Savings & Loans closes initial ‘Kauri Notes’ offer
Media Release: 7 September 2007
Savings & Loans closes initial ‘Kauri Notes’ offer
Savings & Loan announces a successful launch of its Kauri Notes product with a commitment from Merrill Lynch to the NZ market.
Savings & Loans, a leading professional financial service provider, today announced that it had closed its initial Kauri Notes offer in New Zealand to retail investors
In the context of the current bearish global credit market conditions, this represents a pleasing result for the initial release of a new boutique product designed to generate regular income with the benefit of 100% capital protection provided by Merrill Lynch, one of the world's leading wealth management, capital markets and advisory companies.
Savings & Loans is pleased with the demand from Financial Planners for a regular supply of capital guaranteed investments which provide continuing income to their clients. The New Zealand investment market is short of investment grade income investment alternatives, particularly while the market is volatile. Savings & Loans intends to make subsequent offers of Kauri Notes to satisfy this investment demand.
Savings & Loans Director Don Cowie said, “We welcome the commitment of Merrill Lynch to New Zealand, and agree with them that irrespective of the market conditions, there is always room in a diversified portfolio for a long-term investments which provide a combination of high security, regular income, and efficient secondary market liquidity”.
Kauri Notes are a limited recourse interest bearing debt security invested in Merrill lynch Prosper Notes intended to provide investors with a quarterly coupon at a 9.50% per annum return, featuring 100% principal capital protection from Merrill Lynch, and, subject to performance, with the potential for greater returns upon redemption.
Savings & Loans Director Maurizio Piglia, who has had a professional funds management and treasury operations career in Italy and Switzerland over the last 15 years, was instrumental in the development of Kauri Notes.
Mr Piglia said, “We have worked hard with the New Zealand financial advisory and investment community to develop a product that combines all the features which we believe are appropriate for today’s investment market. It is very encouraging to see that so many investors agree with us.”
The offer opened on the 5 July 2007, and closed on 30 August 2007.
- Designed for all market conditions
- Regular fixed coupon generating quarterly income to investors, aiming for 9.50% annually
- Excess returns upon maturity will be paid back as uncapped redemption premium
- Strength of 100% underlying exposure to the Permal Fund, a portfolio of over 50 funds with a Standard & Poor’s AA rating, and with proven record of Permal as a leading hedge fund manager.
- Guarantee of 100% of Investors capital and the first eight quarterly coupons provided by Merrill Lynch & Co., Inc
- The liquidity of a monthly sell back facility is available at Net Asset Value
- 7 ¼ year term
About Savings & Loans
Savings & Loans is a financial services company, established in 1995 and proudly 100% New Zealand owned. We provide quality financial services for individuals and businesses, focusing on tailoring solutions to suit each customer's specific circumstances. Everything we do is backed by our commitment to professional standards, quality and reliability.
Our services include attractive savings and investment products, flexible and competitive loan options, and expert independent mortgage brokering services and financial advice.
Savings & Loans is committed to customer satisfaction and complete transparency, straight talking, and integrity in everything we do.
Savings & Loans has five company directors: Denis Kirkcaldie, Don Cowie, Maurizio Piglia, Milenko Boric and Scott Masters. Together they have more than 120 years' experience in business and finance in New Zealand, the United Kingdom, Italy, Switzerland, the United States, Japan, Hong Kong, Malaysia, and Korea.
While Savings & Loans is operated by financial experts, we recognise that providing financial services is as much about people as it is about money. So when you invest with us or obtain finance from us, we tailor a solution to fit your personal circumstances and lifestyle.
More about Kauri Notes:
- Type of Security - Kauri Notes are limited recourse fixed term interest bearing debt securities.
- Issuer - This offer is being made by Savings & Loans Securities Limited in its capacity as trustee of the Savings & Loans Securities Trust No. 1 and not in any other capacity.
- Issue Price - $1.00 per Kauri Note.
- Scheduled Term - 7 years 3 months, with the Issuer having the right to redeem the Kauri Notes at any time within 3 months of maturity. The Kauri Notes may be redeemed early in certain other circumstances, the details of which are comprised within the terms of the Prospectus and Investment Statement.
- Use of Proceeds - The net proceeds from the issue of the Kauri Notes will be applied towards:
o the payment of all of the initial costs associated with this Offer, being 3.50% of the proceeds raised from the Offer; and
o the purchase of Prosper Notes - Series II issued by Merrill Lynch S.A.
- Principal - $1.00 per Kauri Note - To ensure that this amount is available to holders on maturity, the Issuer will rely on the capital guarantee provided by Merrill Lynch & Co., Inc in respect of the principal of the Prosper Notes - Series II. There are certain circumstances however, where the guarantee of the principal under the Prosper Notes - Series II will not be applicable, the details of which are contained in the Prospectus and Investment Statement.
- Coupons - 9.50% per annum payable in equal quarterly amounts. Coupons are of two types:
o fixed coupons ("Fixed Coupons"), which are the first eight quarterly coupons payable in respect of the Kauri Notes. Savings & Loans Securities expects that these first eight quarterly coupons will be fixed having regard to the fact that Merrill Lynch & Co., Inc. have guaranteed the payment by Merrill Lynch S.A to Savings & Loans Securities of the first eight quarterly coupons of 2.375% each payable in respect of the Prosper Notes - Series II. The amounts payable by Savings & Loans Securities to holders of Kauri Notes in respect of the Fixed Coupons will ultimately reflect the amounts received by Savings & Loans Securities under the Prosper Notes - Series II.
o performance coupons ("Performance Coupons") which are dependent on the subsequent performance of the Prosper Notes - Series II investment in the Permal Fund. In the event that the performance of the Prosper Notes achieves a return of less than 9.50% per annum, then with the exception of the first 8 interest payments, the noteholder may receive an interest return less than 9.50% per annum.
- Redemption Premium - The accumulated returns on the Prosper Notes - Series II at maturity which have not been distributed either as Fixed or Performance Coupons will be distributed to Kauri Noteholders as redemption premium.
- First Coupon - The first coupon payment will be paid to the original subscriber for each Kauri Note irrespective of any subsequent transfer of the Kauri Note before the first coupon payment date (Interest to original subscriber "ITOS").
- Fees - Other than the subscription price payable to subscribe for a Kauri Note, and in respect of the fees applicable to the early redemption of the Kauri Notes by a noteholder no entry or management fees are payable by a holder of Kauri Notes.
- Minimum Investment and Term - $5,000 and thereafter in multiples of $1,000. The term of the Kauri Notes is 7 years and 3 months.
- Limited Recourse - The Kauri Notes are limited recourse obligations of Savings & Loans Securities. This means that Savings & Loans Securities is obliged to make payments on the Kauri Notes only to the extent that it has money available to it from the Prosper Notes - Series II whether or not this is sufficient to repay the Principal or pay any Interest.
Security - The obligations of the Issuer under the Kauri
Notes will be secured by a first ranking security interest
over the Prosper Notes - Series II to be acquired by the