The King’s School Bond Offer for public subscription of up to £2,250,000 3% and 4% limited recourse bonds due 2027 Issued by Secured on a loan to Allia Social Impact Investments Limited The King’s School, Gloucester
IMPACT INVESTMENTS THE KING’S SCHOOL BOND 2 Important Notice
This Offer Document sets out the key points you need care to ensure that such is the case) the information to know to invest in the King’s School Bond. Please make contained in these sections is in accordance with the facts sure you read through the information carefully so you and does not omit anything likely to affect the significance understand the offer and can decide whether investing in of such information. Where information in these sections the Bonds is right for you. Investors should not subscribe has been sourced from a third party, this information has for any Bonds except on the basis of information set out been accurately reproduced and, as far as the School is in this document. aware and is able to ascertain from information published Capitalised words in this document have a particular by that third party, no facts have been omitted which meaning which is set out in the Glossary. References to would render the reproduced information inaccurate “you” mean any prospective investor in the Bonds and to or misleading. The source of third-party information is the “Issuer” or “us” mean Allia Social Impact Investments identified where used. Limited, which is the issuer of the Bonds. The Issuer has taken steps to ensure that this An investment in the Bonds should be seen as a social communication is made only to professional investors investment, meaning that your motive for investing in and to individuals who have self-certified as either a them includes supporting the aims of The King’s School, restricted, high net worth or sophisticated investor. A Gloucester, and not purely to make a financial return. If restricted investor is one who has not invested, and will you are not sure whether an investment in the Bonds is not invest, more than 10% of their assets in investments suitable for you, or you have any questions about the tax similar to the Bonds in the twelve months before and or inheritance consequences of investing, then you must after their certification. This may imply that, if you are a consult a financial advisor. The Issuer cannot give you any restricted investor, you should not invest more than 10% advice and nothing in this document should be construed of your assets in the Bonds. If you are not a professional as advice or as a recommendation to invest. investor and have accessed this Offer Document without first self-certifying, you must complete the Issuer’s The information in this document is dated 16 December certification form at www.allia.org.uk/kingsbond before 2019, and unless otherwise stated has not been updated reading any further. No applications will be accepted from since such date. retail investors who have not self-certified. The Issuer accepts responsibility for the information Please note, these Bonds are for UK tax residents only. contained in this Offer Document. To the best of the This Offer Document does not constitute an offer to knowledge of the Issuer (having taken all reasonable care sell, or the solicitation of an offer to buy, the Bonds in any to ensure that such is the case) the information contained jurisdiction in which such offer or solicitation is unlawful in this Offer Document is in accordance with the facts and, in particular, is not for distribution into the United and does not omit anything likely to affect the significance States or Canada. The Bonds have not been and will not of such information. Where information has been sourced be registered under the applicable securities laws of the from a third party, this information has been accurately United States or Canada and may not be offered or sold reproduced and, as far as the Issuer is aware and is able within the United States or Canada or to any national, to ascertain from information published by that third resident or citizen of the United States or Canada. The party, no facts have been omitted which would render the distribution of this Offer Document in other jurisdictions reproduced information inaccurate or misleading. may be restricted by law and therefore persons outside The King’s School, Gloucester (the “School”) accepts the United Kingdom into whose possession this responsibility for the information in this Offer Document document comes should inform themselves about and contained in the sections ‘The King’s School’, ‘Purpose of observe any such restriction. Any failure to comply the Bonds’ and ‘Risks relating to the School’. To the best of with these restrictions may constitute a violation of the the knowledge of the School (having taken all reasonable securities laws of any such jurisdictions. THE KING’S SCHOOL BOND 3
A word from the Headmaster
Thank you for considering investing in the King’s School Bond. The King’s School Gloucester is an independent, co-educational day school for pupils aged 3-18. We are located in the centre of Gloucester adjacent to the Cathedral. We are a member of HMC (the Headmasters’ & Headmistresses’ Conference), the leading organisation for the very best independent schools in the UK and abroad. Founded in 1541 for the education of the Cathedral’s choristers, the School is an educational charity and has been serving the city of Gloucester for 478 years. We are very much a school based within its community; our families, 90% of whom live within 10 miles of the School, value our small class sizes and our strong pastoral focus. Furthermore, being a day school with no Saturday tuition, our pupils are free to fully engage with other activities and clubs in the wider community. The School has experienced a steady increase in pupil numbers up to today’s roll of 620 children. The School is committed to retaining its small class sizes and remaining a medium-sized school. The one area where extra capacity could be created is in the Sixth Form. Our current Sixth Form Centre is based next to the Cathedral in Dulverton House. Unfortunately, the building, which dates back to the thirteenth century, is tired and has been unsympathetically subdivided and modified over many years. Our vision is to strip back the building to its original open layout, creating a light and contemporary space suitable for education and community use. It is fitting that the Dulverton transformation should be taking place during the 2019/20 academic year. This year marks both the fiftieth anniversary of girls being admitted to the School and also the start of equal provision for girl choristers. I hope that you can see, through reviewing this document and your other interactions with the School, why I am so proud of our School and why I believe the Dulverton project is so important for the fulfilment of the School’s potential and our role in supporting our city.
David Morton, Headmaster THE KING’S SCHOOL BOND 4
Contents
5 Introduction
6 Summary of key terms
7 The King’s School
16 Purpose of the Bonds
20 About the Issuer
21 Information about the Bonds
24 Key documents
25 Risk factors
30 How to invest
32 Disclaimers and general information
33 Glossary
34 Terms and conditions of the Bonds THE KING’S SCHOOL BOND 5
The King’s School Bond
The King’s School Bond is an opportunity to invest in Investors in the Bonds can receive a return of the redevelopment of Dulverton House, a building 3% interest each year on their investment. Investors which dates back to the 13th century, making it fit subscribing for more than £200,000 of Bonds can for 21st century learning and a versatile shared space choose to invest with a return of 4% interest with the local community. each year. The Bonds will be issued by Allia Social Impact The Bonds are a fixed-term investment, and early Investments Limited (the “Issuer”), and the funds redemption will only be possible at the option of the raised will be loaned to The King’s School, Gloucester Issuer. Please note that the Bonds are not covered (“King’s” or the “School”) by way of a loan (the by the Financial Services Compensation Scheme and “Loan”) on the Issue Date under the terms of if you choose to invest in the Bonds your capital will the Facility Agreement between the Issuer and the be at risk. For more information see the section ‘Risk School. Factors’ on page 25. The School will pay interest on the Loan and repay the Loan on maturity, which will fund the payments of interest to Bondholders and the repayment of their investment at the end of the term. The Bonds are limited in recourse to the Loan, meaning that Bondholders are relying exclusively on the School for payments of interest and principal. THE KING’S SCHOOL BOND 6
Summary of key terms
Issuer Allia Social Impact Investments Limited, a charitable community benefit society with registered number 32151R.
Borrower The King’s School, Gloucester, a registered charity with company number 03834841 and charity number 1080641.
Interest rate The 3% Bonds will pay 3% gross per year and the 4% Bonds will pay 4% gross per year, in each case fixed and payable annually in arrears on each anniversary of the Issue Date up to and including the Repayment Date.
Term The Bonds are repayable in full on the seventh anniversary of the Issue Date.
Minimum investment The minimum investment is £5,000 in the 3% Bonds and £200,000 in the 4% Bonds. For either series you may subscribe for any amount greater than this in multiples of £100.
Purpose The Loan will be used by the School to fund the redevelopment of Dulverton House, as described further on page 16.
Status The Loan is not secured against any asset of the School or otherwise. The Facility Agreement between the Issuer and the School contains certain financial covenants, including a covenant that places restrictions on the incurrence of new secured debt (see page 23). The Bonds are secured on a Loan to the School – see page 22 for more information.
Transfer The Bonds are transferable but will not be listed on a recognised stock exchange.
Subscription Closing 24 January 2020, unless the offer is fully subscribed earlier or extended by Date notice in writing by the Issuer to each Applicant. THE KING’S SCHOOL BOND 7
The King’s School
The King’s School, Gloucester is an independent The School structure school for boys and girls aged 3-18 with 620 pupils. The School is divided into a junior school for It was one of seven Cathedral Schools established by children aged 3-11 (the “Junior School”) and a Henry VIII in 1541 and is located in historic buildings senior school for ages 11-18 (the “Senior School”). adjacent to Gloucester Cathedral. There are currently 190 pupils in the Junior School The School is an HMC school. HMC stands for and 430 in the Senior School. The Headmasters’ and Headmistresses’ Conference, Junior School (3-11) which is an association of the head teachers of 283 independent schools in the United Kingdom. Being a Children can start at ‘Little Kings’ at age 3 in the member of the HMC is a kite mark of global quality, Kindergarten class for a minimum of two sessions innovation and excellence in education, and HMC per week, before moving into Reception and full- schools are regularly inspected by the Independent time education. The Junior School years are then Schools Inspectorate to assure the quality and divided into Transition (primary school Year 1-2), effectiveness of the education they provide, the Prep (Year 3-4) and Shell (Year 5-6). welfare of their pupils and to see that statutory The Junior School aims to instil a love of learning requirements are met. The School is also a member and to offer a rich and varied extra-curricular of the Choir Schools Association which is a group programme that enables pupils to discover and of schools attached to cathedrals, churches and explore their personal talents and interests. Being college chapels around the country enabling pupils a choir school, music plays an important role in to have unlimited access to a first-class schooling and the Junior School, and pupils have a variety of musical training. opportunities to be involved in sports, dance and drama and other creative activities. The Junior School also seeks to promote fun while learning through ‘Forest School’, linking children to the world around them using a range of outdoor activities and reinforcing what they learn in the classroom. Senior School (11-18) Most Junior School pupils will transition to the Senior School. Throughout their time in Junior School, children are given the opportunity to become familiar with the Senior School by having lessons or activities in the senior classrooms and interacting with Senior School teachers in subjects such as science, art, design and technology, music and games. New pupils also come from other primary schools to start at the Senior School at King’s. THE KING’S SCHOOL BOND 8
As a medium-sized independent school with small Pupils class sizes (typically 9 pupils to each teacher), King’s The number of pupils at the School has is able to choose the academic curriculum and progressively increased in the last five years, rising assessment methods that it believes are best suited from just over 500 in 2014 to 620 at the start to its pupils. It offers both a wide range of academic of the current academic year (2019/20). This subjects and a variety of co-curricular opportunities, increase has been achieved without increasing including extra sessions for pupils to explore such class sizes, which the School considers essential in topics as architecture, law and palaeography, and maintaining the ethos of the School. The proposed special sessions within curriculum time covering redevelopment of Dulverton House will allow for subjects such as forensic archaeology, the science an extra 20 pupils in the Sixth Form and will allow of pandemics and chaos theory. In the fifth and better utilisation of the existing teaching timetable. sixth forms, students are invited to after-school lectures given by staff or visiting speakers on subjects Despite this success, the School is committed to as varied as medical ethics, epistemology and remaining a ‘medium-sized’ co-educational mixed censorship. In addition King’s offers a diverse range ability day school and would not be looking to of clubs, from learning Mandarin to tap dancing and increase substantially beyond a 650-pupil capacity. computer programming. Being a day school, the pupils come almost entirely The King’s sixth form (the “Sixth Form”) is small from the county of Gloucestershire and surrounding by design in order to be responsive in meeting rural areas, with 90% of pupils living within 10 students’ individual needs. The School’s approach to miles of the School. The largest cohort come teaching and learning in the Sixth Form emphasises from Gloucester itself, but in recent years King’s collaboration, support and challenge, and its students has increased its share of the Cheltenham schools consistently achieve high grades. It also aims to market. Gloucestershire also has a number of mixed equip its students with the values, attitudes, skills and and single sex grammar schools which provide an knowledge that bring success in future employment, alternative for academically gifted children at 11+. study and life. It does this in the Sixth Form by The School accepts children with a range of teaching study skills, emphasising self-discipline and abilities, with typically around 20% having identified by building team and co-operative skills. It promotes special educational needs and half of these getting independence, responsibility, initiative, awareness of additional support through the School. self and concern for others.
