Thistle Pub Co investors set to lose out

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Thistle Pub Company II (TPCII) and Thistle Pub Company III (TPCIII ) – two Enterprise Investment Schemes (EIS) set up by the Maclay Group, are likely to be among the group’s creditors. According to letters sent to shareholders Thistle II is owned £150K while Thistle III is owned £330K.

According to the newly appointed administrators of the Maclay Group, EY, “It’s still the relatively early stages of the appointment and the administrators are currently forming a full picture of Maclay’s financial position – this includes collating a list of creditors. Maclay had contractual agreements in place with TPCII and TPCIII, so it stands to reason that one or both companies might be among those who believe they are owed money.”

The schemes were set up by the Maclay Group to raise money to buy pubs, under the Enterprise Investment Scheme (EIS) initiative, which offered investors income tax relief (at the time up to 20%) on their initial investments, in return for backing smaller companies.

TPCII was set up in 2004 and owns four freehold pubs, which were transferred to LT Pub Management last August, while TPCIII was set up in 2006 and owns seven pubs including The Clockwork Beer Company in Glasgow, and the Dog House in Balloch. They transferred to LT Pub Management when Maclays went into administration.

The original promotor who also administered the funds was Brewin Dolphin, whose Director of Corporate Finance was Alan Stewart. At the time investors were told that the intention was that “the fund will have exited all of its investments within six years, distributing the proceeds by its sixth anniversary.” But as one investor explained, “I invested £25K in 2004, and was told in a brochure I could pull out my cash in 2010.” However he failed to get his cash back, and also found it difficult to get an up to date value on his investment. At the time TPCII revealed that it could be difficult to sell shares in schemes such as this and that investments may not perform as well as expected. It told a newspaper, “this scheme was high risk and investors are sent annual performance updates.”

Both funds have been administered by Cenkos Securities since 2009/2010 when Alan Stewart, now Chairman of TPCIII, joined Cenkos firm. He has told investors recently that every step will be taken to ensure the £330K it believes it is due from Maclays will be recovered.

An industry expert told DRAM, “EIS funds are generally regarded as ‘Unregulated Collective Investment Schemes,’ (UCIS) , and as such are high risk mainly because you are investing in one company. In addition, as the investments are private equity, then anything to do with private equity is generally higher risk. They are normally only for professional investors or high net value individuals. The tax concessions are there to encourage such people to invest in growth companies, that otherwise might find it difficult to get investment. But unfortunately this also means that any losses have to be taken on the chin, although they can be written off against income tax.”