Stand By Letters of Credit (SBLC’s) - Cash them in for real dollars. Note: This also applies to Letter of Credit (LC); Irrevocable Letter of Credit (ILC); and Pay Orders. Value conversion depends on many factors, some fixed, some floating such as:
· Type of Letter of Credit varies and includes (SBLC, ILC, LC, Pay Order, etc.)
· It is Usually viewed as a SBLC is the Better Bank Instrument
· SBLCs are issued on a Bank-to-Bank Basis only
· The Issuing Bank Rating as well as location (branch) of Bank
· Who is issuing the instrument - individual, company, government, etc.
· Instrument Must Be in US Dollars only
· Bank Policy
· Market Conditions
· Client Anticipation of Return
· Place Transaction Occurs What is done with ‘Cash’ after conversion - this is
becoming a paramount issue with banks converting the instrument, the preferred and acceptable method is to deposit a portion of the redeemed funds with the honoring
bank, usually not less than 20% for a period of not less than six (6) months. Hints
· These types of Bank Instruments can be issued to individuals, corporations, trust, pension funds, endowments, non profit organizations, or to any
payable entity.
· Individuals who hold such an instrument may have problems with 3rd party transactions or banks.
· LC, ILC, or SBLC are often times issued for the sale and purchase of tangible assets.
· It is often easier to raise a 'Credit Line' than convert the instrument to
CASH!
· Fluctuating World Market Conditions set the pace and determine the trading value, if any.
· Usually most every instrument can be converted, however, some are just Not desirable Trading Instruments on the current World Market.
· Certain Required "Documentation' is needed for this type of transaction
Documentation, rating agencies, loan syndication
. Project documentation for a
. Project documentation for an existing (operating) project
. An outline of the many contracts involved
. The legal puzzle: fitting the contracts together
. Rating agencies' critical role
. Loan syndication (process and issues)
. Considerations for the default scenario
. Examples, case study and risks
. Emerging market Green-field project
. Case study
. Term sheet example (30 pages plus)
. Project benefits from the viewpoint of the various players
. Political and currency risk
Here are the basic terms below as they were communicated to me from the trade group.
Program Details
* 100M Minimum Entry Investment
* Client Deals with USA Based Company/Trader
* Trader Information/ Trade Contract Directly After Compliance Completion
* High Yield Return Program (Historical Returns to Be Discussed with Trader Directly)
* 40 Week Program Duration (Profits Paid Weekly to Desired Client Coordinates)
* Bank Instruments (CD, MTN, BG, SBLC, Bonds, CMOs, etc.) or Liquid Cash Assets Accepted
* All Other Details Provided Upon Request
* DO NOT WORK with LEASED INSTRUMENTS
Program Procedures
(1) Client Submits Compliance Documentation to Program Manager
(2) Client Background and Asset are Screened/Accepted by Compliance Department
(3) Trade Contract/Trader Information is Sent Out to the Client for Due Diligence
(4) Trader Becomes Available for Contact with the Client
(5) Client Signs Contract and Returns to the Trader
(6) Trader Countersigns Contract and Returns it to the Client
(7) Client Completes the Transaction through Blocking the Asset or Free DTC / Euroclear Delivery(If using DTC/Euroclear delivery to the lending bank, the line of credit account will be opened in the clients name.)
(8) Trader Accesses Line of Credit within 72 Hours and Begins Trading
(9) Client Receives Weekly Distributions to their Account
(10) Client Works at their Leisure with the Trader to Ensure Proper Communication
Other Related Issues
* Investment compounding is known to be an option if the client desires, instead of
the typical consistent weekly payments
* Commissions to intermediaries are paid weekly from the elected paymaster, at the same time which the client receives their profits
* If a client has funds located within the USA, there is little to no chance for a MT 760 to be issued.
Therefore other methods of safe conditional blocking, assignment, or transfer can be used and shall be discussed between the client and trader after compliance.
* If the client owns an instrument, they can deliver it via Free DTC/Euroclear. Once they send the note via Euroclear free delivery to the lending bank, the lending bank will open an account where the loan funds will be deposited in they clients name to trade.
Documents Needed
- Proof of Funds Cash Accounts: Full Bank Letter Signed by (2) Bankers (Provided) or Recent Bank Statement on Bank Letterhead Showing Balance Instruments: Recent Copy of the Instrument/SKR/All Documents and Confirmation of Financial Instrument Letter (Provided)
- Client Information Sheet
- Letter of Intent
- Passport (Color Copy)
- Corporate Resolution (If Applicable)
- Swarn Statement and Funds Affidavit
*Application Documents
Upon Request * MUST Include Proof of Funds and Passport
PROJECT FINANCE:
Oil/Gas & Humanitarian
Trust $100M+.
Humanitarian projects:
helping communities (eg. hospitals, schools, telecom, etc.)
Environmental projects: helping environment (eg. Biofuel, waste heat reuse, solar,
wind, hydropower, etc.)
Socially-Redeemable projects: helping people (eg. Wells, housing, etc.) 3rd World job projects:
helping to create or train for solid long-term employment.
Infrastructure projects: helping to create infrastructure in developing countries (eg. Roads, bridges, tunnels, etc.)
Energy projects: helping to create energy, all types, anywhere in the world. This
fund can also do green buildings (LEED certified silver level) and mining projects. The mining projects have to have some humanitarian aspect such protecting the environment, school, hospital, alternative energy, affordable housing, etc. $5,000 Fee is required after approval of project.
PROJECT FINANCE:
Charitable Foundation
$150M+. 100% LTV.
Interest & Principal are fully forgiven (ie no repayment of interest and debt) 5-7 day approval. 3 to 6 months funding. Due Diligence fees: $90,000 upfront but
refundable if not approved.
Over 17.5 Billion in projects funded in 2006 & $20 Billion to date in 2007.
20% Equity in project.
Closing costs are paid out of the loan and are also forgiven by lender.
Acceptable projects:
alternative/green energy, affordable housing, assisted living, senior housing, go
zone projects, clean water & desalination, major economic stimulus to a region’s public & private sectors, environmentally friendly infrastructure, enhanced agricultural technologies & tools, advanced security applications, minority vendor or ownership status, access to local & affordable health assessment & treatment, public service buildings, transportation.
PROJECT FINANCE:
Private Investors Web Portal Program
This program allows the borrower to present any financing terms they wish to over 8,000 real estate sector based qualified investors, banks, angel firms, and hedge fund managers. An offer letter is completed by the borrower and will be attached to the Power Point Presentation outlining the terms the borrower wishes to secure.
The Private Investor
Program may require personal and/or business financials. JV/Investor
Programs Submission Fee:
$3,500.00 USD. (Flat fee per file) This fee is used to submit the Clients Project to
over 8,000 qualified national and international investors, angel investors, joint venture partners, hedge funds, private banks, and insurance companies that are exclusive worldwide contacts of ACL in the commercial lending sector.
This fee is for the following required services:
Project Power Point Presentation, band width, portal cost, investor(s)/JV partner(s)
approval investigations, and administrative set up. All potential investors are
‘scrubbed and verified” via ACL’s web portal programmers. Client will be given a private web site to view the project in ACL’s web portal and a weekly numerical breakdown of interested investors throughout the world. A personalized video
presentation by the client can be added to the Project Power Point Presentation at
no extra charge. Below is a breakdown of what will be needed and the process flow on every file submitted:
Please initially send:
1- Executive Summary, Color Photos of Property, and Business Plan
2- ACL will review and send out the appropriate Project Program Contract for the
client
3- Once the contract is signed and returned and the submission fee to ACL is received, ACL will then send the needed program forms to be completed by the borrower or LO. (Application, Offer Sheet, financial statements, etc...)
4- Once all forms are completed and returned, ACL will submit to ACL’s exclusive web portal. Client and ACL should begin receiving responses for the project within a week.
PROJECT FINANCE:
SBLC Program. People that do not have a lot of money to start but want in a program…$300,000 to get in and get the money they need….and their money is never at risk. If you’re interested in a leased instrument, we have put together the solution.
Minimum instrument value : $ 10,000,000 Client
investment : $ 300,000
Refundable deposit ( existing instruments also qualify).
STEPS INVOLVED:
* You are to secure an NCND and Non – Solicitation and submit to the Company.
* Conference call with you, your broker and the Company. All details will be
outlined in this call.
* Client will be forwarded complete information package.
* Conference call to review documents and answer questions you may have
* Form an LLC between Investor and Company… split 50 – 50. Investor will
be named Managing Partner so their money is never at risk.
* Investor transfers $ 300 K to escrow.
* SBLC is purchased with Escrow money furnished by investor (steps skipped here)
* This will leave an approx balance of $ 7.5 mm to go into escrow (steps skipped
here)
* This will leave a balance of + $ 15mm (steps skipped here)
* Approx yield of $ 450 mm
* 25% taken for Humanitarian Project
* Balance of monies split 50 – 50 between members of the LLC, the Investor &
the Company.
Sources: Investment
Funds, Private Banks,
Securitization Funds, Hedge
Funds, Umbrella Funds,
Investor Consortium, Venture
Capital, Business Angels,
Private Equity, Luxembourg
Funds, Individual Investors,
Funds of Funds