	(48, 274, 'EIS thoughts (Steve Partridge) v2', 'EIS-thoughts-Steve-Partridge-v2', '2020-08-16 01:29:27', NULL, '<p>&nbsp;</p>\r\n\r\n<p><a name="_MailEndCompose"></a></p>\r\n\r\n<p><a name="_MailOriginal"><strong>From:</strong></a> Steven Partridge &lt;sjpmhh@gmail.com&gt;<br />\r\n<strong>Sent:</strong> 06 July 2020 22:18<br />\r\n<strong>To:</strong> John Soden &lt;soden.j@gmail.com&gt;<br />\r\n<strong>Cc:</strong> Stephen Nurse &lt;nurse_stephen@hotmail.com&gt;; David Smith &lt;parkhouse87@btinternet.com&gt;; Denis Shafranik &lt;denis@ermakgroup.com&gt;; Nicholas Curtis &lt;n.curtis123@btinternet.com&gt;; Nicholas Stockdale &lt;nicholasstockdale@googlemail.com&gt;; Stephen Phillips &lt;Stephen.Phillips@templebright.com&gt;; Alistair Higgins &lt;Alistair.higgins@gmail.com&gt;<br />\r\n<strong>Subject:</strong> Re: Harcourt Pubs</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I read again the income tax loss relief&nbsp;rules.&nbsp; They contain the same &quot;control and independence&quot; condition as the EIS rules. This means if HMRC successfully argue&nbsp;the pubcos are under the control of McC and Harcourt Inns, not only does that invalidate EIS, it rules out income tax relief&nbsp;for the&nbsp;capital&nbsp;loss.&nbsp;&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Alistair&nbsp;this could perhaps explain why you have conflicting advice on Section 131.&nbsp;&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Steve</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp; &nbsp; &nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>On Mon, 6 Jul 2020 at 13:18, John Soden &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt; wrote:</p>\r\n\r\n<p>Dear all,</p>\r\n\r\n<p>See EIS thoughts from Steve on impact of a sale before 3 years trading is up. Particularly relevant to the Coach.</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\nBegin forwarded message:</p>\r\n\r\n<p><strong>From:</strong> Steven Partridge &lt;<a href="mailto:sjpmhh@gmail.com" target="_blank">sjpmhh@gmail.com</a>&gt;<br />\r\n<strong>Date:</strong> 6 July 2020 at 12:33:23 BST<br />\r\n<strong>To:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt;<br />\r\n<strong>Subject:</strong> <strong>Re:&nbsp; Harcourt Pubs</strong></p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>The Coach is tricky due to the open three year period.&nbsp; But the position is similar for Chiswick, Hero and KPH.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>If we sell the company, any value we get reduces the 30%.&nbsp; For&nbsp;example, if you invested 100, got back 30 and now receive 60 on a sale of shares, 18 of your&nbsp;30 gets clawed back by HMRC together&nbsp;with interest.</p>\r\n\r\n<p>You then have a capital loss on the sale of 28 (60-100+30-18) which should be eligible for income tax relief&nbsp;at 45% ie 12.6.&nbsp; So you&nbsp;end up with 60-18+12.6.= 54.6 in your pocket,&nbsp;ignoring the interest.&nbsp; There&#39;s a tricky point here.&nbsp; If we sell within the&nbsp;three year period, the buyer I think needs to continue&nbsp;to ensure that the company continues to meet EIS eligibility&nbsp;for the remainder of the three&nbsp;year period (i.e continues the trade etc).&nbsp; This is a point to be checked with a proper EIS expert in due course as it seems odd that post sale events by a new owner can impact our position, but if so, we&#39;d need to include an&nbsp;undertaking in the sale agreement to that effect.&nbsp; (If this is a point, it will be more significant for the other three which are further away from their three year expiry).&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>If the company sells the asset, on the face of it, it hasn&#39;t traded for the full three year period and this invalidates the initial&nbsp;EIS claim of 30 in its entirety - ie it&#39;s all potentially clawed back plus interest.&nbsp; However, if the sale is in the course of the administration or receivership of the company , then it should be possible to limit the clawback of the 30 as in the previous paragraph.&nbsp; There&#39;s another tricky point here.&nbsp; The sale has to be in consequence&nbsp;of the company going into administration of receivership, not the other way round.&nbsp; &nbsp;&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Would be good if we could defer the Coach sale until&nbsp;the three years has elapsed, as then we should be in the clear as far as clawback of the 30 is concerned.&nbsp; Would need to do a cost/benefit calculation&nbsp;to figure out whether&nbsp;delay is worthwhile.&nbsp; Btw, if we entered into&nbsp;put or call options in this regard, that wouldn&#39;t work.&nbsp; A put would invalidate&nbsp;EIS altogether.&nbsp; A call would be treated as a sale, so any value eventually received&nbsp;would lead to clawback of EIS as in the first paragraph.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>The period of non-trading inspired by Covid raises some questions.&nbsp; My read is that provided it remains the intention of the Coach to resume trading when the time is judged right, and it conducts no other activity in the meantime, this does not invalidate eligibility&nbsp;for EIS, nor should it extend the three year period.&nbsp; &nbsp;If it ever abandons that intention, we would want to put it into&nbsp;liquidation relatively&nbsp;quickly.&nbsp; I hope this is a moot point.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Best</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Steve</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>On Mon, 6 Jul 2020 at 11:06, John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt; wrote:</p>\r\n\r\n<p>Not yet - I have chased.</p>\r\n\r\n<p>The Coach has EIS but doesn&rsquo;t come out of its 3 year hold period till next Jan. What happens if we sell now - assume at a book loss. Do we lose any benefits or can there be any clawback of our 30% already received.&nbsp;</p>\r\n\r\n<p>IE are we able to sell now if we want without adverse tax consequences?</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 5 Jul 2020, at 18:14, sjpmhh &lt;<a href="mailto:sjpmhh@gmail.com" target="_blank">sjpmhh@gmail.com</a>&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>John</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Did you make contact with him?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Best</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Steve</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Sent from my Samsung Galaxy smartphone.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>-------- Original message --------</p>\r\n\r\n<p>From: John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt;</p>\r\n\r\n<p>Date: 03/07/2020 09:45 (GMT+00:00)</p>\r\n\r\n<p>To: Steven Partridge &lt;<a href="mailto:sjpmhh@gmail.com" target="_blank">sjpmhh@gmail.com</a>&gt;</p>\r\n\r\n<p>Subject: Fwd: Harcourt Pubs</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Hi Steve,&nbsp;</p>\r\n\r\n<p>Did you ring him on this number? I want to chase him today and if he hasn&rsquo;t responded have a go at him.</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\nBegin forwarded message:</p>\r\n\r\n<p><strong>From:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt;<br />\r\n<strong>Date:</strong> 2 July 2020 at 14:09:09 BST<br />\r\n<strong>To:</strong> Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com" target="_blank">nurse_stephen@hotmail.com</a>&gt;<br />\r\n<strong>Cc:</strong> Steven Partridge &lt;<a href="mailto:sjpmhh@gmail.com" target="_blank">sjpmhh@gmail.com</a>&gt;, David Smith &lt;<a href="mailto:parkhouse87@btinternet.com" target="_blank">parkhouse87@btinternet.com</a>&gt;, Denis Shafranik &lt;<a href="mailto:denis@ermakgroup.com" target="_blank">denis@ermakgroup.com</a>&gt;, Nicholas Curtis &lt;<a href="mailto:n.curtis123@btinternet.com" target="_blank">n.curtis123@btinternet.com</a>&gt;, Nicholas Stockdale &lt;<a href="mailto:nicholasstockdale@googlemail.com" target="_blank">nicholasstockdale@googlemail.com</a>&gt;, Stephen Phillips &lt;<a href="mailto:Stephen.Phillips@templebright.com" target="_blank">Stephen.Phillips@templebright.com</a>&gt;, Alistair Higgins &lt;<a href="mailto:Alistair.higgins@gmail.com" target="_blank">Alistair.higgins@gmail.com</a>&gt;<br />\r\n<strong>Subject:</strong> <strong>Re:&nbsp; Harcourt Pubs</strong></p>\r\n\r\n<p>﻿The no I have is 07904910301. It was definitely good as of 3 weeks ago. Suggest you call and send sms on it.</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 2 Jul 2020, at 14:00, Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com" target="_blank">nurse_stephen@hotmail.com</a>&gt; wrote:</p>\r\n\r\n<p>﻿ Correct number.</p>\r\n\r\n<p>&nbsp;I have recently communicated with JM on that number.&nbsp; May be worth sending a WA message.&nbsp;</p>\r\n\r\n<p>Stephen Nurse. 447588 717515</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 2 Jul 2020, at 13:58, Steven Partridge &lt;<a href="mailto:sjpmhh@gmail.com" target="_blank">sjpmhh@gmail.com</a>&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>I&#39;ve tried calling McC twice this morning.&nbsp; His phone rang on both occasions.&nbsp; The first attempt went dead.&nbsp; The second&nbsp;eventually went through to a non-personalised answering service.&nbsp; I left a message to the effect of &quot;where are we on the EIS requests, it&#39;s strange it&#39;s taking so long as you just need to instruct Philip Hare to deal openly with me, as a shareholder group we&#39;re beginning to get worried, call me back please&quot;.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Will let you know if and when I hear back.&nbsp; I&#39;m not holding&nbsp;my breath.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Btw, the number I have for him is 07904 910301.&nbsp; Does anyone have a different one?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Best</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Steve</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;&nbsp;</p>\r\n\r\n<p>&nbsp;&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>On Thu, 2 Jul 2020 at 13:17, John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt; wrote:</p>\r\n\r\n<p>The follow up to McCulloch</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\nBegin forwarded message:</p>\r\n\r\n<p><strong>From:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt;<br />\r\n<strong>Date:</strong> 2 July 2020 at 12:47:51 BST<br />\r\n<strong>To:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk" target="_blank">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Cc:</strong> Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com" target="_blank">nurse_stephen@hotmail.com</a>&gt;<br />\r\n<strong>Subject:</strong> <strong>Re:&nbsp; Harcourt Pubs</strong></p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>﻿Dear James,</p>\r\n\r\n<p>We need to move quickly to know where this is going and what your plans are. Shareholders are getting increasingly frustrated and you need to provide clear direction on your intentions to ensure you have their support. To that end;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>1. Your proposal to shareholders. Stephen and I have checked our notes of our call on 12 June and you said you expected to have a proposal by 4 July. In our call of 24 June we reiterated that we were expecting it by that date and you did not say no. You have now said in you recent email to Stephen that you did not commit to that date. Time is of the essence. When will you have it?</p>\r\n\r\n<p>2. Part of evaluating your proposal is having the valuations available also. Please confirm when you will have the valuations and please provide the instructions given and to which firms as requested. Please send them through as available - do not wait to have all 6.</p>\r\n\r\n<p>3. You have been working on a definitive proposal on furlough/cost of redundancies by pub especially given that certain pubs will be unable to open in the foreseeable future. We need to understand the implications and how you propose to fund the costs. Can we expect that info by tomorrow?</p>\r\n\r\n<p>4. Can we have the list of proposed essential payments for each pub by tomorrow please together with the specific status for bounce back loans in each pub.</p>\r\n\r\n<p>5. EIS - When is the call with Philip Hare to take place? We have yet to receive the correspondence which you promised weeks ago.</p>\r\n\r\n<p>6. Please confirm alternative dates for the session with Steve Ham.</p>\r\n\r\n<p>7. when will the Harcourt/Endean contract/correspondence be available?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Stephen is following up separately on other specific info requests.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Please can we have a Zoom call tomorrow to discuss where you are generally and tie down each of these areas.</strong></p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 1 Jul 2020, at 10:24, James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk" target="_blank">james@harcourtinns.co.uk</a>&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Dear John,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Comments below in red.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Regards</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>From:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt;<br />\r\n<strong>Sent:</strong> 29 June 2020 07:39<br />\r\n<strong>To:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk" target="_blank">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Cc:</strong> Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com" target="_blank">nurse_stephen@hotmail.com</a>&gt;; Stephen Phillips &lt;<a href="mailto:Stephen.Phillips@templebright.com" target="_blank">Stephen.Phillips@templebright.com</a>&gt;; Steven Partridge &lt;<a href="mailto:sjpmhh@gmail.com" target="_blank">sjpmhh@gmail.com</a>&gt;; Alistair Higgins &lt;<a href="mailto:Alistair.higgins@gmail.com" target="_blank">Alistair.higgins@gmail.com</a>&gt;; Nick Curtis &lt;<a href="mailto:n.curtis123@btinternet.com" target="_blank">n.curtis123@btinternet.com</a>&gt;; Nicholas Stockdale &lt;<a href="mailto:nicholasstockdale@googlemail.com" target="_blank">nicholasstockdale@googlemail.com</a>&gt;; Denis Shafranik &lt;<a href="mailto:denis@ermakgroup.com" target="_blank">denis@ermakgroup.com</a>&gt;; John Soden &lt;<a href="mailto:john.soden@moorgateindustries.com" target="_blank">john.soden@moorgateindustries.com</a>&gt;; David Smith &lt;<a href="mailto:parkhouse87@btinternet.com" target="_blank">parkhouse87@btinternet.com</a>&gt;<br />\r\n<strong>Subject:</strong> Fwd: Harcourt Pubs</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear James,</p>\r\n\r\n<p>Stephen and I have shared the information you have given us in our calls and by email in the last week or so with the core group. I am writing to set out initial thoughts and reactions.</p>\r\n\r\n<p>There is a universal feeling of shock and disbelief at the financial position of the pubs and the extent of debt and commitments which have built up which significantly impact shareholder value. The high head office costs do not seem to be delivering the necessary benefits to all pubs even pre C-19. I won&rsquo;t comment on other than to say that much of the information has been available to investors from the last reporting period which included management accounts and balance sheets. Other than liabilities owed to Harcourt Investments and Ducalian many of the trading liabilities have been built up in Q1 2020 which is the worst quarter for trading and Feb was a particularly poor month weather wise which was felt across many other pub groups. You then recover from Jan &amp; Feb in the following months but unfortunately we didn&rsquo;t get a chance with the onset of COVID-19.</p>\r\n\r\n<p>The head office costs seem to be a contentious point and so I thought I would cover this off in a little bit more detail. Head office costs are made up of the following (note Rachel is employed directly by each PubCo);</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Henry Harris, F&amp;B director &ndash; Henry is high profile and therefore attracts media, influencers, food bloggers and of course chefs (and GMs). Separating the PR &amp; marketing side one of the hardest areas to manage is the kitchen. You speak to any gastropub group and they would say building and retaining a strong kitchen team is the hardest part of a pub. For the number of pubs within the portfolio we would always need either a chef director or an executive chef who would still command a salary of &pound;70k+. Given several of the pubs are in locations that lack footfall and need to attract customers (ie destinations) we would always need an individual who can develop a top quality food offering &ndash; albeit perhaps &ldquo;pub grub&rdquo;. In any case we are discussing a reduced basic salary and linking his remuneration to a long term share incentive scheme although the latter doesn&rsquo;t work in the current structure.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Steve Ham, Operations Manager &ndash; As you can imagine without an operations manager the pubs aren&rsquo;t sustainable. GM&rsquo;s need supervision, management, infrastructure, controls and support. Again I would like to look at long term share incentive scheme but under the current structure this doesn&rsquo;t work.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Jen Booth, Marketing Coordinator &ndash; Jen oversees all PR and marketing activities for the portfolio. Her role is relatively new having only started in Q4 2019 but vital for the long term success of the pubs. Working with PR consultants, tone of voice, website developers and google marketing, in-pub promotions, instagram and supporting the GMs on local marketing activities.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Events team &ndash; led by Ellie Laidlaw, events and private dining is a fundamental part of the pub&rsquo;s revenue streams. You only need to talk to other gastropub groups and we barely scratch the surface of what we could and should be doing. This is in large part because we didn&rsquo;t have a fully functioning events team until late Q3 2019. A business like Cubitt House, which is undoubtedly one the best in London, invests a lot of time and money into building a quality events team and the supporting infrastructure.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>In any case the events team will be shrunk and Ellie, who will be the only remaining member in the short term and like all other members of the head office team will have to carry out a multi-purpose role.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Clearly under the current fragmented ownership structure and combined with the patience and long term approach required before benefits are realised, shareholders see no use in having a head office team.</p>\r\n\r\n<p><br />\r\nOur initial thoughts are that the priority is for immediate action to be taken to stabilise each pub and to protect value. To that end we believe you should not spend your time rushing or analysing how to re-open the pubs in the next few weeks because the situation is so uncertain and is likely to deplete cash even more. Instead we suggest you focus your attention and energy on the following:</p>\r\n\r\n<p>1. &nbsp;developing further cashflows for each individual pub setting out immediate liquidity needs assuming re-opening does not take place for the next two months, showing the minimum payments that needs to be made to protect the pub and a narrative highlighting issues or risks which threaten continuation and any key milestones in the coming weeks. No problem although we will need to consider who we keep and who we make redundant as it will be cost effective to make the redundancies during furlough to minimise costs depending on notice periods.</p>\r\n\r\n<p>2. Take business bounce-back loans where possible but husband cash and pay only essential costs which protect the pubs in the medium term. For the avoidance of doubt we believe management fees must not be paid. Please send an update on each application made and status. Noted</p>\r\n\r\n<p>3. Managing for cash is essential. Please ask Rachel to compile a list for each pub of payments that are absolutely essential in the coming weeks to ensure stability and any further costs that can be cut. Noted</p>\r\n\r\n<p>4. Work up your proposal to shareholders so that it can be discussed as soon as possible and then we can consider with you how it can be presented to each of the 6 shareholder groups. This includes getting independent valuation ranges (upside and downside) for each of the pubs as soon as possible. Please confirm when valuations will be provided and from who as well as the instructions which have been given to them. Noted</p>\r\n\r\n<p>5. Provide all the information that has been requested and promised to us (Stephen Nurse) will send a separate comprehensive list for completeness). Rachel is providing under a separate email</p>\r\n\r\n<p>6. provide the correspondence and legal advice relating to the management agreement for the Harcourt with Harcourt management (Andrew Endean?). This is held by solicitors so will be requested.</p>\r\n\r\n<p>7. Provide the EIS correspondence with HMRC and ensure that EIS certification is chased with HMRC and set up a call early this week between Philip Hare and Steve Partridge as agreed. Please provide dates when the most recent information on the Hero and KPH were provided to HMRC, confirm that there is nothing outstanding and when you intend to chase HMRC (if this has not already been done). Requesting and will compile all info plus will try and arrange the call as requested.</p>\r\n\r\n<p>8. We would like to seek views from one or two pub specialists known to the group and therefore would like to set up discussions for them with Steve Ham on his operational view of each pub and how operations can be optimised including re-opening strategies where appropriate. Please confirm your agreement so that we can initiate this and provide Steve&rsquo;s contact details. Happy for this but I would like to join the initial call.</p>\r\n\r\n<p>9. Finally, we would like to nominate a director representing shareholders for each pub company. Please confirm that you are agreeable to this.&nbsp;As we understand you will be making some kind of offer in the next few weeks it would be sensible for you to be able to defer decision-making on that offer to the shareholder director. I&rsquo;m sure you appreciate the point that you cannot make an offer and then consider that offer as a director given your fiduciary duty to avoid conflicts as a director. Happy for this</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>John Soden<br />\r\n&nbsp;</p>', 'advocate', 'EIS', 1, '2020-07-06 00:00:00'),
