Foresight Environmental Infrastructure provides an update to the company’s HH2E portfolio – QuotedData

Foresight Environmental Infrastructure (FGEN) provided a portfolio update on the announcement that German green hydrogen project developer HH2E is expected to go into debt.

FGEN made the first investment in the green hydrogen sector in January 2023 and has been working with the management of its partner, HH2E AG, to advance the development of several green hydrogen production sites across Germany.

The company has invested a total of 22.3 million euros in HH2E (£19.3m), representing 2.6% of the total asset value as of 30 June 2024. Investments in HH2E to date have been largely used to secure long-term equipment orders and the creation of the first two green HH2E hydrogen sites in Lubmin and Thierbach, both of which are in need of additional funding to support construction based on the consortium’s original business plan of development.

HH2E has recently completed the process of obtaining additional third party financing for the continued development of the pipeline and the construction of Lubmin, the most advanced of the regions. However, due to the emergence of the hydrogen sector and the challenge of the current global financial environment, this process has not led to a financial partner being saved at the time and to the extent required. needed, and there is now apparent doubt as to whether sufficient funds will be available. reached.

FGEN, along with it financial managerForesight Group, has considered providing additional funding to HH2E to allow it to continue to meet its obligations and requirements under German law. However, the the board does not believe that it is appropriate to do so at this time, reflecting the company’s approach to building​​​​a portfolio, risk and capital allocation according to current market conditions.

Therefore, without third-party financial guarantees and as required by German insolvency law, HH2E’s management is expected to decide to file for insolvency and enter into administration. The board and the investment manager are disappointed by this development, especially given the possibility that green hydrogen can play an important role in disrupting heavy transportation, industry, and other sectors of the economy and the remaining opportunity to Lubmin and. Thierbach.

The management of HH2E will focus on the outcome for the benefit of all creditors. FGEN is indirect credit with a stake in Foresight Hydrogen HoldCo GmbH, which provided shareholder loans to HH2E. Under German insolvency law, shareholders’ loans are ranked below other creditors and therefore it is expected that the invested money will never be repaid.

The result of the administrative process is not yet known, but the company will update the market in due course.

The investment in HH2E is the only development-stage investment in FGEN’s portfolio. Image of FGEN separation the target for FY 2024/25 is 7.80p per share and the board affirms that target in an expected manner. distribution cover in the region of 1.2-1.3x. The company will announce its interim results for the six months ended September 30, 2024, on Thursday, November 21, 2024.

[Stubborn, and in our view, irrational discounts across the renewable energy sector have meant many of these companies have been starved of the capital needed to optimise their growth. This is particularly disappointing given the valuable role that company’s like HH2E play in the effort to decarbonise our energy systems. It’s hoped that with interest rates heading down, and the regulatory backdrop providing further support, these situations will become much less frequent and companies will be able to capitalise on the wealth of opportunities which exist across the sector.]