You are here: Home - Investing - Experienced Investor - News -

“Burrito Bond” company in restructuring talks

0
Written by: Emma Lunn
15/11/2019
UK-based Mexican restaurant chain Chilango launched a mini-bond paying 8 per cent a year ago – but its future is now uncertain.

Chilango raised millions of pounds from small investors via its  “Burrito Bond” scheme, with a first tranche of bonds on sale in 2014 raising more than £2m, and “Burrito Bond 2” launched in October 2018 raising £3.7m.

Chilango claimed the Burrito Bond 2 was “one of the most popular alternative investment offers of recent times”. Nearly 800 investors put money in – including 194 who qualified for a Chilango “black card” entitling them to a free burrito every week for the lifetime of the bond after investing at least £10,000.

However, the restaurant chain, which has 12 UK outlets, is now in talks with restructuring experts about options for the business.

The company has engaged accountancy firm RSM “to assist on long-term planning, options and strategy”, with the options on the table including administration or a restructuring agreement allowing it to cut rents and close outlets, according to press reports.

Chilango’s parent company, London-based Mucho Mas, made a loss of £1.4m in the year to 25 March 2018, the latest period for which accounts are available, and a loss of just under £3.2m the year before.

What are retail and mini bonds?

Retail and mini bonds are a relatively new way for companies to borrow money directly from private investors.

Like a traditional bond, holders of a mini bond are paid interest until the bond reaches “maturation”, when they are repaid the full value of their investment.

Unlike traditional bonds, mini bonds are marketed directly to investors and not listed on any stock exchange.

Retail bonds are also marketed directly to investors but the difference is they are listed on a stock exchange. This means their capital value fluctuates because they can be bought and sold.

It also means they are subject to much stricter regulation than mini bonds.

Bonds can be high risk

A number of high profile companies have issued mini bonds but they are high risk.

The Financial Conduct Authority (FCA) warned earlier this year that prospective investors need to understand the associated risks. Mini bonds are usually illiquid as they are not transferable, unlike listed retail bonds.

Both types of bond can be high risk, as the failure rate of small businesses can be high, and they are not protected by the Financial Services Compensation Scheme (FSCS).

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
BT retains Champions League rights

BT has bought the exclusive rights to the UEFA Champions League, UEFA Europa League and UEFA Europa Conference League until...

Close