Prospective investors in the Bond should consider carefully all of the information set out in
this document and the risks attaching to an investment in the Company, including, in particular,
the risks described below, prior to making any investment decision. The information below does
not purport 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 Bondholders should consider carefully all of the information set out in the
Information Memorandum, and should consider whether an investment in the Company through the
Bonds 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
FSMA before making any decision to invest in the Bonds. An investment in the Blackmore Bond
involves a high degree of risk.
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 Bonds 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 a newly incorporated special purpose vehicle established for the purposes of issuing the Bonds. There can be no guarantee that the Company will achieve its stated trading objectives. The value of the Company’s assets may go down as well as up.
There can be no guarantee of investor appetite for the Bonds to the extent predicted by the Company or, indeed, at all. In such circumstances investors may lose some or all of their investment.
The Company may find that the costs or other risks associated with buying the Properties are in excess of the sums set aside for doing so.
Development of any Property carries execution risk. Unanticipated situations may arise on site or may affect builders or contractors (which may include particular unforeseen circumstances such as the presence of protected wildlife, indecent weather, insolvency affecting contractors, unforeseen ground conditions etc.) each of which may cause increased cost or delay or cause the Project to fail.
The market value of the Properties can go down as well as up, and the Company may not get back the sums it invests in the Properties. The Company will not always have prior arrangements in place with any potential acquirer of the Properties, and accordingly there is no guaranteed exit route for the Company to recover its investment in the Properties.
Whilst the directors will take steps to survey the Properties, there may be hidden defects which are not apparent or identified to the Board and which may later affect the Properties’ rental income and ultimate sale price.
The Company may, depending upon market conditions, find it difficult or impossible to sell the Properties in the timescales or at the prices currently envisaged.
The Company’s future success is substantially dependent on the continued services and performance of its directors and senior management. The Directors cannot give assurances that members of the senior management team and the Directors will continue to remain with the Company. The loss of the services of the Directors, members of senior management and other key employees or consultants could damage the Company’s business. Further details on the Directors and senior management and consultants may be found in Part I of the Information Memorandum.
The Company’s future success is dependent on it having and maintaining the services of its strategic development partners (including Chrome). The Directors cannot give assurances that those relationships will continue throughout the life of the Company, either through the development of such partner businesses away from the core business assistances contemplated in this business, failure to continue to agree the commercial terms for specific projects or the failure of such partner businesses completely. Such failure could seriously damage the Company’s business, particularly in the event that it occurred during a specific project development. In the event that it became apparent that any of those was likely, the Directors would use seek to obtain similarly experienced contractors to take over the role of any particular strategic partner and seek to minimise project disruption and cost escalation as a result.
The Company’s capital requirements depend on numerous factors as outlined in Part I of the Information Memorandum. 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 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.
The Bonds will be secured by a debenture over the assets of Blackmore
to be overseen by Security Trustee. The security documentation (called the mortgage debenture)
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 other suitable lending
institutions. In such a situation, Bondholders’ security will then rank behind that of the bank
(i.e. the lending bank must be repaid before Bondholders), including, in the event that the
Company were to fail. If the Company where to fail the value of the Company’s assets may not be
enough to provide Bondholders with a full return of their capital.
To seek to protect Bondholders in such circumstances, the Directors have put in place protection for Bondholders such that in the case of any shortfall or default in repaying Bondholders at the time redemption is due, a Capital Protection Scheme is in place to seek to ensure that all investors are repaid any shortfall in the amount they recover from the Company (in the event of its insolvent administration) up to a maximum sum of the full amount invested.
The Capital Protection Scheme is underwritten by NLS. In the event that NLS became insolvent, the Capital Protection Scheme would be of no effect and would not protect either the Company or Subscribers as described in the Information Memorandum. In the event that NLS becomes insolvent the Directors would seek to replace the Capital Protection Scheme provided by NLS with an alternative policy, assuming that the cost of doing so was not prohibitive and assuming that a similar product was available in the market at the relevant time. The Directors cannot provide any guarantee that either a similar product would be available at the time or that the terms would be commercially viable for the Company at that time. Accordingly, in the event that the Company went into administration with debts in excess of its assets and NLS had become insolvent and no alternative scheme was in place, Bondholders would not benefit from the protection offered by the Capital Protection Scheme.
Changes in Government policy (and in particular changes (namely
increases) in taxation and stamp duty) could affect the return on any investment made by the
Inflation figures used internally by the Directors in projecting financial returns may be higher or lower than originally forecast. The Directors have assumed a UK inflation rate of 2.0% when modelling expected returns. A significant variation to this figure could affect materially the ability of the Company to realise expected returns.
There may be changes in future government policy in relation to tenanted properties which may have an adverse effect on the Company’s business. The tenanted property sector is a highly regulated environment and there
The Bonds cannot be transferred to any third party and are not listed
on any stock exchange. The return on the Bonds is not guaranteed and prospective investors
should be aware they may therefore not recover either their original investment in the Bonds or
the levels of return stated on the face of the Bonds.
All investments carry an element of risk. However, investments in private limited companies can carry a significantly greater risk than, for example investments in debt issued by FTSE 100 companies.
The Information Memorandum 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 the 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.
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.