Aquila Energy Efficiency Trust : Proposed Tender Offer

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or about what action to take, you should immediately seek your own professional advice from your stockbroker, bank, fund manager, solicitor, accountant or other appropriately qualified independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are taking advice in the United Kingdom or, if you are resident in another jurisdiction, from another appropriately authorised independent financial or professional adviser. All Shareholders are advised to consult their professional advisers regarding their own tax position.

If you sell or otherwise transfer, or have sold or otherwise transferred, all of your Ordinary Shares before 1.00 p.m. on 10 May 2024, please send this document (but not the Tender Form or personalised Form of Proxy) to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee. However, no such documents should be forwarded or transmitted from, in or into any Restricted Jurisdiction. If you sell or otherwise transfer, or have sold or otherwise transferred, only part of your holding of Ordinary Shares you should retain these documents and consult the bank, stockbroker or other agent through whom the sale or transfer was effected. If you receive this document as a purchaser or transferee, please contact the Registrar for a Tender Form and a personalised Form of Proxy.

__________________________________________________________________________________________

AQUILA ENERGY EFFICIENCY TRUST PLC

Incorporated in England and Wales with registered number 13324616

PROPOSED TENDER OFFER TO PURCHASE ORDINARY SHARES FOR UP TO £17.5

MILLION AT A FIXED PRICE OF 94.28 PENCE PER ORDINARY SHARE

AND

NOTICE OF GENERAL MEETING

___________________________________________________________________________

This document should be read in its entirety and as a whole. Your attention is drawn to the letter to the Shareholders from the Chair of the Company, which is set out in Part II of this Circular. The letter contains a unanimous recommendation by the Board of Directors of the Company that you vote in favour of the Tender Offer Resolution at the General Meeting.

Stifel Nicolaus Europe Limited ("Stifel"), which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for the Company and for no one else, including any recipient of this document, and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Stifel or for affording advice in relation to the Tender Offer or any other matter referred to in this Circular.

The Tender Offer will open on 19 April 2024 and will close at 1.00 p.m. on 10 May 2024 (unless extended by the Company by means of an announcement through a Regulatory Information Service). Different procedures for participating in the Tender Offer apply depending on whether Qualifying Shareholders who wish to participate hold Ordinary Shares in certificated form or uncertificated form respectively.

Enclosed with this document is a Tender Form for use by Qualifying Shareholders wishing to participate in the Tender Offer who hold their Ordinary Shares in certificated form. To be effective, Tender Forms must be returned to the Receiving Agent, Computershare Investor Services PLC, by no later than 1.00 p.m. on 10 May 2024. Qualifying Shareholders who hold their Ordinary Shares in certificated form should also return their share certificate(s) and/or other document(s) of title in respect of the Ordinary Shares tendered.

Qualifying Shareholders who hold Ordinary Shares in uncertificated form (that is, in CREST) and wish to participate in the Tender Offer should not return a Tender Form but should transmit the appropriate transfer to escrow in CREST as described in this document as soon as possible and, in any event, so as to be received by no later than 1.00 p.m. on 10 May 2024.

If you do not wish to tender any of your Ordinary Shares do not complete, sign or return a Tender Form or transfer any Ordinary Shares to escrow, or send any TTE Instructions through CREST.

The Tender Offer is conditional on, among other matters, approval from Shareholders, which is being sought at the General Meeting of the Company to be held at 11.30 a.m. on 13 May 2024 at the offices of the Company Secretary, 6th Floor, 125 London Wall, London EC2Y 5AS.

Notice of the General Meeting is set out in Part VIII of this Circular. Whilst Shareholders will be able to attend the General Meeting in person, Shareholders are encouraged to vote via proxy in advance of the General Meeting, appointing the "Chair of the Meeting" as proxy to ensure that their vote is counted.

