We review Blackmore’s bonds paying up to 8.5% per year

Blackmore offers unregulated fixed-interest bonds paying 6.5%pa over three years, 7.5%pa over four years and 8.5% over five years.

Blackmore also offers a “Blackmore Multi Strategy” investment trust registered in Frankfurt and a “Blackmore Global” fund described as “a medium to long-term investment vehicle with a diversified investment portfolio under one structure”. These investments are presumably regulated financial products and beyond the scope of this blog. The rest of this review deals with the fixed-interest bonds.

Who are Blackmore?

Blackmore’s website lacks details of the directors, but it does have blog posts which show that Philip Nunn is the Chief Executive.

Companies House suggests that Blackmore Group Ltd is jointly owned by Philip Nunn and the other director, Patrick McCreesh.

How secure is the investment?

These investments are unregulated corporate loans and if Blackmore defaults you risk losing 100% of your money.

On Blackmore’s web page “How Is Your Money Secured?” it states “Investors have a legal charge over the assets of Blackmore Bond Plc. In the event of business insolvency then the sale of these assets, contribute towards paying back our investors’ capital. Please note that where there is bank borrowing, the bondholders will rank second in order of priority over the charge.“

It is not clear how much Blackmore Bond plc owns in assets, as it was incorporated in July 2016 and has not yet filed accounts – its first accounts are due in March 2018. The latest accounts for its parent company, Blackmore Group Ltd (31 December 2016) show net assets of £2,281. (2,281 pounds, not thousands or millions.) The parent company accounts also state that the parent company owes Blackmore Bond plc £247,769 in respect of expenses incurred on its behalf – which shows that Blackmore Bond plc has at least £247,769 in current assets at the time the accounts were filed.

These accounts are “total exemption” accounts meaning that Blackmore Group Ltd did not have to disclose full details of its finances and was exempt from auditing due to its small size.

If the sale of assets is insufficient to pay back investors in full, the website states that a “Capital Protection Scheme… comes into play”, which is an insurance contract “underwritten by Northernlights Surety”. There is a Northern Light Surety in the USA but it is unclear whether this is the company referred to. There is little public information available on Northern Light Surety.

If for whatever reason Blackmore is unable to sell the assets your bond is secured on for enough money to cover its obligations, after repaying bank borrowers, and Northernlights Surety does not make good the losses, investors still risk losing up to 100% of their money.

With a complex structure like this, it is essential that investors undertake professional due diligence and satisfy themselves that:

• In the event of default, the assets owned by Blackmore Bond plc are liquid enough and valuable enough that they could be sold and raise enough money to meet investors’ claims, after paying bank borrowings
• The bondholders’ charge over these assets has been properly recorded
• The insurer “Northernlights Surety” has sufficient resources to pay out on any claim
• That the insurance contract in place with the insurer will cover investors in the event of a default

Should I invest with Blackmore?

As with any unregulated corporate bond, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

This particular bond is advertised as asset-backed. Before putting any reliance on the security backing the bond, investors should undertake professional due diligence to ensure that a) the security exists b) in the event of default, the security could be easily sold and would raise enough money to cover all investors’ money c) the charge over the security has been properly and legally recorded.

Before investing investors should ask themselves:

• How would I feel if the investment defaulted and I lost 100% of my money?
• Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
• Have I conducted due diligence to ensure the capital protection structure can be relied on?

If you are looking for “certainty”, “capital protection” or “security”, you should not invest in unregulated products with a risk of 100% capital loss.