Equity Bonds Company Profile 05


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Australian Financial Guarantees 2008

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Equity Bonds Company Profile 05

  1. 1. Melbourne Office: Unit 1 / 2 - 16 Warner Street, Oakleigh VIC 3166 Phone: 1300 736 516 Sydney Office: 38 Brisbane Street Bondi Junction NSW 2022 Email: info@equitybonds.com.au Phone: (02) 9369 2448 Company Profile Fax: (02) 9369 2110 www.equitybonds.com.au
  2. 2. Company Overview Our Philosophy Equity, meaning the state, quality, or ideal of being just, impartial, and fair, or the residual value of a business or property Our Mission beyond any mortgage thereon and liability therein. To provide new and innovative Deposit Guarantee solutions for the Australasian market place, that enable Bonds, means to mortgage or place a guaranteed bond on. complementary finance opportunities for our introducers Hence, we guarantee ones equity to optimise cash flow and their clients. through the use of an Equity Bond. Prudence. Through experienced risk Assessors we have Who are we? developed a diversified pool of valued clients that enable long EB is an Australian owned, Surety specialist organisation term growth of our business. formed by Bridge Lending Services P/L & Amitech P/L (established 1998). The company was founded as Equity Ideas Promise. We will act with integrity at all times, meeting our Pty Ltd and then later changed names to Equity Bonds Pty Ltd. client commitments by working to the highest standards. The company was created to provide Residential, Commercial Clients will receive friendly, efficient and professional service at & Commercial leasing surety products to the ANZ, finance every opportunity. brokering community. Prosperity. We will provide innovative bond facilities that assist EB distributes exclusively to introducers through a channel our Introducers clients and ensure our company maintains its model. Our Introducer Relationship Managers (RM’s) are sustainable and prosperous financial future. experienced & qualified finance brokers, each with multiple years of experience in the mortgage industry as residential & commercial brokers. EB’s RM’s are also PS146 compliant, Corporate Structure each with a Financial Services Diploma. Each RM undergoes continuous educational development to ensure our customers are well looked after. Whilst embracing modern technology to streamline our processes, we place the emphasis on people. Our staff & Strategy alliances are our most important assets - at the heart of our Insurance Limited (OTC/BB:SGYI) business. Their in-depth product knowledge, experience and attitude are what make our company different. Melbourne O ce We have developed long term working relationships with & Sydney O ce our clients through our insistence on maintaining the highest standards of service. Sales & Accounts & Introducer All EquityBonds produced in Australian & New Zealand are Marketing Admin Network known as financial instruments and not financial products. Equity Bonds acts as Guarantor for the Deposit Bonds and has elected to securitise the Guarantee Bond Amounts under Risk & Risk & Compliance Compliance binding arrangements held by Strategy Insurance Limited (SIL). www.equitybonds.com.au Page 1 of 9
  3. 3. Credit Ratings Strategy Insurance Limited Bond Insurance Strategy Insurance Limited is organized as a multi-line insurer with a focus on credit and liability insurance in the fixed income EquityBonds are proud to inform you that our Deposit Bonds and construction industries predominately in North America. are 100% Guaranteed by Strategy Insurance Limited (SIL). In It also offers insurance related risk management solutions to the unlikely event that EquityBonds were to cease trading, users and providers of capital. potential valid bond claims remain payable by SIL via their Australian solicitors. As a specialist organisation, SIL provides financial guarantees through a wide network of agencies in more than 40 countries (OTC/BB:SGYI) around the world. SIL has more than US$500 million in capital and is presently reviewing their position in the S&P Financial Enhancement Rating, FER process. This accreditation relates specifically to Surety insurers. Strategy International Insurance Group Inc, the ultimate parent company of SIL, has more than US$600 Million in assets. (OTC/BB:SGYI) See the SIL Company Profile (2005) for further info on SIL’s products, management and financial position. See the Strategy International Insurance Group, Inc. following supporting docs available online at www.sygi.com; 1. Strategy Insurance Comfort Letter. 2. Strategy $518 Million in new capital (Press release June 2006) & 3. Strategy $100 Million in new capital (Press release January 2006) www.equitybonds.com.au Page 2 of 9
