Us Solar Fund Regulatory News (USF)

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9 March 2023

US SOLAR FUND PLC (USF, the "Company")

QUARTERLY TRADING AND NAV UPDATE

US Solar Fund plc (LON: USF (USD)/USFP (GBP)) announces that its unaudited NAV at 31 December 2022 was $320.0 million or $0.963 per ordinary share, a decrease from the 30 September 2022 NAV of $322.2 million or $0.970 per ordinary share.

Highlights for the quarter to 31 December 2022:

• USF's unaudited NAV at 31 December 2022 was $320.0 million or $0.963 per Ordinary Share, marginally lower than the 30 June 2022 NAV of $321.2 million or $0.967 per Ordinary Share. While the portfolio experienced an overall fair value uplift, this was offset by dividends paid, operating costs and US tax losses (deferred tax liabilities arising from an increase in asset valuations) resulting in the reduction in NAV.

• The portfolio fair value uplift was driven by a modest uplift in electricity price forecasts and improved operating cost assumptions which more than offset the impact of increased discount rates driven by sustained higher interest rates.

• During the period, the portfolio produced 168GWh (including reimbursed curtailment), bringing the total production for 2022 to 904GWh. Generation for 2022 remained within the expected range of annual variance. We continue to see the benefits of a high-quality, diversified portfolio as assets largely continued performing well with their long-term PPAs. The distribution of assets across different locations gave the portfolio the benefit of varying weather conditions, mitigating volatility from any particular event or local weather trend throughout the year. Dividends paid during 2022 remained cash covered. 

• All assets in the portfolio have power purchase agreements (PPAs) with contracted prices for 100% of electricity generated. The portfolio weighted average PPA term is 13.8 years as of 31 December 2022, and all PPA counterparties are investment-grade (S&P rated A to BBB).

• The Company paid its Q3 2022 dividend of 1.52 cents per Ordinary Share on 6 January 2023. The dividend is consistent with the Company's target full year dividend of 5.58 cents per Ordinary Share.

• Dividend cover for the twelve months to 31 December 2022 was 1.20x.

• In October 2022, USF's Board announced that it was undertaking a strategic review of the options available to the Company to maximise value for shareholders (Strategic Review) and that it expected to conclude the Strategic Review by the end of Q1 2023. The Strategic Review is considering all options available to the Company including a sale of the entire Company, a sale of the Company's portfolio assets, or changing the Company's investment management arrangements.

• Since the Strategic Review commenced, the Board and its advisors have engaged with a significant number of parties and, following receipt of indicative proposals, have shortlisted several parties who have proceeded to the next phase of the Strategic Review process. In order to provide the shortlisted parties with the requisite time to finalise their due diligence and submit binding proposals, the Board now expects to update shareholders on the outcome of the Strategic Review within the next six to eight weeks.

Highlights post period end:

• In January 2023, the Company announced that MN8, a renewable energy business formerly known as Goldman Sachs Renewable Power LLC, had exercised its purchase option over USF's 50% interest in the 200MWDC Mount Signal 2 asset, with financial close expected to occur in Q2 2023. The sale will generate total proceeds (including the option fee) of $53.2 million and implies a gross return of 11% per annum since USF announced the agreement to acquire up to 50% of MS2 from NEW in December 2020. The Company will update shareholders regarding use of proceeds at the conclusion of the Strategic Review (or the financial close of the MS2 sale if earlier).

The NAV update and the Company's factsheet for Q4 2022 are available on the Company's website at: www.ussolarfund.co.uk/investor-centre.

A separate Solar Market Update can be found on the website at: www.ussolarfund.co.uk/media-and-insights.

For further information, please contact:

About US Solar Fund plc 

US Solar Fund plc, established in 2019, is listed on the premium segment of the London Stock Exchange. The Company's investment objective is to provide investors with attractive and sustainable dividends with an element of capital growth by owning and operating solar power assets in North America and other OECD countries in the America.

The solar power assets that the Company acquires or constructs are expected to have an asset life of at least 30 years and generate stable and uncorrelated cashflows by selling electricity to creditworthy offtakers under long-term power purchase agreements (or PPAs). The Company's portfolio consists of 42 operational solar projects with a total capacity of 543 MWDC, all located in the United States.

Further information on the Company can be found on its website at http://www.ussolarfund.co.uk.

About the Investment Manager 

USF is managed by New Energy Solar Manager (NESM). NESM also manages New Energy Solar, an Australian Securities Exchange (ASX)-listed fund. Combined, US Solar Fund and New Energy Solar have committed approximately US$1.3 billion to 57 projects totalling 1.2GWDC.

NESM is owned by E&P Funds, the funds management division of E&P Financial Group, an ASX listed company (ASX: EP1) with over A$20 billion of funds under advice.