Ecofin US Renewables enters strategic review due to widening discount

investmentweek.co.uk:

RNEW’s board revealed it had recently approached another investment trust with a merger proposition, but this had been unsuccessful.

The trust currently sits on a 31.6% discount after its share price has dropped 26.2% over the last year, compared to a 0.3% drop in net asset value, according to data from the Association of Investment Companies.

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While the US renewable energy sector offers «expanding opportunities for stable investment and growth», the board said it was «conscious of the challenges the company faces as a UK investment trust, including size and liquidity».

In a stock exchange notice today (8 September), RNEW's board revealed it had recently approached another investment trust with a merger proposition, but this had been unsuccessful.

Following that, the trust said it received interest from a different trust over a merger, but «did not consider the proposal to be in the best interests of shareholders for a number of reasons».

Marathon Capital has been appointed as financial adviser for the trust's review, which will centre on a sale of its assets.

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«If successful, and subject to the terms of such disposal, it is expected to return cash to shareholders in connection with a winding up of the company or similar transaction,» the trust's board added.

Earlier this year, the trust announced it would be halving its quarterly dividend due to a decline in cash flows, citing operational issues, «corrective maintenance interruptions» at solar farms and one-time costs.

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