  4. 4. EQUITYBONDS are proud to be a liated with Austcorps development of VISION in Brisbane Our Customers Customer Testimonials Since the launch of the EquityBonds Brand in 2005, AustCorp Group Limited - 20th June 2007 EquityBonds has accredited more than 250 introducer groups around Australia New Zealand. Our customers vary according Dear Rick, to the type of EquityBond that is required to compliment core business. For example, a mortgage broker is likely to sell short I would like to acknowledge the professional and prompt to medium term residential bonds, where a property agent or service we receive in the dealings we have had with Equity developer might sell long term residential bonds “off the plan”. Bonds in the past 12 months. Austcorp’s Vision project is the We have specialist commercial brokers and developers who tallest and most iconic tower in Brisbane and we are excited use our commercial bonds and specialist leasing agents that that the project is now under construction, and your company choose our Lease bonds as an alternative to traditional bank has been an important part of assisting us to obtain the pre guarantees. Other customers include; Mortgage Managers, sales necessary to proceed. As I have previously indicated, I Aggregators, Accountants & Solicitors. also look forward to accepting Equity Bonds in our other major Queensland Projects, including the SW1, located in Southbank, Here is a list of some of our traditional customers; and our other extremely successful project, Coomera Waters (Click on them to view their website) master planned community located on the Gold Coast. 1. FKP Property Group As a national property developer, we are proud of the quality 2. Austcorp (See also www.visionbrisbane.com.au) of our diverse land projects, commercial, and residential 3. Colliers International projects and look forward to growing our business together in 4. CB Richard Ellis the future. 5. Coldwell Banker 6. National Australia Bank Kind Regards, 7. Ashe Morgan Winthrop 8. Balmain Commercial/Guarantee John Hughes 9. WHK Group Limited State Manager, Qld, NT, Sales and Marketing 10. Australand Austcorp Group Limited 11. Seville Hotels & Resorts 12. Ark Property Group 13. Propex Sydney Wide Home Loans - 4th Sep 2006 14. AAA Commercial Mortgages 15. PBS Property Group I can’t believe how easy it has been to arrange deposit bonds 16. Audit Services with Equity Bonds. Justin has been so helpful and made the 17. DIB Finance process very smooth for my clients. To find a company who 18. Savills wants to help and make the process simple has been a great 19. Remax find. I will be using you again and recommending to others. 20. Viva Properties 21. Commercial Brokers Australia Regards, 22. Connective OSN Lyn Janke 23. City Pacific Finance 22. Queensland Financial Services Sydney Wide Home Loans www.equitybonds.com.au Page 3 of 9
  5. 5. Products & Services EquityBond Claim Process - Overview EB currently has three deposit guarantee products for From time to time unforeseen and sometimes unavoidable the Australian & New Zealand market place; Residential & situations arise where a bond may be required to be redeemed. Commercial Guarantee EquityBonds and a Commercial Lease The procedure for bond claimants is as simple as a phone call to Guarantee EquityBond. Over the next 12 months EquityBonds Equity Bonds. Claimants need only quote the bond Guarantee expects to introduce some more guarantee type products to Number for Equity Bonds to establish a valid claim. All valid the ANZ market place. claims will be paid within 14 business days. The payment of claims may be effected earlier. The 14 day period is to allow for the instance where, Equity Bonds is required to have funds Residential & Commercial Equity Bonds telegraphically transferred from Strategy Insurance if the bond This is not insurance, but rather a form of financial instrument or claim exceeds the funds held in trust locally. guarantee which can represent your deposit until settlement, when buying a residential property. Equity Bond Advantages When purchasing a property, it is common practice to lodge Cash Flow a cash deposit of up to 10% of the purchase price with the When financing a deposit, Equity Bonds greatly improves cash vendor’s solicitor as security. For a small fee, an EquityBonds flow, especially when compared with expensive alternatives Residential Deposit Bond can be used in lieu of the cash deposit such as credit cards, lines of credit, personal loans or bank and guarantees the Vendor that you will pay your deposit on guarantees. the day of settlement. Convenience The Deposit Guarantee Bond can be used for all or part An EquityBond removes the need to borrow against an existing of the deposit required up to a maximum of 10% of the property equity or to go through the laborious process of purchase price. organising a bank guarantee. With an Equity Bond, you will have more working capital. Residential