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Tamar Energy Community

Tamar Energy Community 2020 Share Offer - OFFER PAUSED

£250 minimum

Risk factors

All investment and commercial activities carry risk. Anyone buying shares in Tamar Energy Community (TEC) is at risk of losing some or all of the money invested and there is no guarantee that you will receive any return on your investment.  The shares are not covered by the Financial Services Compensation scheme or the Financial Ombudsman service.

Accordingly, the money you pay for shares is not safeguarded by any deposit protection scheme or dispute resolution scheme. Members should take appropriate advice and make their own risk assessment whilst also bearing in mind the social, educational and environmental benefits of investing in TEC. This is an unregulated share offer. Your attention is drawn to the specific risks identified which you should take into account before investing.

Taking up shares in a trading business is not a loan or deposit. Your capital is at risk. Holding shares is a long-term proposition for up to the life of the project with capital repaid during that period; and although arrangements have been made to enable early repayment your shares may not be readily realisable.


General Risks – Shares

Investing in shares is not the same as investing money in a bank account as your capital is at risk and you could lose up to, but not more than, your entire investment. An investment in the shares is not covered by the Financial Services Compensation scheme or the Financial Ombudsman Service. So the money you pay for shares is not safeguarded by any deposit protection scheme or dispute resolution scheme. There is no guarantee that you will receive any return on your investment.

Your shares will not be tradable. Your shares can be withdrawn (i.e. redeemed by TEC for the price paid for them – in this case £1 each) in accordance with TEC's Rules but may not be withdrawable at short notice or when you wish to do so. If the Society lacks sufficient cash to enable shares to be withdrawn when desired, withdrawal may be delayed or not possible. Investment in the shares should be seen as a long-term proposition.

Shares in TEC are not regulated investments for the purposes of the Financial Services and Markets Act 2000 (as amended) and therefore you do not have the protection provided by that Act. This share offer is exempt from regulation under that Act and regulations made under it. This share offer does not need approval and has not been approved by an approved person under that Act. This share offer is not regulated by the Prospectus Regulations 2005 (as amended), which do not apply because there is a specific exemption for the type of fundraising being offered in this offer Document (non-transferable shares).


Key risk factors and how they are managed

 

Supporting the community purpose of TEC should be the primary motivation for investment, and investment in TEC should be seen as a long-term social and environmental investment.

Investment in TEC carries a range of risks, and prospective Members should consider whether investing in this Share Offer is suitable in light of their own personal circumstances. An investment in TEC is an investment in a trading business and is not a deposit. Capital invested is at risk and you should not invest more than you can afford to lose. Therefore, it may not be appropriate to invest savings in TEC.

If you are in any doubt about the contents of this Document or the action you should take, you are strongly recommended to consult a professional adviser authorised by the Financial Conduct Authority to advise on investment in unlisted debt, shares and other securities.
The specific risks highlighted below should be considered carefully before investing. If any of these risks occur, TEC may not be able to conduct its business as planned at the time the Share Offer was launched and its financial condition, operating results and cash flows could be seriously harmed. This could impede its ability to generate community income and pay interest and return capital to Members.

In addition to the risks considered below, there may be additional risks and uncertainties that could adversely affect TEC’s business. The risks below are not intended to be presented in any assumed order or priority.