Whether or not you intend to attend the General Meeting, you are urged to complete, sign and return a Form of Proxy in accordance with the instructions printed thereon and the notes to the Notice of General Meeting. To be valid, the Form of Proxy must be completed, signed and returned in accordance with the instructions printed thereon to be received by the Registrar, Computershare Investor Services PLC as soon as possible and, in any event, by no later than 11.30 a.m. on 9 May 2024. The Form of Proxy can also be completed online at www.investorcentre.co.uk/eproxyor, in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out in the Notice of General Meeting and the CREST Manual on the Euroclear website (www.euroclear.com).

Please read the whole of this document. In particular, your attention is drawn to the risk factors set out in Part IV of this Circular. A summary of the action to be taken by Shareholders is set in Part II of this Circular and in the accompanying Notice of General Meeting in Part VIII of this Circular.

Subject to the terms and conditions of the Tender Offer contained in Part V of this Circular, the Tender Offer will be implemented by means of on-market purchases by Stifel, who will, as principal, purchase the Ordinary Shares tendered (subject to the overall limit of the Tender Offer) at the Tender Price and, following completion of those purchases and in accordance with the Repurchase Agreement, sell them on to the Company at the Tender Price by way of an on-market transaction (all of these transactions will be carried out on the London Stock Exchange's Main Market). The Ordinary Shares that the Company purchases from Stifel will be cancelled and the number of Ordinary Shares in issue carrying voting rights reduced accordingly. The Company will fund that purchase from cash resources available for use by the Company.

The availability of the Tender Offer to Shareholders who are not resident in, or citizens or nationals of the United Kingdom, and the distribution of this document and accompanying documents into jurisdictions other than the United Kingdom may be restricted or affected by the laws of the relevant jurisdiction. Persons who are not resident in, or citizens or nationals of the United Kingdom should read paragraph 6 headed "Overseas Shareholders" set out in Part V of this Circular and should inform themselves about, and observe, any applicable legal or regulatory requirements. This Circular does not constitute or form part of any offer to purchase, or invitation to sell, Ordinary Shares in any jurisdiction in which such offer or invitation is unlawful. Without prejudice to the foregoing generality, the Tender Offer is not being made, directly or indirectly, in, into or from the United States or any other Restricted Jurisdiction or any other jurisdiction where to do so would violate the laws in that jurisdiction, and no person may accept the Tender Offer by use of the mails or, or by any means or instrumentality (including, without limitation, facsimile transmission, email, other electronic transmission, or telephone) of interstate or foreign commerce of, or any facilities of a national, state or local securities exchange of, the United States or any other Restricted Jurisdiction and the Tender Offer cannot be accepted by any such use, means, instrumentality or facility or from within the United States or any other Restricted Jurisdiction. Accordingly, unless otherwise determined

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by the Company and permitted by applicable law and regulation, neither this Circular nor the Tender Form nor any related document is being, nor may it be, directly or indirectly, mailed, transmitted or otherwise forwarded, distributed, or sent in, into or from the United States or any other Restricted Jurisdiction, and any persons receiving this Circular, the Tender Form and/or any related document (including, without limitation, trustees, nominees or custodians) must not mail or otherwise forward, distribute or send such document(s) in, into or from the United States of any other Restricted Jurisdiction. In addition, persons into whose possession such documents come should inform themselves about and observe any such restrictions or requirements. Any failure to comply with these restrictions or requirements may constitute a violation of the securities or other laws of such jurisdiction.

Forward Looking Statements

This Circular contains indications of likely future developments and other forward-looking statements that are subject to risk factors associated with, among other things, the economic, markets, and business circumstances occurring from time to time in the UK, the sectors in which the Group operates and the risks relating to the Company. These factors include, but are not limited to, those discussed in Part IV of this Circular. These and other factors could adversely affect the Company and, or the Group's results, strategy and prospects. Forward-looking statements involve risks, uncertainties and assumptions. They relate to events and/or depend on circumstances in the future which could cause actual results and outcomes to differ materially from those currently anticipated. No obligation or duty is assumed (except as may required by the Listing Rules, MAR, the Disclosure and Transparency Rules, the rules of the London Stock Exchange and by law) to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Apart from the responsibilities and liabilities, if any, which may be imposed on Stifel by FSMA or the regulatory regime established under FSMA, Stifel accepts no responsibility whatsoever for the contents of this document or for any other statement made or purported to be made by it or on its behalf in connection with the Company or the Tender Offer. Stifel accordingly disclaims all and any liability whether arising in tort or contract or otherwise (save as referred to earlier in this paragraph) which it might otherwise have in respect of this document or any such statement. Stifel has given and not withdrawn its written consent to the issue of this document with the references to its name in the form and context in which they are included.

