prepared. This was also not disclosed to the Board.

· A number of the Investment Manager's employees pointed out to its senior management team that this information should be provided to the Board. It was not.

· By the time of a Board meeting on 5 December 2022 (the "December Board Meeting"), a report on the RUMS Project had been prepared for the Board by the Investment Manager, but it did not mention the above issues surrounding the impact of increased costs and the capital injection needed. It simply said that final costs would be revised when EPC and module contracts were finalised: "Overall Project costs - At the time of bidding (July 2021) the total equity required for the project was estimated at INR 1176 million of the total project cost of INR 5880 million, with the remainder to be financed by project debt. The final total project cost will be revised when the EPC and module contracts are finalised at the end of March for EPC/ middle of 2023 for modules".

· Further, the minutes of the December Board Meeting record the following: "The Board queried whether SolarArise held sufficient cash to fund the RUMS Project, and was advised that cash had increased due to increased receivables collections and it was expected that the remainder would be made up from ongoing cash flows in SolarArise". These statements, which were given as part of the Investment Manager's update, were clearly wrong.

· By February 2023, models prepared by the Investment Manager, and not shared with the Board, were still showing project costs at similar levels to those as at August 2022. The Board had by this stage finally been informed that SolarArise would require a capital injection from the Company, although the amount to be funded was said to still be under discussion. There was a suggestion from the Investment Manager that the amount might be US$15 million.

· At the beginning of May 2023, at the request of TLG's new Chief Investment Officer, an internal report was prepared on behalf of the Investment Manager to establish the timeline of when information on the RUMS Project was known within the Investment Manager and when it was provided to the Board, setting out the above matters (and more). This report, which was shared with the Investment Manager's senior management team, was not provided or even mentioned to the Board, despite this being a key workstream that the Board had asked the Investment Manager to progress as a matter of urgency to enable progress to be made on the 2022 Accounts and audit.

· On 5 June 2023 Michael Sieg, the Chief Executive Officer of TLG, communicated to the Board in writing that the Investment Manager only became aware that the RUMS Project was not commercially viable in April 2023 having recently completed its full review in partnership with the Board.

In conclusion, it is now apparent that, as early as August 2022, the Investment Manager knew that the costs of the RUMS Project had increased significantly such that a significant capital injection into SolarArise would be needed. In the Board's view, at that point it would have been apparent that the RUMS Project would not be commercially viable. The Investment Manager was told these matters by SolarArise, and when it did its own work to check, this was confirmed in its own reports. Furthermore, the scale of the capital injection required would have meant that a key restriction in the Company's investment policy would have been breached. However, the Board was not told of these issues at the time. In fact, at the December Board Meeting, the Board was told that no additional equity was required. It was not until February 2023 that it was suggested that any sort of capital injection from the Company would be needed. This all suggests that a deliberate decision was made by the Investment Manager not to inform the Board.

By the time the Board was finally told in mid-April 2023 of the scale of the RUMS Project costs, the amount of equity required and its commercial unviability, it was too late. The delay in full disclosure to the Board, including with regard to potential non-completion liabilities, resulted in material financial uncertainty such that the 2022 Accounts and resulting audit could not be completed by 30 April 2023 and trading in the shares had to be suspended, despite TLG's claims otherwise in its announcement on 11 August 2023, as referred to further below.

In light of the above, and whilst the Board continues to investigate these matters urgently, it appears that key information was withheld from it, and misleading information given to it, over a protracted period of time. In this regard and generally the Company is reserving all of its rights.

CORRECTION OF INACCURATE STATEMENTS MADE BY TLG

Whilst the Board takes issue with a number of misleading and inaccurate statements made in TLG's announcement of 11 August 2023, it believes it is most important to highlight the following.

2022 Accounts and audit

In its announcement of 11 August 2023, TLG made certain statements regarding the Company's financial reporting procedures and subsequent completion of the 2022 Accounts and resulting audit. These include statements that: (i) the Board had the option in late April 2023 to temporarily write down the value of the RUMS Project to nil to allow the 2022 Accounts to be published on time and thereby avoid the suspension of trading in the Company's shares; (ii) the Investment Manager would aim to publish the 2022 Accounts and the interim report to 30 June 2023 (the "2023 Interim Report") by no later than 30 September 2023; and (iii) the Continuation Resolution passing would be a critical and significant step towards getting the 2022 Accounts published and therefore the Suspension lifted.

