Introduction
The Issuer offers interested investors the opportunity to participate in the issuing of the Red Church Vineyard Bond (Bond). These Bonds are issued to accommodate the Red Church Group to purchase the wine estate Red Church Vineyard. The Issuer will raise the capital in order to grant a Loan to the Red Church Group to purchase the wine estate Red Church Vineyard through shares transactions, including all the assets and stock and to finance the wine estate her business operations and growth plans.
Red Church Vineyard
Red Church Vineyard is a boutique project of the Bulgarian wine industry. The Vineyard was established by Mr. N. Penkin together with Mr. A. Kanev (Vinologist) and Mr. T. Katsarov (finance).
Mr. A. Kanev is a professional winemaker with 20 years of proven experience in winemaking, with a proven track record in the introduction and establishment of new fine quality wines on the Bulgarian and international market. He teamed up with some of his partners and started the Red Church Vineyard.
Red Church Vinyard is named after the famous Unesco monument Red Church. Red Church is a large partially preserved late Roman (early Byzantine) Christian basilica in south central Bulgaria.
Red Church is the first Christian Church, dating to the late 5th–early 6th century, the church stands near the town of Perushtitsa in western Plovdiv Province, some 15 kilometres (9.3 mi) southwest of the city of Plovdiv. The Red Church is a rare example of solid brick construction in a church from Late Antiquity in Bulgaria, and it was the red colour of the bricks that gave the church its name.
Red Church Vineyard is situated in a valley at the foot of the Rhodope Mountains, 12 kilometres away from Plovdiv - most of the other famous Bulgarian wine cellars like Starosel, Villa Ystina, Bessa Valley are within 50 km. of Red Church reach.
Red Church Vineyard currently produces 5 types of wine:
- Muscat (petit grain): Fresh and elegant French variety, the wines are best consumed within 3 years.
- Rose (Cabernet sauvignon, Merlot): It’s the most popular, recognised and the most fashionable product with a very high percentage of consummation. The wines are best consumed within 2 years.
- Classic (Merlot, Cabernet sauvignon, Cabernet franc, and/or Mavrud): An exceptional blend, that can be consumed daily, can be combined very well with red meats. The wines are best consumed within 5-6 years.
- Premium (Merlot, Cabernet sauvignon, Cabernet franc and/or Mavrud): Typical Bordeaux style blend with potential for ageing until 10+ years.
- Selection individuelle ( Cabernet sauvignon, Merlot, Cabernet franc): Barrel aging in new French oak for 11 months. Amazing wine with potential for ageing for 15 – 15+ years.
Two of the produced wines of Red Church have been named as award-winning wines.
The Selection individuell 2018 was named by DiVino as award-winning wine in two categories. For the tenth consecutive year, at the beginning of 2021, the tasting team of DiVino ranked the 50 best Bulgarian wines for the past 2020 – based on year-round regular tastings and evaluation of over 500 wines. The results were announced in March and the Selection Individuell 2018 won the first price as best red wine and was also named best wine of Bulgaria of 2020.
In the Balkans international wine competition of 2019 the Grand Sovereigh Rose`2018 won the Silver medal. Dedicated exclusively to regional wines, this annual competition – to take place at the heart of the Balkans, in Sofia, Bulgaria – aspires to draw the attention of the global wine community to the unique range of flavours that this interesting region has to offer. The competition is open to wine producers from all Balkan countries, from the Black sea region and from all over the world.
The issuance and Bond
This Issuing of the Red Church Vineyard Bonds is being made by the Dutch private company with limited liability, Red Church Finance B.V. (the “Issuer”), which is an independent and autonomous party and therefore not part of the Red Church Group.
The Issuer will issue a maximum of 196 (one-hundred ninety-six) Red Church Vineyard Bonds, each with a nominal value of € 25.000,- (twenty-five thousand euro) and a joint nominal value of € 4.900.000,- (four million nine-hundred thousand euro).
The Issuer will collect subscriptions during the subscription period being the period from the date of publication of the Information Memorandum till the 25th of December 2023 (“Closing Date”). The Issuer may at its own discretion decide to end the subscription period at an earlier or later date. The subscription period will close automatically if the Offering has been completed. The minimum bond amount that needs to be placed to allow the placement to take place is € 3.300.000,- (three million three-hundred thousand euro), equal to 132 (one-hundred thirty-two) Red Church Vineyard Bonds.
In the case that the minimum nominal issuance amount is reached, the Issuer is entitled to partially close the Bond, whereby all rights and obligations as set out in the Information Memorandum, the Trust Deed and the Bond Conditions apply to the Issuer, Trustee and the Bondholders. The Issuer will be allowed to issue additional Bonds, after the partial closing date, under the same conditions as stated in the Information Memorandum, the Trust Deed and the Bond Conditions until the total nominal issuance amount of € 4.900.000,- (four million nine-hundred thousand euro) has been issued.
Each Red Church Vineyard Bond with a nominal value of € 25.000,- (twenty-five thousand euro) will give the Bondholder the right, on an annual basis, to a Red Church Vineyard Wine Voucher (Voucher) that provides the Bondholder with the right to receive per Bond 91 (ninety-one) bottles of the Classic Red Wine of Red Church Vineyard.