Equity Bonds are offered for terms of 3 months to 5 years. Commercial Assessment Criteria Equity Bonds uses commercially experienced assessors, who Commercial Equity Bonds are offered for terms of 3 months to understand client‘s business and financial needs. The assessors 2 years (Longer terms are available on application). are able to identify strong customers, where others are not and hence, qualify for greater deposits. Commercial Lease Equity Bonds Guarantors A lease bond is a contract between three parties: (1) landlord, (2) tenant, and (3) surety underwriter. The lease bond may be Equity Bonds accepts guarantors to assist with qualifying when held by the landlord in lieu of a cash security deposit, letter of a client’s asset base is below the required amount. credit, or a personal or corporate guarantee. It serves as security for the tenant’s full and complete performance of the financial Self Certification terms of its commercial lease. When electing to self certify income, bonds can be approved without the need for financials, at no additional cost. Commercial Lease Equity Bonds are offered for terms of 1 to 5 years. (Longer terms are available on application). www.equitybonds.com.au Page 4 of 9
  6. 6. No need for Finance Approval Working capital solutions Equity Bonds approvals are not restricted when a client’s When a cash deposit has already been used to secure a leased finance has not yet been approved. property, why not consult your landlord and exchange it with a Commercial Lease Equity Bond. This gives your clients access to Cost Effective more working capital and more opportunities for investment. The efficient and innovative patented structure of Equity Bonds allows them to be very competitively priced. Full Online Services Accredited Introducers are granted access to the members 24 Hour Turnaround section of the Equity Bonds website for all application forms, Equity Bonds perform bond application assessments calculators, policies and procedures. Introducers will have all within 24hrs. the necessary tools to enable them to do business efficiently and effectively. Higher Bond Amounts We approve bond amounts up to 25% of the customer’s Introducer Branding Available acceptable asset base. This compares to our competitors For large Introducers, Co-branding is available including standard, typically 15% – 20%. documentation and provision for client services. Longer terms Turn Around and Communication We specialise in long-term, Residential and Commercial Bonds: Terms: 3 months – 5 years. We understand how important it is for clients to be kept informed. A dedicated point of contact at Equity Bonds will Tailored Solutions provide you with timely assessment notifications and continued reliable servicing. Application assessment and turnaround is We can tailor bond amounts above $1.0 million AUD (on typically completed within a 24 hour period of receiving your application). client’s application and supporting documents. Put & Call Options Equity Bonds allow Put & Call Options for maximum effectiveness of geared investment strategies. A Unique Solution For Introducers “Equity Bonds provides Introducers with the necessary tools to qualify customers quickly and easily. Equity Bonds has very competitive pricing and remuneration options are available. Quick and easy process Equity Bonds applications are easy to read and understand, while supporting documentation is kept to a minimum. Application forms are easily accessible via the website. The bonds are issued from our Sydney and Melbourne offices. Equity Bonds are produced locally and can be mailed overnight, to anywhere in Australia and New Zealand. www.equitybonds.com.au Page 5 of 9
  7. 7. Commercial Lease What are the main benefits to Landlords? For landlords, the primary benefit of a lease bond is that the Equity Bond FAQ’s credit of the surety underwriter, rather than the credit of the tenant, secures the tenant’s financial performance of the lease. How does a tenant get a Commercial Lease This gives much more security. Equity Bond? Since the lease bonds cost much less to establish and maintain The tenant applies for a bond using the standard application than cash security deposits, tenants are much more likely and forms, including supporting documentation. Equity Bonds able to agree to substantial guarantees. This gives landlords reviews the tenant’s general business history, financial much better protection. statements, capitalization, and in some cases, business plan. Based upon this review, we issue a lease bond in exchange for Proceeds of lease bonds are not currently subject to the the payment of a specified fee. jurisdiction of bankruptcy courts. The landlord holds the lease bond, in the same way as the Finally, because lease bonds tend to be much less expensive landlord would hold a letter of credit. for tenants compared