Direct return 

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,- 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 Red Church Vineyard. This Voucher will be provided to the Bondholder afterwards on an annual basis on the 1st of December of each year. 

The acquisition of the winery by EN exists out of the purchase of all the currently produced bottles, with the harvest years 2018 to 2020 and all the litres of wine that is currently stored in the reservoirs regarding the harvest years 2019 to 2021. The Red Church Group will be able to produce from the current stock of the harvest years 2018, 2019 and 2020 a sufficient amount of bottles to meet the total amount of the to be provided Vouchers regarding the total duration of the Bond. 

Based on the current stock and the bottling plan of the Vinologist the Red Church Group will be able to produce the following bottles of the Classic Red Wine:

  • Harvest 2018: 21.582 bottles are already bottled;
  • Harvest 2019: 30.211 bottles can be produced from the stock in the barrels and tanks;
  • Harvest 2020: 27.667 bottles can be produced from the stock in the barrels and tanks.

In total the Red Church Group will be able to produce from the current stock a total of 79.460 (seventy-nine thousand four-hundred sixty) bottles of the Classic Red wine from the current stock. This stock is sufficient to meet the purchase right of the Issuer regarding the total duration of the Loan. Whereby the period of 2023 is determined for calculation purposes from the closing date of the issuance period of the Bond as per the 25th of December 2023. Based on the assumption that no conversion right will be effectuated during the term of the Bond the maximum amount of bottles connected to the Vouchers will be 72.080 (seventy-two thousand eighty) bottles.

  • 2023:      344 bottles
  • 2024: 17.934 bottles
  • 2025:  17.934 bottles
  • 2026:  17.934 bottles
  • 2027:  17.934 bottles
  • Total: 72.080 bottles 

The Issuer will receive from the Red Church Group a pledge on the Classic Red Wine bottles that are linked to the Vouchers. The Issuer will transfer these rights one-on-one to the Trustee, who will hold these rights for the benefit of the Bondholders.

The valuation of the direct return

There are a number of factors that influence the value of the bottles of Classic Red wine that the Bondholder(s)s receive as an interes in kind in their Bonds and there with their return on investment.

The value of the bottles can mainly be determined by following factors:

  • Age: wine mainly needs time to become a high-quality product. Wine must be given time and that is what happens less and less often in the industry. This often happens under the pressure of rising wine demand and issues such as profit maximization and shareholder value. Although in the past Red Church Vineyard has offered wine at a lower maturity, it currently holds the position / strategy of aging wine for a minimum term.
  • Quality: managing a barrel during the maturation period requires knowledge and expertise. Red Church strives for high quality wine in order to maximize the financial return at the end of the maturation period. In order to know how a wine develops, each cask is sampled semi-annually, or more often to the reason of the winemaker, and its maturation progress is analysed. If necessary, it is decided to adjust the maturation process, for example by transferring the wine to another barrel. Through this method, Red Church knows the quality of the wine at the time of bottling. That the wine that Red Church produces have a high quality shows the award-winning wine Selection individuell 2018 by being proclaimed in 2020 as the best wine in all of Bulgaria by DiVino.Taste.
  • Scarcity: Scarcity combined with a unique winemaking project can be a powerful marketing tool, making the wines reach a high market price and value growth over the years. Name, reputation and unique stances of the winemaker are in this case key to sell the wine at high market prices.
  • Other factors that affect the value of the wine  includes the name and reputation of the winery, the circulation, the alcohol percentage, the "premium feeling" of the pacheging and vintage and quality (rating). 

The management of the Red Church Group aims to guarantee high quality and put quantity second. Therefor the maximum amount of grapes which can be harvested, with the current number of vines, without compromising the quality of the grapes is set by the management at 110 tons. This amount of tons, divided into 5 types of wine, can be classified in the wine industry as a small amount, meaning that the produced bottles are deemed exclusive and the scarcity is supply-caused. In addition the management of the Red Church Group aims to create high level brand awareness and with a limited amount of bottles to be market this will result in a higher market price based on demand-caused scarcity and there with a higher forcasted return on investment. 

Indirect return 

In addition to the interest in kind, with respect to the wine bottles, each Bondholder will receive an indirect return in the form of an annual wine tasting:

  • As an additional compensation, each Bondholder is invited, once a year, to participate in a wine tasting at Red Church Vineyard and at fellow wineries in the region. This wine tasting will be given by the management of the Red Church Group and will be organized annually in September/October. During this wine tasting, the Bondholders will also be given a tour of the wine estate and the bottles kept in storage can be observed. Each Bondholder will receive 2 (two) hotel overnight stays inclusive breakfast for 2 (two) persons in an accommodation arranged by the Red Church Group. Travel and related expenses to the wine estate will be arranged / organized by the Bondholders themselves at their own expenses. This wine tasting is not part of the obligations of the Issuer and rest with the Red Church Group and therefor will not be part of the Bond structure and as a result is not included, as a value or return, in the calculation of the IRR.