Chilango Bond 2
Has anyone reviewed the Chilango Bond 2 currently out on their website offering 8% p.a.?
I've looked at the financials and to me, it seems 8% p.a. just doesn't cut it. Cashflows indicate its negative operating cashflow relying on future financings (equity + bond). It claims to have impressive investors backing it but the promotional video just raises more questions than answers.
https://bond.chilango.co.uk/?gclid=EAIaIQobChMIpv2YjuP53gIVLbHtCh1Rowy3EAAYASAAEgLkYfD_BwE
Comments
"The 'Burrito Bonds' will be issued by Chilango Bonds Plc, a wholly owned subsidiary of Mucho Mas Ltd. (Chilango) which has provided a guarantee for the payment obligations of Chilango Bonds Plc for the Burrito Bonds. Funds will be used to open new restaurants at an approximate cash outlay of £500,000 per restaurant, as well as refinance existing debt."
It should noted that MUCHO MAS LTD has been losing significant amounts of money for the last 3 financial years
Current "Net worth" of the business is probably currently in "Negative Territory"
Only consider Orb listed bonds!
Expect yield to be 4% or below for the safer securities, higher the yield, greater the risk
Ensure you have a well diversified portfolio
Further news
https://www.thisismoney.co.uk/money/investing/article-7689263/8-Burrito-Bonds-firm-Chilango-calls-restructuring-firm-amid-concerns-future.html
Heading
"Chilango auditor declines to sign off accounts after bond raising"
this chilango story reminds of WeWork Masa debacle
I read in the last annual report that directors have made loans to the company at rates of up to 15%. On a risk return basis that is more reasonable for this kind of investment.
I steered clear of all mini bonds thankfully, I'm quite capable of losing money on established quoted investments without getting involved with super risky start ups!
https://www.bondvigilantes.com/blog/2014/06/23/burrito-bonds-example-retail-bond-market/
It's worth checking out just for the "burrito fatigue factor" which is a rarely used metric to assess bonds
I avoid mini bonds although my wife had the Hotel Chocolat bond which paid out in chocolate boxes each month. She thought it was great (she doesn't suffer from chocolate fatigue risk) and was so disappointed when they redeemed them. I was just relieved she got her money back.
There is currently a BrewDog bond (6% interest half paid in beer tokens) that has raised about a million so demand for this kind of thing is still there (please don't take that as a recommendation to buy)
It will interesting when WASPS produce their next annual report, due shortly. No doubt a few investors will get stung!
Their position not being helped by their on the field results.
You may realize that I haven't been a fan of investing in sport clubs, in particular as some of their opponents have owners with very deep pockets. Not a level playing field, unlike my school sporting days!