Preferred Shares

Central Co-op is currently offering Preferred Shares to our members as a way to raise equity in support of important projects at our stores, such as opening in Tacoma and modernizing our Seattle store.

Generous owners like you have joined our effort and have already invested almost $550,000 in Preferred Shares. This means that we can comfortably meet the financial needs for opening our Tacoma location this summer. Our next goal is to remodel our Seattle store, which means that we need to reach $1.6 million in Preferred Shares investments. To stay ahead of increasing competition from other grocers soon moving into our neighborhood, we need to start the Seattle remodel by early January 2019; so we need to reach $1.6 million in Preferred Shares investmentsby the end of July 2018. We are about 1/3rd of the way there now!

Below is a rendering that shows the view into the front-end of our store from the entrance. It shows our plan to change the direction of the checkstands and our shelving.

So, what will be included in the renovation?

+ Our check-out lanes will rotate 90 degrees to run East to West:

  • Easier access: this change will make it easier to get in and out of the store as the lines at the checkstand will run parallel to the path into the store
  • There will be more checkstands available, so the lines will move faster
  • The new checkstands will alternate the direction that they face so that our cashiers can change their arm-motions over the course of the day making the workstations more ergonomic and reducing repetitive motion stress

+ We will modernize our Deli:

  • We will expand our deli kitchen so that we can better keep-up with members' needs for fresh and easy meal solutions
  • We will update our equipment so that we can offer more delicious food that is hot and ready to take home or enjoy in our seating area

+ Improved store layout

  • The aisles will be re-oriented to make the store easier to navigate and give us more room in the fresh departments
  • Shelving will be moved so that there are few columns in the middle of aisle, or blocking product

+ Updated equipment

  • Many of our freezers and coolers date back to our opening at this location, and most of them were bought used at the time and so are beyond their end-of-life and at increased for failure
  • Equipment like our meat grinder and cutter is less efficient and ergonomic compared to equipment available today. Replacing those units will make workers' lives much easier on top of saving energy and reducing waste

Why are we inviting our members to get involved?

Cooperative Principle #3 is Member Economic Participation and one of the unique characteristics of co-ops is the ability to raise capital from within its membership. Just as we like to invest the Co-op’s money in the local economy whenever possible and feasible, we have already heard from many owners who appreciate being able to invest in our co-op and support our mission of spreading the cooperative economy, supporting healthy jobs with great benefits and living wages, as well as promote food access and all of the community support that Central Co-op provides. Learn more about our community impact here.

For more information about the Coop’s history, expansion plans, source and use of funds, and financial information, please contact shares@centralcoop.coop to request the Confidential Offering Memorandum.

 

FAQs

What is a Preferred Share?

Preferred shares are dividend-bearing investments in the Co-op’s equity. They differ from the $100 Fair Share that every Co-op owner is required to purchase to be an owner in the following ways:

  • Preferred shares a do not have specified repayment terms
  • Preferred shares pay a dividend based on the size of the investment and not on the amount of purchases made at the Co-op
  • Preferred share purchases are optional investments made at each owner’s discretion — no owner is required to purchase preferred shares as a condition of membership in the Co-op
  • Preferred Shares carry no voting rights.


How long will my money be invested in the Co-op?
While the offering does not have a set term to the investment, and redemption of preferred shares is entirely at the Board's discretion, our current Board adopted a policy in January 2018 stating that their intent is to begin buying back preferred shares in January 2021.

What is the interest rate?
Interest on preferred shares is set at 2% plus prime. Currently the prime rate (as published by the Wall Strett Journal) is 4.75%, so the interest rate is at 6.75% as of 4/20/18. Interest is paid out annually. The first year's interest will be proprated on the date of issuance.

Why is the Co-op offering preferred shares?
This offering provides owners the opportunity to invest funds in our local business while earning a fair return on their investment. They are being offered at this time to help provide part of the financing for the Co-op’s planned new store in Tacoma, improvements to our Seattle location as well as other growth possibilities. The amount raised through the sale of preferred shares will reduce our need to borrow money for expansion from financial institutions.


What are the risks of this investment?
The Preferred shares that the Co-op is offering for sale are not insured and, like nearly all investments, have an element of risk. By purchasing these shares you are making a good faith investment in the Co-op. You should read carefully the entirety of the Offering Memorandum, including the section entitled ‘Risk Factors’ and consult with your own financial or legal counselor, accountant or business advisor prior to making a decision to invest in Shares.


How do I learn about the specific details of the offering?
Prior to purchase you will be given an Offering Memorandum that provides detailed background on the Co-op’s plans, its financial history and its financial projections that will allow you to determine if making an investment in these shares is appropriate for you. To request an Offering Memorandum, please email: shares@centralcoop.coop.


Will I get a larger say in the Co-op’s governance and operations?
No. The Co-op is founded on the principle of one owner, one vote. Preferred shares carry no voting rights; no investor will have any more say than any other owner.


I heard you have a $2.5 million goal, where did that number come from?
We have prepared an expansion plan that includes opening a new store, renovation of the Seattle store and securing funds for future opportunities. The amount we are raising, combined with $1.2 million in bank financing will allow us to move forward with that plan and have sufficient cash reserves and a strong financial position so we can pursue other opportunities for growth.


What happens if we don’t reach the goal? Will we still open the Tacoma store?
If we don’t reach the goal, we may have to modify the plan based on the amount of funds actually received in the preferred share offering.  We have raised what we need to open our Tacoma store through business loans and preferred shares. Our focus now is on reaching $1.6 million by July 30 so that we can keep on track with our Seattle store remodel.


What is the benefit of my investment to the Co-op?
Shareholders will have the opportunity to invest locally, know how their money is being used and earn a better rate than a similar-sized investment is likely to provide. The Co-op will have the benefit of using the additional funds for expansion or other opportunities without having a fixed repayment schedule.  


Is there a minimum or maximum number of shares I can buy?
We are selling 5000 $500 shares. At the opening of this offering an owner could buy as many as 5000 shares or as few as one share; however you can’t purchase partial shares. As we move forward, the maximum amount an owner can purchase will decrease as more shares are purchased. Members have invested amounts ranging from $500 to $100,000 - every investment counts!


How do I buy shares?
There are two requirements to purchase preferred shares:

  1. You must be a Co-op owner.
  2. You must be a Washington State resident

If you have met those requirements, please contact shares@centralcoop.coop to receive an Offering Memorandum for you to determine whether you would like to invest.

Thanks for your support!