Blackmore Bond - Where is The Money?

The current status of Blackmore Bonds in a few facts. All put together it doesn't paint a very healthy picture of the company.

• Blackmore Bond raised over £25 million from investors
• Many of their developments have seen no work take place and are still building sites.
• 20% of investor funds were passed to Surge Financial at the point investors handed over money
• 60% of the GDV (Gross development value) was borrowed from banks for most sites.
• Bondholders rank after bank lenders in the case of insolvency
• Accounts for 2018 are overdue and Blackmore have broken the law by not providing them
• Accounts also overdue for Blackmore SPV development companies 
• Independent Chairman of Blackmore Bond, Kenneth Buzz West has left the Blackmore
• Interest payments delayed for August due to "bank issues"
• Interest payments failed to be paid for October 2019 and January 2020
• There are only 12 development sites believed to be owned by Blackmore
• Annual payments from Blackmore Bond to Blackmore holding company appear to be 5% so total over £1.8 million per year. This is money taken out of the pot for investors
• Blackmore is dependent on continued investor subscriptions to remain viable - these stopped in 2019.
• Blackmore SPV companies have taken loans against the development property meaning funds are not available to Blackmore Bond

Remember that London Capital & Finance claimed all was well until administrators took over and found the truth. The claims of Blackmore directors that everything is fine does not correspond to the list of issues above.

Many Blackmore investors appear to have been lied to as part of the investment process if they are not High Net Worth or Sophisticated investors and were misled about the risks involved. If Blackmore were prepared to lie about these things why would you believe anything else they say?

One example is Blackmore SPV5 company, fully owned by Blackmore Bond. This is supposedly developing land near High Halden in Kent. The Gross development value of the site is £2.9m. At Dec 2017 this land appeared to be worth £1m. However in November 2018 a loan was taken out against this site which ranks above bondholders for payment. The lender was Nextius Finance and the loan agreement also creates a "negative pledge". This means that no other security can rank above it. If the loan is 60% of GDV then it wipes out bondholder funds.

Taken in total it suggests that the money available within the company at the current time is unlikely to be enough to pay investors back and would explain why interest payments have not been made.

Let's start by assuming £25 million of investor money taken by Blackmore Bond. We don't know the current figure as accounts have not been published but this was the previous value so it will be higher.

20% of this was paid to Surge Financial so £5 million is now removed which means only £20m left. If 5% is paid each year since 2017 as fees to Blackmore Group that's another £4 million gone.

The 2017 accounts show that the GDV for all projects that Blackmore Bond owned was £40 million.

If Blackmore Bond has borrowed 60% of the GDV then this could be £24m that has been borrowed against the sites from banks.

Bear in mind that GDV is the possible sale value of completed sites. Incomplete projects and building sites will be a fraction of this so it's entirely possible that the current value of the assets is only the 40% that bondholders put in.

Banks owed £24 million, bondholders owed £25 million, funds available £16 million (£25m from bonds - £5m to Surge - £4million to Blackmore Group)  - how much was spent on property and how much on other "items"?

However this money has to cover the funds owed to the banks which means that there could be nothing left for anyone else.

https://www.standard.co.uk/business/business-news/fears-rise-for-blackmore-bonds-investors-amid-major-project-delays-a4286376.html