THE PERFORMANCE OF AN INVESTMENT CAN FALL AS WELL AS RISE. PROSPECTIVE INVESTORS MAY RECEIVE BACK LESS THAN ORIGINALLY INVESTED.
Capital repayment will be made at the discretion of the Board of Directors from time to time based on the funds available to Energy Garden in any one year. Capital is intended to be repaid annually over approximately 20 years. As with interest payments, capital repayments will be made within 90 days of the end of each calendar year, subject to available funds, and Energy Garden intends to make the first capital repayment in 2020.
If the renewable energy assets perform above expectations, Energy Garden intends for any surplus to be retained for the development and support of Energy Garden’s activities. The allocation of such surplus would be determined at an AGM. Please note that excess returns cannot be distributed as profits, as Energy Garden is a Community Benefit Society. Any excess income in any given year will be used either to repay capital and reduce the outstanding capital amount of the Bonds, or will be reinvested into further development of the energy garden programme.
If assets perform below expectations, interest payments may be reduced. In this case, a full explanation will be given by the Board of Directors at the AGM and communicated to Bondholders. If projected interest is not fully paid in any year, the relevant “shortfall” will not roll over. For example, if an interest payment of 3% is available to Bondholders in a particular year then the “shortfall” of 1% interest will be cancelled. This mechanism is designed to support the solvency and sustainability of Energy Garden and to comply with the requirements of Community Benefit Society status.
When assessing whether or not Energy Garden can pay interest and repay capital in any given year, the Board of Directors will assess the “Available Funds” of Energy Garden. Available Funds means the funds available after having first satisfied:
(a) all other relevant operational expenditure and the costs of meeting any liabilities of Energy Garden, including any liabilities incurred as part of the energy garden program; and
(b) setting aside such operational or other reserves which the Board of Directors reasonably believe are necessary for the prudent management of Energy Garden’s business.