What are the potential impacts on the fund’s distribution policy and cash flow stability?

Distribution policy – stability vs. flexibility

The five‑year extension pushes the maturity of both Class A and Preferred Shares out to 2031, turning the fund’s payout schedule into a longer‑dated, “run‑off” structure. Because the extension is not a taxable event, the Fund can keep the current 10.2 % distribution rate on Class A shares without forcing a cash‑drain to meet a near‑term redemption. However, the preferred‑share dividend for the new term will be set at least 60 days before the original 2026 maturity and will be tied to prevailing market yields for comparable preferred securities. In a rising‑rate environment this could mean a higher preferred‑share cost, eroding the net cash available for the 10.2 % Class A distribution; in a falling‑rate environment the opposite applies. Consequently, the Fund’s distribution policy remains nominally unchanged (the 10.2 % payout stays in place) but gains a built‑in flexibility that could cause the actual cash outflow to fluctuate with the broader preferred‑share market.

Cash‑flow stability – longer horizon, but yield‑linked exposure

By extending the term, the Fund now has a five‑year buffer to manage its asset base, service debt, and meet distribution commitments without needing to liquidate positions prematurely. This longer horizon generally improves cash‑flow stability, especially for a sustainable‑infrastructure portfolio where projects have multi‑year cash‑generation cycles. Yet the linkage of the preferred‑share dividend to market yields introduces a variable cost component. If preferred‑share yields rise sharply, the Fund will have to allocate more cash to the preferred dividend, potentially compressing the residual cash that can be used for the Class A distribution or for capital‑preservation activities. Conversely, a decline in yields would free cash and could even allow the Fund to lift the 10.2 % payout or reinvest in higher‑return projects.

Trading implications

For investors, the extension removes a near‑term redemption risk and supports the current price level, making the stock relatively defensive in a volatile market. However, the next preferred‑share dividend announcement is a key catalyst—watch the spread between the announced preferred rate and the prevailing market yield. A widening spread signals higher cash‑outflow pressure and may prompt a price correction; a narrowing spread suggests stronger cash‑flow footing and could sustain or even boost the 10.2 % distribution narrative. Position‑sizing should therefore reflect both the attractive current yield and the potential for cash‑flow volatility driven by the preferred‑share rate. A modest long‑position with a stop near the recent swing‑low (≈ $0.95) captures upside while limiting exposure if the preferred‑share cost escalates.