Pastoral care Recent Enrolment Growth King’s seeks to make every child feel they truly belong and that they are part of a cherished 650 community. 600 The School has a strong pastoral care system 550 with small class sizes and a house system in both the Junior School and Senior School to promote 500 community cohesion. In the Senior School, each 450 pupil has a personal tutor with whom they have daily 400 contact and regular one-to-one meetings to review 2011 progress and talk through any difficulties. Other 2009 2010 2012 2013 2014 2015 2016 2017 2018 2019 sources of help include the School Welfare Officer, who is always available to advise on health or well- being issues, along with the School GP and a trained Well-Being Mentor, who are always available should the need arise. Pupils can also talk to a Peer Mentor – a specially trained Sixth Form pupil who has the advantage of being closer in age to the young person seeking support. THE KING’S SCHOOL BOND 9 William the Conqueror sent the Norman abbot Serlo to Gloucester Abbey, where he found eight boys being educated in the Cloisters. These ‘Children of the Cloister’ learned Liturgy, 1072 Calligraphy, Latin and Elementary Sciences.
Gerald of Wales, who later became a famous churchman and writer, studied at the School under 1155 master Haimo. He referred to the School as ‘the most influential centre of learning in the West of England’.
Richard II held his parliament in Gloucester and the School began to meet in the undercroft of the Parliament Room. Nearby Little Cloister House, originally part of the monastic infirmary, dates from 1378 this time and contains one of the oldest rooms in the world still to be used as a classroom. After the dissolution of the monasteries, Henry VIII founded the School as one of the seven new prestigious schools 1541 attached to Cathedrals. With Robert Aufield as its first recorded Headmaster, the School met in the former Abbey library and was known as the ‘College School’.
The highly regarded scholar Maurice Wheeler was appointed Headmaster. The flourishing School of 100 boys over which he presided gradually became known 1684 as The King’s School.
Oliver Cromwell considered demolishing the Cathedral in favour of simpler places of worship, but the City Council 1657 considered that the loss of the King’s School would be too serious to contemplate – and so both institutions survived.
Former Bishop’s Palace acquired by the School (for £14,000) for use by the Senior School. 1960
The original 1963 Junior School is extended to create 1975 a new set of first floor classrooms, allowing for greater capacity and a better learning environment.
Olympic Rowing Gold Medallist Anna Watkins opened the new King’s Sports Hall at Archdeacon Meadow. Pupils from across the School enjoy the 2012 state-of-the-art Sports Hall for games such as Badminton, Hockey, Cricket and Netball. King’s celebrated the 475th anniversary of its foundation in 1541 by King Henry VIII. As part of the commemorative celebrations the School opened a new 2016 performing arts facility, The Ivor Gurney Hall, a bespoke early years facility, Little King’s, and a new creative arts centre in Wardle House.
The all-weather sports pitch at Archdeacon Meadow is opened by Gloucester MP Richard Graham and a new music school is opened by Mark Wildman, former King’s pupil and chorister and Professor of Singing at 2019 the Royal Academy of Music. THE KING’S SCHOOL BOND 10
Academic results Inspection findings Given the relatively small number of pupils in each As a member of the Independent Schools Council, year, it can be expected to see significant variation the School is inspected on a regular basis by the in results between different year groups, as is shown Independent Schools Inspectorate (“ISI”), an in the table below. In the 2018/19 academic year independent, government-approved body which King’s enjoyed good GCSE results with 21% of provides objective inspections to safeguard the quality entries achieving the top grades of A*, 9 or 8, which and effectiveness of the education, care and welfare was one of the highest percentages of top grades of children in schools. ISI reports do not provide achieved by the School in the past five years, witha a single overarching judgement for a school but further 17% of grades being graded as an A or 7. instead give a judgement on each aspect of a school’s 94% of all results were graded A*-C with 89% work. These headline statements must include one of pupils gaining five 9-4 grades (or equivalent) of the ISI descriptors: ‘excellent’; ‘good’; ‘sound’; or including English and Maths. Five pupils gained all ‘unsatisfactory’. 9-7 (or equivalent) in all their subjects. These results The most recent full ISI inspection was conducted were, again, achieved in a wide range of subjects in September 2015. Out of the 8 aspects of the including Dance, Italian and Classical Greek. School’s work assessed in the inspection, 4 were At A-level, pupils achieved results broadly in line described as ‘excellent’ (being pupils’ achievement and with expectations. Some exceptional results were learning; the contribution of curricular and extra- obtained by pupils who had faced considerable curricular activities; the quality of pupils’ personal pastoral challenges in recent years, validating the development; and the contribution of arrangements School’s belief that strong welfare support is for pastoral care) and the remaining 4 as ‘good’ essential for each child to reach their full potential. (being the contribution of teaching; the contribution Across individual departments, there were some of arrangements for welfare, health and safety; the outstanding results, well above the national average, quality of governance; and the quality of leadership with Classical subjects achieving high results along and management). with Spanish which shows the strong linguistic A further regulatory compliance inspection was success in the School. The ‘creative subjects’ in Art carried out by ISI in December 2018 which found and Music were also highly successful, showing the that the School met all of the regulatory standards diverse range of interests at the School. The School and no further actions were required. continues to run the BTEC Extended Diploma in Sport. This year, two students gained their diploma, The full ISI reports of both the 2015 and 2018 achieving full starred distinctions (equivalent to three inspections are available on the ISI website at A* grades at A level in terms of UCAS points). https://www.isi.net/school/the-king-s- school-7130.
Grades 2015 2016 2017 2018 2019
GCSE 39% 43% 43% 54% 38% A*- A
GCSE 93% 93% 90% 96% 94% A*- C
A Level 36% 34% 25% 33% 22% A*-A
A Level 88% 93% 81% 86% 71% A*- C THE KING’S SCHOOL BOND 11
Facilities Social impact The School is situated in the grounds of Gloucester Though it is a fee-paying school, the School strives Cathedral and comprises a mix of historic and to make its education available to as many children modern buildings. Certain facilities are owned by as possible, irrespective of means. Fee remission the School with other buildings leased, mainly from (meaning means-tested bursaries and scholarships the Cathedral. The School’s most recent audited to reduce pupil fees) totalling nearly £2m was given accounts show a net book value of land and buildings in the financial year to 31 July 2019. This equates at 31 July 2019 of £5.98 million. The accounts state to nearly 20% of what the School’s total fee the value of the School’s buildings after depreciation, income would have been for that year without any in some cases being zero for certain historic buildings, remission, whereas the average fee remission rate which may not be the same as their open market for the independent school sector is 11.6%.* 44% value should the School be required to sell its of these awards were made based on educational, buildings in the event of insolvency. creative or sporting ability, 7% were made to support the education of choristers of Gloucester King’s has invested significantly in developing its Cathedral, and the rest were made in means-tested facilities in recent years. In 2018/19 it used reserves, and other access-enhancing awards. together with borrowing, to invest nearly £2m (resulting in an accounting loss for that period). King’s also prides itself on the role it plays within Recent investments include: its community in central Gloucester. Pupils are encouraged to give back to society and to make a • construction of the Archdeacon Sports Centre positive contribution to the benefit of the School’s (£2.6m); neighbours. • a new all-weather sports pitch with attached warm The School’s historic partnership with the up pitch (£1.1m); Cathedral is at the heart of the School ethos. • the conversion of the old gymnasium into a This is evident by the continuing commitment to performing arts space (Ivor Gurney Hall) (£680k); provide choristers to the Cathedral to ensure • the creation of a new art school adjacent to the that worship in the Cathedral continues to be Cathedral (Wardle House) (£890k); rich and meaningful for future generations of • a new music school through conversion of the old Gloucestershire residents and visitors. Gloucester Probate Court; The School makes its facilities available to various • an additional school hall through purchase of organisations at significantly discounted rates to adjoining Mission Hall buildings; and help enhance social cohesion and boost the local • the creation of a dedicated facility to provide economy. It hosts summer schools, Rotary Club ‘wraparound’ care for children outside of normal fund-raising events, the Three Choirs Festival, local school hours. church meetings, dance groups, children’s groups and other community-based activities. In addition, The School’s cumulative investment in its estate the School’s modern sports centre and new all- over the last 10 years is shown in the chart below. weather pitch are extensively used by local clubs and teams, with Gloucester City Hockey Club Cumulative Estate Investment making it their home pitch for 2019 onwards.
