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…and this from the JC itself:
Interest rate seems good, more than double what you can get in the building society but how safe is your money?
The summary risk warning reads:
Your attention is particularly drawn to the Risk Factors which are set out on pages 42 to 43 of the Invitation. Prospective investors should consider carefully whether an investment in The Jockey Club Racecourse Bonds is suitable for them in light of their personal circumstances. The Jockey Club Racecourse Bonds are an unsecured debt of the Company and they may not be a suitable investment for all recipients of the Invitation. The Jockey Club Racecourse Bonds are not transferable or negotiable on the capital markets and no application is to be made for The Jockey Club Racecourse Bonds to be admitted to listing or trading on any market.
Investment in an unquoted security of this nature, being an illiquid investment, is speculative, involving a degree of risk. It will not be possible to sell or realise The Jockey Club Racecourse Bonds or to obtain reliable information about the risks to which they are exposed. There is no certainty or guarantee that the Company (Jockey Club Racecourses Limited, or Jockey Club Racecourses (Holdings) Limited as guarantors), will be able to repay them.
The Invitation, which is a financial promotion for the purposes of Section 21 of the Financial Services and Markets Act 2000, is issued by the Company which accepts responsibility for the information contained herein. The Invitation Document has been approved as a financial promotion for UK publication by BDO LLP, 55 Baker Street, London W1U 7EU which is authorised by the Financial Conduct Authority to conduct investment business. BDO LLP is acting exclusively for the Company in connection with the issue of The Jockey Club Racecourse Bonds and no one else, and will not regard any other person as its customer or be responsible to any other person for providing the protections afforded to customers of BDO LLP or for advising any such person in relation to the issue of The Jockey Club Racecourse Bonds. Applications should only be made on the basis of the Invitation and the Instrument.
The Invitation does not constitute an offer of transferable securities to the public and, accordingly, the Invitation does not constitute a prospectus to which the Prospectus Rules of the Financial Conduct Authority apply nor does it constitute a prospectus to which the Prospectus (Directive 2003/71/EC) Regulations 2005 apply. Therefore, the Invitation and the Instrument have not been approved by the Financial Conduct Authority or any other regulatory body.
The Jockey Club Racecourse Bonds are not protected from loss by the Financial Services Compensation Scheme.
The Invitation does not constitute an offer to sell, or the solicitation of an offer to buy, The Jockey Club Racecourse Bonds in any jurisdiction in which such offer or solicitation is unlawful and, in particular, is not for distribution into the United States or Canada. The Jockey Club Racecourse Bonds have not been and will not be registered under the applicable securities laws of the United States or Canada and may not be offered or sold within the United States or Canada or to any national, resident or citizen of the United States or Canada. The distribution of the Invitation in other jurisdictions may be restricted by law and therefore persons into whose possession the Invitation comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdictions.
https://www.racecoursebond.com/Applicat … aimer.aspx
click both boxes and you get into the detailed Invitation Document.
It is indeed a good interest rate for a 5-year commitment, even at the 4.75% cash rate. The extra 3% in points makes it even better if you will spend them effectively, i.e. replacement for using your money.
However, I believe there is no guarantee on the capital, unlike a bank deposit. That’s why the rate is good, it’s a loan not an investment.
Hi guys,
Scott from The Jockey Club here. Just to help clarify on the Racecourse Bond, investments are guaranteed by Jockey Club Racecourses Ltd. The only way you wouldn’t get your money back is if JCR went bust. 2012 saw its third year of record financial results, while continuing to invest record amounts into prize money. You’ll know its assets include Cheltenham, Aintree, Epsom Downs and Newmarket racecourses among others. Hope that helps!
Best wishes,
S
Hi guys,
Scott from The Jockey Club here. Just to help clarify on the Racecourse Bond, investments are guaranteed by Jockey Club Racecourses Ltd. The only way you wouldn’t get your money back is if JCR went bust. 2012 saw its third year of record financial results, while continuing to invest record amounts into prize money. You’ll know its assets include Cheltenham, Aintree, Epsom Downs and Newmarket racecourses among others. Hope that helps!
Best wishes,
S
That’s not what this says:
"Investment in an unquoted security of this nature, being an illiquid investment, is speculative, involving a degree of risk. It will not be possible to sell or realise The Jockey Club Racecourse Bonds or to obtain reliable information about the risks to which they are exposed.
There is no certainty or guarantee that the Company (Jockey Club Racecourses Limited, or Jockey Club Racecourses (Holdings) Limited as guarantors), will be able to repay them.
"
I know it’s legalese, but companies, even big ones, go bust every day. The JC is not immune, so saying any investment is "guaranteed" to be paid back in a few years time is misleading. You hope you can, just like any other speculative venture, but there are no guarantees.
Why the stipulation about US and Canada? Just curious why those two countries in particular are singled out over the rest of the world.
Why the stipulation about US and Canada? Just curious why those two countries in particular are singled out over the rest of the world.
The US exclusion has long been standard wording in debt and equity offerings issued in the UK.
Its basically because of the US penchant for applying its laws extraterritorially – ie if the JC allowed a US person to invest, it could easily expose itself to various demands later on by either/ both that person and various US regulators / tax authorities under US securities/tax laws, the cumulative effect of which make it not worth the candle of having US investors in the first place.
JC executives could find themselves banged-up in US prisons on securities law violations they had never heard of, whether when setting foot in the US, or now even being extradited under New Labour’s one-way-extradition rules.
The concern has long been there under the main securities laws of the US – the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Investment Advisers Act of 1940, all as constantly amended.
Its gotten even worse this year with the Foreign Account Tax Compliance Act taking effect.
Lots of companies and banks outside the US now blanket exclude any dealings with any US person, rather than have to set up systems to apply US laws in their own jurisdictions.
Canada subsequently went in for a ‘me too’ approach with its large neighbour and trading partner.
Hi guys,
Scott from The Jockey Club here. Just to help clarify on the Racecourse Bond, investments are guaranteed by Jockey Club Racecourses Ltd. The only way you wouldn’t get your money back is if JCR went bust. 2012 saw its third year of record financial results, while continuing to invest record amounts into prize money. You’ll know its assets include Cheltenham, Aintree, Epsom Downs and Newmarket racecourses among others. Hope that helps!
Best wishes,
S
Bit naughty there Scott imo. If this were a regulated investment you wouldn’t be allowed to make any claims outside the formal offer document; the fact that you are able just serves to emphasise this is not an investment it is an unsecured loan. A lot can happen in 5 years and if the JC companies hit trouble you join a list of unsecured creditors.
Thanks, wit. I should have guessed, having just renounced my US citizenship due to the new FATCA tax law that’s coming in and causing chaos for Americans abroad.
Of course there is a risk of default – that is why they are paying a rate above what you could get in a fixed-term savings account for the same period.
That is the premium you earn to compensate for the extra risk to which you are exposing yourself.
Exposure to risk is what drives investor returns, whether that investment is in a corporate bond, which is what this is, or equities.
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