to the cost of posting and maintaining a letter of credit or cash security deposit, landlords have a much What happens if the tenant breaches the better opportunity to lease space to these tenants. lease agreement? How do I get started? If the tenant fails to uphold the terms and conditions of their lease, the landlord may submit a claim against the bond, which The ease of obtaining a Commercial Lease Equity Bond is is paid by the surety underwriter much like a draw made by the one of its main attractions. Applications can be downloaded landlord would be paid by a bank under a letter of credit. completed and faxed to either of the Melbourne or Sydney offices. Bonds will normally be issued within 24 hours. With a lease bond, the surety underwriter (and not the tenant) is liable to the landlord for the tenant’s breach of its lease. Who are EQUITYBONDS? The surety underwriter’s liability on the lease bond is strictly EQUITYBONDS is an Australian owned brand specialising in monetary; the surety underwriter is not required to physically Property Bonds and Financial Guarantees. EQUITYBONDS acts perform the unfulfilled non-monetary obligations of the as Guarantor for the Commercial Lease Security Bonds. These tenant. are securitised by A rated paper via Strategy Insurance Limited. What are the main benefits for tenants? For many tenants, the amount of the premium will be Tenancy Period Extension considerably less than the cost of posting and maintaining a Market survey results have informed us that Lessors and letter of credit throughout the term of the lease. The premium Managing Agents of Commercial Properties require the term will also usually be a much better financial proposition for of the Security Bond to extend past the Expiration of the Initial tenants than sacrificing working capital in order to post a cash Lease Term. security deposit. Equity Bonds caters for this contingency by extending the term The obligation secured by the lease bond is not treated as a of the Security Bond for 90 days after the Expiration date of the contingent liability on the tenant’s financial statements; it is Lease. This was designed in favour of using a Lease / Rental off-balance sheet. As a result, the tenant’s financial statements Guarantee in place of a bank Guarantee after the major banks and borrowing capacity are much stronger. recently announced that all bank guarantee’s MUST have an expiry date. www.equitybonds.com.au Page 6 of 9
  8. 8. Surety Bonds versus Bank Guarantees Prequalification Surety Bonds Bank Guarantees A surety company assesses the purchaser/lessee’s personal A bank guarantee has no guarantee of the purchaser or assets, income streams and or business operation, checking tenant meeting there purchase contract / lease obligation. for adequate financial resources, necessary experience and its The banker examines the quality and liquidity of the collateral profitability, and management skills to carry on its business. available to the bank in case there is a demand on the bank When it issues a bond, the surety company has verified that guarantee. Generally there is no further prequalification. the bond applicant is capable of completing the purchase or Purchasers / lessee who cannot qualify for a surety bond maintaining the proposed lease at time of application. but can provide a bank guarantee may not possess all the necessary capabilities to complete the purchase or maintain the proposed lease. Duration Surety Bonds Bank Guarantees Surety bonds remain in force for the duration of the contract A Bank guarantee is usually date specific, generally for one including sunset clause periods for purchase contracts and 3 year. A Bank guarantee may contain “evergreen” clauses months past lease periods, subject to the terms and conditions for renewal, after re-assessment of the applicant and the of the bond. applicant may be charged renewal related fees. Borrowing Capacity Surety Bonds Bank Guarantees With few exceptions, surety bonds are issued on an unsecured Specific property and or liquid assets are pledged to secure basis. That is, they are usually provided on the individuals and a bank guarantee. Bank guarantees can diminish an existing or company’s financial strength and experience. The issuance line of credit, and are reflected on the applicant’s financial of bonds has no effect on the applicant’s bank line of credit statement as a contingent liability. Having assets tied up, or and in some instances, can be viewed as a credit enhancement. an available line of credit diminished, is counter-productive to Unused borrowing capacity can be viewed as off-balance the vendor / landlord and purchaser / lessee. Cash reserves in sheet strength. funding initial fit outs and operating costs of leased premises can be adversely affected when liquid assets are pledged to a bank, or in the case of purchases the bank