Bamboozled: Inside EcoPlanet Bamboo’s tangled investment web

In 2011 and 2012, a company called EcoPlanet Bamboo (UK) Ltd raised US$12 million by issuing bamboo bonds. The companies marketing the bonds, including Property Frontiers, EcoInvestments, and Emerald Knight promised returns of 500% over a 15 year investment period.

In December 2015, EcoPlanet Bamboo, the US-based parent company of EcoPlanet Bamboo (UK) Ltd, sent a letter to bondholders in the UK, explaining that their investment had gone somewhat pear-shaped.

You can read the letter in full below. That letter was followed by another in April 2016 from EcoPlanet Bamboo, and another in August 2016 from Highpoint Trustees (which was previously known as Citadel Trustees). You can read both of these letters in a previous post on REDD-Monitor.

EcoPlanet Bamboo’s December 2015 letter tells bondholders that their bonds would be swapped for shares in a company called The Eco Resources Fund PCC plc. It’s probably worth noting that in June 2015, Michael Richardson, one of the directors of The Eco Resources Fund PCC plc, wrote to shareholders in the fund:

I am writing to inform you that the Directors of the Fund have decided to close the Sub-Fund to redemptions for a period of time, due to an unexpected increase in the number of redemption requests being made.

In his letter, Richardson explains that “the Fund is not intended to be a short term investment and that the underlying investments are expected to be illiquid”.

Before we take a look at some of the companies involved in this investment scheme, here’s a 2015 interview with Troy Wiseman, the co-founder and CEO of EcoPlanet Bamboo, in April 2015. Skip to 28:04 for the interesting bit – watch Wiseman’s face closely as he avoids telling King how he managed to make money even before the bamboo had been harvested:

Llewellyn King: You’ve been at this for five years. When will your company be in profit?

Troy Wiseman: I’ve made money every year.

Llewellyn King: From day one?

Troy Wiseman: From day one.

Llewellyn King: Before the bamboo had grown?

Troy Wiseman: Mmm hmmm.

Llewellyn King: How did you do that?

Troy Wiseman: Hmmm, hmmm, hmmm. A few different ways, but I’m not, I mean I, you can’t, I don’t believe that you just wait around to make money, right? You have to make money to pay your people, right? So, er.

Llewellyn King: Well on that upward we’re going to end today’s session. But we will be back and we will have another programme talking about the miracle of bamboo in curing poverty, and making Troy Wiseman rich.

Troy Wiseman: Ha ha ha ha.

The Eco Resources Fund PCC plc

The fund’s full name is The Eco Resources Fund Protected Cell Company plc. The company was incorporated in the Isle of Man on 17 July 2012. A Protected Cell Company is a company that is divided into a legally distinct core and a number of cells.

Initially the Eco Resources Fund PCC had three cells: the Premier Eco Resources Sterling Cell, the Premier Eco Resources US Dollar Cell, and the EcoEarth Resources Sterling Cell. Three more were added during 2013: the Premier Eco Resources Euro Cell, the Premier Eco Resources Singapore Dollar Cell, and Eco Resources US Dollar Cell.

Each cell includes a sub-fund with the same name, two of which (The Premier Eco Resources Sterling Sub-Fund and EcoEarth Resources Sterling Sub-Fund) are listed on the Channel Islands Securities Exchange.

Here’s the website for the Premier Eco Resources Sub-Funds:

And here’s the website for the Eco Earth Resources Sterling Sub-Fund:

The Premier Group (Isle of Man) Limited

The manager of the Eco Resources Fund PCC and the various sub-funds is The Premier Group (Isle of Man) Limited. On its website, The Premier Group lists the following as its Board and Management (from left to right) Michael Richardson, John Bourbon, and Jamie Sutton:

Here’s a diagram of the investment structure, taken from The Eco Resources Fund report and financial statements to 31 December 2014:

In case you’re wondering why The Eco Resources Fund PCC plc might be based in the Isle of Man, here’s one possible explanation from a Prospectus for the fund:

The Fund will be subject to Isle of Man tax on its income at the standard rate of zero per cent.

In June 2016, another of The Premier Group’s investments, The New Earth Group of Funds, went into liquidation. The money was invested in a waste recycling scheme, including a low carbon energy from waste project.

The comments following an article in International Adviser about the liquidation are worrying. Here’s a comment from an unhappy investor:

We also invested £40,000 in what we thought was going to be a long term Trust Fund for our two grandchildren to help ensure their future. The value rose to £55,000. The fund was then frozen and we were told the company was being sold and not to worry as there will probably be a bonus paid. It has now taken two years to be told the company was in trouble. I contacted the IOM Ombudsman who told me that investment in this sort of company was for larger businesses and that we should never have been advised to invest our money and that we will not get our money back, so why did Premier take our money?? We are pensioners and this is a great loss to us. We are very upset and angry.

And here’s how Tony Smalley, an investor and adviser based in Malaysia, puts it on his website:

I am taking the view that this looks like a 100% loss and that anything that comes out will be a bonus. I should like to hear from anybody that knows of a “New Earth Action Group” that has the ear of the Administrators.

Smalley has the following to say about The Eco Resources Fund PCC plc:

We are watching this fund carefully. At this time it is still trading and pricing and open for new subscriptions. However, due to liquidity issues they have suspended withdrawals.

The Directors of the Fund are in negotiations with potential lenders with a view to replacing the SAL [Sustainable Asset Lending LLC] loan and security arrangements with new facilities. The ultimate intention of the Directors of the Fund is to procure longer term facilities, thus securing the long term future of the Fund. To this end, the Directors of the Fund are now in advanced negotiations with a capital raising specialist in relation to a longer term facility (the “Longer Term Facility”).