For each 4th (fourth) bond that is owned by a Bondholder two additional bottles of the Classic Red Wine are added to the Voucher. Resulting that per 4 (four) Bonds (equal the minimum participation) with a nominal value of € 100.000,- (one-hundred thousand euro) the Bondholder will receive a Voucher that she can redeem by the Issuer for 366 (three-hundred sixty-six) bottles of the Classic Red Wine of the Red Church Vineyard.
A Bondholder that wants to participate in the Bond must at all times holding a minimum of 4 (four) bonds with a total value of € 100.000,- (one-hundred thousand euro) or sell all of her bonds to a third party and/or convert all of her bonds into share capital as a result of which the Bondholder will no longer be participating in the Bond.
The Term of the Bond is (maximum) five (5) years, for all Bonds from their Closing Date, on the understanding that the Issuer is authorized to make Early Redemption during the Term. As soon as the Closing Date has been definitively determined, the Issuer will communicate this date in writing to the Bondholders and on this webiste.
Early repayment
The Issuer may at all times and under any circumstances, without penalty, subject to a 20 (twenty) business days prior written notice to the Bondholders, decide to fully or partly redeem the Bonds prior to their final maturity (Early Redemption).
The Issuer is allowed to make early repayments on the Bonds in accordance with the following provisions:
- The Issuer is allowed to make an early repayment on the Bond in the years 2024 and 2025, in which case the Issuer is allowed to repay a part of the Bond or the whole bond against a rate of 105,00%
- The Issuer is allowed to make an early repayment on the Bond in 202,6 in which case the Issuer is allowed to repay a part of the Bond or the whole bond against a rate of 102,50%
- The Issuer is allowed to make an early repayment on the bond in 2027, in which case the Issuer is allowed to repay a part of the bond or the whole bond against a rate of 100,00%.
The Issuer is only allowed to make these early repayment in the case that, during the Term, the Issuer attracts a bank financing and/or non-bank money loan(s) from third parties (including via another bond loan), for the (full or partial) refinancing of the Bond, on commercial terms or in the case that the Red Church Group makes an early repayment in the Loan.
Conversion right
The Red Church Group will in addition provide the Issuer with an option to convert the loan into issued share capital of the holding entity of the Red Church Group, known as EN EooD (EN).
The Issuer will receive from the Red Church Group the right per provided € 25.000,- (twenty-five thousand euro) of loan to convert this amount into 25 (twenty-five) issued shares in the capital of the holding company of the Red church Group.. With a maximum Bond of 196 (one-hundred ninety-six) Bonds of € 25.000,- (twenty-five thousand euro) this will result by a total conversion right to receive a total of 4.900 (four-thousand nine-hundred) issued shares in the share capital of EN.
This conversion right will be executable each year during the term of the conversion right on the 15th of December, and will be executable for the first time in the fiscal year of 2024 and will last till the 31st of December 2026.
The Issuer on her turn will transfer these rights one-on-one to the Trustee, whom holds these rights under management for and on behalf of the Bondholders.
The Issuer will only uses her conversion right in the case that a Bondholder has instructed the Trustee in written to effectuate this right that is transferred to her one-on-one by the Issuer and the Trustee has filed this request to the Issuer. Only in this case the Bond or a part of the Bond that is connected with the conversion request will be converted into share capital and the Bondholder will accrue this right, as a result of which its claim against the Issuer will be repaid by the transfer of the shares in the Red Church Group. For the representation of the more detailed conditions applicable to the conversion, please refer to the Information Memorandum and its attachments.
Securities and collateral
Bondholders can not institute their own individual rights of action and/or direct actions against the Issuer. The Trustee will in its sole discretion – but at all times taking into account the interests of the Bondholders – dispose of the rights of such Bondholders under the Bond Conditions. Under the Trust Deed, the Trustee will act on a private basis for and on behalf of the Bondholders. To this end, the Trustee will have its own exclusive claim against the Issuer as a creditor that corresponds in substance to ('parallel to') the claim rights of the Bondholders against the Issuer (a so-called Parallel Claim).
In order to strengthen the position of the Bondholders, the Trustee will obtain as security for the Bond multiple collateral, with a minimum coverage of 100% (one-hundred percent) of the outstanding principal of the Bond, consisting of:
- an irrevocable right, on first call, to establish a first mortgage registration on the real estate and plots of land that are hold by Red Church Estate EooD (UIC 130993943) and Red Church Vineyard EooD (UIC 130493952);
- a first right of pledge on the machinery and equipment that are hold by the Red Church Group;
- a first right of pledge on the barrels that are hold by the Red Church Group;
- a first right of pledge on the shares that are hold by Stichting Red Church Custodian regarding the conversion right.
The Red Church Group will provide the Issuer with this collateral regarding the Loan and as a security for the fulfilment of the Bond by the Issuer vis-à-vis the Bondholders, the Issuer will transfer these rights one-on-one to the Trustee.
Conclusion
In conclusion the Issuer offers the Bondholders the opportunity to invest in the Classic Red Wine of the wine estate Red Church Vineyard in Bulgaria or to participate through the conversion right into the share capital of the Red Church Group and becoming a co-shareholder of the wine estate Red Church Vineyard.