On Tuesday, 3 April 2012, BBC Radio 4 broadcast a programme about a company called EcoPlanet Bamboo. The company was establishing a bamboo plantation in Rama, Nicaragua, part-funded by “the world’s first bamboo bond”.
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EcoPlanet Bamboo aimed to raise US$12 million to fund the company’s plantations. The bond started life in 2011. Here’s Camille Rebelo, one of the co-founders of EcoPlanet Bamboo, explaining the bond:
At the largest bond of US$50,000, it’s about a 500% return on investment over a 15 year period. It’s a guaranteed return to the investor backed by the plantation and the assets that come along with that Rama plantation.
“Conscious capitalism”
BBC World Affairs Correspondent Mike Wooldridge travelled to Nicaragua to take a look at EcoPlanet Bamboo’s operations. “Many would be investors apparently asked, ‘Isn’t this simply too good to be true?’ Well, that’s what we’re exploring too.”
“We like to call it conscious capitalism,” Rebelo told Wooldridge.
Wooldridge asks Rebelo whether she could say to any investors that there is no chance that this could turn out to be a house of cards.
Unfortunately, Rebelo and Wooldridge both seem to have forgotten that earlier in the programme she’d said that there was a 500% “guaranteed return to the investor”. Here is Rebelo’s reply:
“No, absolutely not. As with any investment there’s risk. And we don’t try to cover over those risks. What we do is lay them out on the table for an investor and tell them the options of what happens if that risk occurs and if certain things would happen on the plantation, what would happen to an investor’s money. The most we can do is be transparent.”
Troy Wiseman is the co-founder and CEO of EcoPlanet Group LLC, based in Illinois, USA. He’s an entrepreneur who made his fortune through a clothing company, B.U.M. Equipment, and a series of investment firms: The InvestLinc Group, Legatum, and TriLinc Global. He told Wooldridge that,
“People think well how can you make 500%? Well, really it’s not, right? You divide that by 15 years so it’s 30 something percent, right? That’s what they should have gone out and said.
“And listen, it worked, and that’s their business. That’s what they get paid to do. I didn’t like it. I still don’t like it.
“On this next go round I’ve told them we’re not going to do it if they don’t change it. And so they have.
“But do I think that the people that bought the bigger bond can get average 33%? I absolutely do. Because of the experts that came in to look at it and evaluate the market.”
Emerald Knight is in liquidation. So far, Guardian Business Recovery, the liquidator, has received claims for more than £2.5 million from investors in unregulated investments marketed by Emerald Knight.
The company’s website has gone, but an archived copy is available here.
Enter Citadel Trustees
The bamboo bonds brochure reveals that investors paid their money to Citadel Trustees:
When the boiler room operations disappeared, Citadel Trustees wrote to the people who had been scammed into buying the worthless carbon credits to tell them that they now had to pay an annual fee to Citadel Trustees, to cover the costs of holding the carbon credits.
Things fall apart
In April 2016, EcoPlanet Bamboo wrote to the holders of the bamboo bonds. This was followed in August 2016 by a letter from Highpoint Trustees.
It seems that the promises of 500% returns really were too good to be true.
Here are copies of the letters:
April 20, 2016
Dear Bondholders,
In out last communication to you we informed you that we would transfer the Eco Resources Fund (ERF Fund) shares equal to the face value of your bonds, plus the agreed upon interest payments due, to Highpoint Trustees (Citadel) who would take responsibility for selling the shares once the ERF Fund reopened for trading, and facilitate the bondholders payments due from the Eco Resource Fund shares. There is still also the option to take and hold the shares directly, if you are a qualified investor.
EcoPlanet Bamboo CA II, LLC (EPB CA II) continues to hold the ERF Fund shares, on their behalf as your Trustee, and on behalf of EcoPlanet Bamboo UK, Ltd (EPB UK). EPB CA II would sell these shares for the benefit of the bondholders, thus continuing to facilitate the bond redemption, which includes the agreed upon interest calculated through December 31, 2015.
At the time of the sale of the ERF Fund shares, EPB UK will send the proceeds directly to Highpoint, who will deposit these funds into their respective bondholder clients’ accounts.
Highpoint can at any time take direct possession of the collateral; however at this time EPB UK will continue to facilitate the sale, of the ERF Fund shares. Following the sale of ERF Fund shares EPB UK will send the proceeds directly to Highpoint for payment of the bond redemption and accrued interest.
