Australian energy firm launches 7.5% retail bond
Australian renewable energy firm CBD Energy has launched a four-year retail bond paying a fixed rate of 7.5% interest.
The company is hoping to raise up to £7.5 million from investors from its 'EnergyBonds'.
Interest will be paid quarterly in cash and the minimum investment is £500. The bonds are eligible for self-invested personal pensions but may not be held in an Isa.
Bondholders will be able to redeem the EnergyBonds after four years by giving six months' notice in writing. Otherwise, the term is automatically extended for further periods of 12 months. The bonds are not listed and cannot be traded on the secondary market.
While CBD Energy is headquartered in Sydney and listed on the Australian Stock Exchange, the bonds are actually being issued by Energy Bonds plc, a wholly-owned UK subsidiary of CBD Energy. Capita Registrars is handling the bond issue.
The bonds are classified as unsecured debt. This means it ranks equal with all other unsecured debt of Energy Bonds, in the case of it going into liquidation. CBD Energy acts as the guarantor, but if CBD Energy also becomes insolvent there is a risk bondholders will not receive all their money back.
EnergyBonds are not covered by the Financial Services Compensation Scheme.
Gerry McGowan, executive chairman and managing director of CBD Energy, comments on the launch: "We seek to raise up to £7.5 million with this first tranche of EnergyBonds, primarily to fund the development of utility-scale solar farms and wind farms within the UK, and to finance other overseas renewable energy projects within the group. We are well placed to identify and develop new opportunities in solar and wind, and have already identified several sites available for development."
He adds: "EnergyBonds represent an excellent opportunity to make a socially responsible investment in new green energy projects, and to build a greener, cleaner future - for all of us."
Formed in 1989, CBD Energy runs solar farms and wind farms in Australia and other countries such as Thailand and Italy. It intends to merge with Westinghouse Solar, a US company, in the next few months.
The bond offer runs from 1 June to 2 July, but it may close early if the £7.5 million target is reached.
This feature was written for our sister website Money Observer
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.