	(49, 274, 'Thoughts on Ducalian proposal', 'Thoughts-on-Ducalian-proposal', '2020-08-16 01:43:03', NULL, '<p>&nbsp;</p>\r\n\r\n<p><a name="_MailEndCompose"></a></p>\r\n\r\n<p><a name="_MailOriginal"><strong>From:</strong></a> Steven Partridge &lt;sjpmhh@gmail.com&gt;<br />\r\n<strong>Sent:</strong> 07 July 2020 19:44<br />\r\n<strong>To:</strong> Nicholas Stockdale &lt;nicholasstockdale@googlemail.com&gt;<br />\r\n<strong>Cc:</strong> John Soden &lt;soden.j@gmail.com&gt;; Stephen Nurse &lt;nurse_stephen@hotmail.com&gt;; Alistair Higgins &lt;Alistair.higgins@gmail.com&gt;; Denis Shafranik &lt;denis@ermakgroup.com&gt;; Nicholas Curtis &lt;n.curtis123@btinternet.com&gt;; parkhouse87@btinternet.com; Stephen Phillips &lt;Stephen.Phillips@templebright.com&gt;<br />\r\n<strong>Subject:</strong> Re: Rob&#39;s proposal - Work in Progress</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Initial reaction:</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>The priority&nbsp;is to formulate an immediate crisis plan for each&nbsp;pub, including an assessment of future trading viability, how much further&nbsp;funding is required and whether&nbsp;it can be borrowed,&nbsp;and a recommendation as to how we should move forward.&nbsp; &nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>As to which&nbsp;of their suggested &quot;Ducalian involvement&quot; options is best, I don&#39;t&nbsp;know ,&nbsp; This needs to be talked through&nbsp;with them so we can form a&nbsp;proper&nbsp;view..</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Their deal obviously needs to be&nbsp;worked out.&nbsp; Obviously it should be largely if not entirely&nbsp;based on sharing future&nbsp;upside.&nbsp; And cashless.&nbsp; Can we make it option/equity based rather than fee based.&nbsp; (I can check if any EIS impact for us).&nbsp; &nbsp;They should be incentivised in particular to achieve termination&nbsp;of both&nbsp;the Harcourt&nbsp;Investments and Harcourt Inns management fee/service agreements (plus of course the Andrew Endean version) , and all related outstanding liabilities on acceptable terms to us as soon as possible.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Their own outstanding liability btw is &pound;292k not &pound;275k per slide 6.&nbsp; I&#39;m taking it as a given this will be waived.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I wouldn&#39;t be too quick to offer them the world.&nbsp; They are also in part responsible for getting us into this mess and I think this weighs reasonably heavily on them.&nbsp; But it&#39;s clearly worth our while to share upside with them relative&nbsp;to where we are today, provided we have confidence that they can deliver.&nbsp; We don&#39;t after all have too many options right now.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>It should be made clear to them that it will not be business as before.&nbsp; They will be dealing with, and reporting to, the advocacy team on a week to week basis initially and assuming they can turn things around, on a frequent and active basis for the foreseeable future.,&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Best</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Steve</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>On Tue, 7 Jul 2020 at 16:19, Nicholas Stockdale &lt;<a href="mailto:nicholasstockdale@googlemail.com">nicholasstockdale@googlemail.com</a>&gt; wrote:</p>\r\n\r\n<p>﻿John - agree with all you say.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Straw man proposal below comprising two fee components to Cherry &amp; Co:</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>1. Profit share - set base profit share at 25% of profit (profit after tax with depreciation added back)</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Increase the above base profit share as key milestones are sorted out - eg getting rid of McCulloch&rsquo;s management contract (on acceptable terms to us - we set out those parameters in advance - see below) and all the other contracts (again on acceptable terms to us); and getting EIS sorted out.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Happy to potentially offer up to another 25% profit share for the above milestones in aggregate as they are taking on an absolute mess. And 50% of profits should hopefully seriously incentivise them if they believe the story in their own proposal.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Above profit shares to fall away on pub sales. And also there needs to be a termination notice period and termination payment provisions. Details to be worked out - to avoid another situation like the one we&rsquo;re now in. &nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>2. Share of sale price above the initial gross amount we all put in - here happy to go up to 50% if it really incentivises them and given where we are today.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Rationale for setting the hurdle high is at the amount we paid in, is because the pubs are in way better condition than when we bought them and have additional revenue streams from the bedrooms. If properly run they should be very valuable assets. They are all in prime locations.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Obviously could change this share of sale price around to: a lower percentage above a lower hurdle.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Finally, the &pound;475k they mention in the proposal is owed to them to fall away not least as &pound;200k of it has nothing to do with us in any event.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>The McCulloch 2% of our equity put in management contract buy out:&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>He&rsquo;s currently owed &pound;950k and has a long term (25 year) contract in place. The pubs could fall into administration, and whilst he&rsquo;s likely to get his &pound;950k (though nothing more as they will be sold and his contract would terminate) he will be in a world of pain with the administrators, along with likely law suits against him (or at least threats of them) from some extremely angry shareholders. [Administration would though likely be a Pyrrhic victory for us as sale would be at rock bottom and no upside.]</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>So we could make an offer of 1/3 to 1/2 of the &pound;950k, though payable on sale of the pubs as we don&rsquo;t have the cash now as him and Harris have run them into the ground. And even this amount that we agree should decrease if EIS fails to come through on the pubs or if there is claw back.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Whatever happens I&rsquo;d want McCulloch and Harris no where near these pubs or the management of them.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Thanks</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Nick</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Sent from my iPhone</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 7 Jul 2020, at 15:33, John Soden &lt;<a href="mailto:soden.j@gmail.com" target="_blank">soden.j@gmail.com</a>&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>﻿I have had a quick read and it is sensible stuff but doesn&rsquo;t focus enough on the immediate crisis management necessary - but they don&rsquo;t necessarily know how bad it is.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>1. it looks as if they are owed both &pound;200k by JM and accrued management fees of &pound;275k by the pubs. I was hoping that these were the same thing. They will be open to waiving both but no doubt in expectation of an appropriate economic deal which is not specified and recognising that JM probably won&rsquo;t pay and the pubs can&rsquo;t at the moment. However they have done pretty well so far and apparently had &pound;450k out of JM as well as retaining the storage side of the business. So they are the ones who have benefited most so far.&nbsp;</p>\r\n\r\n<p>2. They are willing to become directors under various scenarios.</p>\r\n\r\n<p>3.&nbsp; I think there is a first phase of, say, 3 months, where they stabilise, seek to manage away liabilities and take out costs, negotiate deals with lenders where required and work up a strategy for each pub and try to address the EIS issues.</p>\r\n\r\n<p>4.&nbsp; In the second phase I think they should focus on what the trading vision should be for each. I suspect only 2 or 3 will actually have one and others are sold or mothballed.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>So the big question is how much is this worth and what do they want?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 7 Jul 2020, at 15:07, Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com" target="_blank">nurse_stephen@hotmail.com</a>&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Forwarding as it arrives.&nbsp; I haven&rsquo;t read yet, but getting out to you all asap</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>From:</strong> Robert Cherry &lt;<a href="mailto:robert.cherry@ducalian.co.uk" target="_blank">robert.cherry@ducalian.co.uk</a>&gt;<br />\r\n<strong>Sent:</strong> 07 July 2020 13:43<br />\r\n<strong>To:</strong> Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com" target="_blank">nurse_stephen@hotmail.com</a>&gt;<br />\r\n<strong>Subject:</strong> Pub cos</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Hi Steve,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Please find the attached. As mentioned on the phone it is a start and options can be explored,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>The split with JM meant that he left Ducalian and the storage projects and James H and I left the pub SPVs and op co. James M bought me and James H out of Ducalian Investments LLP (James M retained this) and it was a three year deferred consideration, (&pound;230k at completion, &pound;220k 1st anniversary, &pound;200k 2nd anniversary) and this now has the &pound;200k left to pay due on 18 April 2021.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Ducalian had management fees owing from the pubs that we had deferred and part of the split deal was that Ducalian would keep some retained debt that pub cos would repay over a three year period. These are specified in the doc. No retained debt payments to Ducalian have been made so far.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>If you have any questions just let me know,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Best regards,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Robert Cherry</p>\r\n\r\n<p>Ducalian Capital</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Linkedin: <a href="http://www.linkedin.com/in/cherryrob" target="_blank">http://www.linkedin.com/in/cherryrob</a></p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Ducalian Capital</p>\r\n\r\n<p>Studio 2</p>\r\n\r\n<p>Henry Wood House</p>\r\n\r\n<p>2 Riding House Street</p>\r\n\r\n<p>W1W 7FA</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>The information in this email and any documents and files transmitted with it are confidential and for the use of the intended recipient only. If you are not the intended recipient, please delete the message and statements immediately and notify the sender. Any unauthorised dissemination or copying of this email, or any misuse or wrongful disclosure of the information contained in it, is strictly prohibited and may be illegal. The opinions, statements and thoughts expressed in this email and its attachments if any, are those of the individual sender and not necessarily Ducalian or any associated personnel. Although Ducalian believes this email and any attachments are free of any virus or other defect which may affect a computer, it is the responsibility of the recipient to ensure that it is virus free and Ducalian does not accept any responsibility for any loss or damage arising in any way from its use.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Ducalian Capital Limited of Studio 2, Henry Wood House, 2 Riding House Street, London, W1W 7FA is authorised and regulated in the UK by the Financial Conduct Authority. FRN: 656531. Further details are available from the FCA Register at <a href="http://www.fsa.gov.uk/register/home.do" target="_blank">www.fsa.gov.uk/register/home.do</a>.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Company No: 07706480. Registered Office: First Floor Healthaid House, Marlborough Hill, Harrow, Middlesex, HA1 1UD.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&lt;Ducalian Pub Management (RC).pptx&gt;</p>', 'advocate', 'Ducalian Pub Management proposal', 0, '2020-07-07 00:00:00'),
	(50, 274, 'More delays', 'More-delays', '2020-08-16 02:00:01', NULL, '<p>&nbsp;</p>\r\n\r\n<p><a name="_MailEndCompose"></a></p>\r\n\r\n<p><a name="_MailOriginal"><strong>From:</strong></a> James McCulloch &lt;james@harcourtinns.co.uk&gt;<br />\r\n<strong>Sent:</strong> 13 August 2020 19:44<br />\r\n<strong>To:</strong> John Soden &lt;soden.j@gmail.com&gt;<br />\r\n<strong>Cc:</strong> Clive J Halperin &lt;cjhalperin@gscsolicitors.com&gt;; Rachel Rossiter &lt;rachel@harcourtinns.co.uk&gt;; Stephen Nurse &lt;nurse_stephen@hotmail.com&gt;; Steven Partridge &lt;sjpmhh@gmail.com&gt;; Stephen Phillips &lt;stephen.phillips@templebright.com&gt;; Alistair Higgins &lt;alistair.higgins@gmail.com&gt;; Nick Curtis &lt;n.curtis123@btinternet.com&gt;; Nick Stockdale &lt;nicholasstockdale@googlemail.com&gt;; David Smith &lt;parkhouse87@btinternet.com&gt;; Denis Shafranik &lt;denis@ermakgroup.com&gt;; Henry Harris &lt;henry@harcourtinns.co.uk&gt;<br />\r\n<strong>Subject:</strong> Re: Harcourt Pubs</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear John,</p>\r\n\r\n<p>Tomorrow doesn&rsquo;t work but I suggest Tues 18th at 10.30am as an alternative.&nbsp;</p>\r\n\r\n<p>If that works then let&rsquo;s meet at George Club which has quiet and private areas - address is 87-88 Mount Street.</p>\r\n\r\n<p>Can I assume it will be you and Nick Curtis as previously suggested?&nbsp;</p>\r\n\r\n<p>Regards</p>\r\n\r\n<p>James&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Get <a href="https://aka.ms/o0ukef">Outlook for iOS</a></p>\r\n\r\n<p>size=2 width=&quot;98%&quot; noshade style=&#39;color:black&#39; align=center&gt;</p>\r\n\r\n<p><strong>From:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt;<br />\r\n<strong>Sent:</strong> Thursday, August 13, 2020 5:47 pm<br />\r\n<strong>To:</strong> James McCulloch<br />\r\n<strong>Cc:</strong> Clive J Halperin; Rachel Rossiter; Stephen Nurse; Steven Partridge; Stephen Phillips; Alistair Higgins; Nick Curtis; Nick Stockdale; David Smith; Denis Shafranik; Henry Harris<br />\r\n<strong>Subject:</strong> Re: Harcourt Pubs</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear James,</p>\r\n\r\n<p>Thank you for your email. We will respond tomorrow.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>We are pleased you have sought legal advice and put you on notice that we expect this to be to your account and not charged to the pubs.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>In the meantime we have made it clear we wish to meet without any further delay to discuss all the pubs and would suggest 10am tomorrow morning. We have repeatedly stressed the financial position of the pubs is critical and gets worse with each passing day.</p>\r\n\r\n<p>Please confirm that you are available to meet.</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 13 Aug 2020, at 16:52, James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Dear John,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I write further to your emails of 11 August.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Firstly, as I wrote on 11 August, I will get back to you next week once I have fully considered your email. I note that you have chosen not to address the point that I made to you regarding the defamatory and misleading comments you have already made. I would urge you to ensure that should you choose to communicate with other shareholders or any other third parties you ensure that you do not make any defamatory or untrue statements. You should consider taking advice as to the consequences of seeking other shareholders to make decisions based on incorrect information.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>One of the key points that I think it is very important to stress is the issue of the management agreements. You suggest some kind of impropriety but the key commercial terms of the management agreements (including their duration) were contained in the prospectuses and shareholder approval was sought and obtained under the advice of a reputable law firm who managed this process. To suggest that either these agreements are not valid or somehow were entered into without disclosure is without any basis whatsoever. I mention this so that you understand that while you may be dissatisfied by your investment, it is simply not the case as you seek to allege that this is down to any misconduct on my part. There have also been previous discussions and conversations with shareholders regarding the management agreements and the issue of management fees has been transparent.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>There is no basis to terminate the management agreements and they will continue to apply, whether I am a director or not.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Your letter also contains many fundamental misunderstandings including the bases on which valuations of businesses and properties in this sector are made. That I have not chosen to address them in this email does not mean that I accept any of the allegations and reserve the right to do so.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>In terms of re-opening the pubs we have plans in place for this to happen. While you - a small number of the shareholders - have stated to me that you do not want this to happen, this is a decision for the board of directors and not the shareholders and we are keeping this under review. While you are not required or entitled to have any say in the management of the companies, the only suggestion you have put forward is for the contract with Harcourt Investments to be terminated and you seem unwilling to discuss anything other than that. I hope I have made it clear both previously and from the above that these Contracts are legally enforceable and so these are not constructive suggestions.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Therefore if you want to meet, which I am happy to do, it needs to be to discuss something other than the Contracts with Harcourt Investments.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>As previously mentioned, I am also trying to secure alternative backing to buy out some of the locations, particularly given your view that they should not reopen (although I reiterate that any decision to open or not is that of the board of directors&rsquo;). I am sure you understand that this is extremely difficult in the current environment but I hope to be able to present something in the next few days.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I am more than happy to discuss any of the above and given the tone of your correspondence I have copied my solicitor on this e-mail.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Regards,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>James McCulloch</p>\r\n\r\n<p>Managing Director</p>\r\n\r\n<p>Harcourt Inns</p>\r\n\r\n<p>Tel: 07904910301</p>\r\n\r\n<p><a href="mailto:james@harcourtinns.co.uk">Email: james@harcourtinns.co.uk</a></p>\r\n\r\n<p>Post: 139 Ladbroke Grove, Notting Hill, London W10 6HJ</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&lt;image002.png&gt;</p>\r\n\r\n<p>&nbsp;</p>', 'advocate', 'SAG - JM communication', 1, '2020-08-13 00:00:00'),
	(51, 274, 'Next steps', 'Next-steps', '2020-08-16 02:01:07', NULL, '<p><a name="_MailEndCompose"></a></p>\r\n\r\n<p><strong>From:</strong> John Soden &lt;john.soden@moorgateindustries.com&gt;<br />\r\n<strong>Sent:</strong> 14 August 2020 13:38<br />\r\n<strong>To:</strong> James McCulloch &lt;james@harcourtinns.co.uk&gt;<br />\r\n<strong>Cc:</strong> Henry Harris &lt;henry@harcourtinns.co.uk&gt;; Rachel Rossiter &lt;rachel@harcourtinns.co.uk&gt;; cjhalperin@gscsolicitors.com; nurse_stephen@hotmail.com; n.curtis123@btinternet.com; Stephen Phillips &lt;Stephen.Phillips@templebright.com&gt;; sjpmhh@gmail.com; Nicholas Stockdale &lt;nicholasstockdale@googlemail.com&gt;; alistair.higgins@gmail.com; Denis Shafranik &lt;denis@ermakgroup.com&gt;; parkhouse87@btinternet.com; simon.beswick@osborneclarke.com<br />\r\n<strong>Subject:</strong> Harcourt Pubs</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear James,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Thanks for coming back to me.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>We would obviously prefer to find a consensual solution to the current concerns and issues but given the lack of progress to date and the comments in your email yesterday, we are concerned this is unlikely. As such, we have sent you a shareholder requisition to remove the current directors and appoint new directors for five of the pub companies. The requisition for the KPH will come early next week. Clearly if we are able to find a solution in the intervening period we can reconsider those requisitions.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>We have taken note of the comments in your email of 11 August and will ensure that shareholder communications are based on the correct position. We have no intention to mislead anyone but note that a week has passed since our communication and you have not identified any specific points that you assert as incorrect.</p>\r\n\r\n<p>We note also that you have not responded to a number of the other points that we raised in the draft letter. Many of these arose directly from our conversations with you/and or Rachel. For example we were told by Rachel that a &pound;50k &ldquo;bounce-back&rdquo; loan has been taken in the Harcourt SPV and then used to repay outstanding debt to Harcourt Investments and lent on to another pub.</p>\r\n\r\n<p>Did this have board approval?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>With regard to the management contracts, we have taken both legal advice and gained an understanding of the market norms at the time they were entered into. Although we were aware of the headline terms from the Information Memorandum, having now seen some of the Management Contracts as part of our discussion it is clear many of the terms are significantly off market. A key point is that you are due a management fee based on a capital raise without any reference to the value of the pubs or the financial performance.&nbsp; We also are concerned that in many of the contracts profit is defined in a way to allow the exclusion of key costs such as interest and annual management fees.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>It is not clear why any board would enter into a management contract for such length without performance related termination grounds.&nbsp; None of the six pubs you manage has ever made a profit and management fees are a key element driving losses. The heart of the issue is that you are both manager and director and so there is an inherent conflict of interest &ndash; what incentive do you have to renegotiate the contract to market terms?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>We are also concerned that post capital raising you may have entered into operational contracts without any reference to shareholders.&nbsp; For example you seem to have taken on an operational role at the Harcourt whilst the Sansar contract continues to run&ndash; who and how was this approved?&nbsp; &nbsp;Any owner would particularly want to look at it closely when the person signing it off from the company was also a director and shareholder in the management company and, as such, is likely to have benefitted from the fees received.&nbsp;</p>\r\n\r\n<p>We are also struggling to reconcile the management fees charged to each pub with the disclosure in the Information Memorandum. To give a few examples where it has been hard to understand the disclosure versus the accounts:</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Crown: </strong>The management fee set out in the Information Memorandum entitles Ducalian to receive a management fee of 2% of the money raised in the offering being &pound;5m (effectively a &pound;100k pa fee). The Information Memorandum discloses that performance fees become payable only after each investor has received distributions (whether capital or income) on their investment equal to their original capital subscription.&nbsp; No distributions have been made available and so on the face of the disclosure Harcourt Investment&rsquo;s only entitlement to fees is &pound;100k pa (subject to an inflationary rachet).&nbsp; The fees in the 2019/20 accounts are &pound;268k (in one month alone March 2020 the fees paid were &pound;184k).&nbsp; On what contractual basis is the &pound;268k charged? Have you signed an operational contract?&nbsp; If so &ndash; who approved it?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Coach: </strong>there are two line items referring to management fees in the 2018/2019 amounting to &pound;259k of management fees (&pound;118k and &pound;140k). The Management Fee disclosed in the Information Memorandum was 2% on the amount of the initial raise (being &pound;4.72m ie &pound;94k subject to an inflation ratchet, plus 25% of profits).&nbsp; As the Coach has never made a profit &ndash; please explain the basis of your contractual entitlement to &pound;259k.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Harcourt: </strong>Again a 2% annual management fee was disclosed which would entitle you to 88k pa. There is a 10% fee on profits, but again no profits have ever been made at the Harcourt. Please explain the basis of your contractual entitlement to management fees of 221k in the period 2017/19?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>To the extent that we can&#39;t come to an agreement with Harcourt Investments on the management contracts and the fees charged then we would expect new directors will commence an investigation.&nbsp; Any new board will look carefully at the conflicts of interest, the quantum of fees, consistency of charging between pubs and the governance structure particularly where there are any post capital raises or amended contracts.&nbsp; We would imagine the board will look to appoint forensic accountants to assist in this process.&nbsp; &nbsp;Clearly if you can explain the rationale, and show that conflicts of interest were adequately dealt with, and fiduciary duties were followed as a director of the company, for entering into the management contract and operational contracts on those terms and for the fees charged, then we are interested to hear that explanation.&nbsp; As a starting point please confirm whether the management contracts have materially changed since the capital raise and confirm whether you have entered into new management or operational contacts or taken assignments of old contracts.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>You have now suggested a meeting next Tuesday which is helpful and I can confirm that Nick Curtis and I will attend. Please confirm whether you will be attending alone or with your solicitor. We are happy to have that meeting on a &#39;without prejudice&#39; basis in the hope that we might find a solution. In essence the shareholders are determined to make a fresh start with new directors and a new manager.