Sunday, 21 June 2015

Secured Energy Bond holders were told "it's time to celebrate" but no one is celebrating now with £7.5 million of investors money going missing

It seemed like an early Christmas present when the email came through from Secured Energy Bonds declaring “It’s time to celebrate.”

The email continued: “We're very pleased to announce that Energy Bonds succeeded in raising it's £7.5 million target and is working on many projects, one of which has already been completed, Sluice Farm.”

The initial response to the offer had been so good that Secured Energy Bonds plc were promising “new investment opportunities with energy bonds in the new year.”

That was back in December 2013, today, the 973 people who invested £7.5 million are asking what has happened to their money. Administrators Grant Thornton are doing their best to find out but things are not looking good. 

The energy bonds were advertised in the financial press, offering 6.5% on cash invested over three years.
The investment looked good and secure. The company Secured Energy Bonds plc was a separate UK incorporated body, which would use the £7.5 million raised to buy solar panels to put on 22 schools. The investors would receive their 6.5% return in the main from the feed in tariff payments on energy generated.
All good so far, the investor’s money was safe because even if some problem arose with the company, the assets (ie the panels on the schools) would still be there raising revenue.
All went well for the first months of the bond, interest was paid on the quarter, there was even an early bird payment. There were, though,  some concerns among investors that the company were not paying on the payment date but utilising the clause that allowed them to pay within 15 business days of that date.

The alarm bells though really started ringing last January, when the fourth interest payment was not made. There was no response to emails sent to the St Albans based company, the phone line was dead. A call to Capita, which dealt with the interest payments, confirmed that interest payments had been suspended.

A bit more digging round the internet revealed that the Australian parent company, CBD Energy, had gone into administration in November. But no worries surely the UK incorporated Secured Energy Bonds was separate – the assets must remain untouched – all £7.5 million of them.

I contacted the Financial Conduct Authority which effectively said nothing to do with us mate, try the trustee Independent Portfolio Managers (IPM).

IPM were the “security trustee” charged with overseeing investors interests. Initially, phone and email messages went unanswered before finally IPM confirmed that SEB had been put into administration. Grant Thornton were appointed administrators.

If things were not bad enough, with the funds having effectively been siphoned off to Australia to the parent company CBC Energy, instead of being used on solar panels in the UK, there was more baffling news to come.

In January, CBD Energy came out of administration in Australia, having exercised a Deed of Company Arrangement – this effectively put all the debts into a creditors trust, with some small payments in the form of dividends possibly coming off of it. The company meanwhile continues to trade.

There are  many questions that the investors want answered, such as just how can CBD Energy have conducted what appears to be a financial conjuring trick that has enabled them to go on as though nothing has happened?

Then there is the question as to what panels were actually fitted to schools and where?

Grant Thornton continue their investigations, with a creditors committee elected by investors to liaise. MPs have become involved. Representations are being made to the FCA and the Financial Ombudsman. The 973 investors, though still remain in the dark, all wanting to know when they are going to get their money back

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