No person has been authorised to give any information or make any representations other than those contained in this Circular and, if given or made, such information or representations must not be relied on as having been so authorised. The delivery of this Circular shall not, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this Circular or that the information in it is correct as of any subsequent time.

The contents of the website of the Company, and any website directly or indirectly linked to that website, do not form part of this Circular and should not be relied upon.

Dated 19 April 2024.

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TABLE OF CONTENTS
	page
PART I EXPECTED TIMETABLE OF PRINCIPAL EVENTS	7
PART II LETTER FROM THE CHAIR	8
PART III QUESTIONS AND ANSWERS ON THE TENDER OFFER	16
PART IV RISK FACTORS	22
PART V TERMS AND CONDITIONS OF THE TENDER OFFER	24
PART VI UK TAXATION CONSIDERATIONS	39
PART VII DEFINITIONS	41
PART VIII NOTICE OF GENERAL MEETING	46

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IMPORTANT INFORMATION

Accompanying this document is a Form of Proxy and a Tender Form.

YOU SHOULD READ THE WHOLE OF THIS DOCUMENT, WHICH CONTAINS THE TERMS AND CONDITIONS OF THE TENDER OFFER, AND NOT JUST THIS SECTION, WHEN DECIDING WHAT ACTION TO TAKE.

To vote at the General Meeting:

YOU ARE ENCOURAGED TO VOTE AT THE GENERAL MEETING WHETHER OR NOT YOU WISH TO PARTICIPATE IN THE TENDER OFFER.

Shareholders are encouraged to return the Form of Proxy accompanying this document for use at the General Meeting. This will ensure that your votes are registered. To be valid, the Form of Proxy must be completed, signed and returned in accordance with the instructions printed thereon to be received by the Registrar, Computershare Investor Services PLC as soon as possible and, in any event, by no later than 11.30 a.m. on 9 May 2024. The Form of Proxy can also be completed online at ww.investorcentre.co.uk/eproxyor, in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out in the Notice of General Meeting and the CREST Manual on the Euroclear website (www.euroclear.com).

If you are an institutional investor you may also be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by not later than 11.30 a.m. on 9 May 2024 in order to be considered valid or, if the meeting is adjourned, by the time which is 48 hours (excluding non-Business Days) before the time of the adjourned meeting. Before you can appoint a proxy via this process you will need to have agreed to Proxymity's associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy. An electronic proxy appointment via the Proxymity platform may be revoked completely by sending an authenticated message via the platform instructing the removal of your proxy vote.

To tender your Ordinary Shares that are held in certificated form under the Tender Offer:

IF YOU DO NOT WISH TO TENDER ANY OF YOUR ORDINARY SHARES, DO NOT COMPLETE OR RETURN THE TENDER FORM OR SUBMIT A TTE INSTRUCTION IN CREST.

Complete and return the Tender Form to the Receiving Agent at Computershare Investor Services PLC, Corporate Actions Projects, Bristol, BS99 6AH as soon as possible and, in any event, by no later than 1.00 p.m. on 10 May 2024.