&nbsp; We believe it is in all stakeholders&rsquo; interest to agree a consensual solution to effect this change as soon as possible given the perilous state of the pubs and look forward to meeting you to discuss a&nbsp;way forward.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>John</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>From:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Date:</strong> 13 August 2020 at 16:52:29 BST<br />\r\n<strong>To:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt;<br />\r\n<strong>Cc:</strong> Clive J Halperin &lt;<a href="mailto:cjhalperin@gscsolicitors.com">cjhalperin@gscsolicitors.com</a>&gt;, Rachel Rossiter &lt;<a href="mailto:rachel@harcourtinns.co.uk">rachel@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Subject:</strong> <strong>Harcourt Pubs</strong></p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Dear John,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I write further to your emails of 11 August.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Firstly, as I wrote on 11 August, I will get back to you next week once I have fully considered your email. I note that you have chosen not to address the point that I made to you regarding the defamatory and misleading comments you have already made. I would urge you to ensure that should you choose to communicate with other shareholders or any other third parties you ensure that you do not make any defamatory or untrue statements. You should consider taking advice as to the consequences of seeking other shareholders to make decisions based on incorrect information.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>One of the key points that I think it is very important to stress is the issue of the management agreements. You suggest some kind of impropriety but the key commercial terms of the management agreements (including their duration) were contained in the prospectuses and shareholder approval was sought and obtained under the advice of a reputable law firm who managed this process. To suggest that either these agreements are not valid or somehow were entered into without disclosure is without any basis whatsoever. I mention this so that you understand that while you may be dissatisfied by your investment, it is simply not the case as you seek to allege that this is down to any misconduct on my part. There have also been previous discussions and conversations with shareholders regarding the management agreements and the issue of management fees has been transparent.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>There is no basis to terminate the management agreements and they will continue to apply, whether I am a director or not.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Your letter also contains many fundamental misunderstandings including the bases on which valuations of businesses and properties in this sector are made. That I have not chosen to address them in this email does not mean that I accept any of the allegations and reserve the right to do so.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>In terms of re-opening the pubs we have plans in place for this to happen. While you - a small number of the shareholders - have stated to me that you do not want this to happen, this is a decision for the board of directors and not the shareholders and we are keeping this under review. While you are not required or entitled to have any say in the management of the companies, the only suggestion you have put forward is for the contract with Harcourt Investments to be terminated and you seem unwilling to discuss anything other than that. I hope I have made it clear both previously and from the above that these Contracts are legally enforceable and so these are not constructive suggestions.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Therefore if you want to meet, which I am happy to do, it needs to be to discuss something other than the Contracts with Harcourt Investments.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>As previously mentioned, I am also trying to secure alternative backing to buy out some of the locations, particularly given your view that they should not reopen (although I reiterate that any decision to open or not is that of the board of directors&rsquo;). I am sure you understand that this is extremely difficult in the current environment but I hope to be able to present something in the next few days.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I am more than happy to discuss any of the above and given the tone of your correspondence I have copied my solicitor on this e-mail.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Regards,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>James McCulloch</p>\r\n\r\n<p>Managing Director</p>\r\n\r\n<p>Harcourt Inns</p>\r\n\r\n<p>Tel: 07904910301</p>\r\n\r\n<p><a href="mailto:james@harcourtinns.co.uk">Email: james@harcourtinns.co.uk</a></p>\r\n\r\n<p>Post: 139 Ladbroke Grove, Notting Hill, London W10 6HJ</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><img src="data:image/png;base64,[encoded data, 58024 characters]" style="height:153px; width:811px" /></p>', 'advocate', 'SAG - JM communication', 1, '2020-08-14 00:00:00'),
	(52, 274, 'JM delaying tactics - a month to get a meeting', 'JM-delaying-tactics-a-month-to-get-a-meeting', '2020-08-16 02:06:29', NULL, '<p><a name="_MailOriginal"><strong>From:</strong></a> James McCulloch &lt;james@harcourtinns.co.uk&gt;<br />\r\n<strong>Sent:</strong> 11 August 2020 17:28<br />\r\n<strong>To:</strong> John Soden &lt;john.soden@moorgateindustries.com&gt;<br />\r\n<strong>Cc:</strong> nurse_stephen@hotmail.com; n.curtis123@btinternet.com; Nicholas Stockdale &lt;nicholasstockdale@googlemail.com&gt;; Stephen Phillips &lt;Stephen.Phillips@templebright.com&gt;; alistair.higgins@gmail.com; sjpmhh@gmail.com; Denis Shafranik &lt;denis@ermakgroup.com&gt;; parkhouse87@btinternet.com; &#39;John Soden&#39; &lt;soden.j@gmail.com&gt;; Rachel Rossiter &lt;rachel@harcourtinns.co.uk&gt;<br />\r\n<strong>Subject:</strong> RE: The Harcourt -URGENT</p>\r\n\r\n<p>Dear John,</p>\r\n\r\n<p>I will get back to you next week once I have fully considered the contents of your email but in the meantime would point out that there are several misleading and untrue statements in your email and document which are defamatory.</p>\r\n\r\n<p>You have already communicated these statements to a third party which is completely unnecessary and I reserve my rights. You should ensure that any statements that you choose to make known to third parties are factually accurate in all respects.</p>\r\n\r\n<p>In the meantime, I suggest that you await my response before taking any further steps.</p>\r\n\r\n<p>Regards,</p>\r\n\r\n<p>James</p>\r\n\r\n<p><strong>From:</strong> John Soden &lt;<a href="mailto:john.soden@moorgateindustries.com">john.soden@moorgateindustries.com</a>&gt;<br />\r\n<strong>Sent:</strong> 06 August 2020 18:28<br />\r\n<strong>To:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Cc:</strong> <a href="mailto:nurse_stephen@hotmail.com">nurse_stephen@hotmail.com</a>; <a href="mailto:n.curtis123@btinternet.com">n.curtis123@btinternet.com</a>; Nicholas Stockdale &lt;<a href="mailto:nicholasstockdale@googlemail.com">nicholasstockdale@googlemail.com</a>&gt;; Stephen Phillips &lt;<a href="mailto:Stephen.Phillips@templebright.com">Stephen.Phillips@templebright.com</a>&gt;; <a href="mailto:alistair.higgins@gmail.com">alistair.higgins@gmail.com</a>; <a href="mailto:sjpmhh@gmail.com">sjpmhh@gmail.com</a>; Denis Shafranik &lt;<a href="mailto:denis@ermakgroup.com">denis@ermakgroup.com</a>&gt;; <a href="mailto:parkhouse87@btinternet.com">parkhouse87@btinternet.com</a>; &#39;John Soden&#39; &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt;; <a href="mailto:shane.gallwey@guinnessfunds.com">shane.gallwey@guinnessfunds.com</a>; Rachel Rossiter &lt;<a href="mailto:rachel@harcourtinns.co.uk">rachel@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Subject:</strong> The Harcourt -URGENT</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear James,</p>\r\n\r\n<p>Since you have gone to ground and are not engaging or making any attempt to resolve the management position we are not prepared to wait anymore and see continuing value destruction for which we hold you responsible.</p>\r\n\r\n<p>I attach a working draft of a letter to shareholders prepared by the Shareholder Action Group (SAG) to accompany the calling of a General Meeting. We are sending it to you so that you can review. If you think there are any factual inaccuracies please point them out.&nbsp; Before we launch this we are giving you and Henry an opportunity to resign from all the pubs, and negotiate the termination of the contracts and a removal of the claims against the pubs. &nbsp;Ideally this will be done consensually in a face to face meeting early next week; you had suggested you would have a proposal by then. &nbsp;But in the absence of a satisfactory response we will be sending notice to you next week to call the General Meeting and will also send this direct to shareholders at the same time.</p>\r\n\r\n<p>This is the first of six letters in total. We are preparing customised letters for the other pubs.</p>\r\n\r\n<p>This is copied to Rachel for her information and also to Shane Gallwey.</p>\r\n\r\n<p>John Soden</p>', 'advocate', 'SAG - JM communication', 1, '2020-08-11 00:00:00'),
	(53, 274, 'JM delaying tactics', 'JM-delaying-tactics', '2020-08-16 02:08:48', NULL, '<p><a name="_MailOriginal"><strong>From:</strong></a> John Soden &lt;john.soden@moorgateindustries.com&gt;<br />\r\n<strong>Sent:</strong> 11 August 2020 17:18<br />\r\n<strong>To:</strong> James@harcourtinns.co.uk; Rachel@harcourtinns.co.uk<br />\r\n<strong>Cc:</strong> nurse_stephen@hotmail.com; Stephen Phillips &lt;Stephen.Phillips@templebright.com&gt;; sjpmhh@gmail.com; n.curtis123@btinternet.com; Nicholas Stockdale &lt;nicholasstockdale@googlemail.com&gt;; alistair.higgins@gmail.com; Denis Shafranik &lt;denis@ermakgroup.com&gt;; parkhouse87@btinternet.com; shane.gallwey@guinnessfunds.com; Bridget Hallahane &lt;Bridget.Hallahane@guinnessfunds.com&gt;<br />\r\n<strong>Subject:</strong> URGENT NOTICE TO THE DIRECTORS OF THE HARCOURT PUB LIMITED</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>To the Board of Directors, The Harcourt Pub Limited</strong></p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>It has now been five days since we sent a draft letter which we proposed to send to the shareholders to start the process of removing James and Henry as directors.&nbsp; We have not had a response.&nbsp; We asked in the cover email for engagement from the board so that we could discuss the terms of James and Henry standing down and the termination of the operational agreement in each of the 6 pubs. We wish to avoid a messy termination process which will not be in anyone&rsquo;s interest.&nbsp; The board should see this from the shareholders&rsquo; perspective.&nbsp; The current management has had 5 years of operations at the Harcourt and we have been left with &pound;2k in the bank and large debts. &nbsp;&nbsp;All of the pubs seem to be in a suboptimal position with liquidity problems, even before the C-19 lockdown and the management fees and other costs have been excessive, and in the pandemic era even more unsupportable.&nbsp; We have been promised an offer since 2019 and none has been forthcoming although we remain open to consider any offer if one were made.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>It is hardly surprising that in these circumstances that the shareholders have decided to seek a change of both the operational management and at the board level.&nbsp; James himself referred to stepping down as a director in past correspondence. &nbsp;&nbsp;In a meeting at the KPH on 8 July with Stephen Nurse and John Soden he acknowledged that shareholders wished to appoint new directors as soon as they had identified replacements.&nbsp; Clearly if this change is done in a consensual way this will enhance the chances of a successful turnaround, and the directors will be able to avoid the scrutiny of an investigation process and the possible legal claims which result.&nbsp; If &nbsp;a chaotic change of management occurs and any of the pubs become insolvent, perhaps as a result of stakeholders taking action, then an administrator is required by law to make a thorough investigation of directors&rsquo; conduct and send a report to the responsible government department.&nbsp; You will be aware that there are circumstances where directors are required after this kind of investigation to make a contribution back into the estate and where directors may be disqualified to act as directors.&nbsp; We would also anticipate some individual shareholders might wish to take action personally too.&nbsp; We are offering you a dignified way out which is likely to be considerably more preferable than the current direction of travel.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>We strongly believe the pubs are fundamentally sound assets which can be run profitably. &nbsp;&nbsp;&nbsp;In a change of management scenario we expect some shareholders would be willing to put more money into the pubs, to fund a turnaround. &nbsp; Refusing to meet and dragging out the termination process which slows the turnaround is not acting in the best interests of the shareholders or other stakeholders in the pubs including creditors. &nbsp;&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>We hope that this can be resolved consensually and we ask again, when is James available to meet to discuss the above? In the absence of any engagement by close of business on Wednesday we will be issuing the request to directors to convene the general meeting which they are required to do under the Companies Act within 28 days of the receipt of notice. Failure to do so will be looked upon very poorly by any liquidator in a subsequent insolvency.&nbsp;&nbsp;&nbsp;&nbsp;We suggest the board takes legal advice as to its possible liabilities and the actions it needs to take at this stage.</strong></p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>We do not have Henry Harris&rsquo; email address please ensure this email is copied to him and acknowledge receipt.</strong></p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>John Soden</p>\r\n\r\n<p>On behalf of the Shareholder Action Group</p>\r\n\r\n<p>&nbsp;</p>', 'advocate', 'SAG - JM communication', 1, '2020-08-11 00:00:00'),
	(54, 274, 'SAG - Ducalian update', 'SAG-Ducalian-update', '2020-08-16 02:12:05', NULL, '<p><strong>From:</strong> John Soden &lt;soden.j@gmail.com&gt;<br />\r\n<strong>Sent:</strong> 10 August 2020 17:00<br />\r\n<strong>To:</strong> Stephen Nurse &lt;nurse_stephen@hotmail.com&gt;<br />\r\n<strong>Cc:</strong> Nicholas Curtis &lt;n.curtis123@btinternet.com&gt;<br />\r\n<strong>Subject:</strong> Re: The Harcourt</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>As discussed I spoke to Rob. I had sent him the letter before the call.</p>\r\n\r\n<p>He opened by saying that on the basis of the stuff about Ducalian and separation it would probably be the end of any chance they would have to get involved. I said that was probably an accurate assessment if it came to it but the purpose of the letter at this stage was to show JM how bad it could be. If he saw sense, sat down with us and we agree a parting of the ways there would be no need to take the attack on the management agreements and breach of fiduciary duties any further. In that case, subject to seeing how we got on with other operators, if they were the best option we might well be able to go forward.</p>\r\n\r\n<p>He is clearly feeling uncomfortable, still can&rsquo;t believe how bad JM has been and thinks they have made a mistake. When they were discussing separation they had asked him where money was coming from because it wasn&rsquo;t practical to think the pubs could pay management fees. JM has said from savings.</p>\r\n\r\n<p>On the management contract and how much Harcourt Inns is charging they had asked at the time about management fees for operations and he had been evasive. He said it had never been Ducalian intention to charge a share of profits if losses were being made - the lawyers had put that in.</p>\r\n\r\n<p>Ski trip - he has no evidence that JM didn&rsquo;t pay for himself but thinks it very unlikely that he did.</p>\r\n\r\n<p>I said we would keep in touch as we worked our way through and asked him to give any thoughts on the letter or other info he could.&nbsp;</p>\r\n\r\n<p>So I haven&rsquo;t closed the door but he knows it is pretty unlikely we&rsquo;ll be able to deal with them. But also they are feeling exposed and uncomfortable from a personal point of view -so that is helpful.</p>\r\n\r\n<p>I also suggested in passing that obviously if they pulled a rabbit out of the hat on Titan then that would help sentiments for those who were invested in storage and pubs!</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 10 Aug 2020, at 09:50, Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com">nurse_stephen@hotmail.com</a>&gt; wrote:</p>\r\n\r\n<p>﻿ Happy to join a call. &nbsp;</p>\r\n\r\n<p>Do you think it is worth holding fire on the news and ask until we see if JM is going to compromise?</p>\r\n\r\n<p>Stephen Nurse. 447588 717515</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 10 Aug 2020, at 08:51, John Soden &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt; wrote:</p>\r\n\r\n<p>﻿ Stephen,</p>\r\n\r\n<p>I have had a message from Rob Cherry this morning asking what is happening.</p>\r\n\r\n<p>I can speak to him this afternoon and will relay our views. I will also tell him we will send him the letter. Overall objective is to get them to walk away from any claims against pubs and if possible drop claims against JM if he is prepared to do a major compromise with us. It is good that they are feeling uncomfortable.</p>\r\n\r\n<p>Do you want to join a Zoom? or I can do it one to one on the phone.</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n&nbsp;</p>', 'advocate', 'SAG - Ducalian', 1, '2020-08-10 00:00:00'),
	(55, 274, 'Strawman mgt contract', 'Strawman-mgt-contract', '2020-08-16 02:14:57', NULL, '<p>From Steve P</p>', 'advocate', 'Trafalgar Taverns', 1, '2020-08-10 00:00:00'),
	(56, 274, 'Summary', 'Summary', '2020-08-16 02:16:49', NULL, '<p><strong>From:</strong> John Soden &lt;<a href="mailto:john.soden@moorgateindustries.com">john.soden@moorgateindustries.com</a>&gt;<br />\r\n<strong>Date:</strong> 7 August 2020 at 17:51:58 BST<br />\r\n<strong>To:</strong> Shane Gallwey &lt;<a href="mailto:shane.gallwey@guinnessfunds.com">shane.gallwey@guinnessfunds.com</a>&gt;<br />\r\n<strong>Cc:</strong> Bridget Hallahane &lt;<a href="mailto:Bridget.Hallahane@guinnessfunds.com">Bridget.Hallahane@guinnessfunds.com</a>&gt;, Nicholas Curtis &lt;<a href="mailto:n.curtis123@btinternet.com">n.curtis123@btinternet.com</a>&gt;<br />\r\n<strong>Subject:</strong> <strong>Re:&nbsp; The Harcourt -URGENT</strong></p>\r\n\r\n<p>﻿ Thanks Shane,</p>\r\n\r\n<p>Sorry to interrupt your holiday.</p>\r\n\r\n<p>That generally makes sense and the liquidity issues in KPH and at least 2 or 3 others are critical. There are common trade creditors across the pubs and we are worried that if one goes there could be some contagion although an unsecured creditor will not be able to push anything very quickly. It is the secured creditors we need to get to quickly with sensible plans.</p>\r\n\r\n<p>With regard to JM we are intending to take a hard line - and we are not looking just for deferral but also write off. We think we could mount pretty serious claims against him and will fight him on 6 fronts. So please don&rsquo;t rush to agree a deal with him on KPH - it needs to be a co-ordinated effort and common attack. The letter is intending to show him what will be coming his way and hopefully will encourage him towards a consensual standing down.&nbsp;</p>\r\n\r\n<p>If you are around next week it would be good to have a detailed chat so that we all get on the same playing field and combine resources. We can also share thoughts on the operator.</p>\r\n\r\n<p>In the Harcourt we are looking, as a starter, at seeking loans from shareholders (with appropriate incentives and priority) to provide breathing space and potentially to take out NWB. The KPH Downing loan however at &pound;3m doesn&rsquo;t leave much headroom at all on a forced sale and is a big lump of cash.</p>\r\n\r\n<p>Let me know when you can speak.</p>\r\n\r\n<p>Kind regards</p>\r\n\r\n<p>John</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 7 Aug 2020, at 17:31, Shane Gallwey &lt;<a href="mailto:shane.gallwey@guinnessfunds.com">shane.gallwey@guinnessfunds.com</a>&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Dear John,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Thank you for copying me on your draft letter to James McCulloch. Bridget and I are both on holiday this week but monitoring emails and have been in touch on this.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>For our part, we have:</p>\r\n\r\n<ul>\r\n	<li>Spoken to Coutts and are looking to apply for a CBILS on behalf of Barts&nbsp;</li>\r\n	<li>Prepared some revised forecasts to go to Coutts as part of this &ndash; we have been seeking input from management and Bridget will chase Rachel on this on Monday</li>\r\n	<li>Requested to be added to the bank mandate</li>\r\n	<li>Arranged a call with Downing early next week and will ask them to push back the interest payments to give us more time on this</li>\r\n	<li>Requested that management prepare a plan to reopen on 1st September</li>\r\n	<li>Asked our lawyers to prepare a letter to James McCulloch reminding him of his obligations as a director&nbsp;</li>\r\n</ul>\r\n\r\n<p>I think a reopening plan is important if we are to persuade Downing to push back interest payments. &nbsp;I agree action needs to be taken but for KPH we need to deal with cash issue. I would like to persuade James to restructure any fees owed to Harcourt (and we would restructure fees owed to Guinness).&nbsp; Without this he could potentially call in accrued fees and push the company into administration. Notwithstanding I agree a change of management is needed.&nbsp; We would however be anxious to see an experienced manager take over to avoid compounding mistakes, and we do not want to spook Downing into calling in the loan.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>We are expecting to hear back from HMRC re Barts EIS in the next couple of weeks.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>We would also like to explore an equity injection.&nbsp; Would there be any appetite from the SAG to put further funds into Barts?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Kind regards</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Shane</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>From:</strong> John Soden &lt;<a href="mailto:john.soden@moorgateindustries.com">john.soden@moorgateindustries.com</a>&gt;<br />\r\n<strong>Sent:</strong> 06 August 2020 18:28<br />\r\n<strong>To:</strong> <a href="mailto:James@harcourtinns.co.uk">James@harcourtinns.co.uk</a><br />\r\n<strong>Cc:</strong> <a href="mailto:nurse_stephen@hotmail.com">nurse_stephen@hotmail.com</a>; <a href="mailto:n.curtis123@btinternet.com">n.curtis123@btinternet.com</a>; Nicholas Stockdale &lt;<a href="mailto:nicholasstockdale@googlemail.com">nicholasstockdale@googlemail.com</a>&gt;; Stephen Phillips &lt;<a href="mailto:Stephen.Phillips@templebright.com">Stephen.Phillips@templebright.com</a>&gt;; <a href="mailto:alistair.higgins@gmail.com">alistair.higgins@gmail.com</a>; <a href="mailto:sjpmhh@gmail.com">sjpmhh@gmail.com</a>; Denis Shafranik &lt;<a href="mailto:denis@ermakgroup.com">denis@ermakgroup.com</a>&gt;; <a href="mailto:parkhouse87@btinternet.com">parkhouse87@btinternet.com</a>; &#39;John Soden&#39; &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt;; Shane Gallwey &lt;<a href="mailto:shane.gallwey@guinnessfunds.com">shane.gallwey@guinnessfunds.com</a>&gt;; <a href="mailto:Rachel@harcourtinns.co.uk">Rachel@harcourtinns.co.uk</a><br />\r\n<strong>Subject:</strong> The Harcourt -URGENT</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear James,</p>\r\n\r\n<p>Since you have gone to ground and are not engaging or making any attempt to resolve the management position we are not prepared to wait anymore and see continuing value destruction for which we hold you responsible.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I attach a working draft of a letter to shareholders prepared by the Shareholder Action Group (SAG) to accompany the calling of a General Meeting. We are sending it to you so that you can review. If you think there are any factual inaccuracies please point them out.&nbsp; Before we launch this we are giving you and Henry an opportunity to resign from all the pubs, and negotiate the termination of the contracts and a removal of the claims against the pubs. &nbsp;Ideally this will be done consensually in a face to face meeting early next week; you had suggested you would have a proposal by then. &nbsp;But in the absence of a satisfactory response we will be sending notice to you next week to call the General Meeting and will also send this direct to shareholders at the same time.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>This is the first of six letters in total. We are preparing customised letters for the other pubs.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>This is copied to Rachel for her information and also to Shane Gallwey.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>John Soden</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>', 'advocate', 'SAG - GAM', 1, '2020-08-07 00:00:00'),