7m The redevelopment of Dulverton House, with on-site catering and a mix of flexible rooms all 6m within the curtilage of the Cathedral, will allow the 5m School’s support of local events to be significantly 4m improved. This use by the wider community is very much part of the inspiration for the transformation 3m of this building and is fully supported by the 2m Cathedral. 1m 0 2011 2009 2010 2012 2013 2014 2015 2016 2017 2018 2019 * Baines Cutler Independent Schools Financial Benchmarking Survey 2019 THE KING’S SCHOOL BOND 12
“Despite the size of the Cathedral and its Governors associated buildings, we do lack modern and The Governors of the School are: flexible spaces with on-site catering where events • Philip Dancey (Chairman), company director and and training can be held. The availability of the new angel investor Dulverton facility in evenings, weekends and during the 17 weeks the school is on leave will be a • The Dean of Gloucester, The Very Reverend Stephen significant asset in helping us with the work we do Lake both for the church and the City of Gloucester”. • Canon N. Arthy The Very Reverend Stephen Lake, Dean of Gloucester • Reverend Canon R. Mitchell Cathedral • Canon C. Thomson Structure and governance • Mr. A. Brett, former bursar, Headington School, Oxford Organisational structure • Mrs. G Brook King’s was originally constituted as a charity (no. • Mr. M. Dunkley, Managing Director, SLG Beauty 311745) under a scheme framed by the Board of • Mrs. A. Gillespie Education under the Endowed School Acts, 1869, • Mr. M. Hurrell, Former Managing Editor, BBC Radio 1873 and 1874. The scheme was approved by His Gloucestershire Majesty King George V by way of Order of Council dated 30 July 1928. • Mr. R. Ingram, former teacher and senior housemaster at Charterhouse The School was incorporated as a limited company • Mrs. S. Lewis, Commercial Manager, Yorkshire Building by guarantee (no. 03834841) on 26 August Society 1999 and registered as a charity (no. 1080641). • Mr. P. Markey, Managing Director of The Markey The assets and liabilities of the old charity were Group transferred to the new charity on 1 September 2000. The Endowed Funds were transferred to a • Mrs. A Reeve, Solicitor separate charity, King’s School Prize and Scholarship • Mrs. B. Sullivan, Principal, Airthrie School Fund (charity no. 3961979), and are consolidated • Mr. M. Watson, retired headmaster Rendcomb within the accounts of the School. The School College Junior School also has a wholly owned non-charitable trading • Mr. K. Wyman, Director Kurt Wyman Surveyors subsidiary, Serlo Enterprises Limited (company no. Limited 02938904) whose activities involve the organising • Mr. S. Mendel, Accountant and marketing of third-party events at the School. Governing Body The Governors of the School (the “Governing Body”) are the trustees of the charity and directors for the purposes of company law. The Articles of Association of the School specify that the board of Governors shall consist of between 12 and 21 members and be comprised of not more than 6 ex-officio Governors, including the Dean of Gloucester Cathedral and up to 5 Residentiary Canons of the Cathedral. THE KING’S SCHOOL BOND 13
The Governors meet as a board at least three Senior Management Team times a year to determine the general policy of the The Headmaster is appointed by the Governors School and to review its overall management and to run the School and is responsible for strategy, control, for which they are responsible. There are academic and pastoral matters, admissions, four key sub-committees to the Governing Body: marketing, and external relations, including with • The Finance & General Purposes Committee parents, alumni, regulatory bodies, overseas bodies scrutinises revenue, the budget, capital and the media. expenditure and monitors the estate The Bursar is also appointed by the Governors development programme and general and is responsible to the Headmaster and maintenance works. This Committee also Governors for School finances, infrastructure, supervises and finalises the financial statements and support operations, the estate, HR and legal annual report for approval by the Governing Body. matters, and is also Clerk to the Governors and • The Strategic Marketing and Development Company Secretary. Committee considers the overall marketing The senior management team of the School needs of the School to ensure that strategies comprises: are in place for pupil recruitment and retention. • Mr. David Morton, Headmaster The Committee also considers proposals for • Mrs. Anne Haas, Head of Junior School capital development and monitors capital building projects. • Mrs. Mandy Phillips, Deputy Head (Pastoral) • The Education and Compliance Committee • Mr. John Collins, Deputy Head (Staff) considers matters relating to the School’s • Mr. David Butler, Head of Sixth Form academic, curricular and pastoral provision • Mrs. Sharon Bird, Registrar and Director of together with a monitoring and co-ordinating role Admissions and Marketing relating to compliance with regulatory standards • Mr. Lloyd Griffiths, Bursar and other legislative requirements. • The Nominations Committee considers the skills required within the Governing Body and actively seeks to recruit new Governors to the School. The first three of these committees meet at least three times a year, preceding the board meetings, to report to the Governing Body. The Nominations Committee meets on an ad-hoc basis as required. THE KING’S SCHOOL BOND 14
Financial summary There has been no significant change in the financial A summary of the School’s historical income or trading position of the School or its subsidiaries and expenditure account and balance sheet is since 31 July 2019 and there has been no material set out below, which has been extracted without adverse change in the financial performance of the adjustment from the audited consolidated financial School or its subsidiaries since 31 July 2019. statements of the School for the years ending 31 July 2017, 2018 and 2019. The School’s financial statements are available in full on the Charity Commission website at https://beta.charitycommission.gov.uk.
CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES Unrestricted Restricted Total Total Total funds funds 2019 2018 2017 £ £ £ £ £ Income and endowments from: School fees 7,847,594 - 7,847,594 7,352,949 7,146,921 Ancillary trading 120,780 - 120,780 88,085 84,195 Other incoming resources 27,229 - 27,229 24,230 18,108 Trading turnover 35,573 - 35,573 91,133 94,620 Investment income 3,847 - 3,847 385 555 Voluntary income 6,004 87,994 93,998 3,835 11,617 Total incoming resources 8,041,027 87,994 8,129,021 7,560,617 7,356,016
Expenditure on: Trading costs 24,099 - 24,099 74,108 62,538 Fundraising costs – other 17,595 - 17,595 5,494 1,204 Finance costs 73,734 - 73,734 40,981 41,723 Total deductible costs 115,428 - 115,428 120,583 105,465
Education and grant making costs 7,969,162 77,211 8,046,373 7,168,046 6,847,687
Total expenditure 8,084,590 77,211 8,161,801 7,288,629 6,953,152
115,428 - 115,428 120,583 105,465 Net (outgoing)/incoming funds from operations before transfers (43,563) 10,783 (32,780) 271,988 402,864 and investment gains Gains on investments - 6,964 6,964 4,587 5,822 Net movement in funds for the (43,563) 17,747 (25,816) 276,575 408,686 year
Fund balances brought forward 4,975,975 198,696 5,174,671 4,898,096 4,489,410
Total funds carried forward 4,932,412 216,443 5,148,855 5,174,671 4,898,096 THE KING’S SCHOOL BOND 15
CONSOLIDATED AND SCHOOL BALANCE SHEETS School Group 2019 2019 2018 2017 £ £ £ £ Fixed assets Tangible assets 6,651,731 6,651,731 4,979,094 4,958,841 Investments 82,791 82,788 75,824 71,237 6,734,522 6,734,519 5,054,918 5,030,078
Current assets Stocks 56,923 56,923 43,546 49,583 Debtors 717,821 693,148 675,355 489,221 Cash at bank and in hand 1,106,908 1,135,436 1,388,876 1,231,082 1,881,652 1,885,507 2,107,777 1,769,886 Creditors: amounts falling due within one year (1,010,138) (1,013,205) (937,624) (884,072) Net current assets 871,514 872,302 1,170,153 885,814
Total assets less current liabilities 7,606,036 7,606,821 6,225,071 5,915,892 Creditors: amounts falling due after more than one year (2,457,966) (2,457,966) (1,050,400) (1,017,796)
Net assets 5,148,070 5,148,855 5,174,671 4,898,096
Income funds Restricted funds 216,433 216,443 198,696 192,941 General funds 4,931,637 4,932,412 4,975,975 4,705,155 5,148,070 5,148,855 5,174,671 4,898,096
Current borrowings of the School of a mix of fixed, variable and interest only terms. The School’s total reserves of £5.15m at 31 July The total bank debt as at 31 July 2019 was £2.03m. 2019 included £216k restricted funds and £4.93m The covenants in the School’s facilities with Lloyds unrestricted reserves. £4.93m represented the net Bank require the gross operating surplus of the book value of fixed assets. The Governors consider School (before interest and depreciation) for any that given the strength of the School balance sheet, financial year to be at least 125% of consolidated the stable cash flow from student rolls, the ongoing principal repayment and interest payment obligations popularity of the School and the available banking to Lloyds Bank for that period. facility that can be called upon if need arises, that there is no need to build up a free reserve. The School currently has 4 loans with Lloyds Bank, all of which are secured against the properties and assets of the School and are of mixed duration and THE KING’S SCHOOL BOND 16
Purpose ofthe Bonds
The purpose of the Bonds is to raise finance to fund The aims of the project are: the redevelopment of Dulverton House. • to restore and expose many architectural features, Dulverton House is a Grade II* listed medieval to preserve them for many generations to come; building. It is owned by Gloucester Cathedral and • to create larger, brighter open spaces to inspire was first leased to King’s in 1957. The lease is due students and allow better flow through the building; to be renewed ahead of project works starting and will be for a term of 25 years with an option, at • to provide opportunities for students to work the School’s sole discretion, to extend for a further together, independently and in a flexible, modern 25 years. Dulverton House has been used as the workspace to prepare them for the world of work; School’s Sixth Form centre since 1989, prior to • to separate the social space (on the ground floor) which it was one of the School’s boarding houses. and the learning space (on the first floor); The building dates back to the 13th century, • to create a Sixth Form kitchen and café, which when it was a small chapel, and is now in need of will offer a range of hot and cold drinks and redevelopment to make it an effective place for refreshments throughout the day; learning and a versatile shared space with the local • to modernise the services within the building, community. The School’s Governors have approved including lighting, heating, wi-fi, electrical supply, a redevelopment project at an estimated cost of IT facilities, CCTV and plumbing; £2.3 million. While the School aims to meet this cost • to create a south-facing, landscaped patio with almost entirely from the funds raised through the cathedral views where pupils can relax and Bonds, it would be able to fund a partial shortfall socialise; and through its cash reserves. • to provide suitable facilities for events organised by the Cathedral and other local community groups.
Dulverton House
Despite the size of the Cathedral and its associated buildings, we do lack modern and flexible spaces with on-site catering where events and training can be held. The availability of the new Dulverton facility in evenings, weekends and during the 17 weeks the school is on leave will be a significant asset in helping us with the work we do both for the church and the City of Gloucester. The Very Reverend Stephen Lake, Dean of Gloucester Cathedral THE KING’S SCHOOL BOND 17
King’s School has successfully delivered several large In November 2019 the School issued capital projects in recent years, most notably the documentation inviting tenders to carry out the completion of the new £1.1m all-weather sports redevelopment on a fixed-cost contract. It is pitch in 2019, and this experience has informed anticipated that the works will commence in April the approach adopted for the Dulverton House 2020 and be complete in time for the start of the project. The day-to-day project management of new academic year in September 2020. the redevelopment works will be undertaken by an experienced project manager within Roberts Limbrick, the architect appointed by the School for this project.
November January April September 2019 2020 2020 2020 Tender Tender awarded Site works Open for start documentation to principal commence of new term issued contractor
Artist’s impressions of the redeveloped Dulverton House
Breakout room Classroom
Reception Cafe
The Oak Room Common Room THE KING’S SCHOOL BOND 18 THE KING’S SCHOOL BOND 19
Financial projections
The Dulverton House redevelopment will enable figures are based on a number of assumptions which the School to expand its Sixth Form pupil numbers are set out below. It should be understood that the by 20% (from a maximum of 50 to 60 in each projected figures are illustrative only and are based year) without requiring additional teaching staff or on the assumptions as to use set out within them. increasing any other marginal costs. As a result, the These figures should not be construed as a forecast School expects to make all payments of interest of the actual income, profits, returns or cash flow of and fully repay the principal on a £2.25 million loan the School and may be affected by matters completely from the Issuer after seven years from the additional outside the control of the School. Potential investors income generated from the redevelopment. should review and form their own views in relation to the reasonableness, completeness and achievability The School has prepared the financial projections of the projections and the relevant underlying below to show the anticipated cash position resulting assumptions and consult professional advisors if they from the creation of 10 additional Sixth Form places deem necessary. per year. Investors should be aware that the projected
FY ending: Jul-20 Jul-21 Jul-22 Jul-23 Jul-24 Jul-25 Jul-26 Jul-27 Jul-28
L6 extra pupils - 10 10 10 10 10 10 10 10
U6 extra pupils -- 10 10 10 10 10 10 10
Total extra - 10 20 20 20 20 20 20 20 pupils
Gross Fee 19,860 20,555 21,275 22,019 22,790 23,587 24,413 25,267 26,152
Less Remission: 2,979 3,083 3,191 3,303 3,418 3,538 3,662 3,790 3,923
Net Fee 16,881 17,472 18,083 18,716 19,371 20,049 20,751 21,477 22,229
Marginal Fee 0 174,718 361,667 374,325 387,427 400,987 415,021 429,547 444,581 income
Interest Payable 0 -78,750 -78,750 -78,750 -78,750 -78,750 -78,750 -78,750 0
Gross Cash 0 95,968 282,917 295,575 308,677 322,237 336,271 350,797 444,581 Generation
Capital Repayable -2,250,000
Total Interest 0 3,359 13,379 24,192 35,842 48,375 61,838 76,280 15,760 accrued
Net Cash 0 99,327 296,296 319,767 344,519 370,612 398,109 -1,822,923 460,341 Generation
Cumulative 0 99,327 395,623 715,390 1,059,909 1,430,521 1,828,630 5,707 466,048 Cash Position Assumptions
Annual Fee increase 3.5% Extra pupils per year in 6th form post-works 10 Average fee remission (percentage of bursaries and scholarships against fees) 15% Return on cash reserves held by the School 3.5% Loan amount from the Issuer 2,250,000 Loan interest rate 3.5% THE KING’S SCHOOL BOND 20
About the Allia group
Allia Ltd is a charity that supports organisations creating positive social impact. It issued its first bond in 1999 to raise finance for community initiatives, and to date the Allia group has raised over £500 million for charities through bond issues.