To tender your Ordinary Shares that are held in uncertificated form (that is, in CREST) under the Tender Offer:

You should send (or, if you are a CREST sponsored member, procure that your CREST sponsor sends) a TTE Instruction to Euroclear, which must be properly authenticated in accordance with Euroclear's specification and which must contain, in addition to other information that is required for the TTE Instruction to settle in CREST, the following details:

• the corporate action number of the Tender Offer. This is allocated by Euroclear and will be available on screen from Euroclear;
• the number of Ordinary Shares to be transferred to an escrow balance;
• your Member Account ID;
• your Participant ID;

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• the Participant ID of the escrow agent in its capacity as a CREST receiving agent. This is 8RA25;
• the Member Account ID of the escrow agent. This is AQLTEN01;
• the intended settlement date for the transfer to escrow. This should be as soon as possible and, in any event, by no later than 1.00 p.m. on 10 May 2024;
• the ISIN of the Ordinary Shares, which is GB00BN6JYS78;
• input with the standard delivery instruction, priority 80; and
• a contact name and telephone number in the shared note field.

Full details of the action to be taken are set out in paragraph 2 of Part II of this Circular and in the instructions on the respective forms. The attention of Overseas Shareholders is drawn to the section headed "Overseas Shareholders" in paragraph 6 of Part V of this Circular.

If you have any queries in relation to your shareholding(s), please contact Computershare Investor Services PLC by telephone on 0370 703 0388 or, if calling from outside the UK, on [phone]. Computershare Investor Services PLC can only provide information regarding the completion of forms and cannot provide you with advice on the Tender Offer or provide any personal, legal, financial or tax advice.

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PART I

EXPECTED TIMETABLE OF PRINCIPAL EVENTS1

Announcement of the Tender Offer, publication of this Circular and	19 April 2024
the Notice of General Meeting
Tender Offer opens	19 April 2024
Latest time and date for receipt of Forms of Proxy	11.30 a.m. on 9 May 2024
Latest time and date for receipt of Tender Forms and share	1.00 p.m. on 10 May 2024
certificates in relation to the Tender Offer (i.e. close of Tender Offer)
Latest time and date for receipt of TTE Instructions in relation to the	1.00 p.m. on 10 May 2024
Tender Offer (i.e. close of Tender Offer)
Tender Offer Record Date	6.00 p.m. on 10 May 2024
General Meeting	11.30 a.m. on 13 May 2024
Announcement of results of the General Meeting	13 May 2024
Announcement of results of the Tender Offer	13 May 2024
Purchase of Ordinary Shares under the Tender Offer	13 May 2024
CREST accounts credited for revised, uncertificated holdings of	by 15 May 2024
Ordinary Shares
CREST accounts credited in respect of Tender Offer proceeds for	by 15 May 2024
uncertificated Ordinary Shares
Cheques and BACs advice despatched in respect of Tender Offer	week commencing 13 May 2024
proceeds for certificated Ordinary Shares
Return of share certificates in respect of unsuccessful tenders of	by 20 May 2024
certificated Ordinary Shares
Despatch of balancing share certificates (in respect of certificated	week commencing 13 May 2024
Ordinary Shares) for revised, certificated holdings in the case of
partially successful tenders

• All times are references to London (UK) times. Other than the date of the announcement of the Tender Offer, each of the above times and dates are indicative only and based on the Company's expectations as at the date of this Circular. If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by an announcement

through a Regulatory Information Service.

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PART II

LETTER FROM THE CHAIR

(Incorporated in England and Wales with registered number 13324616)

Directors:	Registered Office
Miriam Greenwood OBE DL (Non-Executive Chair)	Aquila Energy Efficiency Trust PLC
Nicholas Bliss (Non-Executive Director)	6th Floor 125 London Wall
David Fletcher (Non-Executive Director)	London
Janine Freeman (Non-Executive Director)	England
	EC2Y 5AS

19 April 2024

Dear Shareholder

Proposed Tender Offer to purchase Ordinary Shares for up to £17.5 million

at a fixed price of 94.28 pence per Ordinary Share

1. Introduction

On 6 March 2024, the Company announced that it intended to return value to Shareholders by way of a Tender Offer pursuant to which Qualifying Shareholders are invited to tender some of their Ordinary Shares. It is proposed that up to 18,561,732 Ordinary Shares may be purchased under the Tender Offer for a maximum aggregate cash consideration of £17.5 million and Qualifying Shareholders who participate in the Tender Offer will have a Basic Entitlement to tender approximately 18.6 per cent.2 of the Ordinary Shares held by them at the Record Date, rounded down to the nearest whole number, at a price of 94.28 pence per Ordinary Share.

