What risks should I consider?
The following specific risk factors should be considered carefully in evaluating whether to make an investment in Shenton International Asset-Backed Mini Bonds.
If you are in any doubt, you are strongly recommended to consult a professional adviser who specialises in advising on investment in unlisted debt, shares and other securities.
The directors of Shenton International Bonds plc (the “Directors”) believe the following risks to be significant for potential investors. The risks listed, however, do not necessarily comprise all those associated with an investment in Shenton International Asset-Backed Mini Bonds and are not intended to be presented in any assumed order or priority. In particular, the Company’s performance may be affected by changes in legal, regulatory and tax requirements as well as changes in the economic or political environment.
Illiquid and non-transferable
Investment in unquoted securities such as these (i.e. investments neither listed nor traded on any stock market or exchange) are illiquid. In other words, you cannot trade them, so your money is effectively locked in until the maturity date.
Only in the event of financial hardship or death can you request an early redemption or the transfer of ownership of the Bond to someone else. This important exception is what should allow the Bond to be accepted by the trustees of a self-invested personal pension (SIPP) or small self-administered scheme (SSAS). This does not mean that all SIPP and SSAS providers will accept the Shenton International Asset-Backed Mini Bond, but, should you be interested in investing, it is worth enquiring of your provider.
No repayment guarantee
There is no guarantee that you will get all your money back, or all outstanding interest if the Company becomes insolvent. Shenton International Asset-Backed Mini Bonds are not protected against loss by the Financial Services Compensation Scheme.
The impact of actions, inactions or retrospective legislation in jurisdictions in which Shenton International Bonds plc operates may adversely affect its activities.
Changes in the general economic outlook in the economies in which the Shenton Group operates may impact the performance of Shenton International Bonds plc and its projects. Such changes may include (but are not limited to):
- Contractions in the economy or increases in inflation resulting from domestic or international conditions (including movements in domestic interest rates and reduced economic activity);
- Increases in Shenton International Bonds plc expenses;
- New or increased government taxes, duties or changes in taxation or real estate ownership laws or;
- Fluctuations in international real estate markets.
A prolonged and significant downturn in general economic conditions may have a material adverse impact on the trading of Shenton International Bonds plc and its financial performance.
Reliance on key personnel
The Company may be dependent on the skills of senior people with particular expertise or contacts. If their services are no longer available – whether it is through them changing job, or through illness or death – this could impact the business.
Third party risk
The operations of Shenton International Bonds plc involves exposure to a number of third parties. There is also reliance on the companies or individuals funded by Shenton International Bonds plc. Financial failure, default or contractual non-compliance on the part of such third parties may have a material impact on Shenton International Bonds plc and its general performance. It may not be possible for Shenton International Bonds plc to accurately predict or protect itself against all such risks.
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 repayment of the original investment amount) to the Bondholders when due. The Security Trustee will not have any ability or responsibility to protect any monies in the accounts of Shenton International Bonds plc that may have been set aside for payment of interest or the original investment amount in respect of the Shenton International Asset-Backed Mini Bond.
There is no guarantee outside contractual obligations that the developer uses the funding solely for the projects or that the development does not suffer from cost overruns. This may lead to a delay in the payment of interest and/or capital to Bondholders. Equally, the developer may suffer financial difficulties or, in extremis, financial collapse, in which case the Company and/or the Bondholders would have to rely on the enforcement of the charge and/or title deed (which may take time, leading to a delay in the payment of coupons and/or capital) or not recover the full value of the security, in which case Bondholders may not receive the full return of their capital and/or interest.
The factors detailed thus far are not exhaustive and they do not purport to be a complete explanation of all the risks and significant considerations involved in investing in Shenton International Asset- Backed Mini Bonds.
Accordingly, and as noted above, 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’s business and prospects.
Shenton International Asset-Backed Mini Bonds may not be a suitable investment for all who review this Invitation Document or the Bond Instrument. Investors are strongly advised to take their own tax and investment advice as to the consequences of owning Shenton International Asset-Backed Mini Bonds.
Other than the obligations and other covenants on the part of Shenton International Bonds plc to pay interest on the Shenton International Asset-Backed Mini Bonds and repay the principal sum of the Shenton International Asset-Backed Mini Bonds when due and to perform the other obligations contained in the Bond Instrument, no representation or warranty, express or implied herein, is given to Bondholders by Shenton International Bonds plc or the Directors and officers of Shenton International Bond plc. In particular, but without limitation, no representation or warranty is given by any such person as to: the tax consequences; the regulatory consequences; and the business and investmen risks associated with acquiring, owning or redeeming Shenton International Asset-Backed Mini Bonds.