RISK WARNING

 

GENERAL PRECAUTIONARY MEASURES

Prior to reading the general risk warnings, we would like to point out that inexperienced investors are always advised to consult a trusted financial expert. Never put “all eggs in one basket” and study our offering and the risk profiles of the investments in detail. You should never invest more than 5% of your net worth into individual products with a high-risk profile. FINMA, the Swiss Financial Market Supervisory Authority, offers support and inputs about how to properly evaluate offerings from individual and non-regulated providers. You can always reach out to us if you feel insecure or have any questions. We are always happy to help!

RISK WARNING OWNERS CLUB FRANCHISE

The owners club represents an equity investment model. The investor becomes a shareholder of an operative, independent and fully-fledged Le Bijou Franchise Company. The owners club does not guarantee a minimum rate of return or liquidity. Your capital is at risk and complete loss of the invested capital may incur. The terms and conditions are exclusively according to the official sale prospectus, available at Le Bijou. Before deciding on an investment, read the risk warnings carefully, or in case of doubt, consult a trusted financial expert. Please note, historical or projected performance information is not a reliable indicator for future earnings or losses.

RISK WARNING BONDS

The terms and conditions are exclusively according to the official bond prospectus, available at Le Bijou. Before deciding on an investment, read the risk warnings carefully, or in case of doubt, consult a trusted financial expert. As for every investment, also real estate investments can include (complete) loss of the invested capital. Please note, historical or projected performance information is not a reliable indicator for future earnings or losses.

OTHER TYPICAL RISKS

Risk factors In addition to the information contained in the official Prospectuses, prospective buyers should carefully consider the following risk factors before buying A or B shares (Owners Club Franchise Structure) as well as Bonds. The occurrence of any one or more of the risks described in the risk factors listed below, or any additional risks not yet known to Le Bijou Holding AG and its subsidiaries (later jointly referred to as “the Companies”) or which it does not currently consider to be relevant, may alone or in combination with other known or unknown risks have a negative impact on the Franchise Companies business and financial position. In particular, should one or more of these risks materialise, the stock price may fall and investors may lose some or all of their investment. We therefore never advise investing a substantial amount of your wealth into a single product.

The risks listed below should not be considered as an exhaustive list of possible risks. Their order also says nothing about their meaning, likelihood or relevance.

Missing Track Record

The Franchise Companies have no track record when they launch. There is no track record to give assurance that the Franchise Companies intended business will be successful, namely that the Franchise Companies return and or growth targets can be achieved.

ECONOMIC RISKS AND GENERAL BUSINESS AND MARKET RISKS

The general economic situation/cyclicality

Le Bijou Holding AG and its subsidiaries (later jointly referred to as “the Companies”) are subject to the general economic and political conditions, such as economic growth, inflation, and appeal of locations in terms of national and international competition. A worsening of the economic environment or prospects or the political climate is possible at any time and may lead to a decline in demand for residential and business premises, which may result in a reduction in rental income and/or a lower valuation of real estate. These factors may adversely affect the operations of the Franchise Companies and have a negative impact on its business, financial and earnings performance.

The economic success of Le Bijou Holding AG and its subsidiaries (later jointly referred to as “the Companies”) depends crucially on a minimum use of the rented apartments or on a minimum number of overnight stays, events or long term stays. Accordingly, the economic success of the Companies requires, in particular, a balanced guest allocation in terms of leisure and business travellers, as well as international and domestic guests. This balance will minimise a shortfall in a dominant visitor segment. In turn, this requires attractive and competitive tourism and business location, namely the city of Zurich, Zug, Lucerne, Bern, Basel or Geneva. Therefore, local and global travel risks could negatively impact the Companies business.

Financing and interest rate changes

To carry out their business activities, Le Bijou Holding AG and its subsidiaries (later jointly referred to as “the companies”) rely to a considerable extent on financial resources that are either in the form of debt or equity. The willingness of investors to provide loan capital to the Companies or to invest in the Companies equity depends not only on the success of the Companies but also on the general position of the capital markets. If the Companies are unable to raise the required funding, not all of the targeted projects will be implemented, which may have a negative impact on business and results. The Companies strive to avoid negative interest rates passed on by financial institutions to clients; however, negative interest rates on the Companies bank balances cannot be ruled out, which may have a negative impact on the Companies financial position.

Market risk for revenue

The revenues consist to a large extent of recurring income from overnight stays, events and long term stays. These are subject to fluctuations due to changes in market rents, poor solvency of guests/tenants, the proportion of vacant properties and other factors related to renting out properties. It is also possible that the rental income cannot be fully adjusted to a rising interest level, or that, in the event of a change of tenant, leases cannot be continued under the same conditions as before. The loss of one or more important tenants can lead to a significant decrease in the Companies revenues. All of these factors can have a negative impact on the Companies liquidity and business.

Conversion/new construction of property

Building activity in general, from construction planning to construction itself, involves risks both in the construction of new buildings and in property conversion, to which the Companies itself may also be exposed. In particular, building permits can be delayed by objections, which can lead to additional costs as part of the construction project, for example as a result of additional investments. In addition, objections may mean that construction projects cannot be carried out or are not carried out as desired. Construction involves a risk of higher construction costs than originally anticipated or significant structural defects leading to additional costs. Furthermore, it is always possible that, due to such delays or problems, financing commitments will be withdrawn or offered on less favourable terms. In the worst-case scenario, the Companies may not find replacement financing for a construction project.

Environmental risks

Locations that contain contaminated sites in terms of environmental laws can have a negative impact on the technical, operational and financial progress of a construction project. At the time of purchase and valuation, the state of site contamination may be unknown and may later be discovered, which can never be excluded. It is, therefore, possible that renovations to existing properties may be necessary, which will negatively affect the earnings of the Companies.

Force majeure

Natural disasters caused, for example, by natural events such as earthquakes, storms, war or terrorist events, acts of sabotage, etc., can have a negative impact on the value of properties and, therefore, on the business, finances, and earnings of the Companies.

Dependence on the Board of Directors and Executive Management

The economic success of the Companies depends, to a significant degree, on the experience and knowledge of the administrative board and the directors, whereby the Board of Directors manages the Companies. It is always possible that some or all of the current members of the Board of Directors will be replaced by new people, which may have a negative effect on the business activities and the business results of the Companies.

Dependency on contractual partners

The Companies works closely with local and international partners to identify potential projects. The contractual relationship with these partners is not on an exclusive basis. Therefore, it is always possible that partners will not provide information about attractive project opportunities to the Companies, but rather to competitors. The Companies will work with national and international companies and service providers to create and implement projects. The Companies rely on the quality of the work of these partners. However, it is always possible that errors could arise when creating and implementing projects, which could negatively impact on the Companies business operations.

Dependence on the Landlady

In relation to the existing lease, the Franchise Companies intend to take over the Rental Properties from Le Bijou HRM. As a result, the Companies rely on the existence of the rental agreement to run the rental properties, as well as to comply with the Landlady’s obligations under the lease agreement. There is a risk that the Landlady may fail to fulfill her obligations under the lease agreement or may fail to do so in full. Therefore, the Companies may not be able to run the rental properties or may not be able to do so in the desired manner. In addition, under the lease agreement, the Landlady is entitled to adjust the rent in accordance with the prevailing market conditions when exercising the First Option and/or the Second Option with the Companies. Therefore, there is the risk of a subsequent rent increase, which could negatively affect the Companies profitability.

Dependence on Le Bijou HRM

The Franchise Companies intend to enter into a franchise agreement with Le Bijou HRM to run the rental properties according to the Le Bijou System. There is a risk that Le Bijou HRM will not fulfill its obligations under the franchise agreement or may no longer do so to the required standard. There is also a risk that they may terminate the franchise agreement with the Franchise Companies. This would mean that the Franchise Companies lose all rights to use the Le Bijou System upon termination. Therefore, the Rental Properties could no longer operate under the Le Bijou System.

Non-competition and penalties

The Franchise Companies are subject to a non-competition obligation under the franchise agreement with Le Bijou HRM during the term and for two years thereafter. The Franchise Companies are, therefore, limited in their business activities and cannot develop, offer or run comparable offers in the high-price segment for the duration of the franchise agreement and for two years after it ends by going outside of the Le Bijou System. This is set out by the non-competition clause. Otherwise, they will be in breach of this clause, which could have a negative impact on the business and profitability of the Franchise Companies. For each individual violation of the non-competition clause, as well as the duty to maintain confidentiality, there will be a penalty of CHF 50,000 (excl. VAT). Paying the contractual penalty does not exempt the Franchise Companies from observing the duty to maintain confidentiality and the competition prohibition.

Dependence on developments in legislation

Future changes to national and international laws and regulations may have an impact on costs and revenues and, therefore, on the business results and business activities of the Companies. In Switzerland, for property companies, these are in particular laws and regulations on tax, rental, planning, construction, and environmental protection law, as well as property acquisition by persons abroad, which could significantly influence the Companies finances and earnings.

Uncertain future developments

Forward-looking statements, i.e., statements that are not just based on historical events are published on this website. These forward-looking statements include, but are not limited to, statements concerning the financial performance, strategy, plans, objectives and future business of Le Bijou Holding AG and its subsidiaries. Such forward-looking statements are based on Le Bijou Holding AG and its subsidiaries’ assumptions and expectations and involve known and unknown risks, uncertainties and other factors that may cause these statements to be incorrect. Also, forward-looking statements could differ from actual results. Important factors that could cause actual results to substantially differ from those contained in or derived from the forward-looking statements include, but are not limited to, the Companies ability to implement their business strategy, the financial position and liquidity of the Companies, changes in world and regional markets, currency fluctuations and other factors to which the official Prospectus (available at Le Bijou) refers.

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