The Company did not have the option to temporarily write down the value of the RUMS Project to nil to enable the 2022 Accounts to be published and thereby avoid the Suspension. The Board and the Company's auditor, Deloitte LLP ("Deloitte"), agreed over the weekend of 22/23 April 2023 that there would not have been sufficient time before 30 April 2023 to assess the impact of the new information presented with regard to the RUMS Project on the 2022 Accounts, nor for the financial implications to be thoroughly audited by Deloitte such that the quality of the 2022 Accounts and audit process could be maintained. Over the same weekend and having taken advice from the Company's lawyers and corporate brokers, the Board concluded that the new information created a material uncertainty regarding the fair value of the Company's assets and liabilities and, following discussion with the FCA, trading in the Company's shares was suspended on 25 April 2023. Even if the Suspension had not occurred on 25 April 2023, it would have occurred on 2 May 2023 due to the Company being unable to meet its regulatory obligation to publish the 2022 Accounts by 30 April 2023.

Deloitte has confirmed to the Board that no timetable has been put forward by the Investment Manager with a view to completing the 2022 Accounts and audit by 30 September 2023.

Based on the information it currently has, Deloitte has confirmed that finalising the audit of the 2022 Accounts by 30 September 2023 is unlikely to be achievable while maintaining the quality of the 2022 Accounts and audit.

It is incorrect for TLG to imply that the passing of the Continuation Resolution is a necessary step towards getting the 2022 Accounts published and the suspension lifted. In the event that the Continuation Resolution is not passed, the 2022 Accounts would still be prepared on a going concern basis but with enhanced disclosure on both the basis of preparation and material uncertainty pending the outcome of the Board's proposals to be put to shareholders regarding the Company's future.

Impact of Continuation Resolution

In its announcement of 11 August 2023, TLG seeks to represent the vote on the Continuation Resolution as a binary choice between securing a bright future for the Company or its permanent winding up. As set out in the Company's announcement of 31 July 2023, if the Continuation Resolution is not passed, the Board will bring forward proposals for the future of the Company for consideration by shareholders in accordance with the Company's articles of association, which may include a relaunch of the Company. As required by the Company's articles of association, these proposals regarding the Company's future will be put to shareholders for their approval within four months of the date of the vote on the Continuation Resolution being held.

NEXT STEPS

The Board recognises that, in the event the Continuation Resolution is not passed, the Company will require continuing support to protect shareholder value, complete the 2022 Accounts and audit and develop proposals to put to shareholders regarding the Company's future.

The Board is, therefore, preparing contingency plans to be implemented in the event that the Continuation Resolution is not passed (bearing in mind also that the Company would have the right, in the event that the Continuation Resolution is not passed, to terminate its investment management agreement with the Investment Manager summarily). The Board's immediate priorities in those circumstances will include:

· finalising the 2022 Accounts and 2023 Interim Report;

· managing the existing operating portfolio and ensuring suitable local management and governance structures are in place;

· re-evaluating the status of the RUMS Project and recommending a way forward;

· reviewing strategic options and consulting with shareholders; and

· putting proposals to shareholders for formal approval in due course.

REQUISITIONED GENERAL MEETING AND ADJOURNED GENERAL MEETING (THE "MEETINGS")

As announced on 31 July 2023 and described in detail in the circular posted to shareholders on that date, the Company has convened the Meetings to be held on 24 August 2023 to vote on three resolutions including, at each of the Meetings, a resolution on the continuation of the Company. The Board's recommendations to shareholders regarding the resolutions are unchanged and in light of the new information set out in this announcement the Board urges shareholders in the strongest terms to vote against the Continuation Resolution.

Sue Inglis, Chair of ThomasLloyd Energy Impact Trust plc, said: "The Board is shocked and angry to discover that highly material information appears to have been withheld from it over an extended period of time. Furthermore, statements made in ThomasLloyd Group's announcement on 11 August 2023 continue to misrepresent the Company's circumstances and the steps the Board is taking in the interests of the Company's independent shareholders. The Board therefore believes it is imperative that shareholders vote against the Continuation Resolution."

Further announcements will be made as and when appropriate.

Capitalised terms used in this announcement shall, unless otherwise defined, have the same meanings as set out in the circular to shareholders dated 31 July 2023.

The person responsible for arranging the release of this announcement on behalf of the Company is Uloma Adighibe of JTC (UK) Limited, the Company Secretary.

Enquiries: