We are disappointed to learn that the attempt to purchase the Green Dragon as a community asset has failed. This despite the enormous effort, time and attention paid to the project by the Green Phoenix Team – as well as the significant donations made by various local residents.
This major undertaking was always ambitious, and those of us who shared the vision owe a debt of gratitude to the various individuals who were so active in pursuing a very desirable goal – namely a local pub owned by the community.
Here's the official comment from the Green Phoenix Team:
We wanted to provide you with a further update.
We have now finished receiving extensive legal advice from our lawyers and have subsequently spoken to second legal firm to get a further regulatory guidance. The following are a summary of the findings and results of these discussions:
At the beginning of this process, in Autumn 2018, we were advised by a number of organisations that a Community Interest Company (CIC) was the appropriate vehicle for this type of enterprise due to all of the reasons and benefits that we have previously outlined. However what has become clear is that offering and issuing shares within a CIC (or any company) is not a simple process from both a legal and regulatory perspective.
The offering of shares of a company to the public (as any share offering by the Green Phoenix CIC would be) is heavily regulated by the Financial Conduct Authority (FCA). As such it takes considerable time and also incurs significant costs to have schemes authorised to sell such shares.
We now know there are exemptions from being regulated by the FCA for such a share offering, one of them being that if all potential investors are financial professionals, or 'high net worth' individuals. This is because such people are believed by the FCA to understand the risk of what they are investing in. Anyone outside of such groups who wishes to invest in any type of company formed through a share offering has to do so through a scheme approved by the FCA, or through a Community Benefit Society (CBS). A CBS is exempt from FCA regulations but does not have same features as a CIC such as the asset lock, distribution of profits to the community or qualifying for social investment tax relief etc. A CBS can be the parent company of the CIC and then the CBS can issue shares (which don't require FCA oversight) and then can lend the shares to the CIC which can then purchase the asset with all the benefits of a CIC.
As you can hopefully see these routes are complicated and time consuming but, more importantly, will incur further legal costs of between £8,000 and £12,000. There is also another option, whereby you use a law firm pre-approved by the FCA to manage your share issue. This could potentially, just, be completed in the time available but the cost would be circa £25,000 – £30,000. We would still have conveyancing and accountancy costs in addition.
We are aware we have received many donations so far and do not feel it would be appropriate to seek further funds from the community that are purely speculative and will be unrecoverable should we have reached our funding goal but still not been able to purchase the pub (ie being out bid).
Given the cost of these alternative processes, and our understanding that the selling agent is likely to be ready to complete a sale quickly after the moratorium expires in early May, we have decided, obviously with a very heavy heart, that The Green Phoenix CIC should withdraw from any further engagement in the sale of The Green Dragon.
However, the positive news that we have heard along the way is that there are a number of parties interested in purchasing the Green Dragon and preserving it as a public house serving good quality food along the lines that our recent survey clearly indicated the community wants. We understand that some of these parties are members of our community. We believe we have common goals and now keenly invite them to engage with us, and therefore the community, so that where appropriate we can help facilitate any support the community may be wish to give.
We have received our legal advice so far at minimal cost and we therefore have some funds remaining from your generous donations. There may be some further small costs to incur but we would like to propose that the remaining funds are donated to the Haddenham Beer Festival charity who will then disburse to local charities www.haddenham-beer-festival.co.uk/about-the-charity. The Beer Festival supported us financially at the beginning of our project so feels natural for us to return that support. If anyone strongly disagrees with this course of action please do get in touch with us.
We do not propose to hold another public meeting but if anyone wishes to discuss any of these matters with us, then we as a group would be happy to engage in any way we feel we can. We are aware that many people will be asking how have other villages managed it when we haven't, quite simply our view is that we have not come across an enterprise similar to ours that completed a purchase in six months, all of them took much longer and were lucky to not be in competitive bidding situations.
We have not managed to achieve our objective and for that we are deeply disappointed, however we are hugely encouraged by the passion, engagement and interest the community has shown in the project. It is very encouraging that goodwill and community spirit is so alive and well in Haddenham.
That just leaves us to say a huge thank you to everyone for you engagement, support and assistance.
The Green Phoenix Team
Jamie Hall, Nick Leale, Jon Proctor, Paul Dixon, Chris Martin, Alex Giles, Gareth Cheeseman, Johnny Payne &
Alex Wagstaff
