There’s been some rumbling in the blogosphere about this topic for the last day or two, but we’ve just been directed to some information we can blog about. Our information source is this: Bond Information for the Ark Encounter Project. It’s a separate website presumably set up by Ken Ham (ol’ Hambo).
We assume that this new website was created to keep it legally apart from Hambo’s on-line ministry, Answers in Genesis (AIG), which owns and operates the infamous, mind-boggling Creation Museum. It’s also separate from the newly-revised website for Hambo’s proposed Ark Encounter project.
Our last post about the financial problems for Hambo’s Ark was Ken Ham Keeps Getting Pounded. Ol’ Hambo was upset about news stories claiming that he was having problems raising the $73 million he was seeking for the project.
That’s enough background. Let’s dig into what’s presented at the new website for the bonds. Here’s what we’re told:
Please note that the materials provided on the website are for informational purposes only and do not constitute an offer to sell or the solicitation of an offer to buy any securities. The bonds will be offered by means of a formal bond offering and in accordance with Federal and State securities laws.
Investment in Ark bonds is not appropriate for everyone and entails a level of risk. The Ark bonds will be secured solely by the Ark Encounter project and will not be an obligation of Answers in Genesis. You should consult with your personal financial advisors regarding any investment in the Ark bonds.
That stuff was obviously drafted by lawyers. That’s because in the US, it’s illegal to offer “securities” (stocks, bonds, etc.) unless the offer has been registered with the Securities and Exchange Commission (the SEC), and the offer must be accompanied by a prospectus that has been approved by the SEC. Let’s continue:
You may view an executive summary of the Ark Encounter project that provides an overview of the vision for the project and preliminary information about the bond offering.
Here’s a link to the executive summary. It’s a 4-page pdf file that takes a while to load, not only because of the pictures of Noah’s Ark, but because the whole thing is a graphic, including the text, so it’s not easy to copy and paste excerpts. We’ll get to it, but first, let’s see what else the main website says:
It is anticipated that the bonds will be available for purchase over a six week period until closing on or around December 19, 2013. In order to access information about the Ark bond offering and to receive notice of the release of the formal bond offering documents, you will need to register [link omitted].
Once you register, you will be able to view/download these documents:
• Bond Term sheet
• Frequently asked questions (FAQs)
• Preliminary Official Statement (POS)
This looks like it’s a private placement, which is a technical exception to the registration requirements of the SEC. The typical private placement that we hear about is a transaction in which a venture capital firm invests in the stock of a budding company, hoping to get in on the ground floor and nourish its growth until it’s ready to go public. But in this case it’s bonds.
The sale of securities in a private placement is still subject to the anti-fraud provisions of the SEC, but if the securities are offered and sold only to “accredited investors” with a specified minimum net worth who can evaluate the risks and who are financially sophisticated, then the issuer of the securities can avoid a load of the SEC’s bureaucratic requirements. But although the securities can be sold to another private investor, you can’t take them to your broker to sell them. They can’t be publicly traded until they’re registered — if they ever are.
The last information at the website is this:
The bond issuer will be the City of Williamstown, KY and the co-borrowers will be Crosswater Canyon, Inc., a non-profit organization controlled by Answers in Genesis, and Ark Encounter, LLC (co-borrower; solely owned by Crosswater Canyon, Inc.).
A city is issuing the bonds? That’s a curious arrangement. And we’re not surprised to see that when the bonds are sold, the borrowers of the money will be companies controlled by AIG.
Okay, let’s take a peek at the “executive summary.” We assume this is the only other official information one can get, unless he registers with the people selling the bonds and demonstrates that he’s an “accredited investor.” They first give some fluffy information about AIG, the Creation Museum, and the wondrous Ark project they intend to build. Then it gets serious.
We’re told that the bonds won’t be rated by any rating agency. That means they won’t have any credit rating. They’ll be issued in four different maturities, and can be bought as follows: 7-year bonds, interest rate 5.25%, minimum purchase $250K; 9-year bonds, interest rate 5.5%, minimum purchase $100K, 11-year bonds, interest rate 5.625%, minimum purchase $50K, and 15-year bonds, interest rate 6%, minimum purchase $5K.