To be totally clear EPB CA II as of today holds ERF Fund shares, on behalf of Highpoint as your Trustee, equal to the remaining balance due from the sale of Rio Kama. This includes 100% of the outstanding bonds and interest calculated through December 31, 2015. We will continue to keep you updated on further information regarding the Eco Resources Fund and will inform you as soon as we receive any information that the ERF Fund either reopened for trading, we receive a private offer to purchase the Fund shares and/or when your final bond redemption and interest payments have been sent to Highpoint.
Sincerely,
Troy D. Wiseman, Manager EcoPlanet Bamboo UK LTD Managed by EcoPlanet Capital Management, LLC
CC: Highpoint Trustees Limited
12/08/2016
Dear Bondholder(s),
EcoPlanet Bamboo Bonds project (the “Project”)
We write further to correspondence from EcoPlanet Bamboo (UK) Ltd (the “Issuer“) dated 18 December 2015 and 20 April 2016 (copies of which are attached) and the bonds purchased pursuant to a bond purchase agreement (the “BPA“) between you, Citadel Trustees EP Ltd and the Issuer (the “Bonds“). Pursuant to a trust deed dated 26 July 2011 between the Issuer and Highpoint Trustees Limited (FKA Citadel Trustees Limited)(“Highpoint“), Highpoint agreed to act as trustee on your behalf in relation to the Bonds.
We note from the correspondence dated 18 December 2015 that the Eco Resources Fund has agreed to allow you to own shares directly in Eco Resources Fund equal to the value of your Bonds and accrued interest. In the event that you did not choose to take up the right to own the shares directly, the Issuer stated that Highpoint would hold the shares on your behalf. The Issuer made further reference to this topic in the 20 April 2016 correspondence where they stated that Highpoint could decide to exercise the security it held, on your behalf.
The Issuer added that Highpoint would ‘take responsibility for selling the shares once the ERF Fund reopened for trading’. The Issuer also stated that ‘ECB CA II as of today holds ERF Fund shares, on behalf of Highpoint as your Trustee’.
Whilst not disputing that this offer was made in good faith, it is not an area in which Highpoint could become involved without significant and expensive legal advice as to the nature of the project under the current, complicated legislation and as to the extension of our responsibilities.
Notwithstanding the current structure of the Project, the Issuer wrote to you on 8 November 2013 setting out a strategy for redeeming the Bonds by 31 December 2015. The terms of the BPA allow for the Issuer to do this where they would have otherwise been unable to make payments to Bondholders under the BPA. As you know, redemption has not occurred within the stated timeframe and we consider this to be an Event of Default (as defined by the BPA). As such, we now have the right, with Bondholders’ consent, to enforce the security which we hold on your behalf.
The security consists of a charge over 100% of the membership units of EcoPlanet Bamboo CA II, LLC (“ECB CA II“) (the “Security“). We have been informed by the Bond Issuer, and reviewed verification for Moore Fund Administration (IOM) Limited, the fund’s independent administrator that ECB CA II hold 6,479,933.953 shares in the Eco Resources Fund and the stated value is currently $1.43 per share in accordance with the latest report from June 2016 (attached). If you should have any queries regarding the fund shares please contact the Bond Issuer.
In order to enforce the Security we would need to appoint a liquidator to liquidate and distribute the assets of ECB CA II. The costs of such appointment would be borne by the Bondholders in accordance with the terms of the BPA.
Please be aware that returns will be limited to the value of the assets at the time of their disposal which may not guarantee full return of capital and interest.
We are therefore offering you the choice between two different courses of action as follows:
(i) Highpoint enforces the Security, appoints a liquidator to realise any value it can from the sale of ECB CA II including any assets it may hold and distribute the proceeds amongst the bondholders; or
(ii) Highpoint does not enforce the Security at this time and awaits further developments.
In order for us to proceed with option (i), we will require the consent of bondholders holding 50% or more of the outstanding Bonds within 30 days of the date of this letter.
Please note that by choosing option (ii) you would not preclude Highpoint from enforcing the Security at a later date.
Please complete the attached consent form indicating your preference as to how you wish for us to proceed and return it to us at 5 Priory Court, Tuscam Way, Camberley, Surrey, GU15 3YX.
On another matter, as the administrative burden on FCA authorised entities has grown, it has become increasingly uneconomical for Highpoint to continue to carry out FCA regulated activities. One implication of this is that, quite shortly, we will be relinquishing our authority to hold and safeguard securities on behalf of investors. It is, perhaps of minor significance, in the case of EcoPlanet as we are merely holding Bonds on your behalf; but just to confirm, we anticipate that we will shortly be sending your Bonds back to you, which you are advised to keep in a safe and secure place.
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