	(57, 274, 'Strawman for JM termination/settlement', 'Strawman-for-JM-termination-settlement', '2020-08-16 02:18:55', NULL, '<p><strong>Subject to Contract </strong></p>\r\n\r\n<p><strong>Without Prejudice</strong></p>\r\n\r\n<p><strong>PROPOSED TERMS FOR TERMINATION AND SETTLEMENT OF CLAIMS RELATING TO MANAGEMENT AGREEMENTS AND OPERATING AGREEMENTS [subject to tax review]</strong></p>\r\n\r\n<p><strong>Parties:</strong></p>\r\n\r\n<p>Harcourt Inns, Harcourt Investments, James Mcculloch (JM), Henry Harris (HH), Ducalian Capital, and each pub company managed by Harcourt Investments (&lsquo;<strong>Pubcos</strong>&rsquo;)</p>\r\n\r\n<p><strong>Definitions:</strong></p>\r\n\r\n<p><strong>&lsquo;A Shares&rsquo; </strong>any A Shares issued by any Pubco</p>\r\n\r\n<p>&nbsp;&lsquo;<strong>Ducalian Claims&rsquo;</strong> any claim by Ducalian against JM or any JM owned / controlled vehicle</p>\r\n\r\n<p><strong>&lsquo;Consultancy Contract</strong>&rsquo; contract between JM and each Pubco under which JM assists the operations of the Pubcos and if applicable the progress of any EIS application pursuant to which JM will be paid &pound;30,000 per annum for 3 years</p>\r\n\r\n<p>&lsquo;<strong>Harcourt/JM Claims&rsquo;</strong> means the claims of Harcourt Investments, Harcourt Inns HH and JM or any vehicle controlled by JM against any Pubco arising for any reason under any management contract, operating contract, service or employment contract, &nbsp;loan or outstanding obligation of any kind</p>\r\n\r\n<p>&lsquo;<strong>Pubco Claims&rsquo; </strong>any claims arising against Harcourt Investments, Harcourt Inns, JM, HH, and Ducalian arising as a result of breach of contract, breach of fiduciary duty, misfeasance, negligence or any other claim save fraud</p>\r\n\r\n<p>&lsquo;<strong>Pubco Intercompany Claims&rsquo; </strong>claims (if any) any pub has any other Pubco<a href="#_ftn1" name="_ftnref1">[1]</a></p>\r\n\r\n<p><strong>Key terms:</strong></p>\r\n\r\n<p><strong>Closing:</strong></p>\r\n\r\n<p>The following takes effect on signing (the &lsquo;<strong>Closing</strong>&rsquo;) of a Settlement Agreement (&lsquo;<strong>Settlement Agreement</strong>&rsquo;) which will implement the Proposed Terms in a legally binding manner</p>\r\n\r\n<p><strong>Termination:&nbsp; </strong></p>\r\n\r\n<p>The management agreement with Harcourt Investments and any operating agreements with Harcourt Inns will be terminated on Closing</p>\r\n\r\n<p><strong>Resignation:</strong></p>\r\n\r\n<p>JM and Henry Harris will resign as directors from each pub without any recourse or compensation as soon as replacement directors have been identified by the shareholder Ad hoc committee (&lsquo;<strong>SAG</strong>&rsquo;) provided however that JM will continue to provide support/continuity to achieve a smooth takeover to a new operator and assist with the EIS certification pursuant to a Consultancy Contract</p>\r\n\r\n<p><strong>Claims:</strong></p>\r\n\r\n<p>All &nbsp;Harcourt/JM Claims will be released save for claims amounting to [&pound;100,000] which will be deferred and paid on the date of an Exit (as defined in the articles of association in each Pubco)</p>\r\n\r\n<p>All Pubco Intercompany Claims will be released</p>\r\n\r\n<p>All Pubco Claims will be released</p>\r\n\r\n<p>All Ducalian Claims will be released</p>\r\n\r\n<p><strong>A Shares:</strong></p>\r\n\r\n<p>Any holder of A Shares shall transfer such shares back to each respective Pubco which will hold them in treasury</p>\r\n\r\n<p><strong>General Meeting:</strong></p>\r\n\r\n<p>Shareholders will vote at an General Meeting of each pub to enter into the Settlement Agreement,&nbsp; the Consultancy Agreement and approve the new management contract for each Pubco and the appointment of new directors</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<hr />\r\n<p><a href="#_ftnref1" name="_ftn1">[1]</a> These claims should not exist as all pubs should have been run independently of each other but included in case this is not the case</p>', 'advocate', 'JMTermination', 1, '2020-08-06 00:00:00'),
	(58, 274, 'Ski trip', 'Ski-trip', '2020-08-16 02:22:15', NULL, '<p>FYI &ndash; I came across the below whilst doing research,&nbsp; do you have details of the ski trip?</p>\r\n\r\n<p><strong>Duty not to accept benefits from third parties (section 176)</strong></p>\r\n\r\n<p><em><a href="https://uk.practicallaw.thomsonreuters.com/4-505-5245?originationContext=document&amp;transitionType=PLDocumentLink&amp;contextData=(sc.Default)"><strong>Section</strong> 176</a></em> codified the fiduciary rule prohibiting the exploitation of the position of director for personal benefit.</p>\r\n\r\n<p>Under <strong>section</strong> 176, directors must not accept any benefit (including a bribe) from a third party which is conferred because of his or her being a director or doing or not doing anything as a director. &quot;Benefit&quot; is not defined. The government stated, during the parliamentary debates, that it intended the ordinary dictionary meaning of the word, and noted that the Oxford English Dictionary defined it as a favourable or helpful factor, circumstance, advantage or profit (<em>House of Commons, <strong>Company</strong> Law Reform Bill [Lords] in Standing Committee D, Solicitor-General, column 622)</em>.</p>\r\n\r\n<p>The duty will not be infringed if the acceptance of the benefit cannot reasonably be regarded as likely to give rise to a conflict of interest. Benefits conferred by the <strong>company</strong>, its holding <strong>company</strong> or subsidiaries, and benefits received from a person who provides the director&#39;s services to the <strong>company</strong>, are excluded.</p>\r\n\r\n<p>Unlike <em><a href="https://uk.practicallaw.thomsonreuters.com/0-505-5167?originationContext=document&amp;transitionType=PLDocumentLink&amp;contextData=(sc.Default)"><strong>section</strong> 175</a></em>, board authorisation is not permitted in respect of the acceptance of benefits from third parties, but any previous ability of the members of a <strong>company</strong> to authorise the acceptance of benefits that would otherwise be a breach of this duty is preserved by <em><a href="https://uk.practicallaw.thomsonreuters.com/5-505-5202?originationContext=document&amp;transitionType=PLDocumentLink&amp;contextData=(sc.Default)"><strong>section</strong> 180(4)</a></em>, and the <strong>company&#39;s</strong> articles may contain provisions for dealing with conflicts. <strong>Companies</strong> may wish to provide in their constitutions that where directors accept benefits under a specified value, they will not be in breach of their duty to the <strong>company</strong>, for example to ensure that the acceptance of a certain level of corporate hospitality will not cause a director to breach <strong>section</strong> 176.</p>\r\n\r\n<p>The duty will continue to apply after a person ceases to be a director in relation to things done or omitted by them before they ceased to be a director.</p>', 'advocate', 'JM exit', 1, '2020-08-09 00:00:00'),
	(59, 274, 'Impressions of Frank D', 'Impressions-of-Frank-D', '2020-08-16 02:25:03', NULL, '<p><a href="https://www.greenwich.co.uk/andrew-gilligan/1876-frank-dowling-loses-his-temper/">https://www.greenwich.co.uk/andrew-gilligan/1876-frank-dowling-loses-his-temper/</a>&nbsp;&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>On 3 Aug 2020, at 03:23, Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com">nurse_stephen@hotmail.com</a>&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>NickC, StephenP and myself met with Frank Dowling, at his pub the Trafalgar Tavern, in Greenwich, this afternoon. We spent the best part of 2 hours with him and about half an hour debrief amongst ourselves.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>My conclusion</strong></p>\r\n\r\n<p>I was personally extremely impressed with Mr Dowling.&nbsp; I believe he would be able to turn around the pubs and I think he is someone we can constructively work with. He will add significant value very quickly and can hit the ground running.&nbsp; &nbsp;He recognises that we financial success driven and respects those objectives. He was happy to align interest accordingly. &nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Firstly, what I &quot;observed&quot;, and what it indicated to me:</strong></p>\r\n\r\n<ul>\r\n	<li>The end product: The Trafalgar looks to be a very well run pub. They are clearly busy and the focus is clearly on making money. &nbsp;&nbsp;\r\n	<ul style="list-style-type:circle">\r\n		<li>The enclosed photos are from about 6.30pm today</li>\r\n		<li>Coincidentally, I was in this pub on Friday evening from about 10pm-11pm. It was heaving.</li>\r\n		<li>He renovated the second floor during lockdown. It looked amazing, and clearly optimised for revenue.</li>\r\n	</ul>\r\n	</li>\r\n	<li>His relationship with his staff was very hands-on and no nonsense. I noticed this when instructed his staff when we first arrived - and he mucks in.\r\n	<ul style="list-style-type:circle">\r\n		<li>When they were rearranging the tables etc, Frank was first to the task and beckoned the others to help &ndash; who jumped</li>\r\n		<li>Refreshments arrived asap; the drinks he ordered for us were soft drinks, not alcohol.</li>\r\n	</ul>\r\n	</li>\r\n	<li>He had a typed list of each of the pubs prepared, and he knew where in London they all were etc</li>\r\n	<li>He lives next door to his pub. Literally next door</li>\r\n	<li>He was shabbily dressed; he looks like a bulldog chewing a wasp. &nbsp;This is actually a compliment</li>\r\n	<li>My take&hellip;.\r\n	<ul style="list-style-type:circle">\r\n		<li>He has the respect/attention (fear) of his staff. He is definitely not a stand-off manager. &nbsp;He is definitely &ldquo;on it&rdquo;</li>\r\n		<li>He is a doer, not a stay-behind-the-lines-general. Leads by example</li>\r\n		<li>It&rsquo;s not about him &ndash; it&rsquo;s about the pub/the business -&nbsp; no flash clothes/watch. But he is proud of his business</li>\r\n		<li>He wasn&rsquo;t there to schmooze/sweet talk or try to make it personal (hence soft drinks); it&rsquo;s all about the commercials.&nbsp; So, not trying to &ldquo;impress&rdquo;/bluster. &nbsp;</li>\r\n	</ul>\r\n	</li>\r\n</ul>\r\n\r\n<p>My conclusion: From a personality perspective, he is the exact antithesis of JM. He was all about the hard work and getting it done. He will definitely muck in. None of the fluff and promise. He really knew the details of the business and I doubt much gets by him.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>What he said&hellip;.</strong></p>\r\n\r\n<p><strong>&nbsp;</strong></p>\r\n\r\n<p><strong>About pub operations</strong></p>\r\n\r\n<ul>\r\n	<li>He was all about the details.&nbsp; He had numbers straight at hand about the percentages we should be expecting to make on wet sales and FAB etc. All with ranges.</li>\r\n	<li>He cited salaries for staff, chefs etc.\r\n	<ul style="list-style-type:circle">\r\n		<li>Chefs &nbsp;are on ~&pound;50k &ndash; he thought Henry Harris at 150k was plain wrong</li>\r\n	</ul>\r\n	</li>\r\n	<li>Very focused on the details.&nbsp; He was even desperate to show us the weekly ePOS results on his iphone.&nbsp; Commented on the fact that CV19 was a positive to avoid slippage due to cash sales.</li>\r\n	<li>He was familiar with EIS but had not financed any of his ventures that way</li>\r\n</ul>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>What he can do, when and how much</strong></p>\r\n\r\n<ul>\r\n	<li>He has capacity to apply resources to this &ndash; he a GM from Bristol he needs to redeploy and he said he was a bit bored himself</li>\r\n</ul>\r\n\r\n<p><strong>&nbsp;</strong></p>\r\n\r\n<p><strong>His suggestions on next steps/how to engage</strong></p>\r\n\r\n<ul>\r\n	<li>He did talk about a couple of other alternative operators (Walsh - Citypubs) and encouraged us to talk to them to &lsquo;kick the tyres&rsquo;.&nbsp; He did not deride any of his competitors</li>\r\n	<li>He said regarding any arrangement with him to &ldquo;keep it simple&rdquo; and make it success driven.\r\n	<ul style="list-style-type:circle">\r\n		<li>No lock-ins.</li>\r\n		<li>Shareholder representation on all the key decisions.\r\n		<ul style="list-style-type:square">\r\n			<li>He is not demanding total control, more a partnership &ndash; though I do suspect he will recognise the investors are financial investors only, so I am sure he assumes operational latitude</li>\r\n		</ul>\r\n		</li>\r\n	</ul>\r\n	</li>\r\n</ul>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Incidentally, what he told us about JM</strong></p>\r\n\r\n<ul>\r\n	<li>He had a reasonably good read on JM, through his contact at Savills (Dan Mackerman)\r\n	<ul style="list-style-type:circle">\r\n		<li>DanM has been &ldquo;over-sharing&rdquo; so we should probably not discuss this outside of this email group. &nbsp;</li>\r\n	</ul>\r\n	</li>\r\n	<li>Said that Dan had sat in on an Ops meeting in the Crown and that JM and RR had identified 150k of savings on Tronc off the bat. &nbsp;</li>\r\n</ul>\r\n\r\n<ul>\r\n	<li>&nbsp;</li>\r\n</ul>\r\n\r\n<ul>\r\n	<li>Told us a bricks and mortar valuation instruction (no operator) was a ploy to suppress the valuation</li>\r\n</ul>\r\n\r\n<ul>\r\n	<li>&nbsp;</li>\r\n</ul>\r\n\r\n<ul>\r\n	<li>JM was pleased to get a low valuation &ndash; notable because that was the first time he had seen that.&nbsp; I think we know why.</li>\r\n</ul>\r\n\r\n<ul>\r\n	<li>&nbsp;</li>\r\n</ul>\r\n\r\n<ul>\r\n	<li>From our description of the numbers, he suspects some sort of shenanigans.\r\n	<ul style="list-style-type:circle">\r\n		<li>Note: DanM is the person at Savills that I called to get the valuations when JM wasn&rsquo;t forwarding the valuations (his contact details were on the bottom of the email JM forwarded to explain the delay).</li>\r\n	</ul>\r\n	</li>\r\n</ul>\r\n\r\n<ul>\r\n	<li>\r\n	<ul style="list-style-type:circle">\r\n		<li>&nbsp;</li>\r\n	</ul>\r\n	</li>\r\n</ul>\r\n\r\n<ul>\r\n	<li>\r\n	<ul style="list-style-type:circle">\r\n		<li>Given we are still awaiting the Crown valuation and that Dan had told me Friday (10 days ago) that is was due later that day, I tempted to call DanM again in the morning and do some more digging. &nbsp;Agree?</li>\r\n	</ul>\r\n	</li>\r\n</ul>\r\n\r\n<ul>\r\n	<li>\r\n	<ul style="list-style-type:circle">\r\n		<li>&nbsp;</li>\r\n	</ul>\r\n	</li>\r\n</ul>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Motivations </strong></p>\r\n\r\n<ul>\r\n	<li>We asked what his motivations to get involved were..</li>\r\n	<li>He said he was under-utilised at the moment. The word he used was &lsquo;bored&rsquo;.&nbsp; He was due to start work on a hotel next door (sandwiched between the pub and his personal home &ndash; really) but that he was delaying that for CV19 reasons, and he was losing a pub in Bristol (end of lease) in September.\r\n	<ul style="list-style-type:circle">\r\n		<li>To me, that actually made some sense.&nbsp; He has managed multiple pubs concurrently in the past.&nbsp; He said over his career he has run 30 pubs/restaurants</li>\r\n	</ul>\r\n	</li>\r\n	<li>He said he saw the injustice of what JM has done and would want to help correct this\r\n	<ul style="list-style-type:circle">\r\n		<li>This felt a little too convenient a response to me (like when you say in a job interview that you are &ldquo;too diligent&rdquo;).&nbsp;</li>\r\n		<li>In truth, I did get a sense he disapproved of the entitlement of JM and he is clearly a passionate/pugnacious man, but that response did worry me a little as a bit too convenient.</li>\r\n	</ul>\r\n	</li>\r\n</ul>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>His colourful past</strong></p>\r\n\r\n<ul>\r\n	<li>Nick asked him directly about his colourful past.</li>\r\n	<li>He was very direct about his arrest and detainment and prosecution from the HMRC and the genesis of the argument.</li>\r\n	<li>Bottom line is that he won the debate he is awaiting a settlement back for damages.&nbsp;</li>\r\n	<li>He told us he spent &pound;700k on his defence (and was awarded &pound;400k costs). &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;\r\n	<ul style="list-style-type:circle">\r\n		<li>He went for a top QC and he is a fighter</li>\r\n		<li>Personally I see this as an asset.&nbsp; He was certainly not evasive and I think this experience may indeed help us with any come back with JM. He will not be shy</li>\r\n	</ul>\r\n	</li>\r\n	<li>Nick also asked about his personal financial situation, to make sure he was stable.&nbsp;\r\n	<ul style="list-style-type:circle">\r\n		<li>He volunteered details including the history of his mortgage. Again, no airs or graces, no self bluster, no self importance.&nbsp; And the conclusion seems to be that he is financially stable but still hungry (he volunteered that his house was worth 5.75m, and he does have a mortgage).&nbsp; He is married with 2 kids + 1 on the way</li>\r\n	</ul>\r\n	</li>\r\n	<li>Nick also asked if he wanted to invest&nbsp; (testing for whether this was a cheap fishing exercise?) -&nbsp; and he said that he wasn&rsquo;t that he was in invest mode on the Trafalgar but could find about 400k to redirect. Again, the right balance in my mind</li>\r\n</ul>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>&nbsp;</strong></p>\r\n\r\n<p><strong>Questions he asked us</strong></p>\r\n\r\n<ul>\r\n	<li>He asked a lot about the numbers, and the financials. We gave him some high levels but not the full story &ndash; frankly not sure we have that.</li>\r\n</ul>\r\n\r\n<p><strong>&nbsp;</strong></p>\r\n\r\n<p><strong>Cutting to the chase - My opinion</strong></p>\r\n\r\n<ul>\r\n	<li>He is definitely the high Beta option. &nbsp;\r\n	<ul style="list-style-type:circle">\r\n		<li>On the positive, he doesn&rsquo;t come with the corporate costs of a CityPub etc, while having the experience and know-how to make money.&nbsp;</li>\r\n		<li>However, if it went badly he would be a tough advisory</li>\r\n	</ul>\r\n	</li>\r\n	<li>I think he will be truly transformative and given the structure of EIS (upside tax free, downside dampen), ironically high beta is actually the right approach, especially from our starting point now</li>\r\n	<li>I suspect that once freed of the Ducalian/Harcourt Inn fee drag, he will soon produce significant FCF to pay down debt.</li>\r\n	<li>I suspect he is used to making material returns after paying &lsquo;rent&rsquo; to landlords &ndash; so I think he will get us back to par in a few years.</li>\r\n	<li>Also, in any fight with JM &ndash; he will &nbsp;crush him.&nbsp; &nbsp;</li>\r\n</ul>\r\n\r\n<p>&egrave; Ducalian is the safe option. However, Dowling gets my vote, not only because it frees us from some of the difficult optics of re-employing Ducalian, and I think will help carry the other investors</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>&nbsp;</strong></p>\r\n\r\n<p><strong>Next steps</strong></p>\r\n\r\n<ul>\r\n	<li>I think those who have not met him should definitely do so, and form your own opinion.</li>\r\n	<li>I will adapt the website to share the financials, but no the shareholder list nor the Ducalian plan &nbsp;</li>\r\n</ul>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>First cut of a proposal</strong></p>\r\n\r\n<ul>\r\n	<li>I think something short and sweet. He proposed &pound;200k pa to fund the ops manager, chef and some of his time and the remainder on a cost basis (separable by pub).</li>\r\n	<li>Success element of [15]% of GOP, where GOP excludes the debt servicing costs but includes some reasonable &ldquo;rental&rdquo; yield for investors</li>\r\n	<li>Rolling 6 months.</li>\r\n</ul>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>', 'advocate', 'Trafalgar Taverns', 0, '2020-08-03 00:00:00'),
	(60, 274, 'Exit proposal promised by 7 Aug', 'Exit-proposal-promised-by-7-Aug', '2020-08-16 02:56:57', NULL, '<p><a name="_MailEndCompose"></a></p>\r\n\r\n<p><strong>From:</strong> James McCulloch &lt;james@harcourtinns.co.uk&gt;<br />\r\n<strong>Sent:</strong> 29 July 2020 08:27<br />\r\n<strong>To:</strong> John Soden &lt;soden.j@gmail.com&gt;<br />\r\n<strong>Cc:</strong> Rachel Rossiter &lt;rachel@harcourtinns.co.uk&gt;; Stephen Nurse &lt;nurse_stephen@hotmail.com&gt;<br />\r\n<strong>Subject:</strong> Re: Summary financials</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear All,</p>\r\n\r\n<p>I intend to have the various strategic options ready by 7th Aug after which we can arrange for a face to face meeting to discuss.&nbsp;</p>\r\n\r\n<p>I have a meeting tomorrow to finalise some details and then I can confirm this date.&nbsp;</p>\r\n\r\n<p>Rgds</p>\r\n\r\n<p>James&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Get <a href="https://aka.ms/o0ukef">Outlook for iOS</a></p>\r\n\r\n<p>size=2 width=&quot;98%&quot; align=center&gt;</p>\r\n\r\n<p><strong>From:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt;<br />\r\n<strong>Sent:</strong> Tuesday, July 28, 2020 12:00:45 PM<br />\r\n<strong>To:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Cc:</strong> Rachel Rossiter &lt;<a href="mailto:rachel@harcourtinns.co.uk">rachel@harcourtinns.co.uk</a>&gt;; Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com">nurse_stephen@hotmail.com</a>&gt;<br />\r\n<strong>Subject:</strong> Re: Summary financials</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>James,&nbsp;</p>\r\n\r\n<p>Are we having a call today as suggested by Stephen? Timing and developing a way forward is critical.&nbsp;</p>\r\n\r\n<p>If today doesn&rsquo;t work please propose an early date when we can do a call, or meet face to face which would be preferable.</p>\r\n\r\n<p>Sent from my iPad</p>', 'advocate', 'SAG - JM communication', 1, '2020-07-29 00:00:00'),
