“An investment in knowledge pays the best interest”…

…So said Benjamin Franklin, however a group of local lenders are anxious to know if and when they will get their money back after a deadline has long since elapsed.

In 2016 The Totnes Progressive school had the opportunity to purchase the freehold of Windmill House (across the road from the Police Station) and the school managers (now the Totnes Independent School ) wanted to seize the opportunity to expand the establishment from the confines of The Mansion in Fore Street. This could only happen if they could secure enough funds to do so. They reached out to parents and guardians of pupils of the school with a scheme to raise £700,000 – £775,000 with which it intended use in conjuction with a mortgage of £200,000 to achieve this aim.

A proposed scheme from Dale Lockett who still works at the school and was a director at the time, stated “Such funding will be by way of redeemable preference shares in a separate company – Profecta Limited who will own the freehold of Windmill House. The preference shares will attract 5% p.a. interest payable 1/4rly together with an additional 5% p.a. interest payable when the shares are redeemed (repaid) in January 2021”

The terms of the arrangement stated  “The teaching company will pay rent on Windmill House at the following rates:
o From completion to 31/7/17 – £30,000 p.a.
o For the year to 31/7/18 – £40,000 p.a.
o For the year to 31/7/19 – £50,000 p.a.
o For the year to 31/7/20 – £60,000 p.a.
o Thereafter – £70,000 p.a”

The interest rate offered was very attractive but now, more than four years after the expected January 2021 deadline, the 10 shareholders have yet to see their money returned. Most lent a substantial £50,000 and even as much as £100,000.

Stephen Tyrrell is one of the lenders. He tells me he felt the process was quite “rushed and pressurised” due to the time constraints of securing the purchase of the building, but there was a lot of goodwill within all the participants because of the ethos of the school. “We were all eager to help – the T’s and C’s came after.” Indeed the trust levels with the school were such that the lenders didn’t involve any solicitors of their own at the time.

But Tyrrell is not at all happy with the situation. Since the original loan, he has had £7,500 returned, but the arrangement as a shareholder means that although he lent 50,000 pounds, after the pro-rata calculations on interest he says is currently owed £52,500 by Profecta Limited based on his sums. He was particularly concerned that although the original proposal states the mortgage would be £200,000 – it turned out to be considerably more at £360,000

I asked school founder and principal, Ross Robens, also the sole director of Profecta Ltd and of Totnes Progressive School Ltd, about this – he told me: “You are correct that the 2016 prospectus, authored by Dale Lockett, referred to a projected mortgage of £200,000. In practice, the mortgage taken out was £360,000. This adjustment was made at the time to ensure sufficient working capital of the school and to provide essential investment in facilities and staffing. The mortgage will be repaid, along with the Preference Shareholders, on completion of the remortgage”

Steph Bailey is another lender in a similar situation, loaning twice the amount as Tyrrell. She says it has been a “heartbreaking process” and feels very foolish in retrospect however, like others was caught up in the spirit of the progressive school. Bailey felt she was supporting the school and intended to self-build a house in Totnes when the money was to be returned in 2021. “I’m no longer able to do that” she tells me.

Mark El-Kadhi (a founder and director of the Totnes Pulse) was another lender of £50,000 and is deeply upset by the situation. He has been particularly vocal and has made attempts to rally the lenders together with limited success. He is troubled by the lack of any apparent thriftiness on the part of the principal, Ross Robens who has received wages and expenses that El-Kadhi claims, don’t indicate any notable attempts at saving money for the shareholders funds.

I asked Robens for his view on this and he responded: “This is a fair question, and I appreciate the concern. However, it’s important to clarify that my own income has always been kept well below sector norms for equivalent roles in independent school leadership. In addition to working extremely long hours, I have also contributed a significant amount of my own personal funds to ensure the school could continue to operate and grow. These efforts have helped make it possible for shareholders to receive regular dividend payments and, soon, substantial reimbursement of their original investment. My focus throughout has been on the long-term success of the school and delivering on the commitments made to shareholders.”

Mr Robens has also been accused by all three lenders we spoke with, of not being communicative and even ‘hostile’ to approaches to resolve the situation. Mark El-Kadhi did have a face-to-face assurance from him that “…hopefully 50% would be repaid after a hoped for re-mortgage.” Stephen Tyrrell complained that “They never tell you all the information” and Steph Bailey said the school were “stonewalling“.

Robens also responded to this implication; “I recognise that communication is a key concern, and I take it seriously. In fact, two years ago I took personal responsibility for shareholder communicationsto ensure they were more consistent and transparent. Since then, I have issued quarterly updates, keeping shareholders informed of progress, challenges, and financial developments. Beyond formal updates, I have regularly responded to emails and calls during weekends, holidays, and late at night—a reflection of my commitment to being available and accountable. The only messages I have not responded to are those that were rude or personally insulting, as I believe respectful dialogue is essential to resolving concerns constructively. I remain fully open to speaking with any shareholder who wishes to engage in a professional and productive conversation.”

Will the investors see their money returned?

Ross Robens told me that a re-mortgage of Windmill House is currently in the process of being arranged and that “Our current expectation is that this will enable reimbursement of between 75% and 100% of the original investment to Preference Shareholders. The exact amount will depend on the final terms of the mortgage and any associated costs. We will communicate a detailed update to all shareholders as soon as the process is formally concluded.”