Qualifying Shareholders may tender Ordinary Shares in excess of their Basic Entitlement up to the total number of Ordinary Shares held by each Qualifying Shareholder on the Record Date ("Excess Entitlement") and, to the extent that other Qualifying Shareholders do not tender any of their Ordinary Shares, or tender less than their Basic Entitlement, those Qualifying Shareholders may be able to tender such Excess Entitlement through the Tender Offer. However, if the Tender Offer is oversubscribed, the tender of any such Excess Entitlement will only be successful to the extent that other Shareholders have tendered less than their Basic Entitlement or tendered no Ordinary Shares and may be subject to scaling- down.

To the extent that Qualifying Shareholders tender for less than the total overall amount that may be returned to Shareholders pursuant to the Tender Offer, or where the Board decides not to proceed with the Tender Offer in accordance with terms of this Circular, the Board will consider alternative options regarding how best to return value to Shareholders, including by way of a share buy-back programme or by way of a distribution of dividends, taking into consideration the then prevailing market and economic conditions and other relevant factors at the relevant time.

• This percentage (%) assumes a full take-up of the Maximum Tendered Shares (as defined in paragraph 2.2 of Part II of this Circular). Please see section 2.5 (entitled Basic Entitlement of this Part II) on how the Basic Entitlement is calculated if:
  (i) less than the Maximum Tendered Shares have been validly tendered by Qualifying Shareholders; or (ii) the Company, pursuant to paragraph 2.27 of Part V of the Circular, revises the aggregate value of the Tender Offer to less than the

maximum amount of £17.5 million.

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The purpose of this Circular is to provide you with information about the background to, and reasons for, the Tender Offer and why the Board considers that the Tender Offer is in the best interests of the Shareholders as a whole and why the Board unanimously recommends that you vote in favour of the Tender Offer Resolution to be proposed at the General Meeting, notice of which is set out in Part VIII of this Circular.

The Circular also contains details on the procedure that should be followed by those Qualifying Shareholders in order to participate in the Tender Offer. The Company is seeking Shareholders' approval of the Tender Offer Resolution at a General Meeting to be held at 11.30 a.m. on 13 May 2024.

2. Tender Offer

2.1 Background and reasons for the Tender Offer

Subject to the passing of the Tender Offer Resolution by Shareholders at the General Meeting as a special resolution, the Directors will give Qualifying Shareholders the opportunity to tender Ordinary Shares through the Tender Offer for cash. The Tender Offer Resolution will give the Directors authority to return up to 18,561,732 Ordinary Shares, at a price of 94.28 pence per Ordinary Share, for a maximum aggregate cash consideration of £17.5 million.

Following the IPO of the Company in 2021, the Company deployed the funds raised into various investments and entered into contractual commitments to make further investments. Since the date of the continuation vote in February 2023, which did not pass, no new investment commitments have been made and Aquila Capital Investmentgesellschaft mbH (the "Investment Adviser") has, where possible, renegotiated some of the existing commitments, so as to reduce the amount of further investment required by the Company. As a consequence, at 31 December 2023, the Company and its immediate investment holding entities had contractual legal obligations in relation to existing investments (the "Unfunded Commitments") equivalent to approximately £5.58 million (translating Euro obligations at €1.1535:£1 and including an allowance for external transaction costs). Between 31 December 2023 and 31 March 2024, £0.51 million of those Unfunded Commitments have been added to existing investments.

Following the Company's annual general meeting ("AGM") held in June 2023, the Company's portfolio is being managed in accordance with the "Managed Run-Off Resolution" as approved by shareholders at that AGM.

