HydrogenOne is not expecting any recovery from HH2E insolvency
HydrogenOne says the local court of Berlin-Charlottenburg has now approved the applications of HH2E and HH2E Werk Lubmin GmbH for self-administration proceedings. HH2E has also appointed restructuring experts to assist with the self-administration process and to seek a buyer for the business. No recovery of the company’s investment is anticipated through the insolvency process.
HydrogenOne invested £7m in HH2E, and as at end September 2024 was valuing it at £11m (8.4p per share, or 8% of NAV). HydrogenOne has an 11% shareholding in HH2E, with the remainder held by funds managed by Foresight Group, the founders and HH2E employees.
HH2E had been following a strategy of investing in long lead-time equipment to prepare for the Final Investment Decision on its first project, at Lubmin, ahead of securing bankable offtake agreement for the hydrogen production, and at the same time seeking additional equity funding and bank debt for the construction of the project. To this end, a total of roughly £59m of shareholder loans had been provided to HH2E, including about £1m from HydrogenOne.
HydrogenOne says that on 7 November 2024, an investment proposal to provide further funding for HH2E was not approved by Foresight funds. This was not the outcome that HydrogenOne was expecting.
What does this mean for the future of hydrogen?
HydrogenOne notes that a number of individual hydrogen production projects have seen delays and cancellations in 2024, against the backdrop of evolving regulations and a challenging funding environment. However, the board believes that the investment fundamentals for the hydrogen sector remain positive. At the end of 2023, 1.4GW of green hydrogen was in production worldwide. The International Energy Agency recently updated expectations for green hydrogen capacity worldwide to increase to 5GW this year, and that a further 20GW of green hydrogen production has now reached Final Investment Decision.
In the UK, the new Labour government has committed over £6bn to fund hydrogen and related projects in the recent budget. In Germany, the Federal Network Agency recently announced approval of a 9,040-kilometer core hydrogen network, which is set to become Europe’s largest hydrogen pipeline system with a planned investment of €19bn, targeting completion by 2032.
[I can’t help wondering whether the planned plants at Lubmin and Thierbach won’t end up going ahead under different ownership, but this statement seems to draw a line through any ambition that HydrogenOne still had to profit from this. With Gen2 sold, HGEN now has no exposure to hydrogen production within its portfolio, which is a shame as these seemed as though they had the potential to become relatively low risk investments. Encouragingly, other parts of the portfolio seem to be attracting funding. Even after knocking 8p off the NAV, the discount is extraordinarily wide (about 71%). HydrogenOne says that it expects to have sufficient funding to meet its investment commitments and current working capital requirements for at least 12 months.]HGEN : HydrogenOne is not expecting any recovery from HH2E insolvency
This website is for information purposes only and is not intended to encourage the reader to deal in any mentioned securities. QuotedData is a trading name of Marten & Co Limited, which is authorised and regulated by the Financial Conduct Authority. Some of the content in this website is sponsored and, although it abides by Content Principles and Objectives, (/about-quoteddata/research-principles-objectives/) it is considered non-independent. Investments may involve a significant degree of risk, including loss of capital. The value of an investment and the income from it could go down as well as up. The return of your investment is not guaranteed, and you may get back less than you originally invested. Past performance is not an indicator of future performance. It is important that you read the Terms and Conditions (/about-quoteddata/terms-and-conditions/) before considering any investment
HydrogenOne is not expecting any recovery from HH2E insolvency, source