	(61, 274, 'JM Mismanagement strawman', 'JM-Mismanagement-strawman', '2020-08-16 03:00:22', NULL, '<p><strong>Current Position in the Harcourt Pubs Portfolio</strong></p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Through a combination of<strong> </strong>poor management, reckless spending and the desire to build a pub group for which there was never a mandate, investment proposal, or consultation with shareholders, James McCulloch has dissipated huge sums of money. The result is that, prior to the impact of Covid-19, each of the SPVs have seen a very considerable drop in value, all are loaded with debt and cash, except in one or two, is so tight that the companies are on the verge of collapse. Valuations indicate that all pubs sit below the original purchase cost prior to the redevelopment spends. The Harcourt, KPH and Crown potentially have no shareholder value and are unlikely to be able to pay creditors in full, if at all. Only the Coach has any significant cash and that would probably be dissipated quickly in trading losses in it were to be re-opened under current Covid-19 conditions. Every pub will need urgent discussions with lender to ensure that they do not appoint receivers and active management will be required to engage with creditors and suppliers to ensure they do not precipitate collapse. It is likely that shareholders in each pub SPV will need to be approached to see whether they can be persuaded to invest cash to prevent collapse. In short the position is a disaster and shareholder value has been virtually wiped out. It is likely that a number of the pubs have potentially been trading by insolvent were it not for the de facto recycling of cash from one pub to another even though there is no legal group in place. The vast majority of shareholders are completely unaware of the true financial position due to a lack of reporting or provision of misleading information.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Shareholders in each pub will wish to investigate the management of the SPV and to establish what steps have been taken by James McCulloch as principal director, the failure to provide any accurate financial information and whether there have been any actions taken which are illegal, &nbsp;contrary to company law and whether JM has benefited in any way from use of company assets.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>The major issues and areas of potential scrutiny are set out below</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Creating a Pub group contrary to the best interests of each shareholder group</strong></p>\r\n\r\n<ul>\r\n	<li>Each pub was a standalone investment in a separate company with individual shareholders who were marketed to individually. An EIS&nbsp; prospectus was provided to investors for each pub which supposedly had its own business plan and was to be run on a standalone management basis and be exited at the optimum time after the expiry of the three-year EIS hold period.</li>\r\n	<li>James McCulloch, without reference or agreement of shareholders in each pub SPV decided to attempt to create a pub group to promote his own ends, which created a central cost burden without any attention to the benefit derived by each pub or recognition that the offering needed to be different to cater to each pub&rsquo;s location, attributes and potential clientele. For example, Henry Harris was brought in on a salary double what a head chef should be paid and attempted to shoehorn the same type of offering into each pub even though it was largely inappropriate. The Harcourt had already been burdened with an operating agreement and a food offering which was unworkable and as a result has incurred a double overhead burden.</li>\r\n	<li>Despite being asked by shareholders on many occasions to explain the basis of allocation of central overhead to each pub and benefit that was derived JM refused or failed to provide any information. It has become apparent that no such formal basis exists, and allocation has been arbitrary meaning that the respective interests of shareholders in each pub company have not been observed or protected</li>\r\n	<li>In the normal course bulk buying agreements with suppliers would result in retrospective rebates &ndash; there is a concern that such rebates have not been provided to individual pub companies</li>\r\n	<li>By charging and re-cycling Ducalian/Harcourt Investments management fees some pubs have in effect been cross-subsidising other pubs and shareholder interests have been compromised and the true financial position obscured. Without such subsidy it is now apparent that certain companies would have been effectively insolvent</li>\r\n	<li>C-19 bounce-back loans have been used to pay the debts of other pubs or management fees</li>\r\n	<li>Despite being challenged by certain of the Harcourt shareholders in May 2019 to provide an exit proposal and making repeated assurances that he would do so JM repeatedly failed to deliver anything</li>\r\n</ul>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Fundamental mismanagement leading to major loss of shareholder value</strong></p>\r\n\r\n<ul>\r\n	<li>The debt burden loaded onto pubs caused by a failure to complete building works within budget, large central overheads and operating losses means that most of the pubs were close to collapse prior to the impact of Covid-19. In a low interest rate environment, the Crown is paying interest at 11% pa and the KPH at 9% eroding shareholder value without any discussion with shareholders.</li>\r\n	<li>There has been reckless spending and fundamental mismanagement across the pubs at large. Tight cost control and managing to KPIs is essential in running pubs effectively. The performance data for each of the pubs shows major underperformance against normal industry norms.&nbsp;</li>\r\n</ul>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Failure to obtain EIS certification</strong></p>\r\n\r\n<ul>\r\n	<li>EIS status was a critical part of the investment proposition. However, EIS certificates have still not been received for three of the pubs;\r\n	<ul style="list-style-type:circle">\r\n		<li>The Hero completed its 4-month trading period and could apply for its EIS certificate in June 2018.</li>\r\n		<li>The KPH completed its 4-month period in February 2019</li>\r\n		<li>The Crown completed its trading period in January 2019</li>\r\n	</ul>\r\n	</li>\r\n	<li>It has become apparent that JM has shown a complete disregard to the interests of shareholders in enabling them to qualify for their 30% tax rebates (which totals approximately &pound;5million). The requests for certification could and should have been submitted immediately at the end of each 4-month period but this was not done. Subsequently it has become apparent that extended further delays have been caused by a failure to respond to HMRC enquiries. Enquiries from HMRC in December 2019 relating to the Hero and KPH were only responded to in June 2020. &nbsp;It has been suggested by HMRC that pubs are under common control. The supposed creation of a pub group by JM, for which there was no legal basis, has enabled HMRC to attack the EIS status. This is not true but it has undermined shareholders financial standing.</li>\r\n	<li>The investment manager must not take any action which undermines the EIS process and negatively impacts shareholders&rsquo; positions. There are serious concerns that this duty of care has not been exercised</li>\r\n</ul>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Failure to report accurately to shareholders and providing misleading information</strong></p>\r\n\r\n<ul>\r\n	<li>A key part of JM&rsquo;s responsibilities as investment manager is to report regularly and accurately on the financial position of each pub. Over the course of each investment there has been a failure to issue regular reports to investors.</li>\r\n	<li>Many shareholders have approached JM seeking information and have either been ignored, fobbed off, or led to believe that all was fine</li>\r\n	<li>On the few occasions when information has been provided it has failed to show the true financial position of the pubs because balance sheets were deliberately not provided.\r\n	<ul style="list-style-type:circle">\r\n		<li>&nbsp;Large deficits have been racked up year by year</li>\r\n		<li>The amount of bank borrowing, and terms have not been revealed. The loan facilities in the Crown and KPH, in particular, have been agreed at insupportable rates</li>\r\n		<li>The amount of accrued third party debt including management fees has not been revealed</li>\r\n		<li>Liquidity issues have been obscured by creating payment flows between individual pubs and Harcourt Investments</li>\r\n		<li>The existence of a debt in the Harcourt of &pound;171k supposedly due to Sansar (Andrew Endean&rsquo;s company) who shareholders were told had been removed from the business over two years ago was not revealed. Andrew Endean was shown as a key individual in the original investment prospectus and this was a material issue</li>\r\n		<li>Annual reports have not been filed on a timely basis and extending accounting periods has contributed to the failure to show the true financial position to shareholders</li>\r\n	</ul>\r\n	</li>\r\n	<li>Many shareholders have consistently chased JM for information on the status of EIS. Shareholders were repeatedly told that delays were due to HMRC&rsquo;s failure to respond. In fact, various of these statements were false. In many instances requests for information from shareholders on EIS status went unanswered</li>\r\n	<li>The existence of the deal between Harcourt Inns and Ducalian Capital, which has had a significant impact on shareholders interests was revealed to shareholders only months after it was done. Capital was raised on the track record of the Ducalian team, whose members are set out in each prospectus</li>\r\n</ul>\r\n\r\n<p>&nbsp;</p>', 'advocate', 'JM exit', 1, '2020-08-16 00:00:00'),
	(62, 274, 'Follow-up email to directors on use of funds/loans etc', 'Follow-up-email-to-directors-on-use-of-funds-loans-etc', '2020-08-17 12:21:37', NULL, '<p><strong>From:</strong> John Soden &lt;john.soden@moorgateindustries.com&gt;<br />\r\n<strong>Sent:</strong> 17 August 2020 10:44<br />\r\n<strong>To:</strong> Rachel Rossiter &lt;rachel@harcourtinns.co.uk&gt;; James McCulloch &lt;james@harcourtinns.co.uk&gt;<br />\r\n<strong>Cc:</strong> Henry Harris &lt;henry@harcourtinns.co.uk&gt;; cjhalperin@gscsolicitors.com; nurse_stephen@hotmail.com; n.curtis123@btinternet.com; Stephen Phillips &lt;Stephen.Phillips@templebright.com&gt;; sjpmhh@gmail.com; Nicholas Stockdale &lt;nicholasstockdale@googlemail.com&gt;; alistair.higgins@gmail.com; Denis Shafranik &lt;denis@ermakgroup.com&gt;; parkhouse87@btinternet.com; simon.beswick@osborneclarke.com; Henry Harris &lt;henry@harcourtinns.co.uk&gt;<br />\r\n<strong>Subject:</strong> RE: Harcourt Pubs</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear Rachel</p>\r\n\r\n<p>Whilst your initial response was meant to reassure it raised a number of concerns.</p>\r\n\r\n<p><strong>Loan to Coach from the Harcourt</strong></p>\r\n\r\n<p>We do not understand how the board came to the conclusion any &lsquo;intergroup&rsquo; lending could be justified. In a group the survival of one group entity might assist another which has a benefit to the member lending the money.&nbsp; The investments are supposed to be (and were sold as) completely standalone investments with shareholders being different for each company.&nbsp; There is no group here and shareholders did not invest on a group basis. How can the Coach derive corporate benefit from making a loan to a risky counterparty?&nbsp;&nbsp;&nbsp; In addition we would presume this type of transaction is indicative of group behaviour&nbsp; - precisely the kind of thing HMRC seems to be concerned with.&nbsp; We would like to know as a matter of urgency what other loans have been made between pubs during the life of the individual investments.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Preference / Transactions at Undervalue</strong></p>\r\n\r\n<p>Pre-covid there is a strong argument that all the Pubcos were in the &lsquo;zone of insolvency&rsquo; on the basis they are all making losses and they all seem to be having trouble paying their debts as they fall due.&nbsp; The amounts allegedly owed to Harcourt Investments attest to this.&nbsp; Post-covid with only liabilities and no or uncertain revenue there is no question that they are in the zone of insolvency.&nbsp; When a company is in this position a board should be scrutinising payments very carefully and having board meetings to document controversial commercial decisions such as which creditors to pay. The board should pay particular attention to payments to connected parties such as directors.&nbsp;&nbsp; The board of a company in a distressed state must be particularly careful to avoid making certain payments which would, in an insolvency, be classed as preferences or a transaction at an undervalue. The board must also be careful taking on new credit.&nbsp; On the face the entry into a loan by the Coach to the Harcourt is likely to be a transaction at an undervalue unless a significant rate of interest and other protections are secured such as the taking of security are implemented.&nbsp; The repayment of the loan to a company controlled by the same board of directors is likely to be a preference given that other creditors have remained unpaid. Given that the Harcourt has we understand &pound;2k in the bank, it seems highly questionable why is chose to pay back the Coach at this time.&nbsp; It seems to us that it is likely that if the Coach / Harcourt enter administration the administrators are likely to attack this transaction.&nbsp; No doubt you are aware of the potential for personal liability for directors in these circumstances.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Governance</strong></p>\r\n\r\n<p>Section 175 of the Companies Act states that &quot;a director of a company must avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company&rdquo;. Given the conflicts of interests where in essence two companies controlled by the same manager and board are entering into a loan transaction we cannot see how either board could make any decisions like this without the endorsement of shareholders.&nbsp; If this was done on an arm&rsquo;s length basis as the credit risk is high the lending should have been done at a high commercial interest rate.&nbsp; What (if any) rate was used and what protection did the Coach have in this transaction?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Purpose</strong></p>\r\n\r\n<p>In the website describing the BBL scheme the British Business Bank states &lsquo;The business must confirm to the lender that the loan will only be used to <strong>provide an economic benefit to the business&rsquo;</strong>.&nbsp; We would not imagine that any lender would take the view that repaying another Pubco which had no relationship with the Harcourt other than common directors and management fulfils the purpose of the lending.&nbsp; Did the bank know how the money would be used and was consent granted for the payment to the Coach?&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>Fees</strong></p>\r\n\r\n<p>We remain concerned at the level of the fees and you stated that the fees are explicable.&nbsp; In order to allay our concerns we would be grateful if you could create a spreadsheet for each pub which (i) sets out the total levels of fees paid in each year, (ii) the level of any outstanding fees (iii) breakdown which type of fee ie management charge, annual performance fee or initial commission, each feel falls into (iv) explain what the &lsquo;profits&rsquo; were in any year based on the contract definition on which any performance fees were paid (if any).&nbsp; We note that the Harcourt contract (and we assume the contracts are the same across the pubs) states that&nbsp; the performance fee is only payable from the date that the value of the [name of pub] has increased to an amount equivalent to the Investment Amount (section 4.2).&nbsp; Given that the valuations delivered to us all appear to be at just over 50% of the investment amount our working assumption is that no performance fees has ever been paid.&nbsp; If they have been paid please explain (i) what date this point was reached; and (ii) how the board came to a conclusion that the relevant threshold had been reached and what external verification was put in place given the self-evident conflict of interest.&nbsp;&nbsp;&nbsp; Please provide the above explanation for each pub.&nbsp; We also note some of the pubs seem to have operational contracts too.&nbsp; Please perform an analogous exercise for the operational contracts (if any) for each pub.&nbsp; Finally please provide us with the management and operational contracts for each pub.&nbsp; Please confirm whether the management contracts have materially changed since the capital raise and confirm whether you have entered into new management or operational contacts or taken assignments of old contracts.</p>\r\n\r\n<p>Regards</p>\r\n\r\n<p>John</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>From:</strong> Rachel Rossiter &lt;<a href="mailto:rachel@harcourtinns.co.uk">rachel@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Sent:</strong> 14 August 2020 14:11<br />\r\n<strong>To:</strong> John Soden &lt;<a href="mailto:john.soden@moorgateindustries.com">john.soden@moorgateindustries.com</a>&gt;; James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Cc:</strong> Henry Harris &lt;<a href="mailto:henry@harcourtinns.co.uk">henry@harcourtinns.co.uk</a>&gt;; <a href="mailto:cjhalperin@gscsolicitors.com">cjhalperin@gscsolicitors.com</a>; <a href="mailto:nurse_stephen@hotmail.com">nurse_stephen@hotmail.com</a>; <a href="mailto:n.curtis123@btinternet.com">n.curtis123@btinternet.com</a>; Stephen Phillips &lt;<a href="mailto:Stephen.Phillips@templebright.com">Stephen.Phillips@templebright.com</a>&gt;; <a href="mailto:sjpmhh@gmail.com">sjpmhh@gmail.com</a>; Nicholas Stockdale &lt;<a href="mailto:nicholasstockdale@googlemail.com">nicholasstockdale@googlemail.com</a>&gt;; <a href="mailto:alistair.higgins@gmail.com">alistair.higgins@gmail.com</a>; Denis Shafranik &lt;<a href="mailto:denis@ermakgroup.com">denis@ermakgroup.com</a>&gt;; <a href="mailto:parkhouse87@btinternet.com">parkhouse87@btinternet.com</a>; <a href="mailto:simon.beswick@osborneclarke.com">simon.beswick@osborneclarke.com</a><br />\r\n<strong>Subject:</strong> RE: Harcourt Pubs</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Hi John</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Hope you&rsquo;re well.</p>\r\n\r\n<p>I have a number of points to clarify.&nbsp; I had already referenced the number of incorrect statements and references in my whatsapp with Stephen last week, these below in red is what I was referring to:</p>\r\n\r\n<p>Kind regards</p>\r\n\r\n<p>Rachel</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Rachel Rossiter</p>\r\n\r\n<p>Group Finance Director</p>\r\n\r\n<p>Harcourt Inns</p>\r\n\r\n<p>T: 07915 615 930</p>\r\n\r\n<p>E: <a href="mailto:rachel@harcourtinns.co.uk">rachel@harcourtinns.co.uk</a>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><img src="data:image/png;base64,[encoded data, 47204 characters]" style="height:168px; width:624px" /></p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>From:</strong> John Soden &lt;<a href="mailto:john.soden@moorgateindustries.com">john.soden@moorgateindustries.com</a>&gt;<br />\r\n<strong>Sent:</strong> 14 August 2020 13:38<br />\r\n<strong>To:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Cc:</strong> Henry Harris &lt;<a href="mailto:henry@harcourtinns.co.uk">henry@harcourtinns.co.uk</a>&gt;; Rachel Rossiter &lt;<a href="mailto:rachel@harcourtinns.co.uk">rachel@harcourtinns.co.uk</a>&gt;; <a href="mailto:cjhalperin@gscsolicitors.com">cjhalperin@gscsolicitors.com</a>; <a href="mailto:nurse_stephen@hotmail.com">nurse_stephen@hotmail.com</a>; <a href="mailto:n.curtis123@btinternet.com">n.curtis123@btinternet.com</a>; Stephen Phillips &lt;<a href="mailto:Stephen.Phillips@templebright.com">Stephen.Phillips@templebright.com</a>&gt;; <a href="mailto:sjpmhh@gmail.com">sjpmhh@gmail.com</a>; Nicholas Stockdale &lt;<a href="mailto:nicholasstockdale@googlemail.com">nicholasstockdale@googlemail.com</a>&gt;; <a href="mailto:alistair.higgins@gmail.com">alistair.higgins@gmail.com</a>; Denis Shafranik &lt;<a href="mailto:denis@ermakgroup.com">denis@ermakgroup.com</a>&gt;; <a href="mailto:parkhouse87@btinternet.com">parkhouse87@btinternet.com</a>; <a href="mailto:simon.beswick@osborneclarke.com">simon.beswick@osborneclarke.com</a><br />\r\n<strong>Subject:</strong> Harcourt Pubs</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear James,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Thanks for coming back to me.</p>\r\n\r\n<p>We would obviously prefer to find a consensual solution to the current concerns and issues but given the lack of progress to date and the comments in your email yesterday, we are concerned this is unlikely. As such, we have sent you a shareholder requisition to remove the current directors and appoint new directors for five of the pub companies. The requisition for the KPH will come early next week. Clearly if we are able to find a solution in the intervening period we can reconsider those requisitions.</p>\r\n\r\n<p>We have taken note of the comments in your email of 11 August and will ensure that shareholder communications are based on the correct position. We have no intention to mislead anyone but note that a week has passed since our communication and you have not identified any specific points that you assert as incorrect.</p>\r\n\r\n<p>We note also that you have not responded to a number of the other points that we raised in the draft letter. Many of these arose directly from our conversations with you/and or Rachel. For example we were told by Rachel that a &pound;50k &ldquo;bounce-back&rdquo; loan has been taken in the Harcourt SPV and then used to repay outstanding debt to Harcourt Investments and lent on to another pub.&nbsp; This is an incorrect statement.&nbsp; This was a conversation between Stephen Nurse and myself and it&rsquo;s clearly been recalled and passed on incorrectly.&nbsp; The &pound;50k BBL went from Harcourt Pub to Farringdon Pub repaying a loan that Farringdon had given earlier in the year. &nbsp;I have the bank statements to back this transaction up if needed and this can be used as an audit trail and prove that Harcourt Investments had nothing to do with BBL in any way.&nbsp; It didn&rsquo;t go anywhere near Harcourt Investments, company accounts or bank accounts.&nbsp; I think Stephen has gotten confused as we were talking about Harcourt Inns Ltd being the go between of loans of this type to avoid any blurring of the companies being a group for EIS purposes if ever questioned by HMRC.&nbsp; I can provide dates, bank statements and any other transactional documents you require to also prove the initial loan from Farringdon Pub Ltd to Harcourt Pub Ltd.</p>\r\n\r\n<p>Did this have board approval?</p>\r\n\r\n<p>With regard to the management contracts, we have taken both legal advice and gained an understanding of the market norms at the time they were entered into. Although we were aware of the headline terms from the Information Memorandum, having now seen some of the Management Contracts as part of our discussion it is clear many of the terms are significantly off market. A key point is that you are due a management fee based on a capital raise without any reference to the value of the pubs or the financial performance.&nbsp; We also are concerned that in many of the contracts profit is defined in a way to allow the exclusion of key costs such as interest and annual management fees.</p>\r\n\r\n<p>It is not clear why any board would enter into a management contract for such length without performance related termination grounds.&nbsp; None of the six pubs you manage has ever made a profit and management fees are a key element driving losses. The heart of the issue is that you are both manager and director and so there is an inherent conflict of interest &ndash; what incentive do you have to renegotiate the contract to market terms?</p>\r\n\r\n<p>We are also concerned that post capital raising you may have entered into operational contracts without any reference to shareholders.&nbsp; For example you seem to have taken on an operational role at the Harcourt whilst the Sansar contract continues to run&ndash; who and how was this approved?&nbsp; &nbsp;Any owner would particularly want to look at it closely when the person signing it off from the company was also a director and shareholder in the management company and, as such, is likely to have benefitted from the fees received.&nbsp;</p>\r\n\r\n<p>We are also struggling to reconcile the management fees charged to each pub with the disclosure in the Information Memorandum. To give a few examples where it has been hard to understand the disclosure versus the accounts:</p>\r\n\r\n<p><strong>Crown: </strong>The management fee set out in the Information Memorandum entitles Ducalian to receive a management fee of 2% of the money raised in the offering being &pound;5m (effectively a &pound;100k pa fee). The Information Memorandum discloses that performance fees become payable only after each investor has received distributions (whether capital or income) on their investment equal to their original capital subscription.&nbsp; No distributions have been made available and so on the face of the disclosure Harcourt Investment&rsquo;s only entitlement to fees is &pound;100k pa (subject to an inflationary rachet).&nbsp; The fees in the 2019/20 accounts are &pound;268k (in one month alone March 2020 the fees paid were &pound;184k).&nbsp; On what contractual basis is the &pound;268k charged? Have you signed an operational contract?&nbsp; If so &ndash; who approved it?&nbsp; Now that I have seen the fees queries being raised in this format you&rsquo;ve detailed it here, there has been a misunderstanding that is very easily clarified to explain these.&nbsp; This is the problem with you taking number off the management accounts and not having the detail that backs up those numbers.&nbsp; The &pound;268k in the accounts for The Crown is the Harcourt Investment fee for a three year period that was raised in the last fiscal year once the split from Ducalian had taken place and the agreement between Ducalian and James.&nbsp; There is a corresponding credit note in the system from Ducalian that you haven&rsquo;t picked up on.&nbsp; I can run through this in detail for each pub with you on Tuesday when we meet, explain the background, show you the dates that fall into that one year and show you the corresponding invoices and credit notes.&nbsp; This is not James charging inflationary rates, I am aware of the management contracts and the agreed fees so wouldn&rsquo;t allow these to have gone through without some sort of questioning/explanation.&nbsp; This explanation applies to all the sites.</p>\r\n\r\n<p><strong>Coach: </strong>there are two line items referring to management fees in the 2018/2019 amounting to &pound;259k of management fees (&pound;118k and &pound;140k). The Management Fee disclosed in the Information Memorandum was 2% on the amount of the initial raise (being &pound;4.72m ie &pound;94k subject to an inflation ratchet, plus 25% of profits).&nbsp; As the Coach has never made a profit &ndash; please explain the basis of your contractual entitlement to &pound;259k.