This is not going very well and Premier are now trying to raise $30M from Institutional and Private Investors (minimum $10M batches) with preferential terms and a note paying 15% pa.

“Not really what any of us want to hear!” Smalley adds.

EcoPlanet Bamboo

This is only lightly scratching the surface. The EcoPlanet Bamboo family tree consists of plenty more companies, including the following:

• EcoPlanet Bamboo Central America LLC (incorporated in Delaware, wholly owned by EcoPlanet Bamboo Group LLC),
• EcoPlanet Bamboo CA II LLC (incorporated in Delaware, ultimately wholly owned by EcoPlanet Bamboo Group LLC);
• EcoPlanet Bamboo CA IV LLC (incorporated in Delaware, previously owned by EcoPlanet Bamboo Central America LLC, but bought by EcoPlanet Bamboo IOM Limited);
• EcoPlanet Bamboo IOM Limited (incorporated in the Isle of Man, the holding company of EcoPlanet Bamboo CA IV LLC and EcoPlanet Bamboo SA II LLC);
• EcoPlanet Bamboo SA II LLC (incorporated in Delaware, previously owned by EcoPlanet Bamboo Central America LLC, but bought by EcoPlanet Bamboo IOM Limited);
• EcoPlanet Bamboo (UK) Ltd (registered in the UK, more than 75% owned by Ecoplanet Bamboo Group LLC Series B);
• EcoPlanet Capital Management LLC (incorporated in Delaware, wholly owned by EcoPlanet Bamboo Group LLC, acts as manager of EcoPlanet Bamboo Central America LLC, EcoPlanet Bamboo CA IV LLC, EcoPlanet Bamboo SA II LLC, EcoPlanet Plantation Management LLC, EcoPlanet South Africa Plantation Management LLC);
• EcoPlanet Bamboo Group LLC (incorporated in Delaware);
• EcoPlanet Plantation Management LLC (incorporated in Delaware, wholly owned by EcoPlanet Bamboo Group LLC)
• EcoPlanet South Africa Plantation Management LLC (incorporated in Delaware, wholly owned by EcoPlanet Bamboo Group LLC).

In case you’re wondering why so many of these companies are incorporated in Delaware, the Delaware Department of State Division of Corporations put out a handy leaflet in 2007 titled, “Why Corporations Choose Delaware”. It explains that,

The limited liability company format, in particular, has proved very attractive because of the absence of formalities that it offers and favorable tax treatment.

Companies formed in Delaware but carrying out their operations elsewhere pay no state corporate income tax.

The company list above is based on information from The Eco Resources Fund PCC plc dated March 2014. Since then EcoPlanet Bamboo has set up EcoPlanet Bamboo West Africa, for its proposed plantations in Ghana. No doubt things have become more complicated as a result.

And all this for a few thousand hectares of bamboo. Here is EcoPlanet Bamboo’s December 2015 letter to its bondholders:

December 18, 2015

Dear Bondholders,

From our August communication you are aware that The Eco Resources Fund PCC plc (“Fund”) purchase of the Rio Kama farm was monetized by an equal number of their Fund shares, which totaled the sales price of Rio Kama, inclusive of the entire bond principal outstanding and all respective interest for bondholders through December 31 st 2015. Each month the Fund redeemed a portion of these priority redemption Fund shares, and these proceeds were used to redeem bondholders based on the approved transaction, and in order of the written confirmation by bondholders, by way of Highpoint Trustees Limited F/K/A Citadel Trustees Limited (“Highpoint”).

We were recently informed that although the Eco Resources Fund Board is currently in due-diligence with multiple institutional funding partners they do not expect their first closing to occur before December 31 st 2015, the date they had agreed upon to make the final redemption payments and interest payments. Many of you have asked over the past 18 months if you could exchange your bonds for ERF Fund shares, but until now this has not been possible. In light of the new information, the Fund has agreed to provide individual bondholders the opportunity to directly own Eco Resources Fund shares equal to their bond amount plus accrued interest. For those of you who take the opportunity you will be given direct ownership of your shares in exchange for your bond and interest due. This also allows you the ability to be in control of redeeming all or only portion of your ERF Fund shares, once the Fund reopens for redemptions, or continue as an ERF Fund shareholder.

All remaining Bondholders who choose not to take direct ownership of their Eco Resources Fund shares in exchange for their bond and interest due as of December 31st, 2015, will have their shares transferred to Highpoint Trustees Limited F/K/A Citadel Trustees Limited for their benefit, and Highpoint as trustee will remain custodian of these shares until which time the Fund reopens. At this point they will sell your shares and send your proceeds. Regardless of which option you choose, EPB CA-II have taken possession of ERF Fund shares, which were securing the sale of the Rio Kama Farm and are equal to remaining Bond amounts and interest through December 31st, 2015.

Please check the box on the separate page and tell us is if you wish to hold your Eco Resources Fund shares directly in exchange for your bond and interest due, or if you prefer to have your shares held for your benefit and sold by Highpoint.

For those of you that choose to take direct ownership of your ERF Fund shares, please note there are certain qualified investor forms and fund documents that you will subsequently need to complete in order to accept this option. These shares can be held through a qualifying retirement account, as well as by a qualifying individual.

For your benefit, we have attached the most recent Eco Resources Fund performance sheet, which includes the October 2015 monthly performance return, as well the Fund’s accumulated return which has shown an average annualized return of 16.96%, since its inception in October 2012.

Sincerely,

Troy D. Wiseman, Manager
EcoPlanet Bamboo UK LTD
Managed by EcoPlanet Capital Management, LLC

CC: David Cox, President and Director EcoPlanet Bamboo (UK) LTD
Raymond Withers, Co-Founder and President, Property Frontiers
Highpoint Trustees Limited F/K/A Citadel Trustees Limited