Gore Street Energy Storage Fund (LON:GSF) urged shareholders to vote against two resolutions proposed by Saba Capital Management, arguing that an accelerated wind-down or reorganization could force asset sales at unfavorable valuations and undermine the board’s strategy to return capital while improving selected projects.
Speaking during an investor presentation, Chairman Angus Gordon Lennox said the board believes the company is operating near a cyclical low for battery energy storage revenues and asset values. He said an accelerated disposal process could weaken the company’s negotiating position with buyers.
Saba resolutions and board recommendation
Saba has submitted Resolution 16, an ordinary resolution that the company should not continue as an investment company, and Resolution 17, a special resolution requiring directors to bring proposals within three months to wind up, liquidate, reorganize or unitize the company if Resolution 16 passes.
Gordon Lennox said the board recommends that shareholders support resolutions one through 15 and vote against Saba’s resolutions 16 and 17. He also encouraged shareholders to vote, noting that some investors may hold shares through platforms that can make the process more difficult.
The chairman said the board’s existing plan, announced in March, focuses on “disciplined and timely value realization,” asset augmentations intended to increase revenue generation, and distributions to shareholders. The company has committed to annual distributions of 7 pence per share, he said.
According to Gordon Lennox, asset sales are intended to fund shareholder distributions and capital investment in augmentation opportunities. He distinguished between orderly disposals and the accelerated sales that he said could result from the Saba proposals.
Recent disposals and investment plans
The company recently completed the sale of two Republic of Ireland assets and announced a 1.75 pence dividend. Gordon Lennox said proceeds from the Irish sale had been received and described the transaction as evidence that the strategic plan was progressing.
He said the Irish assets had a March net asset value of approximately £13.6 million. While the company said the assets were sold at a premium to NAV, it did not disclose the sale price because the buyer contractually required the price to remain confidential.
Gordon Lennox said the assets were sold to another fund advised by Gore Street Capital, but maintained that the transaction was not a related-party deal. He said the process involved Alexa as an independent third-party seller, separate teams at Gore Street Capital with an information barrier between them, and close oversight by a board subcommittee.
The chairman said there were numerous interested parties in the sales process and that the winning buyer submitted the highest bid.
The company has also announced plans to sell all or part of the Middleton pre-construction asset, while further disposals and augmentation initiatives remain in progress. The board has set disposal targets of £25 million for the current year and £75 million for the following year, Gordon Lennox said.
Non-Executive Director Norman Crighton said augmentation work at the Stony and Ferrymuir sites could be completed by the end of the year, while Enderby could be completed early next year.
Performance, discount and portfolio outlook
Gordon Lennox acknowledged that shareholders have experienced difficult performance, citing a broader downturn among infrastructure, renewable energy and battery storage investments. He attributed the pressure in part to a significant build-out of energy assets and higher interest rates than those prevailing when the company was established.
He said the company’s revenue per megawatt-hour was currently in a range of roughly £7.50 to £8, compared with approximately £22 to £23 a few years ago. The chairman said a reduction in new asset construction could eventually support a recovery in revenues, though he did not provide a timetable.
Addressing the discount between the share price and NAV, Gordon Lennox said the board expects improved NAV performance, sector conditions and shareholder distributions to help narrow the gap over time. He said distributions provide cash to all shareholders, unlike share buybacks, which would primarily benefit investors who choose to sell.
However, he said the board has not ruled out buybacks. Future capital allocation will depend on whether buying shares at a discount or investing in asset augmentations provides the stronger return for shareholders, he said.
The board said it reviewed alternatives including a possible manager change, mergers and other strategic options during its earlier review. Gordon Lennox said Gore Street Capital is currently considered best placed to manage the portfolio, although the board remains open to options that could improve shareholder value.
On the potential disposal of German assets, including Cremzow, Gordon Lennox said the process remained ongoing but had taken longer than expected. He added that uncertainty around the Saba resolutions had not helped the process.
The company’s annual general meeting is scheduled for Sept. 16 at Stephenson Harwood’s offices in London.
About Gore Street Energy Storage Fund (LON:GSF)
About Us: Gore Street Energy Storage Fund plc is London’s first listed energy storage fund, launched in 2018. The Company is the only UK-listed energy storage fund with a diversified portfolio across five grid networks. The Company is one of the principal owners and operators of battery storage facilities in Great Britain and Ireland and owns and operates facilities in Western Mainland Europe and the US. It is listed on the Premium Segment of the London Stock Exchange and included in the FTSE All-Share Index.
Energy storage technologies enhance power system stability and flexibility and are key tools for balancing out variability in renewable energy generation, facilitating the integration of more renewable energy supply into power grids.
