«IMPORTANT NOTICE Attached please find an electronic copy of the Offering Circular (the “Offering Circular”), dated September 22, 2006 relating to ...»
The Administrator’s principal office is at Walkers SPV Limited, Walker House, Mary Street, P.O. Box 908GT, George Town, Grand Cayman, Cayman Islands.
Capitalization and Indebtedness of the Issuer The capitalization of the Issuer after giving effect to the issuance of the Offered Securities and the ordinary shares of the Issuer but before deducting expenses of the offering of the Offered Securities and
organizational expenses of the Co-Issuers, is expected to be as follows:
As of the Closing Date and after giving effect to the issuance of the Preference Shares, the authorized and issued share capital of the Issuer will be 1,000 ordinary shares, par value U.S.1.00 per share and 25,500 Preference Shares, par value U.S.$0.01 per share, having a liquidation preference of U.S.$1,000 per share.
The Issuer will not have any material assets other than the Collateral.
The Co-Issuer will be capitalized only to the extent of its U.S.$1,000 of share capital, will have no assets other than its share capital and will have no debt other than as Co-Issuer of the Notes. As of the Closing Date and after giving effect to the issuance of the Co-Issuer’s shares, the authorized and issued share capital of the Co-Issuer is 10,000 common shares, par value U.S.$0.10 per share.
The Indenture and the Issuer Charter provide that the activities of the Issuer are limited to (i) the issuance of the Notes and the Preference Shares, (ii) the acquisition and disposition of, and investment and reinvestment in, Collateral Debt Securities, Equity Securities, U.S. Agency Securities and Eligible Investments for its own account, (iii) the entering into, and the performance of its obligations under the Indenture, the Notes, the Purchase Agreement, the Investor Application Letters, the Preference Share Paying Agency Agreement, the Hedge Agreement, any collateral assignment of the Hedge Agreement, the Collateral Servicing Agreement, the Collateral Administration Agreement, the Administration Agreement and the Forward Sale Agreement, (iv) the pledge of the Collateral as security for its obligations in respect of (inter alia) the Notes, (v) the ownership of the Co-Issuer, (vi) the creation of the Preliminary Offering Circular, this final Offering Circular and any supplements thereto and (vii) other incidental activities.
The Issuer has no employees and no subsidiaries other than the Co-Issuer. Article III of the Co-Issuer’s Certificate of Incorporation states that the Co-Issuer will not undertake any business other than the issuance of the Class A-1 Notes, Class A-2 Notes, Class B-1 Notes, Class B-2 Notes and Class C Notes. The Co-Issuer will not pledge any assets to secure the Class A-1 Notes, Class A-2 Notes, Class B-1 Notes, Class B-2 Notes or Class C Notes, and will not have any interest in the Collateral held by the Issuer.
General The Collateral securing the Notes will consist of: (a) the Custodial Account, the Collateral Debt Securities acquired by the Issuer and the Equity Securities, (b) the Interest Collection Account, the Uninvested Proceeds Account, the Principal Collection Account, the Payment Account, the Expense Account, the Hedge Counterparty Collateral Account, each Credit Default Swap Counterparty Account, each Credit Default Swap Issuer Account, all funds and other property credited to each such account, Eligible Investments (and, in the case of the Uninvested Proceeds Account, U.S. Agency Securities) acquired with funds credited to each such account and all income from the investment of funds therein, (c) the rights of the Issuer under the Hedge Agreement, (d) the rights of the Issuer under the Collateral Servicing Agreement, the Collateral Administration Agreement, the Administration Agreement and the Investor Application Letters, (e) all cash delivered to the Trustee and (f) all proceeds, accessions, profits, income, benefits, substitutions and replacements, whether voluntary or involuntary, of and to any of the property of the Issuer described in the preceding clauses (collectively, the “Collateral”). The security interest granted under the Indenture in each Credit Default Swap Counterparty Account is subject to and subordinate to the security interest and rights of the relevant Credit Default Swap Counterparty in and to such Credit Default Swap Counterparty Account.
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.
Each Collateral Debt Security (including Collateral Debt Securities acquired on the Closing Date) must satisfy each of the following criteria (the “Eligibility Criteria”) at the time the Issuer acquires the Collateral Debt Security or, in the case of any Collateral Debt Security acquired after the Closing Date, at the time the Issuer becomes committed to acquire such Collateral Debt Security (if earlier). The Issuer will not acquire any Collateral Debt Security after the last day of the Reinvestment Period other than Collateral Debt Securities not yet acquired but as to which the Issuer has entered into binding agreements for regular settlement. On or before the last day of the Ramp-Up Period, the Issuer is required to use commercially reasonable efforts to invest Uninvested Proceeds and on or before the last day of the Reinvestment Period, the Issuer may, subject to the restrictions specified herein, reinvest Principal Proceeds in additional Collateral Debt Securities. The Eligibility Criteria shall consist of the
If, at any time on or before the last day of the Reinvestment Period, the Issuer has made a commitment to acquire a security, then the Eligibility Criteria (other than paragraphs (7) through (11) and paragraphs (44) and (45)) need not be satisfied when the Issuer grants such security to the Trustee if (A) the Issuer acquires such security within 30 days of making the commitment to acquire such security and (B) the Eligibility Criteria were satisfied immediately after the Issuer made such commitment. With respect to paragraphs (22) through (24) and paragraphs (27) through (43) above, if any requirement set forth therein is not satisfied immediately prior to the acquisition of the related security, such requirement is deemed satisfied if the extent of non-compliance with such requirement is not made worse after giving effect to such acquisition (except to the extent that a reduction in the extent of compliance does not result in non-compliance).