Oh, this is interesting. Even though a city will be technically the issuer of the bonds, the interest will be taxable. So the bonds are definitely not what are commonly known as tax-free municipals. And this is also interesting. It says that the bonds won’t be an obligation of AIG, and won’t be secured by any revenues or assets of AIG. The only security for the bonds will be the revenues and assets of the Ark project itself. We assume (but we aren’t specifically told) that the City of Williamstown won’t be on the hook either.
That’s the only information we’re given about the bonds. It’s probably sufficient for potential investors to decide if they want to go further and register for the information that will be provided only to “accredited investors.”
So there you are, dear reader. If you’re interested, proceed at your own risk.
Addendum: We were wondering how much the total of the bond offering is. We read the executive summary again. It’s not as clear as we’d like, but it says:
COST: $73 million, initial phase $52.6 million in projected future phases over the first 10 operating years.
FUNDING: $13 million already provided from AIG through donations raised, and remaining funds from pending bond offering and AIG (through its donation campaign). Future phases will be funded through future earnings.
As we read that, they’re concerned here only with the initial phase of $52.6 million, because future earnings will take care of the rest. Subtract $13 million already contributed to AIG, and that leaves $39.6 million to be raised from sale of the bonds and from future donations that may be received by AIG. Make of that what you will.
See also: Bloomberg Reports on Ken Ham’s Ark Bonds.
Copyright © 2013. The Sensuous Curmudgeon. All rights reserved.
“You should consult with your personal financial advisors regarding any investment in the Ark bonds.”
Huh. I figured prayer would answer any tough money questions. I bet those lawyers who wrote that are communist-atheist-darwinists.
Smacks of we’re-desperate-for-funds-but-we’ll-make-it-look-exclusive, this whole mess. Reminds me of George Carlin’s poke at organised religion about how it always needs money and can’t handle it. As waldteufel said in the other thread, “[Ham’s] after those with deep pockets and shallow minds…”
[Minor quibbles about your text, Curmy:
(1) Opening paragraph, “It a separate website presumably…” should be “It’s a separate website presumably…”
(2) Fourth paragraph, “Let’s can dig into what’s presented…” should probably be “Let’s dig into what’s presented…”
Feel free to remove this bracketed bit below the line.]
Thanks, Con-Tester. Typos fixed.
Junk bonds to promote junk religion!
Who’d have thunk it?
I suppose it’s a pretty good business model, if you think about it:
1) Create an attraction that’s specifically tailored to appeal to dimwits;
2) Once you’ve indeed drawn plenty of dimwits, ask them for money;
3) Being dimwits, they’ll . . .
“A fool and his money are soon parted,” as the saying goes.
@realthog, you are right on the money! That is a very apt analysis
So, who’s paying the interest, and with what revenue? The Ark Park obviously won’t have any revenue unless and until it’s built, so where’s the money going to come from to pay the interest? The other investors? That may have worked for a while for Bernie Madoff, but I can’t imagine how any “accredited investors” would fall for that scheme now.
Maybe Ham is counting on God to provide Manna from heaven. Or is the interest going to be paid by AiG?
Interest will be paid, guaranteed, in full after 40 days and 40 nights of continuous rain stop. Unfortunately, noone will be left to collect, save for Hambo on his Ark.
@DavidK — In other words, this enterprise will be liquid for about 40 days. After that, the bond holders will be left high and dry.
Don’t we already have enough real estate investors underwater.
I just added an addendum to the end of the original post. They still need to raise almost $40 million for the initial phase, and it looks like most of that needs to come from bond sales.
A quick peek at the internet registration for arkbonds dot com shows the site is hosted in balmy Costa Rica rather than Kentucky. One guesses that Costa Rica is also the destination of any green back cash received from the bond purchasers?
Arkbonds must have been working on this bond
schemebuying opportunity for at least a couple of months. The web URL was registered last August.