</p>\r\n\r\n<p><strong>Harcourt: </strong>Again a 2% annual management fee was disclosed which would entitle you to 88k pa. There is a 10% fee on profits, but again no profits have ever been made at the Harcourt. Please explain the basis of your contractual entitlement to management fees of 221k in the period 2017/19?</p>\r\n\r\n<p>To the extent that we can&#39;t come to an agreement with Harcourt Investments on the management contracts and the fees charged then we would expect new directors will commence an investigation.&nbsp; Any new board will look carefully at the conflicts of interest, the quantum of fees, consistency of charging between pubs and the governance structure particularly where there are any post capital raises or amended contracts.&nbsp; We would imagine the board will look to appoint forensic accountants to assist in this process.&nbsp; &nbsp;Clearly if you can explain the rationale, and show that conflicts of interest were adequately dealt with, and fiduciary duties were followed as a director of the company, for entering into the management contract and operational contracts on those terms and for the fees charged, then we are interested to hear that explanation.&nbsp; As a starting point please confirm whether the management contracts have materially changed since the capital raise and confirm whether you have entered into new management or operational contacts or taken assignments of old contracts.&nbsp;</p>\r\n\r\n<p>You have now suggested a meeting next Tuesday which is helpful and I can confirm that Nick Curtis and I will attend. Please confirm whether you will be attending alone or with your solicitor. We are happy to have that meeting on a &#39;without prejudice&#39; basis in the hope that we might find a solution. In essence the shareholders are determined to make a fresh start with new directors and a new manager.&nbsp; We believe it is in all stakeholders&rsquo; interest to agree a consensual solution to effect this change as soon as possible given the perilous state of the pubs and look forward to meeting you to discuss a&nbsp;way forward.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>John</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>From:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Date:</strong> 13 August 2020 at 16:52:29 BST<br />\r\n<strong>To:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt;<br />\r\n<strong>Cc:</strong> Clive J Halperin &lt;<a href="mailto:cjhalperin@gscsolicitors.com">cjhalperin@gscsolicitors.com</a>&gt;, Rachel Rossiter &lt;<a href="mailto:rachel@harcourtinns.co.uk">rachel@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Subject:</strong> <strong>Harcourt Pubs</strong></p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Dear John,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I write further to your emails of 11 August.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Firstly, as I wrote on 11 August, I will get back to you next week once I have fully considered your email. I note that you have chosen not to address the point that I made to you regarding the defamatory and misleading comments you have already made. I would urge you to ensure that should you choose to communicate with other shareholders or any other third parties you ensure that you do not make any defamatory or untrue statements. You should consider taking advice as to the consequences of seeking other shareholders to make decisions based on incorrect information.</p>\r\n\r\n<p>One of the key points that I think it is very important to stress is the issue of the management agreements. You suggest some kind of impropriety but the key commercial terms of the management agreements (including their duration) were contained in the prospectuses and shareholder approval was sought and obtained under the advice of a reputable law firm who managed this process. To suggest that either these agreements are not valid or somehow were entered into without disclosure is without any basis whatsoever. I mention this so that you understand that while you may be dissatisfied by your investment, it is simply not the case as you seek to allege that this is down to any misconduct on my part. There have also been previous discussions and conversations with shareholders regarding the management agreements and the issue of management fees has been transparent.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>There is no basis to terminate the management agreements and they will continue to apply, whether I am a director or not.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Your letter also contains many fundamental misunderstandings including the bases on which valuations of businesses and properties in this sector are made. That I have not chosen to address them in this email does not mean that I accept any of the allegations and reserve the right to do so.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>In terms of re-opening the pubs we have plans in place for this to happen. While you - a small number of the shareholders - have stated to me that you do not want this to happen, this is a decision for the board of directors and not the shareholders and we are keeping this under review. While you are not required or entitled to have any say in the management of the companies, the only suggestion you have put forward is for the contract with Harcourt Investments to be terminated and you seem unwilling to discuss anything other than that. I hope I have made it clear both previously and from the above that these Contracts are legally enforceable and so these are not constructive suggestions.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Therefore if you want to meet, which I am happy to do, it needs to be to discuss something other than the Contracts with Harcourt Investments.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>As previously mentioned, I am also trying to secure alternative backing to buy out some of the locations, particularly given your view that they should not reopen (although I reiterate that any decision to open or not is that of the board of directors&rsquo;). I am sure you understand that this is extremely difficult in the current environment but I hope to be able to present something in the next few days.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I am more than happy to discuss any of the above and given the tone of your correspondence I have copied my solicitor on this e-mail.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Regards,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>James McCulloch</p>\r\n\r\n<p>Managing Director</p>\r\n\r\n<p>Harcourt Inns</p>\r\n\r\n<p>Tel: 07904910301</p>\r\n\r\n<p><a href="mailto:james@harcourtinns.co.uk">Email: james@harcourtinns.co.uk</a></p>\r\n\r\n<p>Post: 139 Ladbroke Grove, Notting Hill, London W10 6HJ</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><img src="data:image/png;base64,[encoded data, 58024 characters]" style="height:153px; width:811px" /></p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><br />\r\n&nbsp;</p>', 'advocate', 'SAG - JM communication', 1, '2020-08-17 00:00:00'),
	(63, 274, 'Decision for KPH with GAM', 'Decision-for-KPH-with-GAM', '2020-08-17 13:03:04', NULL, '<p>On 17 Aug 2020, at 11:35, Nicholas Curtis &lt;<a href="mailto:n.curtis123@btinternet.com">n.curtis123@btinternet.com</a>&gt; wrote:</p>\r\n\r\n<p>﻿Hi Shane</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Could we go for a call at 6 pm today please. &nbsp; Bridget would you mind sending out a dial in number like last time?</p>\r\n\r\n<p>We are strongly of the view that we need to move quickly and firmly with JM and need your help for the meeting tomorrow.</p>\r\n\r\n<p>Let us be clear - JM and HH are going to be removed from 5 fo the 6 pubs. &nbsp;The new directors will then replace Harcourt Investments as the pub manager. &nbsp;That we have the shareholder votes to do this - you should not be in doubt. &nbsp;The critical issue is timing. &nbsp;</p>\r\n\r\n<p>We would much rather execute the change and conclude the exit discussions with JM quickly so we can get a new operator, stabilise the situation with banks/ creditors and trading strategy with the new operator. &nbsp;There is a real danger that if JM prevaricates that this transition could last up to 7 weeks and be very value destructive. &nbsp; &nbsp;We don&rsquo;t think that Harcourt Investments will be a going concern to manage the KPH in any event.</p>\r\n\r\n<p>We therefore need to show JM that GAM are aligned with the Shareholders Action Group (SAG). &nbsp; &nbsp;We are of the view that it would be very persuasive if GAM were to sign the EGM request (that I forwarded to you) and send to him prior to our meeting tomorrow.</p>\r\n\r\n<p>It would also be very helpful to say to JM tomorrow that GAM have agreed to write off their fees in full and he should do the same.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Regards</p>\r\n\r\n<p>Nick</p>\r\n\r\n<p>&nbsp;</p>', 'advocate', 'SAG - GAM', 1, '2020-08-17 00:00:00'),
	(64, 274, 'Offer for 3 pubs at Savills valuation.', 'Offer-for-3-pubs-at-Savills-valuation', '2020-08-18 11:17:09', NULL, '<p><strong>From:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Date:</strong> 17 August 2020 at 18:55:48 BST<br />\r\n<strong>To:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt;<br />\r\n<strong>Subject:</strong> <strong>Offer Letter</strong></p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Dear John,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Please see attached offer letter.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I look forward to meeting you tomorrow.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Regards,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>James McCulloch</p>\r\n\r\n<p>Managing Director</p>\r\n\r\n<p>Harcourt Inns</p>\r\n\r\n<p>Tel: 07904910301</p>\r\n\r\n<p><a href="mailto:james@harcourtinns.co.uk">Email: james@harcourtinns.co.uk</a></p>\r\n\r\n<p>Post: 139 Ladbroke Grove, Notting Hill, London W10 6HJ</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><img src="data:image/png;base64,[encoded data, 79012 characters]" style="height:191px; width:1014px" /></p>', 'advocate', 'MIke Smith exit proposal', 0, '2020-08-17 00:00:00'),
	(65, 274, 'EIS thoughts (Steve Partridge)', 'EIS-thoughts-Steve-Partridge', '2020-08-18 11:18:05', NULL, '<p>EIS-wise this only works for Crown&nbsp;and Coach if sale occurs in the course of a winding up which is entered into for genuine commercial reasons.&nbsp; I&#39;m concerned in our case HMRC will construe this as an attempt to exit while preserving EIS status rather than genuinely reaching the end of the road on the pubs.&nbsp; Especially if the buyer continues to run them as pubs.&nbsp; And especially given the difficult&nbsp;state of the discussions with HMRC on the EIS claims.</p>\r\n\r\n<p>Even if the liquidation&nbsp;route preserves EIS status, due to the three year rule any value we get will reduce our original relief, eg if a shareholder gets &pound;30k, EIS relief of &pound;9k is clawed back.&nbsp;</p>\r\n\r\n<p>If we were instead to sell the companies for Crown and Coach to Mr Smith, this would almost certainly invalidate EIS altogether because the qualifying conditions (eg&nbsp; no group, no common control)&nbsp;would not be satisfied throughout the relevant three year period.&nbsp; We could defer the sale of the Coach until the three years is up, but cannot agree to agree now.&nbsp;</p>\r\n\r\n<p>If we lose EIS relief, should still get income tax relief&nbsp;for the cap&nbsp;loss (provided HMRC accepts that McC has not already created a group).</p>\r\n\r\n<p>The offer is precisely what I expected and unacceptable to me.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Steve</p>\r\n\r\n<p>&nbsp;</p>', 'advocate', 'MIke Smith exit proposal', 1, '2020-08-18 00:00:00'),
	(66, 274, 'Background to Harcourt Inns', 'Background-to-Harcourt-Inns', '2020-08-18 11:18:38', NULL, '<p><strong>From:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Date:</strong> 18 August 2020 at 08:11:49 BST<br />\r\n<strong>To:</strong> John Soden &lt;<a href="mailto:john.soden@moorgateindustries.com">john.soden@moorgateindustries.com</a>&gt;<br />\r\n<strong>Subject:</strong> <strong>RE:&nbsp; Harcourt Pubs</strong></p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Mike is looking to help me from a hands-on operational and strategic point of view.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>He is currently Chairman of Alegeco Group and is an NED of Avant Homes and was Executive Chairman of ICWG up to the point of sale and an NED of EG Group.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I can confirm that the management agreements have not materially changed since the capital raises. Only the fees (2%) disclosed in the offer document have been charged and certainly not any profit share based fees and I&rsquo;m confident that Rachel can clear up any issues surrounding the quantum of fees. &nbsp;&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Harcourt Inns entered into operating agreements with each pubco after each capital raise. I have no issue in asking Rachel to release management accounts for Harcourt Inns so you can see that firstly it makes no profit and secondly I have not made any money whatsoever from Harcourt Inns. Rachel can even provide a breakdown of the salaries and consultancy costs (as Henry was originally employed as a consultant) so you can see no monies have flowed to me or anyone connected to me.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Holborn Leisure (latterly Harcourt Inns) was created to provide central functions to the pubs that individually they wouldn&rsquo;t normally be able to afford. Naturally these central costs need to be apportioned to each pub and there is a period when the full portfolio isn&rsquo;t up and running and so apportionment isn&rsquo;t an exact science. This certainly isn&rsquo;t exclusive to Harcourt Inns as only recently I heard examples of similar cases, one of which is between the owner of a single large shopping centre and the operator of the global portfolio of shopping centres.</p>', 'advocate', 'MIke Smith exit proposal', 1, '2020-08-18 00:00:00'),
	(67, 274, 'JM \'abdicating\' relationship with Endean', 'JM-abdicating-relationship-with-Endean', '2020-08-27 18:09:21', NULL, '<p><a name="_MailOriginal"><strong>From:</strong></a> John Soden &lt;soden.j@gmail.com&gt;<br />\r\n<strong>Sent:</strong> 27 August 2020 16:52<br />\r\n<strong>To:</strong> Stephen Nurse &lt;nurse_stephen@hotmail.com&gt;; Steven Partridge &lt;sjpmhh@gmail.com&gt;; Stephen Phillips &lt;stephen.phillips@templebright.com&gt;; Nick Curtis &lt;n.curtis123@btinternet.com&gt;; Nicholas Stockdale &lt;nicholasstockdale@googlemail.com&gt;; Denis Shafranik &lt;denis@ermakgroup.com&gt;; Simon Beswick &lt;simon.beswick@osborneclarke.com&gt;; David Smith &lt;parkhouse87@btinternet.com&gt;<br />\r\n<strong>Subject:</strong> Fwd: HARCOURT - WITHOUT PREJUDICE</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear all,</p>\r\n\r\n<p>Received out of the blue.</p>\r\n\r\n<p>He is owed &pound;171k in respect of the original management contract for the pub and so he needs to be dealt with when we do take control.</p>\r\n\r\n<p>It is extraordinary that JM has the gall to just hide from this and pass it on as if it is nothing to do with him.</p>\r\n\r\n<p>The obvious response is that we have no locus in this and to push him back onto JM in the first instance but it is not unhelpful to open up a dialogue. Ideally I think we want Endean to stew a bit, to make him think that we believe there is a major doubt over his contract,that the Harcourt is on the verge of collapse because it has no cash and there is no money to pay him so that we can potentially set him up for a quick heavily discounted settlement assuming that we do put money into the SPV.&nbsp;</p>\r\n\r\n<p>Thoughts on approach?</p>\r\n\r\n<p>Another thought for Stephen Phillips. I am also wondering if we could/should tell him that we are looking at setting up a CVA which provides that creditors are paid Xp in the &pound; and on that basis shareholders will put in new money to enable them to be paid. Should we be thinking about it anyway for the pubs and do we think we could get the necessary majority to carry it? If we had a deal with JM and had control of his claims it might give us a significant stake to build a majority. Or is this all too much?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\nBegin forwarded message:</p>\r\n\r\n<p><strong>From:</strong> andrew endean &lt;<a href="mailto:aendean27@gmail.com">aendean27@gmail.com</a>&gt;<br />\r\n<strong>Date:</strong> 27 August 2020 at 15:47:40 BST<br />\r\n<strong>To:</strong> <a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a><br />\r\n<strong>Subject:</strong> <strong>HARCOURT - WITHOUT PREJUDICE</strong></p>\r\n\r\n<p>﻿Dear John<br />\r\n<br />\r\nCan we please have a meeting to discuss our outstanding fees / payments for services related to our management contract at the Harcourt<br />\r\n<br />\r\nI have spoken to James and he has confirmed that you are our new point of contact ( on behalf of the Investors ) &nbsp;. We have formally written to Harcourt Inns and have put them on notice that we intend to take legal action . The period has expired and we are due to raise a cheque for &pound;8,500 to cover the courts costs which in turn will be recoverable as will any loss of interest etc<br />\r\n<br />\r\nPlease can we meet to tomorrow before say 11am or after 4pm ( virtual or in London )<br />\r\n<br />\r\n<br />\r\nKind regards<br />\r\n<br />\r\n<br />\r\n<br />\r\nAndrew Endean<br />\r\n07920 834242</p>', 'advocate', 'SAG - JM communication', 1, '2020-08-27 00:00:00'),
	(68, 274, 'Andy Cole - Forensic accountant', 'Andy-Cole-Forensic-accountant', '2020-08-28 11:39:15', NULL, '<p>Also</p>\r\n\r\n<p>just to you both</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Andy Cole has been assisting me in my case against HMRC</p>\r\n\r\n<p>I would encourage you both to have a zoom call at the right time with Andy</p>\r\n\r\n<p>He would help you devour JM post replacement and lead someone like Mark Fairhurst in that effort</p>\r\n\r\n<p>He has come up against 1000&rsquo;s of JM type confidence tricksters in his career</p>\r\n\r\n<p>He would be a formidable ally in that effort</p>', 'advocate', 'Post control', 1, '2020-08-28 00:00:00'),
	(69, 274, 'Mark Fairhurst', 'Mark-Fairhurst', '2020-08-28 11:39:58', NULL, '<p>Stephen,</p>\r\n\r\n<p>At the right time Mark Fairhurst is &nbsp;best positioned to help you all understand James&rsquo;s financial journey over the past few years.</p>\r\n\r\n<p>Speak soon</p>\r\n\r\n<p>Frank</p>\r\n\r\n<p><a href="http://www.markfairhurst.co.uk/">http://www.markfairhurst.co.uk/</a></p>', 'advocate', 'Post control', 1, '2020-08-28 00:00:00'),
	(70, 274, 'Harcourt insolvency and Knowledge of Fleurets IM', 'Harcourt-insolvency-and-Knowledge-of-Fleurets-IM', '2020-08-30 10:11:26', NULL, '<p><strong>From:</strong> John Soden &lt;soden.j@gmail.com&gt;<br />\r\n<strong>Date:</strong> 28 August 2020 at 17:40:07 BST<br />\r\n<strong>To:</strong> James McCulloch &lt;james@harcourtinns.co.uk&gt;, Rachel Rossiter &lt;rachel@harcourtinns.co.uk&gt;, Henry Harris &lt;henry@harcourtinns.co.uk&gt;<br />\r\n<strong>Cc:</strong> Shane Gallwey &lt;shane.gallwey@guinnessfunds.com&gt;, Nick Curtis &lt;n.curtis123@btinternet.com&gt;, John Soden &lt;john.soden@moorgateindustries.com&gt;<br />\r\n<strong>Subject:</strong> <strong>EGMs and other</strong></p>\r\n\r\n<p>﻿</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>Dear James,</p>\r\n\r\n<p>I have been surprised and concerned by two developments in the last 24 hours.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>First, I have received an unsolicited approach from Andrew Endean regarding his debt (which I assume is the &pound;171k) stating that he is about to initiate recovery proceedings against the Harcourt and that you apparently referred him to me to resolve the situation. That is an extraordinary thing to do given that you and Henry have still not appointed our suggested shareholder nominees as directors and stepped down. As existing directors you all remain responsible and exposed for all aspects of the company. Given the current inability of the company to pay its debts as they fall due and this pending legal action the company appears to be potentially insolvent in the absence of action to resolve its problems. You cannot remain in place but opt not to act and ignore your responsibilities to the company or shareholders.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Second, whilst waiting for you to respond on the points raised in our meeting on your/Mike Smith&rsquo;s proposals we have heard that you have asked Fleurets to undertake a sale and leaseback transaction for four of the pubs including the KPH without discussing it with shareholders. Of particular concern is that the &nbsp;prospectus refers to;</p>\r\n\r\n<p>- a pub Group - again risking the EIS status of the pubs and providing support to HMRC&rsquo;s attack on the EIS status of which you have informed us</p>\r\n\r\n<p>- &nbsp;the guide price being significantly below vacant possession value and site assembly cost and the rental being significantly below market rental</p>\r\n\r\n<p>Not only is this prejudicial to shareholder value and their EIS claims but it also seems to completely cut across your/ Mike Smith&rsquo;s proposal and raises significant doubts as to whether that proposal is genuine or credible. Please provide Mike Smith&rsquo;s contact details so that we can seek clarification direct from him.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>All of this highlights the fact that your actions and refusal to step down from each of the pubs in favour of new directors or call the EGMs is causing serious potential damage to shareholder interests for which we will hold you accountable. This cannot continue and we would urge you to meet with us early next week to negotiate the basis on which you withdraw and your management agreements are terminated.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 26 Aug 2020, at 18:00, James McCulloch &lt;james@harcourtinns.co.uk&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Dear John,</p>\r\n\r\n<p>Pls note that I am considering this and not ignoring your email.&nbsp;</p>\r\n\r\n<p>I will be in touch shortly with a proposal on how to move forwards.</p>\r\n\r\n<p>Regards,</p>\r\n\r\n<p>James&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Get <a href="https://aka.ms/o0ukef">Outlook for iOS</a></p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>From:</strong> John Soden &lt;soden.j@gmail.com&gt;<br />\r\n<strong>Sent:</strong> Monday, August 24, 2020 10:06:26 AM<br />\r\n<strong>To:</strong> James McCulloch &lt;james@harcourtinns.co.uk&gt;<br />\r\n<strong>Cc:</strong> Nicholas Curtis &lt;n.curtis123@btinternet.com&gt;; Rachel Rossiter &lt;rachel@harcourtinns.co.uk&gt;; Henry Harris &lt;henry@harcourtinns.co.uk&gt;<br />\r\n<strong>Subject:</strong> EGMs</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>James,</p>\r\n\r\n<p>Please can you update on your plans on standing down as a director and appointing new shareholder directors? As you know the clock is ticking on the EGMs but given the position of the pubs, shortage of liquidity and critical issues around solvency as well as &nbsp;the need to resolve your conflict with the offer that has been made there is little sense in waiting and having to go through a procedure that is, in any event, a foregone conclusion. We need to discuss this as a matter of urgency such that shareholder interests are no further Unnecessarily compromised.</p>\r\n\r\n<p>We should sit down and hammer this out this week. Please confirm your availability for a meeting to resolve this.</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 24 Aug 2020, at 09:05, John Soden &lt;soden.j@gmail.com&gt; wrote:</p>\r\n\r\n<p>﻿James,</p>\r\n\r\n<p>thanks for these. We also need the same information for the other three pubs as a matter of urgency. Will these be available today.</p>\r\n\r\n<p>We also await the fee information for each pub. Please pass them on as they become available rather than waiting for the last to be available.&nbsp;</p>\r\n\r\n<p>You have said you are meeting with Philip Hare today so can we please have an update on EIS tomorrow.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 21 Aug 2020, at 15:29, James McCulloch &lt;james@harcourtinns.co.uk&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Dear John/Nick,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>See attached asset / liabilities analysis for the Coach, Crown and Three Cranes based on the offer put forward by Mike Smith.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Rachel has assumed reopening all three pubs in September in the analysis although in reality it probably isn&rsquo;t a good idea to reopen the Three Cranes.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Still waiting on the breakdown of fees and I have also spoken to Philip Hare to understand the dynamics of a sale, inside or outside EIS, and loss relief including a future profit share.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Regards,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>James McCulloch</p>\r\n\r\n<p>Managing Director</p>\r\n\r\n<p>Harcourt Inns</p>\r\n\r\n<p>Tel: 07904910301</p>\r\n\r\n<p><a href="mailto:james@harcourtinns.co.uk">Email: james@harcourtinns.co.uk</a></p>\r\n\r\n<p>Post: 139 Ladbroke Grove, Notting Hill, London W10 6HJ</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>', 'advocate', 'SAG - JM communication', 1, '2020-08-28 00:00:00'),
