«IMPORTANT NOTICE Attached please find an electronic copy of the Offering Circular (the “Offering Circular”), dated September 22, 2006 relating to ...»
Property that Credit Suisse had pledged or assigned, or in which Credit Suisse had granted a security interest, as collateral security for the payment or performance of an obligation, would be treated as property of the estate of Credit Suisse. Property that Credit Suisse had sold or absolutely assigned and transferred to another party, however, would not be property of the estate of Credit Suisse. The Issuer does not expect that the acquisition by the Issuer of Collateral Debt Securities, under the circumstances contemplated by this Offering Circular, would be deemed to be a pledge or collateral assignment (as opposed to the sale or other absolute transfer) of such Collateral Debt Securities to the Issuer but there is no guarantee that a bankruptcy court would not deem such acquisition of Collateral Debt Securities to be a pledge or collateral assignment.
Ramp-Up Period Purchases. The amount of Collateral Debt Securities acquired on the Closing Date and the amount and timing of the acquisition of additional Collateral Debt Securities prior to the Ramp-Up Completion Date, will affect the return to holders of, and cash flows available to make payments on, the Offered Securities. Reduced liquidity and lower volumes of trading in certain Collateral Debt Securities, in addition to restrictions on investment contained in the Eligibility Criteria, could result in periods during which the Issuer is unable to be fully invested in Collateral Debt Securities. During any such period, excess cash is expected to be invested in Eligible Investments or U.S. Agency Securities.
Because of the short term nature and credit quality of Eligible Investments and U.S. Agency Securities, the interest rates payable on Eligible Investments and U.S. Agency Securities tend to be significantly lower than the rates the Issuer would expect to earn on Collateral Debt Securities. The longer the period before investment or reinvestment in Collateral Debt Securities, the greater the adverse impact may be on aggregate Interest Proceeds collected and distributed by the Issuer, resulting in a lower yield than could have been obtained if the net proceeds associated with the Offering were immediately invested in Collateral Debt Securities and remained invested in Collateral Debt Securities at all times.
In addition, the timing of the acquisition of Collateral Debt Securities on or before the last day of the Reinvestment Period, the amount of any purchased accrued interest, the timing of additional borrowings under the Class A-1 Notes, the scheduled interest payment dates of the Collateral Debt Securities and the amount of the net proceeds associated with the Offering invested in lower-yielding Eligible Investments or U.S. Agency Securities until reinvested in Collateral Debt Securities may have a material impact on the amount of Interest Proceeds collected during any Due Period, which could adversely affect interest payments on Notes and distributions on Preference Shares.
The Issuer will use commercially reasonable efforts to acquire or enter into binding agreements to acquire, on or before November 15, 2006, Collateral Debt Securities having an aggregate Principal Balance plus the aggregate amount of all accrued and unpaid interest to the date of acquisition on all Pledged Collateral Debt Securities acquired on the Closing Date or during the Ramp-Up Period with Uninvested Proceeds plus the aggregate Principal Balance of all Eligible Investments purchased with Principal Proceeds on deposit in the Principal Collection Account of not less than U.S.$500,000,000 (in each case, assuming for these purposes (i) settlement in accordance with customary settlement procedures in the relevant markets on the Ramp-Up Completion Date of all agreements entered into by the Issuer to acquire Collateral Debt Securities scheduled to settle on or following the Ramp-Up Completion Date and (ii) that each such Collateral Debt Security is a Pledged Collateral Debt Security).
The Issuer expects that, as of the Closing Date, it will have acquired or entered into commitments to acquire, for settlement on or following the Closing Date, at least 80% of the aggregate Principal Balance of the Collateral Debt Securities to be included in the anticipated portfolio on the Ramp-Up Completion Date. From, and including, the Closing Date to, and including, the Ramp-Up Completion Date, the Issuer will acquire eligible Collateral Debt Securities (for inclusion in the Collateral) having an aggregate Principal Balance of not less than the aggregate Principal Balance necessary for the Issuer to comply with its obligations under the Indenture. The Issuer may not acquire any Collateral Debt Security unless such acquisition is made (a) on an “arm’s-length basis” for fair market value or (b) pursuant to the Warehouse Agreement or the Forward Sale Agreement.
