Metis Energy Limited Responds to Key Shareholder Questions Ahead of AGM

Impacts of Geopolitical Events on Operations and Revenue

Metis Energy Limited has provided shareholders with detailed responses regarding the potential impact of recent geopolitical tensions—including the Iran war, Straits of Hormuz blockade, and the resulting spike in global energy prices—on its business operations.

• Vietnam Operations (Core Asset): Metis owns and operates 51.88MWp of rooftop solar projects in Vietnam, selling electricity directly to factory users under long-term Power Purchase Agreements (PPAs). Importantly, the tariffs are set at a discount to prevailing Electricity of Vietnam (EVN) prices, directly linking Metis’s revenue to any changes in the regulated EVN tariff.
  • If EVN raises tariffs in response to higher global energy prices or supply disruptions, Metis’s contracted selling prices would also increase. This mechanism provides potential upside for the company if tariffs rise.
  • Conversely, absent any adjustments to EVN tariffs, Metis does not expect immediate direct financial impact from global energy price volatility or external geopolitical events.
  • As of the latest update, the Vietnamese government has not announced changes to electricity tariffs, and the company does not anticipate a material short-term impact on its Vietnam operations from the current geopolitical situation.
• Australia Operations: Metis has completed construction and commissioning of a ground-mounted utility-scale solar project in Queensland.
  • 80% of the project’s generation is secured under a fixed-price PPA with a retailer, which provides revenue certainty and protects against short-term market volatility.
  • The remaining 20% of output is sold into the spot electricity market. While this exposes the company to increased price volatility from global market disruptions, it also offers potential for upside if spot prices rise.
  • The company’s revenue mix, with both contracted and market-exposed segments, provides a buffer against market uncertainties while retaining some exposure to positive price movements.

Shareholder Note: The company’s revenue is largely insulated from immediate global energy price shocks due to its PPA structures, but any official changes in Vietnam’s electricity tariffs or sustained price spikes in Australia could materially affect revenues and, consequently, share value.

Details on High-Interest USD Loan and Financing Strategy

Loan Overview: The company’s Annual Report revealed that its USD Loan, secured from responsAbility Investments AG (a Swiss impact asset manager), carries an interest rate as high as 10.16%. This rate has drawn attention from shareholders given the secured nature of the loan.

• Loan Purpose and Terms: The loan was taken in March 2022 to support Metis’s Vietnam rooftop solar portfolio, with a tenure extending to December 2029. It is a secured facility, with collateral in line with market practice for project financing.
• Interest Rate Explanation:
  • The loan is priced on a floating basis (6-month SOFR plus fixed margin). At the time of negotiation (late 2021), benchmark rates like SOFR were low, and the margin was set to reflect risks related to project type, emerging market exposure, and the specialized nature of rooftop solar in Vietnam.
  • Since drawdown, global interest rates have risen sharply due to monetary tightening, pushing the loan’s all-in cost above 10% at peak periods.
  • Despite being secured, lending to distributed solar projects in emerging markets is considered higher risk compared to conventional or developed market lending, resulting in higher interest rates.
• Choice of Lender:
  • Metis chose responsAbility due to its expertise and flexibility in structuring financing for distributed renewable energy projects, which traditional banks may not have matched, especially given the early-stage nature of Metis’s Vietnam portfolio.
  • Bank loans might not have been cheaper and could have come with stricter covenants or more onerous requirements.
  • The association with an established international impact investor also enhances Metis’s profile and could benefit future fundraising and partnerships.
• Interest Rate Outlook:
  • SOFR has moderated in 2025, and Metis continues to monitor the situation to optimize its financing structure if opportunities arise.

Shareholder Note: The high-interest cost is a function of market and project-specific risk, not just collateral. While it adds to financing costs, the loan supports the company’s growth in Vietnam. Future decreases in benchmark rates or refinancing could improve net margins and thus positively impact share value.

Key Takeaways for Investors

• Metis’s business model is largely shielded from global energy price volatility due to its reliance on contracted PPAs, but is sensitive to regulatory changes in Vietnam and market prices in Australia.
• The company’s financing strategy reflects the challenges of raising capital for renewable energy projects in emerging markets, where specialized lenders may be preferable to traditional banks, despite higher costs.
• Any significant changes in Vietnam’s regulated electricity tariffs, or improvements in Metis’s financing structure, could materially affect earnings and share price.
• Investors should watch for:
  • Announcements on Vietnam electricity tariffs
  • Further refinancing or debt optimization moves by Metis
  • Updates on the performance and market exposure of the Australian solar plant

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should consider their own financial situation and consult professional advisers before making investment decisions.

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