Ecofin Water & Power Opportunities : Statement re Continuation Vote Update

ECOFIN WATER & POWER OPPORTUNITIES PLC

Continuation Vote and Reconstruction Proposals

On 19 February 2016, Ecofin Water & Power Opportunities plc ('EWPO' or the 'Company') announced that, in advance of the continuation vote due to be held before the end of June 2016 (the 'Continuation Vote'), the Board would be considering the structure of the Company going forward including the investment policy, capital structure and levels of gearing.

The Board is pleased to announce details of the reconstruction proposals that, subject to shareholder consultation, it intends to implement in the event that the Continuation Vote is passed (the 'Reconstruction Proposals').

Key Highlights of the Reconstruction Proposals

Subject to the passing of the Continuation Vote, the Company intends to propose a scheme of reconstruction under section 110 of the Insolvency Act 1986 (as amended) ('Scheme of Reconstruction') with shareholders being:

(i) issued with ordinary shares in Ecofin Global Utilities and Infrastructure Trust plc, a newly incorporated investment trust that will focus on investing in global utilities and infrastructure equities and, to a limited extent, related fixed income securities ('Ecofin Global');

(ii) issued with new ordinary shares in a newly incorporated investment company that will hold the illiquid assets of the Company ('EF Realisation'); and

(iii) offered a cash exit for up to 35 per cent. of the issued share capital of the Company.

Ecofin Global

· Ecofin Global will, pursuant to the Scheme of Reconstruction, hold the Company's liquid investments and will be admitted to the premium segment of the Official List and to trading on the main market of the London Stock Exchange.

· Ecofin Global will focus solely on investing in utilities and infrastructure investments (excluding social infrastructure).

· Ecofin Global will have no ongoing exposure to unquoted equity investments or early stage listed companies - and a greater restriction on the level of investment in non-OECD countries.

· Ecofin Global will have a flexible gearing policy with the ability to borrow up to 25 per cent of net assets. There will be no structural gearing.

· The Board of Ecofin Global is expected to include the majority of the existing directors of the Company.

· Jean‐Hugues de Lamaze, who has worked at Ecofin Limited (the 'Manager') for 8 years, will have sole responsibility for the management of Ecofin Global's portfolio.

· Ecofin Global will target an initial dividend yield of at least 4 per cent on net assets using gearing and, if necessary, reserves to augment the portfolio yield.

· A further continuation vote will be held in 2019 and every five years thereafter.

· The Board has agreed with the Manager that the management fees on Ecofin Global will be charged on net assets only.

EF Realisation

· All remaining unquoted equity investments and illiquid assets, including Lonestar Resources Limited (the 'Illiquid Portfolio'), will, pursuant to the Scheme of Reconstruction, be transferred to EF Realisation, a newly incorporated, Guernsey-domiciled investment company to be admitted to trading on the specialist fund segment of the main market of the London Stock Exchange.

· Based on the valuations as at 30 April 2016 the Illiquid Portfolio represents approximately £44.3m representing 14.1 per cent. of EWPO NAV.

· There will be an orderly realisation of the assets held within the Illiquid Portfolio over the course of a period of 24 months with the net proceeds distributed to EF Realisation shareholders.

· The Board of EF Realisation, which will be formed in due course, will include at least one of the existing directors of the Company.

· There will be no base management fee for the management of EF Realisation but the Manager will be eligible to receive a performance fee of 15 per cent. of all cash returned to shareholders over the Performance Fee Initial Value (as defined below), subject to a compounding 10 per cent. hurdle and subject to a cap.

· The Performance Fee Initial Value will be, unless otherwise determined by the Board, the aggregate of the initial value of each asset calculated as the higher of: (i) the original cost price to EWPO; or (ii) the current holding value (the aggregate of all such valuations being the 'Performance Fee Initial Value').

Cash Exit

· In addition to the capital that will be returned to investors via the run off of the illiquid assets shareholders will also be offered an immediate cash exit as part of the Scheme of Reconstruction for up to 35 per cent. of the issued share capital of the Company (the 'Cash Exit'). Based on the NAV as at 30 April 2016 this would equate to a cash return of up to £110m (less costs).

· Shareholders will be able to elect for their proportional entitlement under the cash exit and to apply for more than their proportional entitlement, satisfaction of which will depend on other elections received.

The combination of the Cash Exit and the realisation of the Illiquid Portfolio is expected to result in the return of approximately £154.3m to ordinary shareholders (based on the net asset value as at 30 April 2016), equal to 49.1 per cent of the net assets of the Company as at 30 April 2016.

A circular in connection with the Continuation Vote will be sent to shareholders in due course and will include further details of the Reconstructions Proposals.

Commenting on the Reconstruction Proposals, Ian Barby, Chairman of the Company, said:

'The Reconstruction Proposals create a new investment trust, Ecofin Global Utilities and Infrastructure Trust plc, that will provide exposure to a sector currently under-represented in the investment company universe and one that will seek to provide a strong yield to investors at a time when it is difficult to identify assets that can provide a regular sustainable income at an attractive level. The capital return through the realisation of the Company's illiquid assets and the cash exit provides a balance of liquidity for those shareholders seeking an exit while maintaining sufficient scale in the ongoing entity for shareholders going forward.'

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23 May 2016