Why are the Units being offered?
The entertainment business is talent, time and capital intensive. Without sufficient capital to fund pre-production expenses, no business can operate effectively. Large amounts of money is required for marketing, publicity, logistics an for set and costume construction, pay-ment of the artists - BEFORE even one ticket is sold to the public. Typically, budgets are spent THREE MONTHS BEFORE bookings open to the general public. Without a capital base, productions would not reach Opening Night! The Production Units are being offered to ensure that NTO never finds itself in a tight spot with regard to production and operational capital.
What can I expect in the form of monthly returns?
Once a production starts touring and earning revenue, NTO reserves 30% of all gross profits for distribution to its Unit Holders. An amount equal to 30% of the weekly gross profit is held in a separate account with First National Bank. At the end of the month, this amount is dis-tributed amongst Unit Holders. At the end of a production, surplus funds (if any) are also distributed to Units Holders up to a maximum of 30% of such profits.
EXAMPLE
30% of weekly gross profit = estimated at R20 000 per week x 4 weeks = R80 000 - Divided by 150 Units = R533 per Unit .
When will returns commence?
You will receive your first returns 90 days after the date of subscribing for Units. Thereafter, monthly returns will be paid on the 7th of each month until expiry of the term of your agreement with NTO.
For how long will I receive returns?
Depending on the terms of your agreement with NTO, you will receive returns for either 12 or 24 months. The term is determined by the number of Units you apply for - the more Units you apply for, the longer the term for returns.
Can I sell my Units before expiry of the term?
Yes, you may sell your Units back to NTO before expiry of your term, provided that six months have lapsed since the purchase date. In or-der to do so, NTO requires a notice period of 90 days in order to effect the buy-back of your Units. You may NOT sell your Units to a third party without the prior written consent of NTO. The amount that NTO will pay for your Units will be equal to the original amount you paid for the Units. During the 90 days notice period, you will still receive your regular monthly returns.
From how many productions will I earn returns?
NTO currently has four musical productions and two plays scheduled for production and tour during 2019/20 and beyond. During 2020, a further two productions will be launched. You will receive returns on a minimum of 4 productions, depending on the term of your Unit Holder Agreement.
Will I have the option to buy further Units before my term expires?
If at the time of your request, NTO has any remaining Units left, you will have right of first refusal to acquire more Units. If further new productions are announced and additional Units are created for those productions, you will be invited to take up additional Units in such productions.
What are the greatest risks involved in being a Unit Holder?
The entertainment industry is, by its nature, a risky business. While some productions will earn excellent returns, other productions may fail. NTO looses revenue during school holidays when there are no performances. As a result of this, returns in those months will be much lower than usual. During winter, audience numbers decrease as people tend to stay indoors. Unforeseen unrest / protests in certain areas may force the cancellation or postponement of performances. (In this instance, NTO’s insurance will cover any losses) Artists may get ill and have to be replaced at short notice.
What happens if certain performances of a production get cancelled?
If any performance is cancelled due to the incapacity of an artist, sudden unavailability of a venue or any other occurrence beyond NTO’s control, the losses of such performance will be covered by NTO’s insurance policy. If a performance is cancelled because of lack of sufficient ticket sales, NTO will suffer a loss. Such losses will impact on the returns in that particular month.
Apart from the financial returns, what other benefits will I enjoy as a Unit Holder?
Once a production reaches the town / city where you live, you will receive four complimentary tickets to the Gala Opening Night. You will also receive an autographed copy of each production’s programme as well as invitations to the Curtain Call Party after the Gala Opening Night. Every month, together with your returns, you will receive a Financial Summary, outlining the highlights of the past month, together with some photographs of the various performances.
May I give this brochure to my friends and colleagues who may also want to buy Units?
Unfortunately not. You first need to obtain written permission from NTO before you do so. This brochure is not for public distribution and only you, as a privately invited individual, may apply for Units. If we were to distribute this brochure widely to the general public, we would first need to register a prospectus and comply with onerous rules and regulations pertaining to all public offers of shares in South Africa. This is therefore a private invitation to specifically selected individuals.
Will I be able to participate in any other possible offers made by NTO?
Yes indeed. As a Unit Holder, you will receive other offers from NTO when they wish to undertake bigger projects. Currently, plans are underway to establish a theatre / supper theatre in the Cape Town area. For this project, additional funds will be required. Once the project is formally launched, existing Unit Holders will get an exclusive opportunity to participate.
