We are pleased to announce the launch of the Owner Bond drive with a goal of raising $600,000 in 60 days to support our opening of Willy Street Co-op–West at 6825 University Avenue, Middleton. Issuing Bonds to support our growth has a long history at Willy Street Co-op dating back to opening our first location in 1974. We last held a Bond drive in 1999 as part of our expansion to 1221 Williamson Street. Through strong member support we successfully raised $443,000 during that campaign.
For those that have not participated in prior Bond drives, here is the quick look at the process. Willy Street Co-op Owners lend the Co-op money. Willy Street Co-op issues an IOU (a.k.a. Bond) to each lender which pays a stated rate of interest in addition to the return the original loan amount at maturity.
Why purchase a Bond?
Like each Owner’s Fair Share equity payment, purchasing a Bond is a way for Owners to economically participate (a core cooperative principle) by contributing to the Cooperative’s capital. It is important to the Co-op to have as many Owners as possible purchase a bond, whether it is for $200 or $12,000. Each Bond is a signal of support and a direct way to help the expansion succeed. Everyone will have their own reason for wanting to provide financial support. Some people will look forward to a more convenient location in Middleton. Others may just be proud to have stood by the Co-op as it has grown over the years.
How do we intend to use the Bond money?
In conjunction with planning for the Co-op’s expanded operations, we have also been planning a fiscally responsible approach intended to protect the Co-op’s financial health well into the future. Our approach includes:
- Contributing the money raised from Owner Bonds towards the cash portion of the new store’s financing.
- Maintaining sufficient cash reserves for operating support and contingency.
- Reducing our bank debt once our cash flow from operations merit it. By paying down more expensive bank debt, we will keep interest payments within our community and free up cash for other Owner priorities.
What Owner Bonds are available?
The Owner Bonds are setup as Zero Coupon bonds, which is a simplified bond structure that pays all the interest at maturity. For example, if you purchase a $200 bond, the Co-op will pay you back either $225 after 3 years, $250 after 5 years or $285 after 7 years, depending on which term you choose.
It is critical to note that all Owner Bonds are absolutely unsecured, non-transferable, and subordinated to other creditors. (See chart above.)
Who is eligible to purchase Owner Bonds?
To purchase a Bond you will be asked to satisfy three basic requirements. By law, you must be a resident of the State of Wisconsin at the time of purchase and be a paid-in-full Fair Share equity owner. If you are not paid-in-full, you will be asked to pay off the balance of your Fair Share before a Bond can be purchased. Finally, all Owners wanting to purchase a Bond must review the Owner Bond Information Packet, which will be provided.
How can you get additional information?
We understand that you will desire substantially more information before making a decision. Therefore, the following sources of information are immediately available:
- The Willy Street Co-op website contains further details and can be accessed by logging onto: http://www.willystreet.coop/willy_street_co_op_owner_bonds
- To ask questions, request materials, or purchase a Bond, email or call Lynn Olson, Director of Co-op Services, at 608-237-1217.
- Updated Owner Bond information will be available in the Owner Resource Area, located just inside the Eastside store, on our website (http://www.willystreet.coop/), and at various events leading up to and following the grand opening.
We need as many Owners as possible to consider purchasing a Bond. The reduced minimum purchase amount from the last Bond drive was put in place to provide greater accessibility to more Owners. The interest rates we’re offering are based on our value and importance of Owners in this process. Great attention has been placed on providing as much information about this program as possible and we hope you seriously consider this opportunity. Your support can also be voiced in other ways like paying off the balance of your equity Fair Share, voting, writing customer comments, and shopping. However you choose to show your support, the aggregate action will strengthen the Willy Street Grocery Cooperative and reaffirm our uniqueness as a community and a community-owned business.