	(71, 274, 'Unsolicited approach by Andrew Endean, JM abdicated responsibility', 'Unsolicited-approach-by-Andrew-Endean-JM-abdicated-responsibility', '2020-08-30 10:14:40', NULL, '<p><strong>From:</strong> andrew endean &lt;<a href="mailto:aendean27@gmail.com">aendean27@gmail.com</a>&gt;<br />\r\n<strong>Date:</strong> 27 August 2020 at 15:47:40 BST<br />\r\n<strong>To:</strong> <a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a><br />\r\n<strong>Subject:</strong> <strong>HARCOURT - WITHOUT PREJUDICE</strong></p>\r\n\r\n<p>﻿Dear John<br />\r\n<br />\r\nCan we please have a meeting to discuss our outstanding fees / payments for services related to our management contract at the Harcourt<br />\r\n<br />\r\nI have spoken to James and he has confirmed that you are our new point of contact ( on behalf of the Investors ) &nbsp;. We have formally written to Harcourt Inns and have put them on notice that we intend to take legal action . The period has expired and we are due to raise a cheque for &pound;8,500 to cover the courts costs which in turn will be recoverable as will any loss of interest etc<br />\r\n<br />\r\nPlease can we meet to tomorrow before say 11am or after 4pm ( virtual or in London )<br />\r\n<br />\r\n<br />\r\nKind regards<br />\r\n<br />\r\n<br />\r\n<br />\r\nAndrew Endean<br />\r\n07920 834242</p>', 'advocate', 'SAG - JM communication', 1, '2020-08-27 00:00:00'),
	(72, 274, 'Latest draft of Investor template', 'Latest-draft-of-Investor-template', '2020-09-04 08:59:35', NULL, NULL, 'advocate', 'Investor letter', 0, '2020-09-04 00:00:00'),
	(74, 274, 'JM promise for 6 monthly financials (sent 18 Feb 2019)', 'JM-promise-for-6-monthly-financials-sent-18-Feb-2019', '2020-09-05 22:15:08', NULL, '<p><strong>From:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Date:</strong> 18 February 2019 at 19:12:58 GMT<br />\r\n<strong>To:</strong> Nicholas Stockdale &lt;<a href="mailto:nicholasstockdale@googlemail.com">nicholasstockdale@googlemail.com</a>&gt;<br />\r\n<strong>Subject:</strong> <strong>Financials</strong></p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Hi Nick,</p>\r\n\r\n<p>Please see attached financials for the&nbsp;Three&nbsp;Cranes, Harcourt and Coach.</p>\r\n\r\n<p>As promised I will circulate financials every 6 months with a short report.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Regards,</p>\r\n\r\n<p>James</p>', 'advocate', 'JM promise for 6 monthly financials (sent 18 Feb 2019)', 1, '2019-02-18 00:00:00'),
	(75, 274, 'Proposal from Frank Dowling', 'Proposal-from-Frank-Dowling', '2020-09-07 12:07:22', NULL, '<p><strong>From:</strong> Frank Dowling &lt;<a href="mailto:frank@farrockaway.co.uk">frank@farrockaway.co.uk</a>&gt;<br />\r\n<strong>Sent:</strong> 06 September 2020 17:26<br />\r\n<strong>To:</strong> Stephen Phillips &lt;<a href="mailto:stephen.phillips@templebright.com">stephen.phillips@templebright.com</a>&gt;; Stephen Nurse &lt;<a href="mailto:nurse_stephen@hotmail.com">nurse_stephen@hotmail.com</a>&gt;<br />\r\n<strong>Subject:</strong> FW: Proposed Agreement</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear Team (Investor Panel),</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I needed to take the right time to deliver the below proposal, of particular importance was the recruitment and interviewing of some</p>\r\n\r\n<p>very special talent. I had a second interview with one of the target candidates this morning.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>From the moment Stephen approached me via his partner I became interested in assisting where I could.</p>\r\n\r\n<p>Over the last 6 weeks and undertaking much needed in depth research I would like to present my proposal to you.</p>\r\n\r\n<p>This is based upon the concept of little axe big tree.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I firmly believe with an owner/operator mentality these pubs can be turned into pretty nifty profit earners.</p>\r\n\r\n<p>I am confident given the right time and professional approach these pubs will be able to exit their EIS structures and provide a positive return to the investors.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>The Trafalgar Tavern is not dissimilar to the 6 pubs that the investors have stakes in.</p>\r\n\r\n<p>It has recently received a multi million pound investment and is in a massive upward trajectory.</p>\r\n\r\n<p>It is a local neighborhood pub and it behaves like one, it sells cold beer, good wine, decent cocktails and ok food.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I have addressed the ok food part with investment in a new &pound;500k kitchen fitout and introducing a phenomenal young and gifted chef in Daniel Doherty.</p>\r\n\r\n<p>I am investing in Dan after many meetings and I believe everyone deserves a second chance in life.</p>\r\n\r\n<p>I am testeament to this concept.</p>\r\n\r\n<p>Going forward the Trafalgar Tavern will have excellent food, so will your 6 pubs.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>The Crown, the Three Cranes, the Hero, the KPH, the Harcourt and the Coach are great pubs, they need to act like the Trafalgar Tavern, they need to focus on their neighborhood, they need to keep it simple and sell cold beer and great food.</p>\r\n\r\n<p>They need to become friendly and welcoming.</p>\r\n\r\n<p>Besides the upper parts of the Harcourt they all have been heavily invested in and should be in good shape to start up again&hellip;&hellip;Quickly.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Mother Ship (Home Office)</p>\r\n\r\n<p>I propose in order to run the 6 pubs properly we would need the following talent, I must add that C-19 has thrown some extremely talented people in our laps especially in skill sets of sales and marketing:</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<ol>\r\n	<li>Team leader: Frank Dowling&nbsp; in each site weekly, leading the team to deliver the proper results</li>\r\n	<li>Operations Manager: Lorraine Harrow, has been my operations manager over the last ten years, and started with me in 2003 as a glass collector, she will be in</li>\r\n</ol>\r\n\r\n<p>each site every week leading the professional operations of the onsite teams</p>\r\n\r\n<ol>\r\n	<li>Executive Chef: Dan Doherty, leading the chef teams, menu development and deployment, maniacal food cost control</li>\r\n	<li>Payroll and HR manager: Kate Rogers</li>\r\n	<li>Book-keeping and Cost Control: Abbas Ali, AA will also require a data inputer for 3 days pw</li>\r\n	<li>Social Media Team (websites, Instagram, Facebook, all visual identities: Hannah Sherwood and Jack Brent</li>\r\n	<li>Sales Team, driving events and generating revenue outside of normal pub trade revenue:&nbsp;Amy Harte and Charlotte Chittleburgh</li>\r\n</ol>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I have attached the CVS&rsquo;s for the last 4 as they are new to me but all four of their backgrounds are outstanding and fit in perfectly to the 6 pubs demographic</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Proposed costs for the Team</p>\r\n\r\n<ol>\r\n	<li>FD: &pound;0</li>\r\n	<li>LH: &nbsp;&pound;75,000</li>\r\n	<li>DD: &pound;75,000</li>\r\n	<li>KR: &pound;10,000</li>\r\n	<li>AA: &pound;40,000</li>\r\n	<li>HR and JB: &pound;75,000</li>\r\n	<li>AH and CC: &pound;75,000, please note that each of these women would receive</li>\r\n</ol>\r\n\r\n<p>A bonus of 2% of all net sales, which would come out of the individual sites profit and loss</p>\r\n\r\n<p>So if they achieved sales of &pound;10k in a month for sales, an additional &pound;200 would be paid to them</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>It would be our goal to drive &pound;1m of additional sales into the venues outside of its normal day to day pub business.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>In summary the Mothership&rsquo;s costs would be &pound;350,000 per annum to be billed each month in advance divided between each Operating Co.</p>\r\n\r\n<p>This works out to roughly &pound;5,000 per site per month.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>If you think this is too steep we can cut it down accordingly but I believe this team gives the venues the best chance to succeed and eventually provide a high level of profit.</p>\r\n\r\n<p>The Mothership will have an agreement with each Property Co. and Operating Co.</p>\r\n\r\n<p>I believe this represents a &pound;800,000 swing on the current arrangements</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I have decided to not take any remuneration personally for the following reasons:</p>\r\n\r\n<ol>\r\n	<li>I have enough of profit from my existing business</li>\r\n	<li>I am focusing on a long term relationship and focusing on driving value and the option to transact will be my long term reward</li>\r\n</ol>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Property Co.&rsquo;s</p>\r\n\r\n<p>I propose I should become one of the directors of each property company as this will allow me to take the lead on debt negotiations with regards to the existing property company debt.</p>\r\n\r\n<p>In addition each property company should budget &pound;10,000 p.a. for statutory account filings. This will be accounted for in the operating companies affairs.</p>\r\n\r\n<p>I propose that Accounts Unlocked perform this duty. <a href="http://www.accountsunlocked.co.uk/i">http://www.accountsunlocked.co.uk/i</a></p>\r\n\r\n<p>Depending on the appetite of the Advisory panel I would lead the investigation and attack on JM (obviously depends on how he behaves on exit)</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Operating Co&rsquo;s</p>\r\n\r\n<p>I propose that 6 new operating Co&rsquo;s are set up to trade each venue on behalf of the Property Co.&rsquo;s via a management agreement</p>\r\n\r\n<p>The operating co&rsquo;s will be owned by FD and will allow all future trading liabilities to be insulated against the Property Co&rsquo;s assets</p>\r\n\r\n<p>The following would be the parameters that we would like to adhere to:</p>\r\n\r\n<ol>\r\n	<li>Staffing, fixed and variable would be in the 30% region (it is unknown how the hotel rooms are managed ie. Night managers etc.)</li>\r\n	<li>Gross profits on food 70%</li>\r\n	<li>Gross profits on drinks 70%</li>\r\n</ol>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I think the following target revenues for 2021 could be achieved with the C-19 hangover (in general it is predicted&nbsp;that there will be a 35-50% drop on pre c-19 revenues)</p>\r\n\r\n<ol>\r\n	<li>Coach &pound;1.25m</li>\r\n	<li>Crown: &pound;1m</li>\r\n	<li>Hero: &pound;1m</li>\r\n	<li>KPH: &pound;700k</li>\r\n	<li>Three Cranes: &pound;500k</li>\r\n	<li>Harcourt: &pound;400k</li>\r\n</ol>\r\n\r\n<p>Certainly our goal would be to break even for the year 2021</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>It would be anticipated that the 2022 revenue should get back to 2019&rsquo;s revenue:</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<ol>\r\n	<li>Coach &pound;1.6m</li>\r\n	<li>Crown: &pound;1.25</li>\r\n	<li>Hero: &pound;1.25m</li>\r\n	<li>KPH: &pound;900k</li>\r\n	<li>Three Cranes: &pound;750k</li>\r\n	<li>Harcourt: &pound;750k</li>\r\n</ol>\r\n\r\n<p>We believe we could deliver a profit based upon these figures</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Working Capital:</p>\r\n\r\n<p>Each operating company should have 1 month (on the 2019 figures) of working capital in order to properly operate and pay its liabilities in a timely manner from the start of trading.</p>\r\n\r\n<p>Cash on delivery of most purchases should be contemplated.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Insurance:</p>\r\n\r\n<p>It may be required for all insurance premiums to be paid up front from the start of trading for the new year, I am pricing up the insurance premiums as we speak.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Reporting:</p>\r\n\r\n<p>Within 3 months we aim to provide a weekly snapshot to the Investor Panel in order to track the weekly progress.</p>\r\n\r\n<p>I would propose that we meet with the Investor Panel quarterly to review all of the affairs of the companies, these snapshots will be the basis for the management accounts as well.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Strategic Decisions:</p>\r\n\r\n<p>As part of the quarterly meetings we would propose to present a food tasting for our advising partners to feedback to us, we will also share any other strategic thinking at these meetings.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Profit Share:</p>\r\n\r\n<p>We would like to agree a profit share arrangement between the Prop Co&rsquo;s and Operating Co&rsquo;s, the remaining profits will be delivered to Prop Co. at an approved time.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Term:</p>\r\n\r\n<p>We would like a three year term with an option to extend for another 3 years.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Agreement Determination and Breach Remedies</p>\r\n\r\n<p>It is important that The Prop Co&rsquo;s have the ability to determine the Agreement, I would want this ability to be for serious breaches or non-performance.</p>\r\n\r\n<p>I would like to agree the correct and fair mechanism for determination and how breaches can be remedied to prevent determination.</p>\r\n\r\n<p>It would not be fair for Prop Co&rsquo;s. to determine on an ad hoc basis.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Start up Capital Expenditure:</p>\r\n\r\n<p>It is anticipated that each site would require an infrastructure tune up from the C-19 lockdown.</p>\r\n\r\n<p>A budget of &pound;5k per site should be contemplated.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Capital Expenditure for the upper parts of the Harcourt</p>\r\n\r\n<p>Obviously I have not had site of this but in the future if it makes sense to exploit this space, a cap ex budget should be contemplated now.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Websites:</p>\r\n\r\n<p>It would be hopeful that the websites IP will be transferred over from JM</p>\r\n\r\n<p>Should this not be the case then a &pound;5k per site budget should be contemplated, however should the websites be handed over a &pound;2k per site should be budgeted to make each site more individual and unique to its venue.</p>\r\n\r\n<p>It is vital that the 6 pubs are not viewed as part of a &ldquo;pub group&rdquo;</p>\r\n\r\n<p>&ldquo;Pub groups&rdquo; are ego trips for the owners of them. These days punters get turned off by &ldquo;pub groups&rdquo;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Agreement to an Option to Transact:</p>\r\n\r\n<p>I would like to agree a mechanism that allows me to have an option to transact.</p>\r\n\r\n<p>This option could be for any transaction agreeable that will deliver the best return for the investors</p>\r\n\r\n<p>This may be a straight purchase, lease grant, sale and leaseback or any other transactional mechanism.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I am confident that my team can turn these wonderful pubs into cracking profit earners but they need an owner/operator mentality and the emphasis should be on the pub itself and not the cult of the owner.</p>\r\n\r\n<p>This is how I have succeeded in the past and I have a propensity of selling businesses for some incredible value.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I look forward to discussing this further.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Kindest regards,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Frank</p>', 'advocate', 'Trafalgar Taverns', 1, '2020-09-06 00:00:00'),
	(76, 274, 'Update to Shane on position in all the pubs', 'Update-to-Shane-on-position-in-all-the-pubs', '2020-09-07 16:22:14', NULL, '<p><a name="_MailEndCompose"></a></p>\r\n\r\n<p><strong>From:</strong> Nicholas Curtis &lt;n.curtis123@btinternet.com&gt;<br />\r\n<strong>Sent:</strong> 07 September 2020 15:18<br />\r\n<strong>To:</strong> Shane Gallwey &lt;shane.gallwey@guinnessfunds.com&gt;<br />\r\n<strong>Cc:</strong> Bridget Hallahane &lt;Bridget.Hallahane@guinnessfunds.com&gt;; John Soden &lt;soden.j@gmail.com&gt;; nurse_stephen@hotmail.com; Stephen Phillips &lt;Stephen.Phillips@templebright.com&gt;<br />\r\n<strong>Subject:</strong> Re: KPH</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear Shane</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Thanks for your email of Friday. &nbsp;You asked where equity could come from for the KPH?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I understand there is no chance of further equity from GAM. &nbsp;The ability to get equity from the existing Harcourt shareholders ( and I use the term loosely across all the 6 PubCos) depends on how quickly the current shareholders realise that their equity has been all but wiped out ( and as a shareholder in the KPH - I include myself in this)!</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I enclose the table below to illustrate how bad the situation is in the KPH relative to the other pubs. &nbsp;Not only is there only a 2.2% margin above the current valuation but the Downing debt is at a quantum where it will be unlikely to be refinanced by equity. &nbsp; &nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>In all the other pubs we can at least have a shot at trying to pay back the debt and giving new money a first charge over the assets - to get them to participate. &nbsp; Shareholders will be comparing their investments across the other pubs and where to put the new money.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I appreciate that you think the Savills valuation is not a fair reflection of the assets worth, which may be true. &nbsp; &nbsp;The interest bill, however, on the &pound;4m of debt will be c. &pound;350k p.a. and it is hard to see trading profit covering this cost. &nbsp;Any new money coming into the business will be speculative and need control of the asset. &nbsp; The existing shareholders may at best be able to negotiate some upside in the event of a substantial turn around and keep the asset trading to claim EIS.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Kr Nick</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><img src="data:image/png;base64,[encoded data, 17200 characters]" style="height:222px; width:713px" /></p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 4 Sep 2020, at 09:16, Shane Gallwey &lt;<a href="mailto:shane.gallwey@guinnessfunds.com">shane.gallwey@guinnessfunds.com</a>&gt; wrote:</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear Nick,<br />\r\n<br />\r\nThank you for your email.<br />\r\n<br />\r\nWe will not propose you as a director of Barts Pub, and I understand your reasoning. &nbsp;<br />\r\n<br />\r\nRegarding the funding solution - I do agree that more equity would be preferable to increasing the debt - do you have any suggestions on where that could come from?<br />\r\n<br />\r\nWe will continue to liaise with you on progress.<br />\r\n<br />\r\nBest wishes<br />\r\n<br />\r\nShane<br />\r\n&nbsp;</p>', 'advocate', 'SAG - GAM', 1, '2020-09-07 00:00:00'),
	(77, 274, 'Rachel - current position', 'Rachel-current-position', '2020-09-07 19:13:34', NULL, '<p><a name="_MailEndCompose"></a></p>\r\n\r\n<p>-----Original Message-----<br />\r\nFrom: John Soden &lt;soden.j@gmail.com&gt;<br />\r\nSent: 07 September 2020 16:56<br />\r\nTo: Stephen Nurse &lt;nurse_stephen@hotmail.com&gt;; Nick Curtis &lt;n.curtis123@btinternet.com&gt;; Stephen Phillips &lt;stephen.phillips@templebright.com&gt;<br />\r\nSubject: Rachel</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>She had contacted me following an aggressive&nbsp; email sent to her and James at the weekend&nbsp; by a shareholder, Andy Thompson.</p>\r\n\r\n<p>She said Andy Thompson has always been aggressive﻿ and she&rsquo;s not surprised.</p>\r\n\r\n<p>I said that there had been a vacuum after the notices were sent out by JM because we hadn&rsquo;t sent out our letters to shareholders but we were sending them today. Therefore there may be a lot more of that&nbsp; sort of emails.</p>\r\n\r\n<p>She said she had been piggy in the middle in a toxic situation and had therefore kept her head down and was conscious that she had not been as communicative as she could have been in recent weeks- and she that she may well have been wrong. But she needed to take a lead from JM.</p>\r\n\r\n<p>However she needed to know where she stood. So she had contacted me and also Shane Gallwey.</p>\r\n\r\n<p>&nbsp;She knew we were meeting JM tomorrow. I said we would be seeking his departure earlier than 30 September and an orderly hand-over.</p>\r\n\r\n<p>&nbsp;I said I would not be telling JM that we had spoken.</p>\r\n\r\n<p>&nbsp;She also knew that he had put in an offer with Mike Smith - she had not met MS (and wondered why - but had been fobbed off by JM).</p>\r\n\r\n<p>Regarding her position I said we had had an open mind and she would have noticed that we had not sought her removal as a director - we had noted that she had not been especially helpful in recent weeks but understood that she was in a difficult position.</p>\r\n\r\n<p>She is willing to do what we want but she is single with two children and needs to protect herself. I said we were hoping to bring in a new operator and the pub needs would depend on what was required going forward. At the very least I felt that it would be sensible to have an orderly hand-over and we could see how things went after that. She said she would be completely professional and do what was necessary and wanted to be helpful.</p>\r\n\r\n<p>I asked her about re-opening.</p>\r\n\r\n<p>Crown is re-opening tomorrow. The Hero and Coach within days. Staff have been re-engaged, suppliers have been talked to and instalment plans agreed.</p>\r\n\r\n<p>I queried how this could be funded. Cash in Hero is &pound;16k, Coach has &pound;60k, Crown has &pound;25k.</p>\r\n\r\n<p>We can consider what we need when we know where we stand with Frank D.</p>\r\n\r\n<p>&nbsp;</p>', 'advocate', 'Rachel', 1, '2020-09-07 00:00:00'),
	(78, 298, 'Outstanding EIS Approvals', 'Outstanding-EIS-Approvals', '2020-09-09 17:41:24', NULL, '<p>Firstly, thank you to the SAG for acting on this matter and representing shareholder interests.&nbsp; I am wholly supportive.&nbsp;&nbsp;</p>\r\n\r\n<p>In addition to what you&#39;ve shared in your letter, JM has also been deficient in updating shareholders on the status of EIS approval for both Maida Vale and Chiswick pubs.&nbsp; And I&#39;m inclined not to trust what little he has shared.&nbsp;</p>\r\n\r\n<p>Do we know the status of these submissions, and do we have a sense of whether we will receive EIS status approval from HMRC?&nbsp;</p>\r\n\r\n<p>Thanks&nbsp;</p>', 'default', NULL, 1, NULL),
	(79, 295, 'New Management', 'New-Management', '2020-09-10 12:44:40', NULL, '<p>Thank you to the SAG for all their hard work. If we win the EGM can you be more specific about whom have you approached as potential operational management?</p>\r\n\r\n<p>&nbsp;</p>', 'default', NULL, 1, NULL),
	(80, 490, 'James Anthony McCulloch: Details (plus Henry Harris)', 'James-Anthony-McCulloch-Details-plus-Henry-Harris', '2020-09-13 18:39:15', NULL, '<p>I have initiated a track/tracing request for James McCulloch using information I have been able to collate from across the web. I have also requested a property search that will, ideally, detail any property that is owned or that this character&nbsp;has an interest in.&nbsp;</p>\r\n\r\n<p>I will update/share when I get any response/result. In the meantime see below for information I have thus far and please do share any additional information and/or links.</p>\r\n\r\n<p><strong>James Anthony MCCULLOCH&nbsp; </strong>&nbsp;<strong>Date of Birth:</strong> April 1981</p>\r\n\r\n<p><strong>The registered home address for James A McCulloch is:</strong>&nbsp; 29 Seymour Road, London, SW18 5JB</p>\r\n\r\n<p><a href="https://beta.companieshouse.gov.uk/officers/yTVU_IYpXUy2gWjcVAahwNCgldA/appointments">https://beta.companieshouse.gov.uk/officers/yTVU_IYpXUy2gWjcVAahwNCgldA/appointments</a></p>\r\n\r\n<p>Correspondence address<br />\r\n139 Ladbroke Grove, London, United Kingdom, W10 6HJ</p>\r\n\r\n<p>Previous Correspondence address<br />\r\nApartment 13, 38 Paradise Street, Birmingham, England, B1 2AF</p>\r\n\r\n<p>LinkedIn Profile:<br />\r\n<a href="https://uk.linkedin.com/in/mccullochjames">https://uk.linkedin.com/in/mccullochjames</a></p>\r\n\r\n<p>--------------------------------------------------------------------</p>\r\n\r\n<p><strong>Henry John Martin Harris&nbsp; &nbsp;&nbsp;Date of birth:&nbsp;</strong> August 1963</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Correspondence address<br />\r\n139 Ladbroke Grove, London, United Kingdom, W10 6HJ</p>\r\n\r\n<p>Previous Correspondence address<br />\r\n32 Derwentwater Road, London, W3 6DF</p>\r\n\r\n<p>Previous Correspondence address<br />\r\nEuropa House, Goldstone Villas, Hove, East Sussex, United Kingdom, BN3 3RQ</p>\r\n\r\n<p>Twitter Profile:<br />\r\n<a href="https://twitter.com/racine_kitchen?lang=en">https://twitter.com/racine_kitchen?lang=en</a></p>', 'default', NULL, 1, NULL),