The Issuer The Issuer of the Bonds is Allia Social Impact Investments Limited, a charitable community benefit society. It is a subsidiary of Allia Ltd and has been established for the sole purpose of issuing bonds and making loans to charities. The Issuer will process the applications, issue the Bonds and make the Loan to the School. It will maintain the details of Bondholders, collect payments owed by the School on the Loan and make payments owed to Bondholders. Allia Social Impact Investments Limited is registered under the Co-operative and Community Benefit Societies Act 2014 (No. 32151R). As such, it is permitted to offer and issue certain bonds to the public in the United Kingdom based on the exemption under the Financial Services and Markets Act (section 85(5) and Schedule 11A).
The Arranger Allia C&C (the “Arranger”) is a subsidiary of Allia Ltd that arranges finance for charities and responsible businesses. It has been engaged by the School to advise it on raising funding, arrange the Loan with the Issuer and promote the offer of the Bonds to professional investors. Allia C&C is a trading name of City & Continental Limited (company no. 09997053) which is authorised and regulated by the Financial Conduct Authority. THE KING’S SCHOOL BOND 21
Information about the Bonds
What is a bond? In relation to the King’s School Bond, the funds A bond is a form of borrowing by an organisation invested in the Bonds will be loaned to the School seeking to raise funds from investors. The by way of the Loan under the terms of the Facility organisation that issues a bond promises to pay Agreement entered into between the Issuer and interest to each investor in the bond periodically the School. The Issuer will depend on the School until the date when the bond becomes repayable to make payments on the Loan in order for it to be (usually on the specified maturity date, although a able to make payments on the Bonds. Therefore, bond may also become repayable early in certain investors in the Bonds will be assuming credit risk circumstances), at which time the issuer also on the School (for more information see the section Risk factors promises to repay the amount borrowed. ‘ ’). Who is issuing the Bonds? Payments and repayment The Bonds will be issued by Allia Social Impact Payments of interest will be made to Bondholders Investments Limited, a specialist charity bond issuer. It annually on each anniversary of the Issue Date up has been established as a special purpose vehicle to to and including the Repayment Date, which will make it easier for UK charities to raise money from be the seventh anniversary of the Issue Date. The investors without each charity having to issue bonds Bonds are due to be repaid in full at their face directly. Instead, the Issuer may issue bonds from denomination on the Repayment Date. All Bonds time to time, and lend the proceeds of the issue will be repaid on the same date (subject to any rights to a charity. In each case, the payments of interest of early repayment). All payments will be made for and principal due on the loan and those due on value by electronic transfer to the account specified the bonds will be identical so that the payments of by each Bondholder. The Issuer will not be liable for interest and repayment of the loan by the borrower any failure or delay in payment which results from will provide the Issuer with funds to make the events beyond its control. corresponding payments on the related bonds. Early repayment at the option of the Issuer The Issuer may at its option repay any or all of the Bonds, in whole or in part, prior to the Repayment Date. The Facility Agreement also contains provisions permitting the School to repay some or all of the Loan prior to the Repayment Date. If the School decides to exercise this option and repay an amount of the Loan early, the Issuer shall correspondingly repay the same amount of the Bonds early. The Issuer will give not less than 30 days’, and not more than 90 days’, notice to the relevant Bondholders of an early repayment of the Bonds. There is no obligation on the School to repay any part of the Loan or on the Issuer to repay any of the Bonds prior to the Repayment Date. THE KING’S SCHOOL BOND 22
Purchase by the Issuer insolvency of the School any creditor of the School The Issuer may agree with a Bondholder to with security over the assets of the School will be purchase Bonds held by that Bondholder. Such repaid ahead of the Loan and the Bonds (for more Risk factors’ purchase will be subject to agreement with information see the section ‘ ). the relevant Bondholder and may incur an Limited recourse administrative charge. There is no obligation on the Issuer to purchase any of the Bonds. The Bonds are limited in recourse to the proceeds received under the Loan. This means that the Issuer Transfer is only liable to make payments in relation to the The Bonds are transferable. To transfer Bonds Bonds to the extent that it has received payments in whole or part (subject to the specified from the School under the Loan. denominations) a transfer form must be completed Taxation and returned to the Issuer. The transferee must also meet the conditions of who may invest in the Bonds. Investors should not be liable to pay any UK tax The transfer on sale of the Bonds will be subject to on the return of their principal investment on stamp duty (currently at 0.5% of the consideration) redemption of the Bonds. Payments of interest on payable by the transferee unless the value of the the Bonds will be paid without deduction of tax. consideration paid does not exceed £1,000 and the The Issuer will notify HMRC of the amount of each transfer instrument includes a certificate of value interest payment made to each Bondholder within confirming this. three months after the end of its financial year. Each Bondholder has the duty to declare the amount of Form, denomination and title interest received from the Issuer to HMRC and to The Bonds are available in denominations of account to HMRC for any income tax due. Investors £100 and integral multiples thereof. The minimum may also be liable to capital gains tax on any gain investment in the Bonds is £5,000 for the 3% Bonds arising on a transfer of the Bonds. Investors who and £200,000 for the 4% Bonds. are companies within the charge to UK corporation tax in respect of the Bonds will generally be subject The Bonds are in registered form. This means to corporation tax in respect of all profits arising that ownership of the Bonds will be recorded from the Bonds, broadly on the basis reflected in by the Registrar in the Register. The name of the their statutory accounts. Potential investors should Bondholder as recorded in the Register will be the seek advice from a professional tax advisor if in any owner of the Bonds. doubt about the tax implications of an investment What does it mean that the Bonds are in the Bonds. Nothing in this Offer Document or secured on a loan to the School? any other document issued by the Issuer should be construed as tax advice. The Issuer’s rights in respect of the Loan will be charged as security and assigned to the Trustee for Covenants the benefit of the Bondholders. This means that As part of the terms and conditions of the if the School fails to make payments of interest or Bonds, the Issuer makes certain covenants to the principal owed under the Loan and this results in Bondholders (see the section ‘Terms and conditions’). the occurrence of an event of default under the Subject to certain conditions, if the Issuer breaches terms and conditions of the Bonds, the Trustee these covenants and does not remedy them within (acting on the instructions of the Bondholders, and if the permitted timeframe, then the Bondholders placed in funds for that purpose by the Bondholders may seek early repayment of the Bonds. or the Issuer) may enforce the terms of the Loan Bondholders should note that any such repayment against the School, and if any amounts are recovered will be subject to the limited recourse conditions as under the Loan they will be available, following described above. Under the Facility Agreement with payment of certain costs related to enforcement the Issuer, the School also makes certain covenants (such as the fees of the Trustee), for payment to the which, if breached and not remedied, would result in holders of the Bonds. a default on the Loan and, accordingly, a default on The Loan itself is not secured against any asset of the Bonds. the School or otherwise. This means that upon the THE KING’S SCHOOL BOND 23
The key covenants in the Facility Agreement are: (c) if any member of the Group grants a floating charge over any of its business, assets, • a commitment that the School and/or any properties and/or undertakings to secure member of the School’s group (together the the New Debt, the School shall grant, or shall “Group”) shall not incur any additional debt procure that there is granted (as the case may secured against any of the business, assets, be), a floating charge (on substantively the properties and/or undertakings of any member of same terms) to the Issuer to secure the Loan the Group (the “New Debt”) unless: on a pari passu basis to the New Debt; and (a) The total amount of the New Debt, together (d) the School gives at least 30 days’ advanced with any existing secured debt of the Group notice in writing to the Issuer of the (“Existing Secured Debt”), is less than 50% proposed incurrence of the New Debt with of the total value of the assets of the School as computations as to compliance with paragraphs determined with reference to the School’s then (a) and (b) above, such computations to be most recent consolidated audited accounts; satisfactory to the Issuer (acting reasonably). (b) the Group’s consolidated net earnings in the • a provision that if the School takes further previous financial year, as determined with unsecured borrowing and the terms of such reference to the School’s then most recent borrowing include a financial covenant that is consolidated audited accounts and before not in the Facility Agreement with the Issuer and deductions for interest, tax, depreciation and would be more beneficial to the Issuer than any amortisation, is greater than (i) the interest analogous covenant in the Facility Agreement, the payable on the New Debt and any Existing School shall notify the Issuer and those terms shall Secured Debt; plus (ii) three times the interest be automatically incorporated into the Facility payable under the Loan and any other debt Agreement; of the Group, in each case as estimated by the School to be payable in the 12 months • the School will send a copy of its audited financial following the incurrence of the New Debt; statements to the Issuer as soon as they are available, together with a certificate confirming its compliance with the covenants; and • the School will use its reasonable endeavours to provide an annual statement of social impact together with each set of audited financial statements. Fees and expenses The School has committed to paying the expenses of the Issuer in issuing the Bonds (being primarily its legal fees and the Trustee’s costs), which are estimated to be in the region of £15,000 plus VAT (equivalent to 0.8% of £2,250,000). It has further agreed to pay a one-off fee to the Arranger for its services equal to 1% of the value of the Loan. The Issuer will deduct these amounts from the funds raised through the issue of the Bonds before transferring the net proceeds to the School under the Loan. The School may also incur its own legal fees in relation to the Loan and the information it has provided in this Offer Document, which it shall pay directly. The School will further pay an annual fee to the Issuer during the term of the Bonds of £3,000 for its services, as described on page 20.
