Company Structure

Norfolk Arms Hotel Arundel

In 2018 Nicholas Crawley’s Pension Fund (SIPP) purchased the Norfolk Arms Hotel, Arundel, West Sussex and granted a sub lease to Imolott Limited which operates the hotel on behalf of the Pension Fund.

The hotel is an 18th Century Coaching Inn adjacent to the castle walls of Arundel Castle. There are 38 bedrooms, some in an annex on the site of the original stables, but the majority are within the main hotel building. The hotel has a four-star rating and has won a Tripadvisor award for good comments left by guests. There is also a large 18th Century Ballroom that seats up to 100 people for events, weddings, and dinners. In addition, there also two private dining rooms and the Castle restaurant. The Tap bar, popular with both hotel guests and passing trade, offers a wide range of Sussex Craft ales, gins and locally roasted coffee. The rear patio, private ‘secret’ garden and archway provide attractive outdoor seating areas and alfresco dining facilities in the summer.

Prior to its acquisition by Imolott Limited the hotel was losing money due to a lack of investment in both the property and personnel. A programme of gradual restoration and renovation including all the bedrooms, bathrooms and public areas has been carried out since 2018 and the hotel now, post covid, has been making a healthy profit, with year-round occupancies at circa 80%.

Imolott ltd will seek to retain £500,000 of the funds raised on which it will pay an 8 per cent yield out of trading profits. This is to invest in further upgrading of the hotel, particularly some of the Food and Beverage areas, and the creation of three new bedrooms, for which planning permission has been granted. This will further enhance the profitability of the hotel. This will be secured by way of a charge over the lease of the hotel.

Imolott Limited Structure

Imolott Limited (trading as the Norfolk Arms Hotel) is an established company, and would invest in a group of hotels, acquired via the Fund.

• Fund Investment is via Imolott Limited which is the holding company from which the Hotels are acquired via individual SPV’s.
• Each of the Hotel’s trading and staff will be employed directly by the hotel in their respective individual Hotel Company SPV.
• Imolott Limited to provide management services to the respective SPV businesses for a fee of 3% revenue and 8% of EBITDA, but only paid after 8% return has been made to Investors.
• Each SPV will enter into an additional agreement with Imolott Limited to provide revenue management, procurement, centralised sales and marketing support across the business. These services will operate on a cost neutral basis less any central admin costs of the service.

Risk Factors

The risks described below are those risks that the Directors of the Company consider at the date of this document to be material to a decision as to whether to make an investment in the Loan Notes. However, they are not the only risks relating to the Company or the Loan Notes. If any of the following risks, as well as other risks and uncertainties that are not herein identified or that the Company does not consider to be material at the date of this document, were to occur, then these could have a material adverse effect on the Company’s ability to fulfil their obligations to pay interest, principal or other amounts in connection with the Loan Notes. Potential investors are strongly advised to consult their stockbroker, bank, solicitor, accountant or other financial adviser who is authorised under FSMA to advise on investments of this sort if they are in any doubt.

Invested capital is at risk and you may not get back what you invest. The Company, like all businesses, is vulnerable to financial difficulties and investing in unlisted corporate loan notes involves significant risk of default and loss of capital.

Investment in Loan Notes of this nature is speculative and involves a higher degree of risk than other types of investment. Investments of this type are not suitable for all investors.

The Loan Notes are not transferable or negotiable on the capital markets and no application will be made for the Loan Notes to be admitted for listing or trading on any market. It will not be possible to sell or realise the Loan Notes until they are repaid by the Issuer, so please ensure you are fully aware of the risks involved and that you will not be able to cash in or sell your Loan Notes before their maturity date. Prospective investors should not submit an application form unless they are prepared to hold the Loan Notes for their full term. In the event of the death of a Loan Noteholder or in other exceptional personal circumstances, individual Loan Noteholders may be repaid early. However, any such early repayment is at the Company’s discretion and subject to there being sufficient cash available at that time.

The content of this document has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000. Please note that this is an unregulated product.

The compensation entitlements under the Financial Services Compensation Scheme (FSCS) do not apply to this investment. In the event of the Company being unable to pay either the capital or interest payments, the protections afforded by the Financial Services and Markets Act 2000 including recourse to the Financial Ombudsman Service and access to the FSCS will not apply.

Even though the Loan Notes are secured by way of a fixed charge (or second ranking fixed charge where senior finance is obtained) over the hotel properties purchased, meaning Loan Noteholders rank ahead of unsecured creditors in a default situation, the Company assets have not been valued and the presence of this security does not guarantee that investors in the Loan Notes will be repaid at maturity or receive their interest payments in full. The Loan Notes rank below employees and certain administrators (and senior debt providers in some cases) but ahead of unsecured creditors and equity shareholders. The Company also has the right to enter other debt arrangements, issue further Loan Notes and to grant other security over its assets provided it ranks equal to or behind the security in favour of Loan Noteholders. This means that the Company’s available assets may be spread around a larger group of secured creditors in a default or insolvency situation resulting in less being available to satisfy the claims of Loan Noteholders.

The Loan Notes attract a fixed rate of interest and as such will not benefit from any subsequent increases in market interest rates. Accordingly, you should note that a rise in interest rates may adversely affect the relative returns that the Loan Notes offer. Further, inflation may reduce the real value of the returns over time.