If the Issuer has succeeded in acquiring Collateral Debt Securities having an aggregate Principal Balance plus the aggregate amount of all accrued and unpaid interest to the date of acquisition on all Pledged Collateral Debt Securities acquired on the Closing Date or during the Ramp-Up Period with Uninvested Proceeds plus the aggregate Principal Balance of all Eligible Investments purchased with Principal Proceeds on deposit in the Principal Collection Account of U.S.$500,000,000 by the Ramp-Up Completion Date and the Issuer obtains a Rating Confirmation from each Rating Agency by the later of (x) 30 Business Days following the Ramp-Up Completion Date or (y) the first Determination Date following the Ramp-Up Completion Date, all Uninvested Proceeds remaining on the first Determination Date thereafter are required to be applied on the related Quarterly Distribution Date as, first, Interest Proceeds in an amount equal to the lesser of (a) the Interest Excess and (b) U.S.$2,000,000 and second, Principal Proceeds. If there is a Rating Confirmation Failure, however, such Uninvested Proceeds will be used to pay principal of the Notes on the first Quarterly Distribution Date thereafter in accordance with the Priority of Payments, to the extent necessary to obtain a Rating Confirmation from each Rating Agency. If the Issuer does not succeed in acquiring Collateral Debt Securities having an aggregate Principal Balance plus the aggregate amount of all accrued and unpaid interest to the date of acquisition on all Pledged Collateral Debt Securities acquired on the Closing Date or during the Ramp-Up Period with Uninvested Proceeds plus the aggregate Principal Balance of all Eligible Investments purchased with Principal Proceeds on deposit in the Principal Collection Account of U.S.$500,000,000 by the Ramp-Up Completion Date, all Uninvested Proceeds will be also used to pay principal of the Notes. Following the use of Uninvested Proceeds to pay down principal on the Notes or a redemption of the Notes by reason of a Rating Confirmation Failure, the Issuer may reduce the notional amount of the interest rate swap transaction and the interest rate cap transaction under the Hedge Agreement.
Dependence on the Collateral Servicer and Key Personnel and Prior Investment Results. The performance of the portfolio of Collateral Debt Securities depends heavily on the skills of the Collateral Servicer in analyzing and selecting the Collateral Debt Securities. As a result, the Issuer will be highly dependent on the financial and managerial experience of the Collateral Servicer and certain of the officers and employees of the Collateral Servicer to whom the task of selecting and monitoring the Collateral has been assigned or delegated. Certain employment arrangements between those officers and employees and the Collateral Servicer may exist, but the Issuer is not, and will not be, a direct beneficiary of such arrangements, which arrangements are in any event subject to change without the consent of the Issuer. The prior investment results of the Collateral Servicer and the persons associated with the Collateral Servicer or any other entity or person described herein are not indicative of the Issuer’s future investment results. The nature of, and risks associated with, the Issuer’s investments may differ substantially from the investments and risks undertaken historically by such persons and entities. There can be no assurance that the Issuer’s investments will perform as well as the past investments of any such persons or entities. See “The Collateral Servicing Agreement”.
Projections, Forecasts and Estimates. Any projections, forecasts and estimates contained herein are forward looking statements and are based upon certain assumptions that the Co-Issuers consider reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results.
Accordingly, the projections are only an estimate. Actual results may vary from the projections, and such variations may be material.