THE KING’S SCHOOL BOND 24
Key documents
The King’s School Bond is documented by important in England and Wales under the company number legal documents which set out the relationship 06657231. The registered office of the Trustee is between Bondholders, the Trustee and the Issuer. Brief 19-21 Cookridge Street, Leeds, LS2 3AG. descriptions of these documents are set out below. The Deed of Charge Trust Deed The Deed of Charge protects Bondholders against The Trust Deed establishes the role of the Trustee the risk of the Issuer becoming insolvent. It will be to hold on trust the various promises made by the entered into by the Issuer and the Trustee on the Issuer to Bondholders and enforce these if necessary. Issue Date. Under the Deed of Charge, the Issuer It will be entered into by the Issuer and the Trustee assigns its rights under the Loan to the Trustee by on or around the Issue Date and contains: way of security for the benefit of the Bondholders. This means that in the event the Issuer becomes (i) the terms and conditions of the Bonds; insolvent, does not repay the Bonds in full on the (ii) the terms of appointment of the Trustee including Repayment Date or does not pay interest on the the terms on which it may retire or be removed; Bonds on the due date for payment, the Trustee may (iii) the terms on which the Trustee will act, including enforce the terms of the Loan against the School that the Trustee is not required to take action on behalf of Bondholders. The effect of this security on behalf of Bondholders unless it has received is that Bondholders are taking credit risk on the instructions as set out in the Trust Deed and has School and not the Issuer. The Deed of Charge also received such indemnities and security against contains limited recourse provisions, the effect of loss from the Bondholders as it may require; and which is described in the sections ‘Information about the Bonds’ and ‘Risk factors’. (iv) the terms on which Bondholders’ meetings will be held and the requisite quorums and The Registrar Agreement majorities required to pass Bondholder The Registrar Agreement will be entered into by resolutions. the Registrar and the Issuer on or around the Issue In particular, Bondholders should note that they Date. Under the Registrar Agreement the Registrar cannot enforce the terms and conditions of the will agree to perform certain duties for the Issuer Bonds on an individual basis but only through the in respect of the Bonds, including maintaining the Trustee. Register. Bondholders should provide details of any change in ownership or other change (including The Trustee is not required to enforce the terms any change of contact details) to the Issuer, who and conditions of the Bonds if its costs will not be will maintain a database in respect of the Bonds covered by the Bondholders (for more information and Bondholders and will provide a copy of such see the section ‘Risk factors’ below). database to the Registrar on a regular basis. The The Trustee does not investigate and has not Registrar is Wrigleys Solicitors LLP, a Limited investigated the credit-worthiness of the Issuer or Liability Partnership registered in England under No. the School. The Trustee accepts no liability, except OC318186, regulated by the Solicitors Regulation for its own wilful default as Trustee, in the event that Authority and authorised and regulated by the payments are not made in full as they fall due. Financial Conduct Authority. The registered office of The Trustee for the Bonds is Wrigleys Trustees Wrigleys Solicitors LLP is 19-21 Cookridge Street, Limited, a trust corporation which is incorporated Leeds, LS2 3AG. THE KING’S SCHOOL BOND 25
Risk factors
Like any financial investment, investing in the Bonds If the School fails to make payments under the Loan involves certain risks. The following is a description (whether of principal or interest), the Issuer will not of the principal risks and uncertainties relating to be able to meet its payment obligations in respect the Bonds. However, please note that there may of the Bonds. be other risks involved in investing in the Bonds and certain risks may be due to your individual No independent investigation by the Issuer circumstances. If you are concerned about these of the School risks you must consult a financial advisor. The Issuer has not undertaken and will not undertake any investigations or due diligence to Risks relating to the Issuer establish the creditworthiness of the School for Limited recourse the benefit of Bondholders. The Issuer does not provide any credit enhancement, guarantee or any The Issuer’s only material assets corresponding to other credit support in respect of the School or its the Bonds will be its rights under the Loan. Whilst obligations under the Loan. the Issuer may issue other bonds and advance loans to other charities, the Issuer’s rights in respect of The Issuer is under no obligation to monitor the those other loans will be held as security for the performance by the School holders of the corresponding bonds and will not The Issuer is under no obligation to investigate or be available to investors in the Bonds described in monitor the continued compliance by the School this Offer Document. Accordingly, in the event that of the covenants in the Facility Agreement and is the Issuer fails to make payments in respect of the entitled to assume without enquiry that no event of Bonds, investors in the Bonds will have recourse default has occurred under the Facility Agreement. only to certain of the assets of the Issuer. THE KING’S SCHOOL BOND 26
In addition, the Issuer is under no obligation to in the repayment of the Loan. Furthermore, after take any action (including any enforcement action enforcement of the Lloyds Bank security the value following the occurrence of an event of default of the School’s remaining assets may be insufficient under the Facility Agreement) in relation to the to repay the School’s unsecured borrowing School or in respect of its rights under the Facility (including under the Loan). Accordingly, the School Agreement. might not be able to repay the Loan in full or at all, and Bondholders might not be repaid in full or at all. Investors should note that the School has agreed to deliver certain information to the Issuer pursuant Fee income and pupil roll to the terms of the Facility Agreement including (i) its audited annual report and accounts; (ii) a The School generates surpluses for reinvestment compliance certificate confirming whether a default back into the operation of the School and servicing has occurred and is continuing at the relevant time; of debt. Such surpluses are derived from fee income and (iii) an annual statement of social impact. In less operational, funding and other costs. The level addition, the Borrower is required to notify the of fees charged is therefore a key component in the Issuer of any default under the Facility Agreement operation of the School. There is no guarantee that promptly upon becoming aware of its occurrence. the current ratio of fee income to expenses can The Issuer will forward such information to the be maintained, particularly if there is a downturn in Trustee and publish it on its website at http:// the ability and willingness of parents to pay for an allia.org.uk/kingsbond. Investors should note, independent school education caused, for example, however, that the Issuer and the Trustee shall not be by a downturn in the state of the local and wider responsible for reviewing or monitoring the receipt economy. A reduction in that ratio may impact the of any such information and that Bondholders School’s ability to make payments under the Loan, will therefore be responsible for reviewing such which would, in turn, have an impact on the Issuer’s information and deciding upon a course of action to ability to make payments in respect of the Bonds. be taken in relation to it. In order to mitigate such risk, the School continually reviews costs and fee levels against budgets Risks relating to the School and projected long-term pupil numbers. Local Credit risk on the School demographic data is analysed to inform strategic planning for pupil admissions up to five years ahead Credit risk can be described as the risk that a of their entry to the School. borrower of money will be unable to repay it. Investors in the Bonds will take credit risk on the Competition School. If the School becomes unable to pay its The School is aware that there are competitors in debts as they fall due, an investor in the Bonds the education market who may offer an alternative could lose some or the entire amount of his or provision and different fees and charges. This may her investment. Accordingly, investors should have include competition from the state education regard to the detailed information contained in this sector and be affected by Government policy on Offer Document in relation to the School to assess independent schools. Competition in the education the credit risk of an investment in the Bonds. sector may reduce the ability of the School to retain The Borrower has creditors who rank ahead existing pupils or attract new pupils, which would of the Issuer have a direct impact on the School’s revenue. A reduction in revenue may impact the School’s The School currently has 4 loans with Lloyds Bank, ability to make payments under the Loan, which all of which are secured against the properties would, in turn, have an impact on the Issuer’s and assets of the School. This means that if the ability to make payments in respect of the Bonds. School were to become insolvent, Lloyds Bank Through continual evaluation, the School tracks its would have the right to enforce its security and competitors’ offerings and local demands and, where recover its loans before any of the School’s other possible, the School will seek to equal or better unsecured creditors are paid. As a result, there is those offerings, although no assurance can be given a risk that in such an event there may be a delay that the School will succeed in such an endeavour. THE KING’S SCHOOL BOND 27
Risk of adverse financial impact from political Failure to comply with laws and compliance change requirements A change of Government and/or of the policies The School knows the significance to its operations regarding independent schools, such as eligibility of, and is focused on adhering to, all legal and for charitable status or relief from paying VAT on compliance legislation. The School is not currently school fees (or other taxes and duties), could lead aware of any material failure to adhere to to increased costs or lower revenues for the School applicable health and safety or environmental laws, in the longer term. The financial impact of such litigation or of any breach of regulatory laws, or change is being monitored by the School and is failure to comply with corporate, employment or considered when updating financial forecasting over taxation laws. If any such breach or failure were to the following five years. A significant adverse change occur, this could have an adverse impact on the may affect the School’s ability to make payments School’s results of operations. Consequently, the under the Loan and, in turn, the Issuer’s ability to School engages with appropriate networks and make payments in respect of the Bonds. organisations to ensure that all relevant legislation is tracked and regularly reviews its existing policies. Regulatory Issues Furthermore, the School has the benefit of No assurance can be given as to the impact of any insurance for, among other things, employer’s liability, possible changes in regulations after the date of this public liability and professional indemnity at a level Offer Document. The education sector is highly which the management of the School considers to regulated and there has been significant change to be prudent for the type of business in which the the legislative regime over recent years. Changes School is engaged and commensurate with an entity in regulation could result in increased costs for of a similar size and nature. There are no current the School. This, in turn, could adversely affect the litigation claims made against the School although ability of the School to make payments under the there can be no assurance that the School will not, Loan and, in turn, the ability of the Issuer to make in the future, be subject to a claim which may have payments in respect of the Bonds. a material impact upon its revenue or business. Any In light of the above, the School maintains a such claims may have an adverse impact on the governance system suitable to meet current School’s ability to make payments under the Loan regulatory requirements and also monitors and, in turn, the Issuer’s ability to make payments in ISI publications, updates and the ISI website to respect of the Bonds. ensure its governance system remains valid. The School also provides regular updates and training Claims and reputational risks to its Governors, managers and staff to ensure Given the nature of its business, the School may compliance with the regulatory requirements. from time to time face legal action from parents No major failings have been identified in any ISI of pupils, and from staff for work-related incidents. inspection report. Although such liability is subject to insurance cover, if the claims record worsens, insurance may become Adverse Inspection Findings more expensive and this may have an adverse effect The School is regulated and inspected by the ISI. on the School’s operations and revenue. In addition, Any adverse findings of an ISI inspection could result if there were to be high profile claims, or allegations in adverse publicity. This could result in the loss of of mistreatment or abuse, the reputation of the market share and might have a material adverse School, and, therefore, its business, might suffer. This effect on the business, results of operations, financial may affect the School’s ability to make payments condition or prospects of the School. If the ISI under the Loan and, in turn, the Issuer’s ability to findings are seriously adverse, the School could be make payments in respect of the Bonds. subject to restrictions imposed by the Department for Education or removal from its register. THE KING’S SCHOOL BOND 28