	(81, 531, 'Looking forward and definitely not back', 'Looking-forward-and-definitely-not-back', '2020-09-14 11:38:20', NULL, '<p>First of all, i want to also thank the SAG for taking action on this issue. i support a replacement in the managemnt unreseverdly. I have invested in a number of EIS in numerous sectors, and this has been the most shambolic without a doubt. &nbsp;When it comes to turning these businesses around i do know a very well acclaimed consulatant&nbsp; in the pub/restaurant industry who was Gordon Ramsey&#39;s right hand man. He now works for himself and i know he has space in his schedule at present. Might be worth having a good chat with him&nbsp;on our best strategy in getting these establishments back into the investment we were sold. Happy to share<br />\r\n<br />\r\nStewart Williams<br />\r\n<br />\r\n&nbsp;</p>', 'default', NULL, 1, NULL),
	(82, 274, 'Response to request for  info agreed, but not followed on', 'Response-to-request-for-info-agreed-but-not-followed-on', '2020-09-17 13:59:59', NULL, '<p><strong>From:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt;</p>\r\n\r\n<p>&nbsp;\r\n<p><strong>Date:</strong> 14 September 2020 at 14:19:42 CEST<br />\r\n<strong>To:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Cc:</strong> Nick Curtis &lt;<a href="mailto:n.curtis123@btinternet.com">n.curtis123@btinternet.com</a>&gt;<br />\r\n<strong>Subject:</strong> <strong>Re:&nbsp; EGMs and other</strong></p>\r\n</p>\r\n\r\n<p>﻿Dear James,</p>\r\n\r\n<p>At our meeting of 8 September you agreed that you would provide a number of things:</p>\r\n\r\n<p>1. Copies of the final management agreements between Harcourt Inns and each of the pubs</p>\r\n\r\n<p>2. A note by Beechcrofts on the EIS position arising from a sale</p>\r\n\r\n<p>3. Details of how you intended to run the EGMs, who would chair, secretarial/legal support and the agendas covering any presentation you wished to make, response from SAG and Q&amp;A</p>\r\n\r\n<p>4. We are also waiting for updated cash and liability numbers for each of the pubs so that we are clear on the cash requirements&nbsp;</p>\r\n\r\n<p>5. You were going to consider whether you would stand down as director with Henry earlier.</p>\r\n\r\n<p>6. You were going to propose a follow up meeting since we agreed that it was important to stay closely in touch</p>\r\n\r\n<p>7. Finally you were going to raise the question of submitting a final financed offer with Mike Smith which would cover the various points we have discussed.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Nick have I missed anything?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 7 Sep 2020, at 10:31, James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear John,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I have answers for structuring to maintain EIS status upon liquidation which we can discuss tomorrow.&nbsp;</p>\r\n\r\n<p>Could we actually meet at the Hero? There are private rooms we can use.</p>\r\n\r\n<p>James&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>From:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt;<br />\r\n<strong>Sent:</strong> 02 September 2020 15:04<br />\r\n<strong>To:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Cc:</strong> Nick Curtis &lt;<a href="mailto:n.curtis123@btinternet.com">n.curtis123@btinternet.com</a>&gt;<br />\r\n<strong>Subject:</strong> Re: EGMs and other</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear Jame﻿s,</p>\r\n\r\n<p>Thanks for this. I confirm that we can meet next Tuesday at 10am. We are happy to meet at the KPH.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I also note that you are sending out the meeting notices tomorrow.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>As you know we have spoken to Mike Smith this morning as you requested to try to establish where you are on your joint proposal. We noted that after our meeting two weeks ago we were still waiting for support for your assertion in the proposal that EIS status would not be undermined with a sale of the Coach and the Crown, which is a critical value consideration for shareholders in those pubs. Despite pushing from us for access to Philip Hare, which you were going to arrange, we are no further forward.&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;We also discussed financing &nbsp;and understand that a sale and leaseback is being pursued which also includes the KPH. However the KPH was not part of your proposal so we are not clear what is being proposed. Mike said he was confident about securing financing but also said arranging a sale and leaseback was critical. Putting a sale and leaseback in place and also including the KPH introduces further complexity and uncertainty so this does not feel like a proposal which is near being worked up to a fully financed offer. So we would be surprised if a deal could be executed by the end of September as was suggested in our meeting.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>We also raised again the fundamental conflict inherent in your position as a potential buyer and also director of the relevant pubs.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Please note that we did not discuss some other more detailed outstanding issues which are of lesser importance at this point.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>On 2 Sep 2020, at 12:07, James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Dear John,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Notices will be issued in the next 24 hours.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Why don&rsquo;t we meet Tues morning if that works for you and discuss everything at hand hopefully in a positive way.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>I suggest 10am and I will be on my own if that works for you and Nick?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>James &nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>From:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt;<br />\r\n<strong>Sent:</strong> 01 September 2020 09:02<br />\r\n<strong>To:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Cc:</strong> Rachel Rossiter &lt;<a href="mailto:rachel@harcourtinns.co.uk">rachel@harcourtinns.co.uk</a>&gt;; Henry Harris &lt;<a href="mailto:henry@harcourtinns.co.uk">henry@harcourtinns.co.uk</a>&gt;; Shane Gallwey &lt;<a href="mailto:shane.gallwey@guinnessfunds.com">shane.gallwey@guinnessfunds.com</a>&gt;; Nick Curtis &lt;<a href="mailto:n.curtis123@btinternet.com">n.curtis123@btinternet.com</a>&gt;; John Soden &lt;<a href="mailto:john.soden@moorgateindustries.com">john.soden@moorgateindustries.com</a>&gt;<br />\r\n<strong>Subject:</strong> Re: EGMs and other</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Dear James,</p>\r\n\r\n<p>I am happy to take a call from Mike Smith but you need to address as a matter of urgency your position on standing down and the EGMs which you have so far ignored. As directors you must be becoming perilously close to falling foul of the Companies Act and Insolvency Act. We first raised this at our meeting at the KPH in June.</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n&nbsp;</p>\r\n\r\n<p>On 1 Sep 2020, at 08:01, James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Dear John,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>We can discuss the Andrew Endean email when we meet.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Re sale and leasebacks its imperative that all options are explored.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Mike Smith would like to speak to you directly so if you don&rsquo;t mind I will pass on your mob number?</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>After that we can arrange a meeting</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><strong>From:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt;<br />\r\n<strong>Sent:</strong> 28 August 2020 17:40<br />\r\n<strong>To:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt;; Rachel Rossiter &lt;<a href="mailto:rachel@harcourtinns.co.uk">rachel@harcourtinns.co.uk</a>&gt;; Henry Harris &lt;<a href="mailto:henry@harcourtinns.co.uk">henry@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Cc:</strong> Shane Gallwey &lt;<a href="mailto:shane.gallwey@guinnessfunds.com">shane.gallwey@guinnessfunds.com</a>&gt;; Nick Curtis &lt;<a href="mailto:n.curtis123@btinternet.com">n.curtis123@btinternet.com</a>&gt;; John Soden &lt;<a href="mailto:john.soden@moorgateindustries.com">john.soden@moorgateindustries.com</a>&gt;<br />\r\n<strong>Subject:</strong> EGMs and other</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p><br />\r\n<br />\r\n&nbsp;</p>\r\n\r\n<p>Dear James,</p>\r\n\r\n<p>I have been surprised and concerned by two developments in the last 24 hours.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>First, I have received an unsolicited approach from Andrew Endean regarding his debt (which I assume is the &pound;171k) stating that he is about to initiate recovery proceedings against the Harcourt and that you apparently referred him to me to resolve the situation. That is an extraordinary thing to do given that you and Henry have still not appointed our suggested shareholder nominees as directors and stepped down. As existing directors you all remain responsible and exposed for all aspects of the company. Given the current inability of the company to pay its debts as they fall due and this pending legal action the company appears to be potentially insolvent in the absence of action to resolve its problems. You cannot remain in place but opt not to act and ignore your responsibilities to the company or shareholders.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Second, whilst waiting for you to respond on the points raised in our meeting on your/Mike Smith&rsquo;s proposals we have heard that you have asked Fleurets to undertake a sale and leaseback transaction for four of the pubs including the KPH without discussing it with shareholders. Of particular concern is that the &nbsp;prospectus refers to;</p>\r\n\r\n<p>- a pub Group - again risking the EIS status of the pubs and providing support to HMRC&rsquo;s attack on the EIS status of which you have informed us</p>\r\n\r\n<p>- &nbsp;the guide price being significantly below vacant possession value and site assembly cost and the rental being significantly below market rental</p>\r\n\r\n<p>Not only is this prejudicial to shareholder value and their EIS claims but it also seems to completely cut across your/ Mike Smith&rsquo;s proposal and raises significant doubts as to whether that proposal is genuine or credible. Please provide Mike Smith&rsquo;s contact details so that we can seek clarification direct from him.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>All of this highlights the fact that your actions and refusal to step down from each of the pubs in favour of new directors or call the EGMs is causing serious potential damage to shareholder interests for which we will hold you accountable. This cannot continue and we would urge you to meet with us early next week to negotiate the basis on which you withdraw and your management agreements are terminated.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n<br />\r\n&nbsp;</p>\r\n\r\n<p>On 26 Aug 2020, at 18:00, James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Dear John,</p>\r\n\r\n<p>Pls note that I am considering this and not ignoring your email.&nbsp;</p>\r\n\r\n<p>I will be in touch shortly with a proposal on how to move forwards.</p>\r\n\r\n<p>Regards,</p>\r\n\r\n<p>James&nbsp;</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Get <a href="https://aka.ms/o0ukef">Outlook for iOS</a></p>\r\n\r\n<hr />\r\n<p><strong>From:</strong> John Soden &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt;<br />\r\n<strong>Sent:</strong> Monday, August 24, 2020 10:06:26 AM<br />\r\n<strong>To:</strong> James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Cc:</strong> Nicholas Curtis &lt;<a href="mailto:n.curtis123@btinternet.com">n.curtis123@btinternet.com</a>&gt;; Rachel Rossiter &lt;<a href="mailto:rachel@harcourtinns.co.uk">rachel@harcourtinns.co.uk</a>&gt;; Henry Harris &lt;<a href="mailto:henry@harcourtinns.co.uk">henry@harcourtinns.co.uk</a>&gt;<br />\r\n<strong>Subject:</strong> EGMs</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>James,</p>\r\n\r\n<p>Please can you update on your plans on standing down as a director and appointing new shareholder directors? As you know the clock is ticking on the EGMs but given the position of the pubs, shortage of liquidity and critical issues around solvency as well as &nbsp;the need to resolve your conflict with the offer that has been made there is little sense in waiting and having to go through a procedure that is, in any event, a foregone conclusion. We need to discuss this as a matter of urgency such that shareholder interests are no further Unnecessarily compromised.</p>\r\n\r\n<p>We should sit down and hammer this out this week. Please confirm your availability for a meeting to resolve this.</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n<br />\r\n&nbsp;</p>\r\n\r\n<p>On 24 Aug 2020, at 09:05, John Soden &lt;<a href="mailto:soden.j@gmail.com">soden.j@gmail.com</a>&gt; wrote:</p>\r\n\r\n<p>﻿James,</p>\r\n\r\n<p>thanks for these. We also need the same information for the other three pubs as a matter of urgency. Will these be available today.</p>\r\n\r\n<p>We also await the fee information for each pub. Please pass them on as they become available rather than waiting for the last to be available.&nbsp;</p>\r\n\r\n<p>You have said you are meeting with Philip Hare today so can we please have an update on EIS tomorrow.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Sent from my iPad</p>\r\n\r\n<p><br />\r\n<br />\r\n&nbsp;</p>\r\n\r\n<p>On 21 Aug 2020, at 15:29, James McCulloch &lt;<a href="mailto:james@harcourtinns.co.uk">james@harcourtinns.co.uk</a>&gt; wrote:</p>\r\n\r\n<p>﻿</p>\r\n\r\n<p>Dear John/Nick,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>See attached asset / liabilities analysis for the Coach, Crown and Three Cranes based on the offer put forward by Mike Smith.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Rachel has assumed reopening all three pubs in September in the analysis although in reality it probably isn&rsquo;t a good idea to reopen the Three Cranes.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Still waiting on the breakdown of fees and I have also spoken to Philip Hare to understand the dynamics of a sale, inside or outside EIS, and loss relief including a future profit share.</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>Regards,</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>James McCulloch</p>\r\n\r\n<p>Managing Director</p>\r\n\r\n<p>Harcourt Inns</p>\r\n\r\n<p>Tel: 07904910301</p>\r\n\r\n<p><a href="mailto:james@harcourtinns.co.uk">Email: james@harcourtinns.co.uk</a></p>\r\n\r\n<p>Post: 139 Ladbroke Grove, Notting Hill, London W10 6HJ</p>\r\n\r\n<p>&nbsp;</p>\r\n\r\n<p>&lt;image001.png&gt;</p>\r\n\r\n<p>&nbsp;</p>', 'advocate', 'SAG - JM communication', 1, '2020-09-14 00:00:00'),
	(83, 353, 'Proposed directors', 'Proposed-directors', '2020-09-17 19:34:48', NULL, '<p>Please provide profiles for each of the proposed directors.</p>', 'default', NULL, 1, NULL),
	(84, 274, 'Instructions to Counsel', 'Instructions-to-Counsel', '2020-09-28 17:39:22', NULL, NULL, 'advocate', 'Legal advice', 0, '2020-09-28 00:00:00'),
	(85, 274, 'Pub management agreements', 'Pub-management-agreements', '2020-09-29 10:26:08', NULL, NULL, 'advocate', 'Management agreements', 1, '2020-09-29 00:00:00'),
	(86, 463, 'recent questions raised by Steve Waite through the Wealth Club , which were unanswered by James McCulloch', 'recent-questions-raised-by-Steve-Waite-through-the-Wealth-Club-which-were-unanswered-by-James-McCulloch', '2020-10-06 11:40:04', NULL, '<p>From: stephen waite &lt;waitestephen@hotmail.com&gt;&nbsp;<br />\r\nSent: 27 August 2020 15:35<br />\r\nTo: Tom Dimonaco &lt;tom.dimonaco@wealthclub.co.uk&gt;<br />\r\nCc: Gayle Bowen &lt;gayle.bowen@wealthclub.co.uk&gt;<br />\r\nSubject: Re: The Hero of Maida (Truscott) - Investment Update<br />\r\n&nbsp;<br />\r\nHi Tom and thanks for this and the South West Leisure details . It made for grim reading and there certainly doesn&#39;t seem to be a strategic plan that is being followed !!.&nbsp;<br />\r\nIt raises the following questions.<br />\r\n&nbsp;<br />\r\nSouth West Leisure Ltd.<br />\r\nIn June the shareholders report made a big play of Harcourt hiring 2 senior executives to drive the company through these difficult times , no mention of this now!! , what is going on.<br />\r\nAgain, a positive was made of the outside space at the Crown Inn and in the financials, it was going to trade in August . However shortly after the report it decides not to open until September !! This would appear to be a big mistake as not only has it missed the great weather it has also missed out on the government initiative &quot;eat out to help out &quot; and we have heard how that has helped numerous other pubs/restaurant chains. It is now faced with the need to make its own relaunch of the pub without government help, as contrary to their report the scheme is not going to be extended into September.<br />\r\nIn the budget issued to shareholders in June the year end result was a loss of &pound;229k and in the latest it is reduced to &pound;150k . Initially that looks like progress but the reduction is mainly the removal of 90k of Private loan interest ,why is this not being budgeted for now ?&nbsp;<br />\r\nThere are substantial savings being shown in kitchen staff costs down from 189k to 116k , is this the initiative of a rota system that is still under discussion ?<br />\r\nI notice in both budgets that Harcourt are still charging 100K a year to these pubs despite the lack of trading, surely there should be a substantial reduction here .<br />\r\nMy main query on Maida Vale is the comments on EIS which seem to be in conflict with your previous feedback . I understood they had not made a submission on Maida Vale ( I know they haven&#39;t on the Crown Inn) as they were waiting for the result of another group pub submission ? However, the report clearly relates to MVLL so have they ? what are we to believe ?<br />\r\n&nbsp;<br />\r\nThese are the worst investment I have made through The Wealth Club and I see no way that this group will deliver for shareholders so the EIS certificates are crucial to getting any money back . If the HMRC do not issue the certificates what does the wealth club intend to do on behalf of shareholders?</p>\r\n\r\n<p><br />\r\nAll the best&nbsp;<br />\r\nSteve Waite&nbsp;<br />\r\n&nbsp;</p>', 'default', NULL, 1, NULL),
	(87, 463, 'personal communication', 'personal-communication', '2020-10-06 11:43:13', NULL, '<p>From: James McCulloch &lt;james@harcourtinns.co.uk&gt;<br />\r\nSent: 09 May 2019 12:30<br />\r\nTo: stephen waite<br />\r\nSubject: Re: Ducalian Capital<br />\r\n&nbsp;<br />\r\nHi Stephen,</p>\r\n\r\n<p>Thanks for your email and I believe this is in the best interest of shareholders as management and shareholders are now completely aligned which wasnt the case previously.</p>\r\n\r\n<p>HMRC keep asking questions which aren&#39;t particularly relevant such as proof of the sale from a third party so there is no connected party transaction. Naturally, these questions are easily answered they just add time on to the process.</p>\r\n\r\n<p>Everything is with HMRC so fingers crossed they can issue the certificate shortly.</p>\r\n\r\n<p>Regards,</p>\r\n\r\n<p>James McCulloch<br />\r\nManaging Director<br />\r\nHarcourt Inns<br />\r\nTel: 07904910301<br />\r\nEmail: james@harcourtinns.co.uk<br />\r\nPost: 32 Harcourt Street, London W1H 4HX<br />\r\n&nbsp;</p>', 'default', NULL, 1, NULL),
	(88, 463, 'Personal  questions', 'Personal-questions', '2020-10-06 11:45:22', NULL, '<p>stephen waite<br />\r\nWed 29/05/2019 14:15</p>\r\n\r\n<p></p>\r\n\r\n<p></p>\r\n\r\n<p></p>\r\n\r\n<p><br />\r\nTo: James McCulloch</p>\r\n\r\n<p>Hi James hope the management buy-out is settling down now. I thought I would send you a note as I am registered with Downing Crowd and have invested regularly with them . I notice that a new 2 year fixed rate bond has just come out to finance the bedroom works at Maida Vale and secured on the asset of the pub at a LTV of 37 % .&nbsp;<br />\r\nI don&#39;t recall as a shareholder having any communication on this? although clearly this is not a shareholder issue, but &nbsp;my main question is was this planned or is our cashflow predictions awry? due to trading underperformance .</p>\r\n\r\n<p>All the best&nbsp;<br />\r\nSteve Waite&nbsp;<br />\r\nFrom: James McCulloch &lt;james@harcourtinns.co.uk&gt;<br />\r\nSent: 22 May 2019 12:10<br />\r\nTo: James McCulloch<br />\r\nSubject: Maida Vale Leisure Limited<br />\r\n&nbsp;<br />\r\nDear Shareholder,</p>\r\n\r\n<p>In April 2019 the management team of Harcourt Inns completed the management buy out of Harcourt Inns and all the management A shares in the pub portfolio.</p>\r\n\r\n<p>This will now mean that the management team is well positioned to maximise shareholder value as both management and shareholders are fully aligned.&nbsp;</p>\r\n\r\n<p>As managing director of the group one of my key areas of focus is building the infrastructure to ensure the group as whole and The Hero of Maida specifically maximise value through combining quality, value and operational excellence.</p>\r\n\r\n<p>The group wide financial year now runs from 1st April to 31st March and so financial reporting will link in with these dates and include bi-annual management information with an accompanying report. All shareholders will be included in our quarterly newsletter.<br />\r\nI am acutely aware that shareholders are waiting for their EIS certificates to be distributed by HMRC. Unfortunately HMRC has been incredibly slow in responding and when responses have been received some of the questions have been somewhat irrelevant. In any case, all questions were answered and so I hope to receive full clearance shortly.<br />\r\nOnce I hear back from HMRC we will be able to provide shareholders with an update. I look forward to your continuing support in delivering success at the Hero of Maida.<br />\r\nRegards,<br />\r\nJames McCulloch<br />\r\nManaging Director<br />\r\nHarcourt Inns<br />\r\nTel: 07904910301<br />\r\nEmail: james@harcourtinns.co.uk<br />\r\nPost: 32 Harcourt Street, London W1H 4HX<br />\r\n&nbsp;<br />\r\ncid:image001.png@01D50A76.277538B0<br />\r\n&nbsp;</p>', 'default', NULL, 1, NULL),
	(89, 463, 'response from James', 'response-from-James', '2020-10-06 11:52:05', NULL, '<p>stephen waite<br />\r\nMon 10/06/2019 11:00</p>\r\n\r\n<p></p>\r\n\r\n<p></p>\r\n\r\n<p></p>\r\n\r\n<p><br />\r\nTo: James McCulloch<br />\r\nThanks James I trust this refinancing has improved our situation and profitability ? Certainly the reservations for the bond went in an exceptionally short period !!<br />\r\nLook forward to your next update on the pubs I have invested in.</p>\r\n\r\n<p>Regards&nbsp;<br />\r\nSteve Waite&nbsp;</p>\r\n\r\n<p>From: James McCulloch &lt;james@harcourtinns.co.uk&gt;<br />\r\nSent: 05 June 2019 09:45<br />\r\nTo: stephen waite<br />\r\nSubject: RE: Maida Vale Leisure Limited<br />\r\n&nbsp;<br />\r\nHi Stephen,<br />\r\n&nbsp;<br />\r\nThe business was under some cash flow pressures since the operational underperformance in the first 6 months (operating expenditure and GP&rsquo;s rather than revenue) but the main reason for the refinance was that we had financial covenants with the previous lender that were at risk of being breached.<br />\r\n&nbsp;<br />\r\nRegards,<br />\r\nJames<br />\r\n&nbsp;<br />\r\nFrom: stephen waite &lt;waitestephen@hotmail.com&gt;&nbsp;<br />\r\nSent: 29 May 2019 15:15<br />\r\nTo: James McCulloch &lt;james@harcourtinns.co.uk&gt;<br />\r\nSubject: Re: Maida Vale Leisure Limited<br />\r\n&nbsp;<br />\r\n&nbsp;<br />\r\nHi James hope the management buy-out is settling down now. I thought I would send you a note as I am registered with Downing Crowd and have invested regularly with them . I notice that a new 2 year fixed rate bond has just come out to finance the bedroom works at Maida Vale and secured on the asset of the pub at a LTV of 37 % .&nbsp;<br />\r\nI don&#39;t recall as a shareholder having any communication on this? although clearly this is not a shareholder issue, but &nbsp;my main question is was this planned or is our cashflow predictions awry? due to trading underperformance .<br />\r\n&nbsp;<br />\r\nAll the best&nbsp;</p>', 'default', NULL, 1, NULL),
