Bruce Pubs plc

  • Bond Programme
  • NEX Exchange
  • £20,000,000 7.20% secured bond programme
  • 3-year life, repayable in March 2022
  • Minimum Investment: £10,000
  • Closing: Live-ongoing

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Bruce Pubs plc

18th February 2019

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, TO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY MEMBER STATE OF THE EEA (OTHER THAN THE UNITED KINGDOM) OR TO ANY NATIONAL, RESIDENT OR CITIZEN OF THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY MEMBER STATE OF THE EEA (OTHER THAN THE UNITED KINGDOM)

About Bruce Pubs plc

Bruce Pubs PLC currently takes advantage of the lack of funding available to traditional pub operators alongside the more recent portfolio rationalisation taking place by major operators, leading to a favourable buyer’s market. Management has deduced that this is particularly true of Scotland where 17% of pubs are tenanted compared to 39% in England. Investment will be made to acquire tenanted properties within the pub space in Scotland.

Highlights
  • Interest to be paid quarterly in arrears
  • Bonds to bear interest at a rate of 7.20% per annum
  • Guaranteed by parent company (Bruce Group)
  • Standard tenancy agreement incl.
    → 10 year full repairing and insuring lease
    → Landlord insures the land and buildings (reimbursed by the tenant)
    → Annual RPI linked rent increases with 5 yearly open rent reviews
  • Asset backed bonds secured on new properties acquired
  • Bruce group has seen growth in profits and has been EBITDA profitable for the last three years (Year ended, June 2018)
  • The Group has identified a substantial pipeline incl. the opportunity to acquire 11 tenanted units.

Use of Proceeds
  • To acquire and operate, or acquire and let pubs and bars in Scotland.

Downloads

Risks*
  • Concentration Risk- The groups planned investment remains specific to jurisdiction and industry and as a result is exposed to downturns associated with them
  • Changes in consumer tastes may result in industry downturns as health conscience societies grow and preferred means of socialising change
  • Economic circumstance- adverse changes in disposable income and general economic conditions may reduce the groups revenues and profits.
  • Declining sales of beer- a significant portion of the underlying group (Bruce Holdings) is currently derived from the sale of beer to its customers. Beer has seen declining number of sales in Scotland since 2007. The group may face significant decreases in revenue if this trend accelerates or is not appropriately modelled into forecasts
  • Changes in tax laws- increase in VAT or taxation on alcoholic beverages may reduce the appeal of the groups primary products
  • Inflationary risk: increase in costs of labour, production and product may eat into the groups profits
  • Interest rate risk: Interest on the bond is payable at a fixed rate and therefore changes in market interest rates may adversely impact the value of the underlying bond
  • Failure to conduct appropriate due diligence prior to acquisitions may result in the group overvaluing prospects or acquiring assets which are not fit for purpose
  • Loss of key staff
  • Future performance is not guaranteed and past performance is no indication of future results
  • The group may face litigation from tenants, customers or local authorities – leading to loss of reputation and/or financial detriment
  • The secondary market of the bond may not be favourable for an exit prior to bond maturity
  • Default by tenants
  • The group may be unable to exit loss making assets
  • Other risks associated with NEX listed bonds

*Please note that these risks represent the judgement of Cornhill Capital, there may be additional risks represented in the prospectus


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Cornhill Capital is a trading name of Pello Capital Limited, company number 5267797. Pello Capital Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) with Financial Services register number 449720.


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