Delay or inability to recover losses through it may not be able to meet its obligations under the insurance Loan, which would, in turn, affect the Issuer’s ability The School has in place comprehensive insurance to make payments in respect of the Bonds. cover against the risk of physical destruction of or Risks relating to the nature of the Bonds damage to physical assets including by means of fire, storm damage, contaminated land, asbestos Fixed return and subsidence problems, totalling £47m in rebuild The Bonds will pay interest each year, at the relevant cost cover. Any failure by the School to keep the rate, on each anniversary of the Issue Date up to relevant insurance policies current in respect of a and including the Repayment Date. If you invest in relevant property may, on the occurrence of any the 3% Bonds you will not be able to move any part damage to such property, which would otherwise of your investment to the 4% Bonds at any time have been recoverable under such insurance during the term of the Bonds. policy, result in a corresponding loss in the value of such property. Similarly, even where the relevant The rate for each series of Bonds is fixed for the life insurance policy is current, there could be an of the Bonds and will not fluctuate with prevailing administrative delay in obtaining payment by the interest rates. If interest rates start to rise, then the School from the insurers, which could affect the income to be paid by the relevant series of Bonds ability of the School to meet its respective payment might become less attractive on a relative basis. obligations during that period of delay. Certain types Inflation will also reduce the real value of the Bonds. of risks and losses (such as losses resulting from war This may affect what you could buy with the return or terrorism) may be or become either uninsurable on your investment in the future and may make the or not economically insurable or are not covered fixed interest rate on the Bonds less attractive in the by the insurance policies. Other risks might become future. uninsurable (or not economically insurable) in the Access to capital future. If an uninsured or uninsurable loss were to occur, the School might not have sufficient funds Although the Bonds are transferable they will not to repay in full all amounts owing under the Loan, be listed on a recognised stock exchange and which would impact the ability of the Issuer to pay there is a risk that you may not find a purchaser for all amounts owing under the Bonds. your Bonds. Except at the Issuer’s option (which it may decide not to exercise), the Bonds are only Refinancing risk repayable on the Repayment Date. This means that The current intention of the School is to repay the the Bonds are not suitable for investors who need Loan on maturity from available reserves to be ready access to their capital. built up within the business or from a new fund No direct recourse to the School raising. Monitoring of key performance indicators, detailed monthly management reporting and regular Under the Deed of Charge, the Issuer assigns its review of the reserves policy ensure that there are rights under the Loan to the Trustee by way of sufficient funds to meet the School’s needs. If the security for the benefit of the Bondholders. In the School decides to refinance the Loan with a new event that the School fails to make payments under fund raising, the availability of credit for the School the Loan, the Trustee may enforce the terms of the will be dependent upon economic conditions Loan including taking action against the School on then prevailing in the United Kingdom, being the behalf of the Bondholders. However, the Trustee market where its operations are based, as well as is not required to take enforcement action unless the willingness and ability of lenders to make such it is instructed to do so by the requisite majority loans or investors to buy new bonds. Such lenders of Bondholders and has been indemnified for typically include banks, insurance companies and potential costs by Bondholders. Such enforcement finance companies. The availability of funds in the proceedings may cause delay in repayments or credit markets fluctuates and there can be no losses to Bondholders. Bondholders will not have assurance that the availability of such funds will any direct recourse against the assets of the School remain at current levels. If the School has insufficient in respect of any failure by the School to make reserves and is unable to obtain additional financing payments under the Loan. THE KING’S SCHOOL BOND 29
No recourse to the Financial Services Modification of the terms of the Bonds and the Compensation Scheme (FSCS) waiver of certain rights Unlike a bank deposit, the Bonds are not protected The conditions of the Bonds contain provisions for by the FSCS, the UK statutory compensation fund calling meetings of Bondholders to consider matters of last resort for customers of authorised financial affecting their interests generally. These provisions services firms. If the Issuer is unable to pay any permit defined majorities to bind all Bondholders, amounts in respect of the Bonds, investors will have including Bondholders who did not attend and vote no recourse to the FSCS for compensation or any at the relevant meeting and Bondholders who voted other amounts. If the Issuer or the School go out of in a manner contrary to the majority. The conditions business or become insolvent, investors may lose all of the Bonds also provide that the Trustee may, or part of their investment in the Bonds. without the consent of Bondholders and without regard to the interests of particular Bondholders, Losing contact with the Issuer (i) agree to any modification of, or to the waiver or It is a duty of the Bondholder to keep the Issuer authorisation of any breach or proposed breach of, informed of any change of address. If the Issuer’s any of the provisions of the Bonds, or (ii) determine attempt at repayment of the Bonds on the without the consent of the Bondholders that any Repayment Date is unsuccessful, any interest that event of default shall not be treated as such where, is unclaimed within 5 years of the Repayment in any such case, it is not, in the opinion of the Date and any principal investment unclaimed Trustee, materially prejudicial to the interests of the within 10 years of the Repayment Date will Bondholders, or (iii) agree to any modification to the become forfeit and will be granted by the Issuer terms of the Bonds which is of a formal, minor or to the School to be applied in furtherance of its technical nature or to correct a manifest error or an charitable objects. error which, in the opinion of the Trustee, is proven. THE KING’S SCHOOL BOND 30
How to invest
You may invest in the Bonds if you are: (i) an and the Issue Date and will notify each Applicant individual aged 18 or over and resident in the UK; in writing if it does so. The Issuer also reserves the (ii) a corporate body whose registered office is right not to accept your application. in the UK; (iii) a charitable trust; or (iv) a public sector body in the UK (including local authorities Basis of the application and the devolved administrations in Scotland (the The Issuer will accept applications only on the Scottish Government), Wales (the Welsh Assembly basis of information in this document ‘Offer for Government) and Northern Ireland (the Northern public subscription of up to £2,250,000 3% and 4% Ireland Executive)). limited recourse bonds due 2027’. This information To invest in the Bonds you must complete the supersedes all other information (written or oral) application form on the Issuer’s website at concerning the Bonds. http://allia.org.uk/kingsbond-apply. Payment The minimum subscription amount is £5,000 for the Payment may be made by cheque or by electronic 3% Bonds and £200,000 for the 4% Bonds. You may bank transfer to the account specified on the subscribe for any amount greater than this for either application form. A separate payment must series in multiples of £100. The Issuer expects to accompany each application. Cheques should be close the offering of the King’s School Bond on made payable to “Allia Social Impact Investments” 24 January 2020, though the offer may be closed and must be drawn on a bank in, and be payable in, earlier if fully subscribed. the United Kingdom, the Channel Islands or the Isle The Bonds will be issued within 15 days of the of Man in the same name as the subscriber. Payment Subscription Closing Date. The Issuer reserves received before the Subscription Closing Date will the right to extend the Subscription Closing Date be placed in a separate account of the Issuer. THE KING’S SCHOOL BOND 31
The Issuer has declared that such account is held as agent, in accordance with anti-money laundering on trust for the Applicants until the Issue Date. On regulations. They may therefore ask you to supply the Issue Date the monies standing to the credit of documentation to confirm your identity, address or the account will be transferred, net of the Issuer’s both, or may undertake an electronic identity check. fees and expenses, to the Trust under the Loan. No Any documents provided will be recorded and interest accruing on the account will be payable copied for audit purposes as part of our anti-money to Applicants; however, any amounts standing to laundering requirements. If satisfactory evidence of the credit of the account following the Issue Date identity is not received within the specified time, this will be used for the Issuer’s charitable purposes. may delay the processing of your application and No application will be accepted unless and until may even result in your application being rejected. payment has been received. You should ideally make payment from your personal bank or building society account. Allocation In the case where the Issuer receives applications for Certificates in excess of £2,250,000 nominal of Bonds, while it Certificates in respect of holdings of the Bonds will will attempt to allocate them on a “first come, first be sent by post within 30 days of the Issue Date. served” basis, it may allocate them in any manner Please note that title to the Bonds is recorded that it chooses. This means that you may receive no through the Register. Bonds or not all the Bonds you apply for. Notification Cancellation If your details change or if your bond certificates You have the right to withdraw your application are lost or stolen you must contact the Issuer at any time up to the Issue Date. You will receive immediately. your money back in full but no interest will be paid to you on such monies. If you wish to withdraw Information your application, please write to us at Allia Impact Information provided by the School under the Investments, Future Business Centre, King’s Hedges terms of the Facility Agreement will be published Road, Cambridge, CB4 2HY. on the Issuer’s website. The Issuer may alert you periodically to these updates by email and, if you Notice on Money Laundering have given consent, may send you information The Issuer and the Registrar are required by law about other social investment opportunities which it to check the identity of any Applicant for the Bond believes may be of interest to you (see the section or of any person for whom an Applicant is acting below ‘Data Protection Consent’). THE KING’S SCHOOL BOND 32
Disclaimers and general information
Data protection consent You have the right to ask for a copy of the By completing the application form you are giving information held about you in the Issuer’s and the consent for the Issuer, the Registrar and the Trustee Registrar’s records, and to require them to correct to hold the information you provide in accordance any inaccuracies. Please write to the issuer at Allia with current data protection legislation. The Impact Investments, Future Business Centre, King’s Registrar and the Issuer will use your information for Hedges Road, Cambridge, CB4 2HY and the the maintenance of the Register, to inform you about Registrar at Wrigleys Solicitors LLP, 19-21 Cookridge the impact of your investment and for payments Street, Leeds, LS2 3AG. of interest and the redemption of the Bonds on Legal background maturity. The information will be shared where appropriate with the Trustee in the normal course of This offer is issued by Allia Social Impact Investments the registration process including for identity checks Limited. The Issuer is not an investment institution and fulfilment of the duties of Trustee. authorised and regulated under the Financial Services and Markets Act 2000, and does not In the application form you will be given the option accept deposits. It is permitted to issue this financial for the information about your investment to be promotion pursuant to the exemption to Section passed to the School for the purpose of receiving 21(1) of the Financial Services and Markets Act 2000 updates directly from the School about how the contained in paragraph 35 of the Financial Services Loan funds have been used and other news about and Markets Act 2000 (Financial Promotions) Order its activities. You will also be given the opportunity 2005. This offer of transferable securities does not to consent to the Issuer sending you information require an approved prospectus pursuant to Section about other social investment opportunities which it 85 Financial Services and Markets Act 2000 because believes may be of interest to you. the Bond falls within paragraph 7(2)(a) of Schedule The Issuer shall process your information in 11A of the Financial Services and Markets Act 2000 accordance with the Allia group privacy policy, which Prospectus Regulations 2005. is available at https://allia.org.uk/privacy-policy. It may share information within the Allia group and may send you details of other bond offers if you have given your consent to receive such communications. The Trustee and the Registrar shall process your information in accordance with their privacy policy, which is available at https://www.wrigleys.co.uk/ privacy-notices/privacy-notice-for-clients. The School shall process your information in accordance with its privacy policy, which is available at www.thekingsschool.co.uk/terms. Your information will not be disclosed to other firms for marketing purposes. We may from time to time share anonymised aggregate statistics about our investors but will not do so in a way that could be used to identify you. THE KING’S SCHOOL BOND 33
Glossary
3% Bonds A series of the Bonds paying 3% interest each year
4% Bonds A series of the Bonds paying 4% interest each year
Applicant A potential subscriber for the Bonds who has paid subscription monies to the Issuer
Bonds The 3% Bonds and the 4% Bonds offered under this Offer Document
Bondholders The holders of the Bonds
Deed of Charge A security agreement entered into by the Issuer and the Trustee on or around the Issue Date under which the Issuer assigns its rights under the Loan to the Trustee by way of security
Facility Agreement A facility agreement entered into between the Issuer and the School on 16 December 2019 under which the Issuer may make loans to the School from time to time from the proceeds of bond issues
