The table below is the projected income statement from a 'community' hydro-electric project doing the rounds in Aberdeen. Do have a glance at the whole prospectus here.
Now I'm presuming the "£400,00" in column one is a misprint for "£400,000" and "£500,00" for "£500,000". And I reckon the bank closing balance at the bottom of column one is supposed to say "£400,000" and not "£500,000" otherwise £100k just disappears. So the typos, as careless as they are, aren't the issue.
I'm trying to work out what the 'scam' is, because it's bound to be a scam. As far as I can see, this hydro thing is basically being 'flipped' onto members of public in the form of untradeable illiquid securities that promise to start paying out profitably in a decades time, once another tier of debt investors have been paid back, and once the FIT and leecy prices have grown at a compounded 2%/2.5%.
Anyone else?
5 comments:
"They are in a hurry to get it commissioned before mid September when the FIT reduces by about two thirds or so."
What, even for hydro?
According to the prospectus, if they don't commission in time the FIT reduced and the projected payout reduced from 7% to 2% for members (but presumably doesn't reduce at all for the other tranches of investors).
I wonder if this is true or whether it's a simple "buy now, offer expires shortly" come-on. OTOH, isn't it a criminal offence to tell lies in a prospectus?
Even if the FCA didn;t see it as a 'criminal' issue, I'm sure they could take 'disciplinary' action if there were lies in the prospectus.
But I don't think it would be a sensible lie to tell, as it adds to the risk.
SL, I am sure that your initial assumptions are correct. This is so highly leveraged and subject to so much wild guesswork that the 7% IRR is meaningless, it might turn out much better than that, it might come out negative. More likely the latter.
And yes, the table makes clear that the £400k coming in is to repay "bridging loan capital".
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