Risks relating to the legal structure of TEC

● Successful Applicants will become Members of TEC and thereby own TEC. If TEC is unable to meet its debts and other liabilities, you could lose up to the whole amount held in Shares (but no more than that amount).
● Investments in Community Benefit Societies are not like deposits at a bank. Neither the Financial Services Compensation Scheme which applies to bank accounts, nor the Financial Ombudsman Service apply, nor is TEC subject to prudential supervision by the FCA or the Prudential Regulation Authority.
● The value of your Shares will not increase and may decrease if TEC does not achieve the financial performance forecasted at the time of the Offer. This means you may not get back the amount you invested.
● Investment in a small and unquoted business like TEC is likely to involve a higher degree of risk than investment in larger, established companies and those traded on a stock exchange.
● The target Share Interest rate may not be achieved if TEC does not achieve the financial performance forecasted at the time of the Offer. However, the intention is to pay the target Share Interest rate, subject to available funds and the conditions set out in the Rules.
● The Shares are an unsecured investment and will rank behind the LCS Loan. In the event of TEC’s financial failure, the Shares 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 TEC’s assets fail to cover all unsecured liabilities.
● Shares are not transferable and will not be traded on a recognised stock exchange or otherwise.
● Shares can only be withdrawn in accordance with the Rules and the ability to withdraw Shares can be suspended at the sole discretion of the Board (even if an application for withdrawal has already been submitted to TEC). Applications for withdrawal should be sent to Ethex as TEC’s share registrar and will normally be considered by the Board once per year following the AGM.
● TEC’s intention is to repay the Shares over time out of funds built up out of revenue. If TEC lacks sufficient cash to enable Shares to be withdrawn when desired withdrawal may be delayed, or not possible. Investment in the Shares should be seen as a long-term proposition which may span the life of the project (over 16 years).

 

General investment risks

● Changes in laws, regulations, government policy or applicable UK tax arrangements (including any changes to bases of taxation, capital allowances and rates of tax) may affect TEC and its ability to generate the target community income and member returns.
● TEC’s business may be affected adversely by changes in economic, political, administrative or other regulatory forces.
● Information provided in the Document is understood to be correct as at the date of writing and may change without notice. We are under no obligation to ensure that such updates are brought to the attention of any recipient of this Document.

Energy and renewable energy industry risks

● The host buildings may require the equipment to be removed permanently or for prolonged periods and may not honour the compensation clauses set out in the roof leases to cover lost income.
● The host buildings may reduce their energy demands or cease to operate and therefore purchase less electricity than anticipated. They may not honour their payment obligations under the Power Purchase Agreements.
● Government policy towards renewable energy may change which could result in a reduction in the future support for renewable energy through the Feed-in Tariff. However, the Feed-in Tariff on electricity generation is currently fixed for 20 years (inflated with RPI) from the point of accreditation, and TEC is not aware of any proposed change to this policy.
● Long-term changes to weather patterns and/or equipment underperformance may result in lower than predicted levels of electricity generation and therefore income.
● Abnormal short-term weather conditions could affect expected levels of electricity generation and therefore income, although overall patterns outside anticipated parameters are considered unlikely.
● Installations are insured for damage, breakdown and loss of income in line with standard industry practice. However, there may be interruptions to the generation of electricity, caused by damage to or mechanical or electrical failure of equipment.
● The companies who provide warranties and guarantees in respect of the plant and equipment may default or may not have sufficient resources to support their obligations. In this case, TEC would need to incur higher costs in rectifying any issues that would otherwise have been rectified under those warranties and guarantees.
● New technology and developments in the generation of power may render existing technologies obsolete, including the technologies employed for TEC’s Solar Roofs.


Financial risks

● Financial projections – The Directors have commissioned financial advisors Westerly Chartered Accountants to assist them in producing financial projections and provided them with the relevant assumptions upon which the projections are based. The financial projections show that the business (including the target Member payments and community income) is viable on the basis of reasonable assumptions made by the Directors at the time of the Offer. Actual results, performance or achievements may differ from those expected due to known or unknown risks, uncertainties and other important factors. No representation or warranty is made that any indicative or illustrative performance or return indicated in the Document will be achieved in the future.
● Past performance is not necessarily a guide to future performance.
● Inflation – FiT payments are set by the UK Government and increase each year in line with the Retail Prices Index (RPI) inflation. The on-site Power Purchase Agreements are also RPI-linked. If long-term inflation is higher or lower than the RPI assumption used in the base case projections, then the income received will be affected, as will costs.

 

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