Issue Date The date the Bonds will be issued, which will be within 15 days of the Subscription Closing Date
Issuer Allia Social Impact Investments Limited
King’s or School The King’s School, Gloucester
King’s School Bond The offer of the Bonds made under the Offer Document
Loan The loan that will be advanced to the School on the Issue Date under the terms of the Facility Agreement, funded by the proceeds of the Bonds
Offer Document This document ‘Offer for public subscription of up to £2,250,000 3% and 4% limited recourse bonds due 2027’
Register The register of Bondholders held by the Registrar
Registrar Agreement The agreement entered into by the Registrar and the Issuer on or around the Issue Date
Registrar Wrigleys Solicitors LLP
Repayment Date Bondholders will be repaid on this date which will be the seventh anniversary of the Issue Date
Subscription Closing 24 January 2020, unless fully subscribed earlier or extended by notice in writing by Date the Issuer to each Applicant
Trustee Wrigleys Trustees Limited
Trust Deed An agreement entered into by the Issuer and the Trustee on or around the Issue Date appointing the Trustee THE KING’S SCHOOL BOND 34
Terms and conditions of the Bonds
The offer of up to £2,250,000 limited recourse 1 Form, Denomination and Title 3% Bonds 3 per cent. Interest Bonds (the “ ”) and (a) Form and denomination: The Bonds are in 4% Bonds 4 per cent. Interest Bonds (the “ ”), in registered form and represented by registered Bonds each case due 2027 (together, the “ ”), was certificates (“Certificates”) in denominations authorised by a resolution of the Board of Directors of £100 and integral multiples thereof (the of Allia Social Impact Investments Limited (the “Specified Denomination”). Each Bondholder Issuer “ ”) passed on 9 December 2019. will be issued with a certificate or certificates The Bonds will be constituted by a trust deed denominated in the relevant Specified (the “Trust Deed”) between the Issuer and Denomination to an aggregate of the entire Wrigleys Trustees Limited (the “Bond Trustee” holding of that holder. which expression shall include all persons for the (b) Title: Title to the Bonds shall pass by registration in time being the trustee or trustees under the Trust the register that the Issuer shall procure to be kept Deed) as trustee for the holders of the Bonds (the by the Registrar in accordance with the provisions Bondholders “ ”). of the Registrar Agreement (the “Register”). The These terms and conditions (the “Conditions”) holder of any Bond will (except as otherwise include summaries of, and are subject to, the detailed required by law) be treated as its absolute owner provisions of (i) the Trust Deed, which includes for all purposes (whether or not it is overdue and the form of the Bonds, (ii) the deed of charge (the regardless of any notice of ownership, trust or any “Deed of Charge”) to be dated the Issue Date interest in it, any writing on it, or its theft or loss) between the Issuer and Wrigleys Trustees Limited and no person will be liable for so treating the (the “Security Trustee”) and (iii) the registrar’s holder. “Bondholder” means the person in whose agreement (the “Registrar Agreement”) between name a Bond is registered in the Register. Registrar Wrigleys Solicitors LLP (the “ ”), Allia Social (c) Transfer of Bonds: One or more Bonds may be Impact Investments Limited as the register servicer transferred upon the surrender (at the specified Register Servicer (the “ ”) and as the Issuer. office of the Register Servicer (if an Event of Copies of the Trust Deed, the Deed of Charge, the Default has not occurred or is not continuing) Registrar Agreement and the rules of the Issuer will, and at the specified office of the Registrar (if an when published, be available on the website of the Event of Default has occurred and is occurring)) Issuer at http://allia.org.uk/kingsbond. of the Certificate representing such Bonds to be transferred, together with the form of transfer The Bondholders will be entitled to the benefit of, endorsed on such Certificate, duly completed will be bound by, and will be deemed to have notice and executed and any other evidence as the of, all the provisions of the Deed of Charge, the Trust Register Servicer or the Registrar (as the case Deed and the Registrar Agreement. may be) may reasonably require. In the case Repayment of the Bonds is limited in recourse to of a transfer of part only of a holding of Bonds monies received by the Issuer from the School represented by one Certificate, a new Certificate pursuant to the loan granted by the Issuer as lender shall be issued to the transferee in respect of the and the School as borrower (the “Loan”) designated part transferred and a further new Certificate as the “King’s Loan 1”. in respect of the balance of the holding not transferred shall be issued to the transferor. However, a Bond may not be transferred unless (i) the principal amount of Bonds proposed to THE KING’S SCHOOL BOND 35
be transferred and the principal amount of the “Secured Property” means the assets from time balance of Bonds proposed to be retained by the to time subject, or expressed to be subject, to the relevant transferor are, in each case, denominated Security or any part of those assets. in the relevant Specified Denomination; and (ii) in respect of any transfer which is chargeable to 4 Interest UK stamp duty, the Issuer has received a duly (a) The 3% Bonds will bear interest at a rate of stamped form of transfer. 3 per cent. per annum and the 4% Bonds will (d) Series: whether a Bond is a 3% Bond or a 4% bear interest at a rate of 4 per cent. per annum. Bond shall be stated on the relevant Certificate Interest will be payable annually in arrears on and recorded in the Register. The Register shall each anniversary of the Issue Date up to and be conclusive as to the Series (as defined in the including the Repayment Date (each an “Interest Trust Deed) of a Bond. Payment Date”). The amount of interest payable on each Interest Payment Date per Bond of 2 Status, Priority and Security Specified Denomination will be £3 in respect of (a) Status of the Bonds: The Bonds constitute the 3% Bonds and £4 in respect of the 4% Bonds. secured obligations of the Issuer, recourse (b) For Bonds redeemed prior to the Repayment in respect of which is limited in the manner Date in accordance with Condition 5 described in Condition 12 (Enforcement, Limited (Redemption and Purchase), the amount of Recourse and Non-Petition). interest payable per Specified Denomination (b) Priority: The Bonds shall at all times rank pari in arrear on the relevant redemption date shall passu and without any preference among equal the product of the Specified Denomination, themselves. The payment obligations of the relevant rate of interest and the day-count the Issuer under the Bonds, save for such fraction, rounding the resulting figure to the exceptions as may be provided by applicable nearest one penny (half of one penny being legislation, at all times rank at least equally with rounded upwards). The day-count fraction shall all its other present and future unsecured and be the number of days in the period from and unsubordinated obligations. including the last Interest Payment Date to but excluding the relevant redemption date. (c) Security: The holders of the Bonds and the other Secured Creditors (as defined in the Deed of (c) Each Bond will cease to bear interest from Charge) will, subject to the terms of the Trust the Repayment Date unless, upon surrender Deed, share in the security created by the Deed of the Certificate representing such Bond on of Charge (the “Security”). Upon enforcement the Repayment Date, payment of principal is of the Security the proceeds of such enforcement improperly withheld or refused. In such event it shall be applied by the Security Trustee as set out shall continue to bear interest at such rate (both in the Deed of Charge. If the moneys received before and after judgment) until whichever is the by the Security Trustee are not enough to pay earlier of (a) the day on which all sums due in in full all amounts to persons whose claims rank respect of such Bond up to that day are received rateably, the Security Trustee shall apply the by or on behalf of the relevant holder, and (b) moneys pro rata on the basis of the amount due the day falling seven days after the Bond Trustee to each party entitled to such payment. has notified Bondholders of receipt of all sums due in respect of all the Bonds up to that seventh day (except to the extent that there is failure in 3 Negative Pledge the subsequent payment to the relevant holders Except as provided in the Deed of Charge, the Issuer under these Conditions). shall not create or allow to exist any Security Interest on the whole or any part of the Secured Property. “Security Interest” means any mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having a similar effect. THE KING’S SCHOOL BOND 36
5 Redemption and Purchase 6 Payments (a) Final Redemption: Unless previously redeemed, (a) Method of Payment: Payments of principal or or purchased and cancelled, the Bonds will interest or other payments on the Bonds will be redeemed at their principal amount on be made to the persons shown in the Register. the Repayment Date. The Bonds may not be Each such payment will be made by electronic redeemed at the option of the Issuer other than bank transfer to a bank account nominated by in accordance with this Condition 5 (Redemption the Bondholder in the application form (or as and Purchase). otherwise notified to the Issuer in writing no less than five Business Days prior to the date of such (b) Redemption at the Option of the Issuer: The payment). The Issuer shall not be liable for any Issuer may at its option, having given not less delay in payment due to any technical failure of than 30 nor more than 90 days’ notice to the the electronic transfer system. Bondholders in accordance with Condition 14 (Notices) (which notice shall be irrevocable), (b) Payments Subject to Laws: All payments are redeem the Bonds in whole or, subject to the subject in all cases to any applicable fiscal or relevant Specified Denomination, in part at other laws and regulations in the place of their principal amount. The Bonds may not be payment, but without prejudice to the provisions redeemed at the option of the Issuer other than of Condition 7 (Taxation). No commissions or in accordance with this Condition 5 (Redemption expenses shall be charged to the Bondholders in and Purchase). respect of such payments. (c) Notice of Redemption and Drawings: All (c) Payments on Business Days: A Bond may only Bonds in respect of which any notice of be presented for payment on a day which is redemption is given under this Condition shall be a Business Day in the place of presentation. redeemed on the date specified in such notice “Business day” means a Day on which in accordance with this Condition. In the case of commercial banks are open in London. a partial redemption the Bonds to be called for redemption shall have been drawn in such place 7 Taxation as the Bond Trustee may approve and in such (a) All payments in respect of the Bonds shall be manner as it deems appropriate. made free and clear of, and without withholding (d) Purchase: The Issuer may at any time purchase or deduction for, any taxes, duties, assessments Bonds from individual Bondholders without or governmental charges of whatever nature making a general offer to Bondholders at any imposed, levied, collected, withheld or assessed price. The Bonds so purchased, while held by or by or within the United Kingdom or any authority on behalf of the Issuer shall not entitle the holder therein or thereof having power to tax, unless to vote at any meetings of the Bondholders such withholding or deduction is required by and shall not be deemed to be outstanding law. In that event the Issuer shall make such for the purposes of calculating quorums at payment after such withholding or deduction meetings of the Bondholders or for the purposes has been made and shall account to the relevant of Condition 11 (Meetings of Bondholders, authorities for the amount so required to be Modification, Waiver and Substitution). withheld or deducted. (e) Cancellation: All Bonds so redeemed or (b) The Issuer shall not be obliged to make any purchased will be cancelled and may not be additional payments to Bondholders in respect of re-issued or resold. any withholding or deduction. THE KING’S SCHOOL BOND 37
8 Events of Default or sued out on or against any part of the property, If any of the following events occurs and is continuing assets or revenues of the Issuer, and in any such the Bond Trustee at its discretion may, and if so case not being discharged within 30 days; or requested by holders of at least three-quarters in (e) Security Enforced: any mortgage, charge, pledge, principal amount of the Bonds then outstanding or lien or other encumbrance, present or future, if so directed by an Extraordinary Resolution (as created or assumed by the Issuer becomes defined in the Trust Deed) shall (subject in each case enforceable and any step is taken to enforce to the Bond Trustee being indemnified and/or secured it (including the taking of possession or the and/or prefunded to its satisfaction), give notice to the appointment of a receiver administrator or other Issuer that the Bonds are, and they shall immediately similar person); or become, due and payable at their principal amount (f) Insolvency: the Issuer is (or is, or could be, (such notice, an “Acceleration Notice”): deemed by law or a court to be) insolvent (a) Non-Payment: the Issuer fails to pay any amounts or bankrupt or unable to pay its debts, stops, due on any of the Bonds when due and such suspends or threatens to stop or suspend failure continues for a period of seven days; or payment of all or a material part of (or of a (b) Breach of Other Obligations: the Issuer particular type of) its debts, proposes or makes does not perform or comply with any one or any agreement for the deferral, rescheduling or more of its other obligations in the Transaction other readjustment of all of (or all of a particular Documents (as defined in the Trust Deed) type of) its debts (or of any part which it will or which default (a) is incapable of remedy or, if might otherwise be unable to pay when due), in the opinion of the Bond Trustee capable of proposes or makes a general assignment or an remedy, is not in the opinion of the Bond Trustee arrangement or composition with or for the remedied within 30 days after notice of such benefit of the relevant creditors in respect of default shall have been given to the Issuer by the any of such debts or a moratorium is agreed or Bond Trustee