Some important factors that could cause actual results to differ materially from those in any forward looking statements include changes in interest rates, market, financial or legal uncertainties, differences in the actual allocation of the Collateral Debt Securities included in the Collateral among asset categories from those assumed, the timing of acquisitions of the Collateral Debt Securities by the Issuer, mismatches between the timing of accrual and receipt of Interest Proceeds and Principal Proceeds from the Collateral Debt Securities included in the Collateral (particularly during the period prior to the termination of the Reinvestment Period), defaults under Collateral Debt Securities included in the Collateral and the effectiveness of the Hedge Agreement, among others. Consequently, the inclusion of projections herein should not be regarded as a representation by the Issuer, the Co-Issuer, the Trustee, the Collateral Servicer, the Hedge Counterparty, the Initial Purchaser or any of their respective affiliates or any other person or entity of the results that will actually be achieved by the Issuer.
None of the Issuer, the Co-Issuer, the Trustee, the Collateral Servicer, the Hedge Counterparty, the Initial Purchaser, any of their respective affiliates and any other person has any obligation to update or otherwise revise any projections, including any revisions to reflect changes in economic conditions or other circumstances arising after the date hereof or to reflect the occurrence of unanticipated events, even if the underlying assumptions do not come to fruition.
Money Laundering Prevention. “The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001” (the “USA PATRIOT Act”), effective as of October 26, 2001, requires broker-dealers registered with the Securities and Exchange Commission and the National Association of Securities Dealers (the “NASD”), such as Credit Suisse Securities (USA) LLC, to establish and maintain anti-money laundering programs. With respect to the content of those programs, the NASD has issued a rule that requires broker-dealers to establish and maintain anti-money laundering programs similar to those currently in place at U.S. banks. On April 23, 2002, the United States Department of the Treasury (the “Treasury Department”) issued regulations pursuant to the USA PATRIOT Act that, as amended, exempt “investment companies” such as the Issuer from the anti-money laundering requirements set out thereunder for an indefinite period of time, pending the issuance of a final rule. On September 18, 2002, the Treasury Department issued proposed regulations that, if enacted in their current form, will compel certain “unregistered investment companies” to undertake certain activities including establishing, maintaining and periodically testing an anti-money laundering compliance program, and designating and training personnel responsible for that compliance program. As part of the rulemaking process, the Treasury Department is considering the appropriate definition of, and exceptions to, the term “unregistered investment company”. The Treasury Department may, in its final rule, define such term in such a way as to include the Issuer. In addition, in April 2003, the Treasury Department issued proposed regulations that would require certain investment advisers to establish anti-money laundering programs. The Issuer will continue to monitor the ambit of the proposed regulations, and of the exceptions thereto, and will take all necessary steps (if any) required to comply with those regulations once they are finalized and made effective. It is possible that legislation or regulations could be promulgated which will require the Collateral Servicer or other service providers to the Co-Issuers to share information with governmental authorities with respect to investors in the Offered Securities in connection with the establishment of anti-money laundering procedures or require the Issuer to implement additional restrictions on the transfer of the Offered Securities. The Issuer reserves the right to request such information as is necessary to verify the identity of the holder of an Offered Security and the source of the payment of subscription monies, or as is necessary to comply with any customer identification programs required by the Treasury Department or by any other governmental or selfregulatory agency. Legislation and/or regulations could require the Issuer to implement additional restrictions on the transfer of the Offered Securities. In the event of delay or failure by the applicant to produce any information required for verification purposes, an application for or transfer of the Offered Securities and the subscription monies relating thereto may be refused.
The Issuer and the Administrator are subject to anti-money laundering legislation in the Cayman Islands pursuant to the Proceeds of Criminal Conduct Law (2005 Revision) (the “PCCL”). Pursuant to the PCCL the Cayman Islands government enacted The Money Laundering Regulations (2005 Revision), which impose specific requirements with respect to the obligation “to know your client”. Except in relation to certain categories of institutional investors, the Issuer will require a detailed verification of each investor’s identity and the source of the payment used by such investor for purchasing the Offered Securities in a manner similar to the obligations imposed under the laws of other major financial centers.