Shenton International Bonds plc launched in March 2016 and issued two-year and four-year bonds paying 9% per year and 10% per year respectively. Shenton provides bridging finance to property developers, principally in Brazil.
Last month it belatedly filed its December 2017 accounts, three months overdue, a delay which led to Companies House briefly applying to strike the company off the register (strike-off filed 28 August and suspended on 1 September).
£2.38 million was raised from the 2016 2-year bonds, with a further £1.264 million raised from the 2016 4-year bonds.
In April 2018 (just as the 2016 2-year bonds were coming up for repayment), Shenton launched a further unregulated bond issue, this time paying a higher rate of 10% over two years (12% to Shenton’s previous investors).
Investors holding just over 70% of the capital which was due for repayment in March 2018 rolled their investments into the new 2-year minibonds.
On 5 April 2018 the Company launched a third two year Mini Bond to coincide with the repayment date of 29 April 2018 for the 2-year Mini Bond launched on 27 January 2016. Investment amounting to £675,000 was repaid and £1,704,500 was invested in the New Mini Bond.
This means that Shenton successfully repaid the capital falling due in early 2018, and the next big test of its business will be when both the 2016 4-year bonds and the 2018 2-year bonds fall due in 2020.
As at the balance sheet date of 31 December 2017, the company had £177,000 in net assets, comprising £3.9 million of assets (predominantly £3.4 million loans to developers, plus some cash and trade debtors) minus £3.75m of liabilities (predominantly £3.6 million in investor loans).
The loans to developers are valued on the effective interest rate basis, with no impairment provision against bad debts. This is on the basis that Shenton’s loans to developers are asset-backed (i.e. in theory, if the borrower defaulted, Shenton would be able to recover its money from the security).
Shenton will include an impairment provision if either a loan is underperforming (i.e. interest is not being paid), or the value of Shenton’s loan exceeds the value of the property it is secured on (note 14b). As the December 2017 accounts do not include any impairment provision (note 9), presumably this did not apply to any of Shenton’s loans.
The next accounts are due to be filed in June 2019.