Loan Notes are a very different kind of investment to equity shares and investors do not own a stake or have any right to participate in management of the Company. As such, Loan Noteholders will not be in a position to object to particular strategies or decisions of the Company’s directors. Security Trustee Whilst the security in favour of Loan Noteholders is held on their behalf by a Security Trustee, the Security Trustee shall not be responsible, nor shall face any liability, for any loss incurred by the Loan Noteholders relating to a failure of the Company to make payments (whether of interest or of the principal amount) to the Loan Noteholders when due.

The Security Trustee will not have any ability or responsibility to protect any monies in the accounts of the Company which may have been set aside for payment of interest or the principal amount in respect of the Loan Notes. The Security Trustee cannot guarantee return of any monies in the event of default. The Security Trustee has no role in the day-today management of the Company and its personnel are not experts in the Company’s business. Accordingly, in the event that the security is enforced, there can be no guarantee that it will be possible to realise the assets for the same value as stated in the IM (or realise them at all in some cases).

Investors will not be able to cancel an application to subscribe for Loan Notes once they have signed the application form. Investors should review the term and conditions of application carefully and seek professional advice from financial intermediaries authorised under FSMA to advise on investments of this type.

Investments in this type of Company carry particular risks over and above the general risk of unquoted debt investment described above. Investors are reminded that there is no guarantee that the Company’s strategy or trading activities will be successful and that their investment is consequently at risk.

The Company may not perform as well as expected and may even fail completely. Investors are reminded that any financial forecasts include in this document are hypothetical projections only. Projected results have many inherent limitations and there are frequently sharp differences between such projections and the actual results subsequently achieved. The Company cannot make any representation or warranty as to what the actual results will be and has provided its projections by way of illustration only.

The Company’s performance is dependent on the continued services and performance of members of its board, management team, operational employees and professional advisers. If the Company does not succeed in retaining skilled personnel, fails to maintain the skills of its personnel or is unable to continue to attract and retain all personnel necessary for the development and operation of its business, it may not be able to grow its business as anticipated or meet its financial objectives including the servicing, and ultimately the redemption, of the Loan Notes.

Changes to existing laws or regulations, or the creation of new laws or regulations may have an adverse effect on the Company’s business and could result in the Company failing to generate sufficient returns to service the Loan Notes or redeem them in full (or at all).

The Company may rely on the valuations of independent legal professionals. Such valuations will be used for the purposes of calculating the valuation of hotel properties in financial reports and forecasts. There can be no assurance that such valuations will be correct or that such information will be received in a timely manner.

Fluctuations in the hotel property market and hotel business trading could affect the value of the properties. Any negative fluctuations in the property market and individual hotel trading profitability (Earnings before interest, depreciation and amortisation (EBITDA)) could affect the performance of the Company and its ability to repay Loan Noteholders.

The proceeds raised from the issue of Loan Notes may be held by the Company until properties are purchased. Investor security is the Company’s priority. In the event of a default, as defined by the Loan Note Instrument, the Security Trustee will have the benefit of a legal charge over all the properties purchased by the company using the proceeds of these loan notes and upon instruction from the Noteholders may appoint an agent to sell the properties and return the proceeds to the Noteholders.

Diversified Portfolio Investors are reminded to maintain a balanced portfolio. Diversification by spreading your money across different types of investments should reduce your overall risk. Investors should only invest a small proportion of their available investment funds via this Offer (and others like it) due to the high risks involved.

The statements in this document regarding taxation only represent the Company’s understanding of the current law and practice as regards the taxation of the Loan Notes. Nothing in this document should be considered tax or legal advice and prospective investors are recommended to seek their own independent advice before investing. The tax legislation referred to herein may change in the future and such changes may have retrospective effect. Investors are reminded that any future legislation regarding taxation could also have an adverse effect on the Company’s profitability.

Individual tax circumstances may differ from investor to investor and persons wanting to invest are advised to seek specific tax advice based on their personal circumstances.

Certain information contained in this document constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “assumed”, “example”, “illustrative”, “may”, “will”, “should”, “expect”, “intend”, “anticipate”, “project”, “estimate”, “plan”, “seek”, “continue”, “target”, or “believe”, or the negatives thereof or other variations thereof or comparable terminology, and include projected or targeted minimum returns to be made by the Company. Such forward-looking statements are inherently subject to material, economic, market and other risks and uncertainties, including the risk factors set out in the “Summary” and “Risk Factors” sections of this document and, accordingly, actual events or results or the actual performance of the Company may differ materially from those reflected or contemplated in such forward looking statements.

In addition, investors should not place undue reliance on “forward-looking statements”, which speak only as of the date of this IM. The Directors believe that the factors described above represent the principal risks inherent in investing in the Loan Notes, but the Company may be unable to pay interest, principal, or other amounts on or in connection with the Loan Notes, for other reasons and the company does not represent that the statements above regarding the risks of holding the Loan Notes are exhaustive. Prospective investors should also read the detailed information set out elsewhere in this IM (including any documents incorporated by reference herein) and reach their own views prior to making any investment decision.

Investors are advised to take their own tax advice on the tax consequences of acquiring, holding, and disposing of the Loan Note. Individual tax circumstances may differ from investor to investor, and persons wanting to invest are advised to seek specific tax advice based on their personal circumstances.