Chilango has postponed its annual general meeting (AGM) amid continued questions over the burrito chain’s future, City A.M. can reveal.
The Mexican restaurant group is in talks with restructuring firm RSM to secure its long-term future, and is almost eight weeks late posting its accounts to Companies House.
The chain has raised £5.8m from the sale of two mini-bonds – dubbed burrito bonds – to around 1,500 small investors.
The financial watchdog today announced a ban on the marketing of some mini-bonds to retail investors, but as funds raised through Chilango’s bonds were used to finance the company directly, they wouldn’t be covered by the ban.
Chilango’s AGM had been scheduled for Friday, but the company wrote to investors last night telling them it has postponed the meeting until 19 December.
“You may have seen in recent press coverage that we have begun working with RSM on long term business planning and strategy,” the company told investors in a letter seen by City A.M.
“As a result, we are rescheduling our General Meeting to ensure we can give you a full update.”
Mini-bonds such as Chilango’s two burrito bonds allow investors to purchase company debt for a set period, in exchange for regular interest payments.
They offer returns as high as eight per cent, but are unsecured, meaning that if the company involved collapses, bondholders are not guaranteed to get any of their money back.
More than 700 individuals backed Chilango’s first bond raising in 2014, and almost 800 supported its most recent bond, which closed in April.
In its announcement banning the mass marketing of speculative mini-bonds earlier today, the Financial Conduct Authority (FCA) said unregulated bonds could harm ordinary investors.
“We remain concerned at the scope for promotion of mini-bonds to retail investors who do not have the experience to assess and manage the risks involved,” said FCA chief executive Andrew Bailey.
Chilango declined to comment on the postponement of its AGM.
When City A.M. revealed the Mexican food chain’s financial difficulties earlier this month, Chilango said it was “working with RSM to assist on long-term planning, options and strategy.”
Accounts for Chilango – which runs 12 restaurants in London, Manchester and Birmingham – were due to be filed with Companies House by the end of September, but are marked as overdue online.
The spokesperson said Chilango was “currently working” with its auditors, Grant Thornton, to get the accounts published “as soon as possible”. Grant Thornton declined to comment on the delay.