Orchard Community Energy

2017 Bond offer

£500 minimum

Risk factors

All investment and commercial activities carry risk, and investors should consider whether Orchard Community Energy is a suitable investment for them in light of their own personal circumstances.

 This offer is not covered by the Financial Services Compensation Scheme.

 


Risks associated with your investment

The Directors believe the following risks to be the most significant for potential Bondholders. However, they do not necessarily comprise all those associated with an investment in the Bonds and are not intended to be presented in any assumed order or priority.

  • Capital Risk: Investment in smaller, new and unquoted businesses is likely to involve a higher degree of risk than investment in larger, established companies and those traded on a stock exchange. Investing in bonds is not the same as investing money in a bank account as your capital is at risk and you could lose up to, but no more than, your entire investment.
  • Repayment: An investment in a bond of this type is speculative and involves a degree of risk. Orchard Community Energy’s ability to repay the Bond on 31 October 2019, or at all, is dependent on the continued success of its business model.
  • Security: The Bonds are an unsecured investment and will rank behind secured or preferential creditors. In the event of Orchard Community Energy’s financial failure, the Bonds would have the status of an unsecured creditor and may not be capable of being repaid in full or at all should the proceeds from a sale of Orchard Community Energy’s assets fail to cover all unsecured liabilities.
  • Liquidity: The Bonds will not be traded on a recognised exchange and are therefore non-readily realisable. Although Bondholders may be able to buy and sell Bonds on a matched bargain basis via www.ethex.org.uk, Applicants should be aware that there is no guarantee that a willing buyer will be found.
  • Long-term commitment: Applicants should consider investment in the Bonds as a long-term commitment until the Repayment Date as the original amount invested will not be available to them except through trading via Ethex. Note, all private sales of bonds will be subject to approval by Orchard Community Energy and must be traded via Ethex.
  • Bond redemption: Bondholders will have the contractual right to full redemption of their bonds at the end of the initial term and, if they wish to extend beyond the initial term, at annual intervals thereafter. Orchard Community Energy’s ability to repay the bonds at these points is dependent on it being able to secure finance from third parties and/or future bond investors. The Directors are committed to managing Orchard Community Energy’s business with a view to ensuring a range of options are available to enable it to repay the bonds and the interest due on them. However, there is no guarantee that there will be sufficient finance available to repay the bonds at this point.
  • Fundraise: If this fundraise does not meet its maximum target then the project will still go ahead as the project is fully underwritten by the developer OPDE. However, in this circumstance the community fund will be less in early years as the interest rate of the underwriting finance will be higher than the bonds. If the underwriting finance is called on then Orchard Community Energy will endeavour to raise further finance at a lower interest rate to replace the underwriting as soon as possible.
  • The Bonds are not covered by the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS): This means if Orchard Community Energy does not fulfil the terms of the Bond Instrument there is no right to complain to FOS or to get compensation from FSCS.
  • Past performance is not necessarily a guide to future performance: Events in the past, or experience derived from these, or indeed present facts, beliefs or circumstances, or assumptions derived from any of these, do not predetermine the future.
  • Financial projections: Hopes, aims, targets, projections (including the financial projections in this offer), plans or intentions contained in this document are no more than that and should not be construed as forecasts.

Risks associated with the project

  • Mechanical failure: Installations will be insured for damage, breakdown and loss of income in line with standard industry practice and as required by the Triodos Bank loan facility. However, there may be interruptions to the generation of electricity from the installations once built, caused by damage to or mechanic/electrical failure of equipment.
  • Solar PV performance: Orchard Community Energy assumptions around energy generation levels each year are based on site capacity and yield calculations provided by our construction partners based on methodologies commonly used by the industry. These calculations, and the solar radiation data behind them, have been reviewed and verified by external technical experts appointed by Triodos Bank as part of their due diligence process. However, long-term changes to weather patterns and/or equipment under performance may result in lower levels of electricity generation and therefore income.

Industry risks

  • Government legislation: Orchard Farm Solar Array has been preaccredited with Ofgem which means that the FiT tariff is fixed for 20 years. However, changes in government legislation may affect the profitability of Orchard Community Energy renewable energy projects.
  • Electricity prices: If the electricity prices for which Orchard Community Energy can sell electricity from the solar farm fall, we may opt to use export tariff as a floor price. The financial projections assume that electricity prices over the long-term will exceed the export tariff. However, those assumptions of future electricity prices may be inaccurate.
£828,00069%
Applied for to date, of
£1,200,000 target

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