Notwithstanding the foregoing provisions, if an Event of Default shall have occurred and be continuing during the Reinvestment Period, no Collateral Debt Security may be acquired unless it was the subject of a commitment entered into by the Issuer prior to the occurrence of such Event of Default.
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. In connection with any such acquisition, pursuant to the Collateral Servicing Agreement, the Collateral Servicer will represent that the Collateral Servicer reasonably believes that such acquisition will not result in the downgrade in any of the ratings assigned by any Rating Agency to any of the Notes. Any such acquisition that would result, or that the Collateral Servicer reasonably believes would result, in such a downgrade is prohibited.
The Issuer has agreed to use commercially reasonable efforts to acquire during the Ramp-Up Period 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 the aggregate Principal Balance necessary for the Issuer to comply with its obligations under the Indenture.
For the purpose of determining compliance with the Eligibility Criteria set forth above, the AssetBacked Securities to be pledged to the Trustee on Closing Date and Assets Backed Securities which are referenced in the Credit Default Swaps so pledged to the Trustee, are divided into the following different “Specified Types” (each as defined in Annex A): Automobile Securities, CMBS Conduit Securities, CMBS Credit Tenant Lease Securities, CMBS Large Loan Securities, Credit Card Securities, Equipment Leasing Securities, Prime RMBS Securities, Mid-Prime RMBS Securities, Sub-Prime RMBS Securities, Small Business Loan Securities, Student Loan Securities and Subprime Automobile Securities.
The Specified Types of Asset-Backed Securities (including Asset Backed Securities which are referenced in the Credit Default Swaps) are divided into the following categories: “CDO Securities,” “Commercial ABS Securities,” “CMBS Securities,” “Consumer ABS Securities,” and “Residential ABS Securities,” each as defined in Annex A.
After the Closing Date, any other type of Asset-Backed Security (including any Asset Backed Securities to be referenced in the Credit Default Swaps) may be designated as an additional “Specified Type” in a notice from the Collateral Servicer to the Trustee so long as Moody’s and S&P have confirmed in writing to the Issuer, the Trustee and the Collateral Servicer that such designation satisfies the Rating Condition and the Hedge Counterparty has consented in writing thereto. If any type of Asset-Backed Security shall be so designated as an additional Specified Type, the definition of each Specified Type of Asset-Backed Security in existence prior to such designation will be construed to exclude such newlydesignated Specified Type of Asset-Backed Security.
Asset Acquisition Guidelines
The Collateral Servicing Agreement provides that, in acquiring or entering into CDO Securities, RMBS Securities, CMBS Securities, other Asset-Backed Securities or Credit Default Swaps on behalf of the Issuer, the Collateral Servicer shall be deemed to have complied with its responsibility with respect to the requirement that the manner of acquisition not cause the Issuer to be engaged in a U.S. trade or business for U.S. Federal income tax purposes if each of the following requirements is satisfied.
The first requirement prohibits the Collateral Servicer on behalf of the Issuer from acquiring or committing to acquire a CDO Security, RMBS Security, CMBS Security or other Asset-Backed Security from itself (whether or not acting in its capacity as Collateral Servicer), an Affiliate thereof or any account or portfolio for which any such person serves as investment advisor unless the seller acquired the security in a way that would have satisfied these requirements (applied as if the seller were the Collateral Servicer). There is an exception to this requirement if the seller regularly acquires obligations or securities of the same type for its own account, could have held the obligation or security for its own account consistent with its investment policies, held the obligation or security for at least 90 days and during that period did not commit to dispose of or identify the obligation or security as intended for disposition to the Issuer.
The second requirement prohibits the Collateral Servicer on behalf of the Issuer from acquiring or committing to acquire a CDO Security, RMBS Security, CMBS Security or other Asset-Backed Security for inclusion as a Collateral Debt Security from (i) the obligor or issuer or (ii) any seller that has not purchased and at least partially funded the obligation or security. There are two exceptions to this requirement. The first exception permits the Issuer to acquire an obligation or security in a registered offering where neither the Collateral Servicer nor an Affiliate acted as underwriter or placement agent.
The second exception permits the Issuer to acquire an obligation or security that is privately placed under Rule 144A if (i) the Collateral Servicer and its employees did not participate in the placement or participate in negotiating or structuring the terms of the obligation or security or (ii) the Collateral Servicer and its Affiliates neither participated in negotiating or structuring the terms of the obligation or security nor at issuance acquired or committed to acquire more than 33% of the aggregate principal amount of such obligations or securities or any other class of obligations or securities offered by the obligor or issuer in the same or any related offering (unless persons unrelated to the Collateral Servicer and its Affiliates purchase more than 50% of the aggregate principal amount of such obligations or securities at substantially the same time and on substantially the same terms as the Issuer). The Collateral Servicer (on behalf of the Issuer) is permitted to comment on offering documents to an unrelated underwriter or placement agent where the ability to comment was generally available to investors and to undertake due diligence of the kind customarily performed by investors in securities.
The third requirement prohibits the Collateral Servicer on behalf of the Issuer from acquiring or committing to acquire a CDO Security, RMBS Security, CBMS Security or other Asset-Backed Security from (i) the obligor or issuer, (ii) any seller that has not purchased and at least partially funded such obligation or security or (iii) an Affiliate thereof, unless, in each case, the Issuer’s purchase price is fixed at the time of commitment and the commitment was subject to there being no material adverse change in the condition of the obligor or issuer or in the financial markets between the time of commitment and the time of purchase.