The Company's cash and cash equivalents as at 31 March 2024 were £28.72 million (with cash in Euro accounts converted at €1.1697:£1 and exclusive of the £2.5 million of cash held as collateral for the Company's existing currency hedges held in line with its strategy). Given the uncertain nature of the timing of returns of certain of the Company's investments, combined with upcoming cash requirements for Unfunded Commitments (referred to above), it is important to maintain a cash buffer to ensure the Company can continue to meet its liabilities and commitments.

The Board of Directors of the Company considers the Tender Offer to be beneficial to the Shareholders as a whole, including, among other reasons, in that:

• the Tender Offer is available to all Qualifying Shareholders regardless of the size of their holding;
• the Tender Price represents a premium of 65.4 per cent. to the Company's Ordinary Shares closing price of 57.00 pence on 18 April 2024 (being the Latest Practicable Date);

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• the Tender Offer provides Qualifying Shareholders who wish to reduce their holdings of Ordinary Shares with an opportunity to do so at a price which reflects the Company's last published net asset value per share;
• the Tender Offer enables Ordinary Shares to be sold free of commissions or charges that would otherwise be payable if Qualifying Shareholders were to sell their Ordinary Shares through their broker; and
• the Tender Offer permits Shareholders who wish to retain their current investment in the Company and their Ordinary Shares to do so, as no Shareholder is required to participate in the Tender Offer, and thus providing Shareholders with flexibility.

As announced on 6 March 2024, as and when sufficient cash has been accumulated, the Board's current intention is there will be further tender offers to shareholders.

1. Principal Terms of the Tender Offer
   Subject to the terms and conditions contained in Part V of this Circular, Stifel will implement the Tender Offer by acquiring, as principal, the successfully tendered Ordinary Shares at the Tender Price. Ordinary Shares purchased by Stifel pursuant to the Tender Offer will be purchased by Stifel in on-market purchases in accordance with the provisions of the Act and the rules of the London Stock Exchange and the FCA. Immediately following completion of the Tender Offer, Stifel shall sell such Ordinary Shares to the Company, at a price per Ordinary Share equal to the Tender Price, pursuant to the Repurchase Agreement. Purchases of Ordinary Shares by the Company pursuant to the Repurchase Agreement will also be on-market purchases in accordance with the provisions of the Act and the rules of the London Stock Exchange and the FCA. All of the Ordinary Shares purchased by the Company pursuant to the Repurchase Agreement in connection with the Tender Offer will be cancelled. Further details on the Repurchase Agreement are set out in Part V of this Circular.
   Qualifying Shareholders must consider carefully all of the information contained in this Circular as well as their personal circumstances when deciding whether to participate in the Tender Offer.
   The maximum number of Ordinary Shares that may be purchased under the Tender Offer, being up to 18,561,732 Ordinary Shares, will equate to approximately 18.6 per cent. of the Issued Ordinary Share Capital at the Tender Offer Record Date, for a maximum aggregate cash consideration of £17.5 million ("Maximum Tendered Ordinary Shares"). As at 18 April 2024, being the Latest Practicable Date, there are 100,000,000 Ordinary Shares in issue with no Ordinary Shares being held in treasury.
   If the Maximum Tendered Ordinary Shares are repurchased by the Company for cancellation pursuant to the Tender Offer, the total number of Ordinary Shares of the Company in issue following such cancellation will be 81,438,268 Ordinary Shares. Successfully tendered Ordinary Shares will be cancelled and will not rank for any future dividends.
2. How to Participate in the Tender Offer
   Qualifying Shareholders are not obliged to tender any Ordinary Shares if they do not wish to do so. If no action is taken by Qualifying Shareholders, there will be no change to the number of Ordinary Shares that they hold and they will receive no cash as a result of the Tender Offer.
   Each Qualifying Shareholder who wishes to participate in the Tender Offer is entitled to submit a tender to sell some or all of their Ordinary Shares.

The total number of Ordinary Shares tendered by any Qualifying Shareholder should not exceed the total number of Ordinary Shares registered in the name of that Qualifying Shareholder at the Record Date. For example, a Qualifying Shareholder may decide to tender fifty per cent. (50%) of their Ordinary

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