reduces the purchases borrowing capacity as a result of the issuance of a bank guarantee. Claims Surety Bonds Bank Guarantees Surety Bonds are irrevocable. Most Bank Guarantees are irrevocable, which means that both parties must agree to any changes to the Bank Guarantee. Changes must be documented by an amendment signed by both parties. The Surety Company will pay on a bond upon demand of the The bank will pay on a Bank Guarantee upon demand of the holder. The holder or beneficiary must make a demand prior to holder. The holder or beneficiary must make a demand prior the expiration date. to the expiration date. Note: Some material contained in this document has been sourced from publicly released information written by: Surety Information Office, Washington, DC & the Surety & Fidelity Association of America & from the National Association of Surety Bond Producers, Washington, DC. In some sections the term contractor company has been replaced with Purchaser /lessee. www.equitybonds.com.au Page 7 of 9
  9. 9. Residential & Commercial When does it expire? An Equity Bond ceases when the Contract of Sale is completed, Equity Bond FAQ’s terminated, rescinded or the Guarantee Bond expiry date occurs, whichever happens first. The Deposit Guarantee Bond also terminates when a claim is paid by Equity Bonds, Frequently Asked Questions the Guarantor. How do they work? What happens if the buyer defaults under the Outlaying a large cash deposit (for example $50,000 on a $500,000 property can be complicated or impractical if buyer’s Contract of Sale? funds are already tied up in an existing property or other If the buyer defaults under the Contract of Sale, the seller is investments. The convenience of using an Equity Bond will entitled to retain the deposit. The seller can claim the guaranteed attract some buyers having difficulty accessing the full cash amount from Equity Bonds. This amount will be paid to the deposit. The Equity Bond is legally effective and accepted by stakeholder nominated in the contract within fourteen days sellers in all States and Territories. (However, it’s usually paid within four days) of Equity Bonds being supplied with the necessary documentation. Equity Who can apply? Bonds will then recover the money from the purchaser. Anyone wishing to purchase a residential or commercial property can apply for an Equity Bond. This may include existing property owners wanting to purchase property, investors wanting to expand their property portfolio, property developers and first home buyers. Can it be used at auction? Yes. The flexibility of a residential or commercial Equity Bond is one of its key features. An Equity Bond Deposit Guarantee can be issued prior to an auction. The Bond amount is fixed but not the property details, so buyers can attend a number of auctions. The purchaser simply completes the vendor and property details on the Guarantee Bond Certificate when they are the successful bidder. Will the seller / vendor accept the Equity Bond? The Equity Bond is legal. It is available for residential & commercial property purchases in all states & territories. It is at the sole discretion of the vendor to accept it. However, the seller is often anxious to obtain a Contract of Sale on the property and secure a deposit commitment from the buyer. An Equity Bond can usually be organized within 24 hours of the contracts being signed. www.equitybonds.com.au Page 8 of 9
  10. 10. Why do buyers and sellers like residential Equity Bonds? Property purchasers are in favour of using an Equity Bond because it allows them to keep their cash until settlement. Shorter term guarantee bonds (up to 6 months) appeal to homeowners upgrading to a new property or investors who wish to purchase property when the opportunity arises, but have funds tied up in non-liquid assets. Longer term guarantee bonds appeal to people who are buying property under construction or “off the plan”, therefore not tying up liquid assets for extended periods of time. Vendors accept Equity Bonds because it acts as a financial guarantee and can assist in the sale of their property. Does an Equity Bond cost less than other deposit options? Yes, compared with the interest costs associated with financing a cash deposit by other means, an Equity Bond is a very cost effective option. How do I get one? The ease of obtaining an Equity Bond is one of its main attractions. Strategy International Insurance Group, Inc. Applications can be downloaded from - www.equitybonds.com.au, completed and faxed to either of the Melbourne or Sydney officers. An Equity Bond will normally be issued within 24 hours. Visit: www.equitybonds.com.au Phone: 1300 736 516 Fax: (02) 9369 2110 Equity Bonds Head Office Building 1 2 / 16 Warner Street Securitised by Strategy Insurance Limited. (OTC/BB: SGYI) Oakleigh VIC 3166 Australia www.equitybonds.com.au Page 9 of 9