An investment in Loan Notes involve a high degree of risk. Prospective investors in the Loan Notes should consider all of the information set out in this document and the risks associated with an investment in the Company, including, in particular, the risks described below, prior to making any investment decision. The information below does not claim to be an exhaustive list or summary of the risks which the Company may encounter and is not set out in any particular order of priority. Prior to making an investment decision, prospective Loan Note holders should consider carefully all of the information set out in this Information Memorandum, and should consider whether an investment in the Company through the Loan Note constitutes a suitable investment in light of their personal circumstances, tax position and the financial resources available to them. Potential investors should seek advice from a stockbroker, accountant, fund manager or other independent financial adviser authorised under the FSMA before making any decision to invest in the Loan Notes.
The Company’s business, financial condition or operations could be materially and adversely affected by the occurrence of any of the risks described below. In such case, the value of the Loan Notes could decline due to any of these risks and investors could lose all or part of their investment. Additional risks and uncertainties not presently known to the Directors, or that the Directors currently deem immaterial, may also have an adverse effect on the Company.
The Company is in its eighth year of trading and is a growing business and there can be no guarantee that the Company will achieve its stated trading objectives, therefore, the value of the Company’s assets may go down as well as up.
The Company may encounter unforeseen difficulties in delivering projects, which could result in and bear additional and unforeseen costs, which could exceed the budgets initially set aside for these costs.
Developing properties inevitably bears execution risk, due to the large number of factors beyond the control of the developer and/or contractor. Supply chain failure, inclement weather, poor ground conditions, subcontractor issues and archaeological discoveries are all examples of potential risks that could slow down, add additional cost, or even, cause a project to fail.
As with all investments, the property market goes down as well as up and in the event of a drop in the market, the value of the Company’s properties could go down and the Company could lose money. While the Company has sold all historic properties at profit, there is no guarantee of this in the future and the Company may not recover all of it’s investment in a property or properties.
The Directors will appoint legal advisors, surveyors, architects, engineers and specialist consultants to minimise as much hidden risk as possible, however, it is impossible to cover all potential eventualities. Hidden defects may arise which could adversely affect the ultimate ale price of a project or projects.
As with all investments, the property market goes down as well as up and in the event of a drop in the market, it could be difficult to sell the properties. While the Company has sold all historic properties off-plan, there is no guarantee of this in the future and the Company may not recover all of it’s investment in a property or properties.
The Company employs a number of key personnel and executives, who the company is largely dependent on for its future success. Although the three Directors have substantial equitable interests in the company and their retirement is highly unlikely, the Directors cannot guarantee that the management team will remain engaged in perpetuity. While any of the management team or Directors could be replaced, in the short term, the loss of any of these key members, or Directors, could have an adverse effect on the business.
The Company engages with third-party suppliers and subcontractors (Supply Chain) in order to deliver its projects. While the Team conducts thorough due diligence on its Supply Chain, often working with suppliers and subcontractors it has worked with on previous projects, the Company has no control over the day to day management of its Supply Chain companies. If a Supply Chain company were to fail, this could result in unforeseen costs and delays being incurred by the Company. The Company would look to immediately replace a Supply Chain partner if that partner failed, however, costs and delays could be incurred during this time frame.
The Loan Notes will be secured by a debenture over all of the assets of the Company and its subsidiary entities, which is to be overseen by the Security Trustee. The Loan Note includes the ability for the Company to raise further funds (in the situation that the Directors feel it sensible, prudent and appropriate to do so) from banks or third party lenders. In such a situation, Loan Note holders’ security will then rank behind that of the lender (i.e. the lending bank must be repaid before Loan Note holders), including in the event that the Company were to fail. If the Company were to fail, the value of the Company’s assets may not be enough to provide Loan Note holders with a full return of their capital or any overdue interest on their investment.
Changes in Government policy (and in particular changes (namely increases) in taxation) could affect the return on any investment in the Company and/or the Company’s business. Inflation figures used internally by the Directors in projecting financial returns may be higher or lower than originally forecast. The core financial forecast has been prepared based on income and expenditure in real terms. It has been assumed that fees charged will be adequate of offset inflation in operating costs.
The value of the Company’s net asset value is highly dependent on the combined value of the SPV’s. Each SPV has a specific risk and each SPV may or may not have other creditors ranking higher than the noteholders’ security. As some SPV’s are leveraged, the return on investment and any projected profits are very dependent on the success of each development project.
The Loan Notes cannot be transferred to any third party and are not listed on any stock exchange. The return on the Loan Notes is not guaranteed and prospective investors should be aware they may therefore not recover either their original investment in the Loan Notes or the levels of return stated on the face of the notes. All investments carry an element of risk. However, investments in private limited companies can carry a significantly greater risk than, for example, investments in shares issued by FTSE 100 companies.
This Funding Pack includes statements that are (or may be deemed to be) “forward- looking statements”. These forward-looking statements can be identified by the use of forward-looking terminology including the words “believes”, “continues”,“expects”,“intends”,“may”,“would”or“should”, or in each case their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. Forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements contained in this Information Memorandum based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future.
Loan Note subscribers will not be able to claim under the Financial Services Compensation Scheme established by the Financial Conduct Authority in the event that the Company fails.
The Company’s capital requirements depend on numerous factors and it is difficult for the Directors to accurately predict the timing and amount of future costs and therefore of any future need to raise further capital. If the plans or assumptions set out in the Company’s current business plan change or prove to be inaccurate, the Company may require further financing. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations or sell the Properties (or any of them), and such sale may not be at the prices expected by the Directors.