Ripple Energy wind farm?

QrizB

barker77 said:

Is there a way to limit my liability other than not investing?

The name of the Co-Op is "Ripple Wind Coop 2 Limited". It is a limited liability organisation.

Rule 46 of the Co-Op Rules (also available at the FCA site) states:

The liability of a Member is limited to the amount of their shareholding plus any Joining Fee.

It should be just like owning shares in any other Limited Company.

Edit:

See also Regulation 3(3) here:

A registered society is by virtue of its registration a body corporate by its registered name, with limited liability.

Ripple Wind Coop 2 Limited is registered under those Regulations and therefore has limited liability.

paul991

take it  like this if your a member of your local co op shop would you have any liability  for any thing that  went the answer is  no

ey143

barker77 said:

Can I ask - if I invest and something goes wrong that’s not accounted for , is the worst outcome that I lose my investment fully or can I potentially become liable for more than that too? 

Interesting question.  Is there any reason which makes you think you or other investors might be liable for more costs or is this purely speculative?  I put this question to Tom on the Ripple chat and he came back with the following:

The liability of a Member is limited to the amount of their shareholding plus any Joining Fee.

As per coop rulesthe https://static.rippleenergy.com/assets/KirkHill/Ripple-Coop2-rules.pdf

It's section 46 of the coop rules for the limited liability point.

The risk factors are also laid out in Section 13 of the share document https://static.rippleenergy.com/assets/KirkHill/KirkHillShareOffer-2.pdf

70sbudgie

I think it is the Customer Agreement that also goes into a bit more detail. It explained that if there were a situation where further costs were required by the Co-op, they may come back to the membership. A member is within their rights to decline to provide additional funds. The number of shares you hold may be reduced to cover the costs, but you would not be liable for any more than the value of your shares. So it is possibe to lose the value of your shares, but you would not be liable for any more.
(Btw, the above is my paraphrasing).

For openness, I have invested in Kirk Hill WF.

barker77

Thanks all for the info. I guess I was just concerned that if something happened that no one had accounted for if legally I might have to pay a huge bill. The above makes me reassured but I don’t understand legally what I might be liable for so might have to gamble anyway 

Miss.Twizz

Is anyone able to help explain the loan idea and what exactly are the knock on effects on someone's investment? As far as I understand it, savings will reduce to service the loan? Ripple representatives are, understandably, downplaying any implications as they want people to invest, I may just be being sceptical but I'd like to make sure I understand it fully. 

JKenH

I am writing from memory after investigating the first Ripple wind turbine project so please correct me if I have this wrong. 

In the event that operating costs rose and/or income from the project was insufficient then some of the member’s share capital (over and above the normal annual return of share capital) could be used to make up the ‘dividend’. This probably won’t be a problem while wholesale electricity prices are high but in the event the much heralded cheap RE prices materialise in future years this could happen. 

One could therefore be left in a position where one’s investment was eroded to the extent (say) that after 15 years all the initial investment had disappeared and I would presume in this situation there would be no shares left to sell if one wanted to exit the project.

Edit: what I can’t recall (and I don’t know if it was made clear) is if the reduced shareholding translates into a reduced share of the profits.

Exiled_Tyke

As I see it the reduction of shares is just a way to ensure the investors aren't left with an interest in the operation at the end of 25 years.   Now dividends are only allowed to be paid out of profits (as dividends are the sharing out of the profits). So if there aren't enough profits to pay a dividend then the cash can be returned to shareholders by cancelling more shares instead (in theory at least).   This should not result in a reduced share of any future profits as shares will be cancelled by the same proportion for every investor.   A smaller number of shares simply means a larger dividend per share, but actually the same dividend per shareholder. 

Now the loan.  Businesses have two key ways of raising finance, loans and shares.  Loans are more risky because there is a contract to pay back the capital and interest on top whereas with shares in poor years the company can just determine not to pay a dividend if it needs to.  In the case of the business failing altogether the loan gets paid out first and shareholders usually get nothing.  Generally speaking (and it's a huge generalisation!) the finance world does not tend to worry where loans make up less than fifty per cent of the the total finance raised. (This would be the case with Ripple as over 50% of the share have now been taken up).  There is a potential benefit to investors here. With fewer shares in issue than originally planned, if the loan interest is less than the profits (which is quite common) then the excess profits are available to the shareholders as increased dividends. This will depend on exactly how the loan is structured. 

As a comparison Greencoat UK Wind (which has mainly onshore wind farms across the UK) is structured with about 25% of its capital in the form of loans and the rest in shares.  

Personally I'm not unduly worried by the possibility of the loan and am actually reassured that Ripple has taken into account the possibility of not all the shares being taken up.  

Hope this helps! 

JKenH

I found this in the customer agreement for Kirk Hill.

OPERATING COSTS SHORTFALL

In the event that the Price Paid to the SPV does not sufficiently cover the Project Operating Costs for any reason, the Society may request that You (as a Member) contribute additional funds to cover such operating costs. Your contribution will be based on Your Ownership Percentage. The amount of such contribution shall be decided upon by the Board, such decision to be taken in accordance with the Society’s Rules. In the event You fail to pay such contribution to the Society, Your Ownership Percentage may be reduced according to a formula decided upon by the Board, such decision to be taken in accordance with the Society’s Rules.

Edit: 

I have been struggling to find anything in the latest Ripple docs online to back up what I said in my last post but on page 2 of this thread I posted a quote from a Ripple document I had seen:

It is the intention that 5% of the shares issued in this offer will be withdrawn each year of the turbine’s operation. The value of those share withdrawals will form part of your savings and will not be taxable. The remainder of the savings will be potentially taxable as your trading benefit as a member of the co-op. In the event the savings in any year are less than the value of the equivalent of 5% of the share capital, a larger proportion of shares will be withdrawn in following years (if the savings are sufficient) so that the 5% per annum cumulative position is achieved on an average basis. 

Edit: In the Kirk Hill share offer the above has been replaced with the following.

Return of share capital

It is the intention that 5% of the shares issued in this offer will be withdrawn automatically in each year of the wind farm’s operation. This means that your share capital will be gradually repaid. This ensures the value of share capital broadly reflects the actual value of the wind farm (which gradually reduces over its lifetime). The value of the share withdrawals will form part of your savings, they are not additional to the savings and will not be taxable12. The return of share capital does not reduce the proportion of the wind farm you own or the amount of electricity you are allocated.

Trading benefit

The remainder of the savings will be potentially taxable as your trading benefit as a member of the co-op12. In the event the savings in any year are less than the value of the equivalent of 5% of the share capital, a larger proportion of shares will be withdrawn in following years (if the savings are sufficient) so that the 5% per annum cumulative position is achieved on an average basis.

ed110220

Just pulled the pin on their Kirk Hill offer. I had some Greencoat UK wind shares already, but I liked the idea of buying shares that will directly lead to new capacity being built rather than buying a share of what already exists.