These contracted-out schemes give a set return at the end of five years. But the sponsors will hand over a smaller sum immediately. Typically, this will deliver between 17 and 24 per cent on the original investment. If the money stayed invested to the end, then investors would get annual yields of about 17 per cent.
The loan and the interest will roll up over the remaining years and will be paid off when the scheme is wound up.
The scheme only applies to contracted exit BES that were set up before 16 March 1993. Loan-back schemes were banned after that date.
Downing said that at least 27 BES companies with pounds 100m invested were eligible.
Charles Fry, chief executive of the BES specialist Johnson Fry, said: 'If you need money to buy milk with then it is quite a good idea.'
Downing tel: 071-411 4700.Reuse content