The risks described below are those risks that the Directors of the Company consider to be material to a decision as to whether to make an investment in the Bonds but are not the only risks relating to the Company or the Bonds.
If any of the following risks, as well as other risks and uncertainties that are not herein identified or that the Company does not consider to be material, were to occur, then these could have a material adverse effect on the Company’s ability to fulfil their obligations to pay interest, principal or other amounts in connection with the Bonds.
Potential Eligible Investors are strongly advised to consult their stockbroker, bank, solicitor, accountant or other financial adviser who is authorised under FSMA to advise on investments of this sort if they are in any doubt.
RISK TO CAPITAL
Invested capital is at risk and you may lose all of the amount you invested.
The Company, like all businesses, is vulnerable to financial difficulties and investing in unlisted corporate Bonds involves significant risk of default and loss of capital. Investment in Bonds of this nature is speculative and involves a higher degree of risk than other types of investment. Investments of this type are not suitable for all investors and are not aimed at retail investors.
NON-TRANSFERABLE AND ILLIQUID INVESTMENT
The Bonds are not transferable or negotiable on the capital markets and no application will be made for the Bonds to be admitted for listing or trading on any market. It will not be possible to sell or realise the Bonds until they are repaid by the Issuer, so please ensure you are fully aware of the risks involved. In the event of the death of a Bondholder or in other exceptional personal circumstances, individual Bondholders may be repaid early. However, any such early repayment is at the Company’s discretion and subject to there being sufficient cash available at that time.
FINANCIAL SERVICES COMPENSATION SCHEME AND REGULATION
The content of this document has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000. Please note that this is an unregulated product.
The compensation entitlements under the Financial Services Compensation Scheme (FSCS) do not apply to this investment. In the event of the Company being unable to pay either the capital or interest payments, the protections afforded by the Financial Services and Markets Act 2000 including recourse to the Financial Ombudsman Service and access to the FSCS will
not apply.
SECURITY NO GUARANTEE OF REPAYMENT
Even though the Bonds are secured by way of a charge over the shares in the company, meaning Bondholders rank ahead of unsecured creditors in a default situation, the Company assets have not been valued and the presence of this security does not guarantee that investors in the Bonds will be repaid at maturity or receive their interest payments in full. The Bonds rank below employees and administrators but ahead of unsecured creditors. The Company also has the right to enter other debt arrangements, issue further Bonds and to grant other security over its assets provided it ranks equal to or behind the security in favour of Bondholders. This means that the Company’s available assets may be spread around a larger group of secured creditors in a default or insolvency situation resulting in less being available to satisfy the claims of Bondholders.
CORPORATE GUARANTEE
Urban Village Holdings Limited, the holding company of UV Real Estate Holdings has provided a corporate guarantee for the purpose of providing credit support to the Company for the Company’s obligations under the Bond Instruments subject to a standstill provision of 90 days to allow for remedies to any demand against the user. This guarantee will not expire until the earlier of (a) the redemption in full of all Bonds outstanding under the Offer or (b) the provision of an independent valuation of the Company’s net assets from an RICS accredited valuer, which provides confirmation, acceptable to the Security Trustee, that the Company’s net assets are greater than its liabilities outstanding under the Bonds.
BOND RETURN RATE, MARKET INTEREST RATES INFLATION
The Bonds attract a rate of return which is in no way linked to market interest rates and as such will not benefit from any subsequent increases in market interest rates. Accordingly, you should note that a rise in market interest rates may adversely affect the relative returns that the Bonds offer. Further, inflation may reduce the real value of the returns over time (i.e. the profit earned on the investment adjusted for inflation).
NO RIGHT TO PARTICIPATE IN MANAGEMENT OF PROFITS BEYOND FIXED RETURN
Bonds are a very different kind of investment to equity shares and Investors do not own a stake or have any right to participate in management of the Company. As such Bondholders will not be in a position to object to particular strategies or decisions of the Company’s Directors.
SECURITY TRUSTEE
Whilst the security in favour of Bondholders is held on their behalf by a Security Trustee, the Security Trustee shall not be responsible, nor shall face any liability,
for any loss incurred by the Bondholders relating to a failure of the Company to make payments (whether of interest or of the principal amount) to the Bondholders when due. The Security Trustee will not have any ability or responsibility to protect any monies in the accounts of the Company which may have been set aside for payment of interest or the principal amount in respect of the Bonds. The Security Trustee cannot guarantee return of any monies in the event of default. The Security Trustee has no role in the day to day management of the Company and its personnel are not experts in the Company’s business. Accordingly, in the event that the security is enforced, there can be no guarantee that it will be possible to realise the assets for the same value as stated in the IM (or realise them at all in some cases).
CANCELLATION RISKS
Investors will have fourteen (14) working days from the date they sign the application form to cancel an application to subscribe for Bonds. Investors should review the term and conditions of application carefully and seek professional advice from financial intermediaries authorised under FSMA to advise on investments of this type.
RISKS RELATING TO THE COMPANY
Redemption Risk
Bondholders may redeem their Bond at the anniversary of their original investment as described in the Summary of the Offer above. However, the company reserves the right not to satisfy or to scale back any and all early redemption requests in the event that more than 10% of the Bonds then outstanding are subject to such requests within a six month period.
Performance Risk
The Company may not perform as well as expected and may even fail completely. Investors are reminded that any financial forecasts included in this document are hypothetical projections only. Projected results have many inherent limitations and there are frequently sharp differences between such projections and the actual results subsequently achieved. The Company cannot make any representation or warranty as to what the actual results will be and has provided its projections by way of illustration only.
Personnel
The Company’s performance is dependent on the continued services and performance of members of its board, management team, operational employees and professional advisers. If the Company does not succeed in retaining skilled personnel, fails to maintain the skills of its personnel or is unable to continue to attract and retain all personnel necessary for the development and operation of its business, it may not be able to grow its business as anticipated or meet its financial objectives including the servicing, and ultimately the redemption, of the Bonds.