and (b) in the opinion of the Bond declared or comes into effect in respect of or Trustee is materially prejudicial to the interests of affecting all or any part of (or of a particular type the Bondholders; or of) the debts of the Issuer; or Winding-up: (c) Cross-Default: (i) any other present or future (g) an administrator or similar official indebtedness of the Issuer for or in respect of is appointed, an order is made or an effective moneys borrowed or raised becomes due and resolution passed for the winding-up or payable prior to its stated maturity by reason of dissolution or administration of the Issuer, or the any actual event of default (howsoever described), Issuer ceases or threatens to cease to carry on or (ii) any such indebtedness is not paid when all or substantially all of its business or operations, due or, as the case may be, within any originally except for the purpose of and followed by a applicable grace period, or (iii) the Issuer fails reconstruction, amalgamation, reorganisation, to pay when due any amount payable by it merger or consolidation on terms approved under any present or future guarantee for, or by the Bond Trustee or by an Extraordinary indemnity in respect of, any moneys borrowed Resolution of the Bondholders; or or raised provided that the aggregate amount (h) Illegality: it is or will become unlawful for the of the relevant indebtedness, guarantees and Issuer to perform or comply with any one indemnities in respect of which one or more of or more of its obligations under any of the the events mentioned above in this Condition Transaction Documents; or 8(c) (Cross-Default) have occurred equals or (i) Transaction Documents: any Transaction exceeds £100,000 and provided further that Document is not, in whole or (in the opinion “indebtedness” or “moneys borrowed or of the Bond Trustee) in any material part, (or is raised” for the purposes of this Condition 8(c) claimed by the Issuer not to be) in full force and (Cross-Default) shall not include any indebtedness effect; or incurred or moneys raised on a limited recourse basis; or (j)Analogous Events: any event occurs which has an analogous effect to any of the events referred to in (d) Enforcement Proceedings: a distress, attachment, any of the foregoing Conditions 8(a)-(i). execution or other legal process is levied, enforced THE KING’S SCHOOL BOND 38
9 Prescription of the Bonds, (iii) to make any modification Claims in respect of principal, interest and other as to the calculation, amount or due date of sums will become void unless presentation for interest in respect of any Bonds, (iv) to change payment is made as required by Condition 6 the currency of payment of the Bonds or (v) to (Payments) within a period of 10 years (in the case modify the provisions concerning the quorum of principal) or five years (in the case of interest) required at any meeting of Bondholders or from the Repayment Date and thereafter all such the majority required to pass an Extraordinary Basic Terms sums shall be forfeited and revert to the Issuer. Resolution (each of (i) to (iv) a “ Modification”), in which case the necessary 10 Replacement of Bonds quorum will be two or more persons holding or representing not less than 75 per cent., or at any If any Certificate is lost, stolen, mutilated, defaced adjourned meeting not less than 25 per cent., in or destroyed, it may be replaced at the specified principal amount of the Bonds for the time being office of the Register Servicer (if an Event of Default outstanding. Any Extraordinary Resolution duly has not occurred and is not continuing) or the passed shall be binding on Bondholders (whether Registrar (if an Event of Default has occurred and is or not they were present at the meeting at which continuing) subject to all applicable laws and stock such resolution was passed). exchange or other relevant authority requirements, Written resolutions: upon payment by the claimant of the expenses (b) The Trust Deed provides incurred in connection with such replacement and that a resolution in writing signed by or on on such terms as to evidence, security, indemnity behalf of all the Bondholders outstanding shall and otherwise as the Register Servicer (if an Event for all purposes be as valid and effective as an of Default has not occurred and is not continuing) Extraordinary Resolution passed at a meeting or the Registrar (if an Event of Default has occurred of Bondholders duly convened and held. Such and is continuing) may reasonably require. Mutilated a resolution in writing may be contained in one or defaced Certificates must be surrendered before document or several documents in the same replacements will be issued. form, each signed by or on behalf of one or more Bondholders. 11 Meetings of Bondholders, (c) Bondholders of separate Series: An Modification,Waiver and Substitution Extraordinary Resolution passed at a meeting of the Bondholders shall be binding on the holders (a) Meetings of Bondholders: The Trust Deed of each Series of Bonds irrespective of the effect contains provisions for convening meetings on them, except for an Extraordinary Resolution of Bondholders to consider matters affecting of the Bondholders to sanction a Basic Terms their interests, including the sanctioning by Modification which shall not take effect unless Extraordinary Resolution (as defined in the it has also been sanctioned by an Extraordinary Trust Deed) of a modification of any of these Resolution of the holders of each Series of Conditions or any provisions of the Trust Bonds. Deed. Such a meeting may be convened by Bondholders holding not less than 10 per The Trust Deed provides that: cent. in principal amount of the Bonds for the (i) meetings of Bondholders of separate Series time being outstanding. The quorum for any will normally be held separately, but the Bond meeting convened to consider an Extraordinary Trustee may from time to time determine that Resolution will be two or more persons holding meetings of Bondholders of separate Series or representing a clear majority in principal shall be held together; amount of the Bonds for the time being outstanding, or at any adjourned meeting two or (ii) an Extraordinary Resolution that in the more persons being or representing Bondholders opinion of the Bond Trustee affects one Series whatever the principal amount of the Bonds alone shall be deemed to have been duly held or represented, unless the business of such passed if passed at a separate meeting of the meeting includes consideration of proposals, Bondholders of the Series concerned; inter alia, (i) to modify the maturity of the Bonds, (iii) an Extraordinary Resolution that in the (ii) to reduce or cancel the principal amount opinion of the Bond Trustee affects the THE KING’S SCHOOL BOND 39
Bondholders of more than one Series but the Bond Trustee shall have regard to the interests does not give rise to a conflict of interest of the Bondholders as a class and shall not have between the Bondholders of the different regard to the consequences of such exercise for Series concerned shall be deemed to have individual Bondholders and the Bond Trustee been duly passed if duly passed at a single shall not be entitled to require, nor shall any meeting of the Bondholders of the relevant Bondholder be entitled to claim, from the Issuer Series; and any indemnification or payment in respect of any tax consequence of any such exercise upon (iv) an Extraordinary Resolution that in the individual Bondholders. opinion of the Bond Trustee affects the Bondholders of more than one Series and gives or may give rise to a conflict of 12 Enforcement, Limited Recourse and interest between the Bondholders of the Non-Petition different Series concerned shall be deemed (a) Enforcement: Subject always to the terms of the to have been duly passed only if it shall be Deed of Charge, at any time after the Bonds duly passed at separate meetings of the become due and payable, the Bond Trustee Bondholders of the relevant Series. may, at its discretion and without further notice, (d) Modification and aiver:W The Bond Trustee may institute such proceedings against the Issuer as agree, without the consent of the Bondholders it may think fit to enforce the terms of the Trust to (i) any modification of any of the provisions Deed and the Bonds, but it need not take any of the Trust Deed which is of a formal, minor such proceedings unless (i) it shall have been or technical nature or is made to correct a so directed by an Extraordinary Resolution or manifest error, and (ii) any other modification so requested in writing by Bondholders holding (except as mentioned in the Trust Deed), and at least one-fifth in principal amount of the any waiver or authorisation of any breach or Bonds outstanding, and (ii) it shall have been proposed breach, of any of the provisions of the indemnified and/or secured and/or prefunded Trust Deed which is in the opinion of the Bond to its satisfaction. No Bondholder may proceed Trustee not materially prejudicial to the interests directly against the Issuer unless the Bond Trustee, of the Bondholders. Any such modification, having become bound so to proceed, fails to do authorisation or waiver shall be binding on the so within a reasonable time and such failure is Bondholders and, if the Bond Trustee so requires, continuing. such modification shall be notified to the (b) Limited Recourse: Bondholders as soon as practicable. (i) Enforcement of Security: Only the Security (e) Substitution: The Trust Deed contains provisions Trustee may enforce the Security over the permitting the Bond Trustee to agree, subject Secured Property in accordance with, and to such amendment of the Trust Deed and subject to the terms of, the Deed of Charge. such other conditions as the Bond Trustee (ii) Issuer Liability Limited: The liability of the may require, but without the consent of the Issuer to pay any amounts due under the Bondholders, to the substitution of certain other Bonds shall be limited to, and payable solely entities in place of the Issuer, or of any previous out of, the amounts received by the Issuer, substituted company, as principal debtor under or the Security Trustee on behalf of the the Trust Deed and the Bonds. In the case of Secured Creditors (as defined in the Deed of such a substitution the Bond Trustee may agree, Charge), in respect of the Secured Property without the consent of the Bondholders, to a and applied in accordance with the Deed of change of the law governing the Bonds and/ Charge. or the Trust Deed provided that such change would not in the opinion of the Bond Trustee (iii) Amounts to Remain Outstanding: Subject be materially prejudicial to the interests of the always to Condition 12(b)(i) (Enforcement of Bondholders. Security) above and Condition 12(c) (Non- Petition) below, any amount due under the (f) Entitlement of the Bond Trustee: In connection Bonds and not payable or paid when due with the exercise of its functions (including but by the Issuer in accordance with Condition not limited to those referred to in this Condition) THE KING’S SCHOOL BOND 40
12(b)(ii) (Issuer Liability Limited) above will or not addressed to it and whether their liability nevertheless continue to be regarded as in relation thereto is limited (by its terms or by being outstanding for the purposes of making any engagement letter relating thereto entered any demand under, or enforcing any Secured into by the Bond Trustee or in any other manner) Property created by the Issuer pursuant to, by reference to a monetary cap, methodology or any Transaction Document. otherwise. The Bond Trustee may accept and shall be entitled to rely on any such report, confirmation (iv) Insufficient Recoveries: If, or to the extent that, or certificate or advice and such report, after the Security over the Secured Property confirmation or certificate or advice shall be binding has been enforced and as fully as practicable on the Issuer, the Bond Trustee and the Bondholders. realised and the proceeds thereof have been applied in accordance with the Deed of Charge the amounts recovered on realisation 14 Notices of the Secured Property are insufficient to Notices to Bondholders will be either mailed or sent pay or discharge amounts due from the Issuer electronically to them at the respective addresses in to the Bondholders in full for any reason, the the Register and deemed to have been given on the Issuer will have no liability to pay or otherwise second business day after the date of mailing. make good any such insufficiency. (c) Non-Petition: No Bondholder may take 15 Contracts (Rights of Third Parties) any corporate action or other steps or legal Act 1999 proceedings for the winding-up, dissolution, No person shall have any right to enforce any term arrangement, reconstruction or reorganisation of or condition of the Bonds under the Contracts the Issuer or for the appointment of a liquidator, (Rights of Third Parties) Act 1999. receiver, administrative receiver, administrator, trustee, manager or similar officer in respect of the 16 Governing Law Issuer or over any or all of its assets or undertaking. (a) Governing Law: The Trust Deed and the Bonds and any non-contractual obligations arising out 13 Indemnification of the Bond Trustee of or in connection with them are governed by The Trust Deed contains provisions for the English law. indemnification of the Bond Trustee and for its relief (b) Jurisdiction: The courts of England are to have from responsibility. The Bond Trustee is entitled to jurisdiction to settle any disputes which may arise enter into business transactions with the Issuer and out of or in connection with the Trust Deed and/ any entity related to the Issuer without accounting or the Bonds and accordingly any legal action or for any profit. proceedings arising out of or in connection with The Bond Trustee may rely without liability to the Trust Deed and/or the Bonds may be brought Bondholders on a report, confirmation or certificate in such courts. The Issuer has in the Trust Deed or any advice of any accountants, financial advisers, irrevocably submitted to the jurisdiction of such financial institution or any other expert, whether courts. ISSUER LEGAL ADVISORS Allia Social Impact TRUSTEE To the Issuer Investments Ltd Wrigleys Trustees Limited Wrigleys Solicitors LLP Future Business Centre 19-21 Cookridge Street 19-21 Cookridge Street King’s Hedges Road Leeds LS2 3AG Leeds LS2 3AG Cambridge CB4 2HY REGISTRAR To the Borrower BORROWER Wrigleys Solicitors LLP Harrison Clark Rickerbys Limited The King’s School, Gloucester 19-21 Cookridge Street Ellenborough House Pitt Street Leeds LS2 3AG Wellington Street, Cheltenham Gloucester GL1 2BG Gloucestershire GL50 1YD
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