Curiously, for a venture that is offering fairly long term bonds, arkbonds dot com has only paid for one year of web hosting.
While AiG claims they have raised $13 million in donations, the truth is that an estimated $5 million of that sum actually represents funds collected since 2010 from purchasers of “lifetime boarding passes” and should be counted against any future earnings. I think we can safely assume that those funds have already been spent and that AiG does not have the cash to make refunds if the project is never built.
Fund raising for the project through donations and boarding pass sales has been going so slowly that they are still years away from initiating the first phase of the project as things stand now. I think they made the decision that they can not wait years and hope to finally raise the money through donations and advanced sales and have the project remain viable much longer. This sudden bond offering seems like an act of desperation to raise enough money to actually start construction on the project.
When they first announced this project in 2010 they stated that they did not want to fund the ark encounter with debt. Now it looks like if the ark is built at all it will be mainly with expensive debt since I doubt that these bonds will sell for anything near their face value.
From the official bond information website:
Ham muffed the Monty Python routine. Obviously he meant it to read:
“The bonds will also be offered in $5,000 increments with three, no four! yes, four term options: 7, 9, 11, and 15 year maturities. NOObody expects the Spanish Inquisition”
Genesis 6, updated version:
” And God said unto Noah: Make thee an ark of gopher wood; rooms shalt thou make in the ark, and shalt pitch it within and without with pitch. And in case thou wonderest whence thou wilt get the money to build it, thou art to sell lots and lots of bonds.”
If I have read correctly, the period over which the bonds will be sold will be the six weeks that ends 12/19/13 which means that the bonds will go on sale starting tomorrow. I wonder if there is some major payment, maybe related to permits, that is due December 20th for the project to move forward. This is something that looks like it is being done very suddenly. I can not help but think that AiG has a sudden need for a large amount of cash.
I wonder how much money old Hambo has parked offshore. According to a recent news article “Costa Rica has become a real-estate magnet for money laundering.”
Now, why would anyone pay Hambo $250k with the almost certainty of never getting the interest and losing all the money, too? What investor is that stupid?
Unless they don’t actually lose the money. What if the money gets parked in Costa Rica for pickup later. Maybe I should start writing crime novels!
CUrmie: Did you see this one?
Tomato Addict asks: “Did you see this one?”
Yeah, but it’s not Hambo’s museum, and the reasons for denial were silly.
Stephen Kennedy suggests
Was ever there a time that AiG–or indeed, any Creationist flim-flam operation, wasn’t in “sudden need for a large amount of cash”?
Come to think on it, I, too, feel a sudden need for large amounts of cash… 🙂
The city is involved because this is what is called a “public-private’ bond issue. This is how Jerry Jones built Jerry’s world in Arlington etc.
Can not remember who, but some one did point out in a previous post that the State help to build it will expire in May next year, so if they still want that I presume they need to get work started before that deadline
These bonds are very high risk for only a modest return, they can’t be easily resold, and they are taxable. What can go wrong?
The state sales tax rebate is limited to 25% of whatever is spent on construction through May 2014. That’s a clear reason for the rush to sell these bonds and get something started. It’s very interesting to read this article written in Aug 2012 and compare it to where they are today… http://leoweekly.com/news/investors-lost-ark
At the time of the article, they stated that the first of a three part documentary about the park would air on PBS in the fall, that they had 75% of their funding committed, the park would open in Spring 2014, and on and on.
The HamBonds are fully backed by prayers.
(Cue On a Ark and a Prayer music.)
So, Ham is anxious to get started so he qualifies for state money. Headline: Ham Goes for Pork.
Ham is nearly 63 (albeit he has the mind of a ten-year old). He knows that every day his stupid boat is unfinished is a day nearer to never seeing it finished. He’s. Desperate to raise money any way he can. By hook or by crook.
There’s been a wonderful thread about this over at:
You all underestimate the power of God and how much each and everyone of you needs to accept His love for you. This is real and you joke? My prayers are with each and everyone of you.