AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 6, 2005
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
INTERSTAR SECURITISATION MANAGEMENT PTY LIMITED
(ABN 56 100 346 898)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS GOVERNING INSTRUMENTS)
-----------------------
LEVEL 10
101 COLLINS STREET
MELBOURNE VIC, 3000
AUSTRALIA
TELEPHONE: (0011) 613-8616-1600
(ADDRESS, INCLUDING ZIP CODE/POST CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-----------------------
AGENT FOR SERVICE
CT CORPORATION SYSTEM
111 EIGHTH AVENUE
13TH FLOOR
NEW YORK, NY 10011
TELEPHONE: (212) 590-9100
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
-----------------------
WITH A COPY TO:
SAM KYRIACOU DIANE CITRON, ESQ.
DIRECTOR MAYER, BROWN, ROWE & MAW LLP
INTERSTAR WHOLESALE FINANCE PTY LIMITED 1675 BROADWAY
LEVEL 10, 101 COLLINS STREET NEW YORK, NEW YORK 10019
MELBOURNE, VICTORIA 3000, AUSTRALIA
STEVE LEVITAN
MCKEE NELSON LLP
5 TIME SQUARE
35TH FLOOR
NEW YORK, NY 10036
-----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of the registration statement, as
determined by market conditions.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
=========================================================================================================================
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED PROPOSED AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED* MAXIMUM MAXIMUM REGISTRATION
OFFERING PRICE AGGREGATE FEE
PER UNIT OFFERING PRICE
- -------------------------------------------------------------------------------------------------------------------------
Class A Mortgage Backed Floating Rate Notes ....... $1,000,000 100% $1,000,000 $126.70
- -------------------------------------------------------------------------------------------------------------------------
Total Mortgage Backed Floating Rate Notes.......... $1,000,000 -- $1,000,000 $126.70
=========================================================================================================================
* Estimated for the purpose of calculating registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
********************************************************************************
Information contained herein is not complete and may be changed. We may not sell
these securities until the registration statement filed with the Securities and
Exchange Commission is effective. This prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these securities in any State
where the offer is not permitted.
********************************************************************************
SUBJECT TO COMPLETION DATED APRIL [*], 2005
US$[1,000,000,000]
INTERSTAR MILLENNIUM SERIES 2005-1G TRUST
US$[1,000,000,000] CLASS A MORTGAGE BACKED FLOATING RATE NOTES
[GRAPHIC OMITTED]
INTERSTAR SECURITISATION MANAGEMENT PTY LIMITED
(ABN 56 100 346 898)
TRUST MANAGER
PERPETUAL TRUSTEES VICTORIA LIMITED
(ABN 47 004 027 258)
ISSUER TRUSTEE
The Class A notes, also known as the US$ notes, will be collateralized
by a pool of housing loans secured by properties located in Australia. The
Interstar Millennium Series 2005-1G Trust will be governed by the laws of New
South Wales, Australia.
The US$ notes are not deposits and neither the US$ notes nor the
underlying housing loans are insured or guaranteed by any governmental agency or
instrumentality. The US$ notes represent obligations of Perpetual Trustees
Victoria Limited solely in its capacity as trustee of the Interstar Millennium
Series 2005-1G Trust and do not represent obligations of, or interests in,
Interstar Securitisation Management Pty Limited or Perpetual Trustees Victoria
Limited in any other capacity, and are not guaranteed by Interstar
Securitisation Management Pty Limited or Perpetual Trustees Victoria Limited.
INVESTING IN THE US$ NOTES INVOLVES RISKS - SEE "RISK FACTORS" ON PAGE [*].
UNDERWRITING
ISSUED INITIAL PRINCIPAL INITIAL INTEREST DISCOUNTS AND PROCEEDS TO ISSUER
SECURITIES* BALANCE RATE PRICE TO PUBLIC COMMISSIONS TRUSTEE**
- ------------- ------------------ ---------------- ------------------ -------------- --------------------
Class A notes US$[1,000,000,000] LIBOR+[*]% US$[1,000,000,000] US$[*] or [*]% US$[1,000,000,000 or
or 100% 100]%
An application will be made to have the US$ notes listed on the Irish
Stock Exchange. There can be no assurance that any such listing will be
obtained. The issuance and settlement of the US$ notes on the closing date is
not conditional on the listing of the US$ notes on the Irish Stock Exchange.***
Delivery of the US$ notes in book-entry form through The Depository
Trust Company, Clearstream, Luxembourg and the Euroclear System will be made on
or about [*] [*], 2005.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the US$ notes or determined
if this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
UNDERWRITERS OF THE CLASS A NOTES
JPMORGAN DEUTSCHE BANK SECURITIES
RBS GREENWICH CAPITAL
The date of this prospectus is [*] [*], 2005
- --------------------------------------------------------------------------------
* See continuation of cover on next page.
** The underwriting discounts and commissions will be paid separately by
Interstar Wholesale Finance Pty Limited (formerly, Interstar Securities
(Australia) Pty Limited) and not from the proceeds to the issuer trustee.
*** This prospectus will comprise listing particulars for the purposes of the
Irish Stock Exchange.
(cover continued)
In addition to the US$ notes, the issuer trustee will also issue Class
AB Notes and Class B Notes, with an initial principal balance of A$[*] and
A$[*], respectively, collateralized by the same pool of housing loans as the US$
notes. The Class AB notes and the Class B notes have not been and will not be
registered under the Securities Act of 1933, as amended, and are not being
offered by this prospectus and are described herein solely for the information
of investors in the Class A notes. In addition to the US$ notes, the Class AB
notes and the Class B notes, the issuer trustee may issue Redraw notes
collateralized by the same pool of housing loans as the US$ notes and the Class
AB notes and the Class B notes. The Redraw notes, if and when issued, will not
be registered under the Securities Act of 1933 and are not being offered by this
prospectus.
ii
TABLE OF CONTENTS
PAGE
----
Important Notice............................................................viii
Disclaimers With Respect to Sales to Non-U.S. Investors........................x
Australian Disclaimers......................................................xiii
Distribution of Income on Each Payment Date...................................15
Distribution of Mortgage Principal Repayments, Liquid Authorized
Investments and Recovery Amounts on Each Payment Date......................17
Risk Factors..................................................................17
Risk Factors..................................................................18
Capitalized Terms.............................................................33
U.S. Dollar Presentation......................................................33
The Issuer Trustee, the Trust Manager and the Servicer........................34
Description of the Trust......................................................38
Description of the Assets of the Trust........................................39
Housing Loan Information......................................................47
Analysis of the Housing Loan Pool.............................................47
Housing Loans By Occupancy....................................................47
Housing Loans By LVR (Loan-To-Value Ratio)....................................48
Housing Loans By Product Types................................................48
Mortgage Loans By Product Codes...............................................49
Housing Loans By Geographical Distribution....................................49
Housing Loans By Loan Size....................................................49
Housing Loans By Postcode Concentration -- Top 10 By Loan Amount..............50
Housing Loans By Loan Seasoning...............................................50
Housing Loans By Maturity.....................................................51
Housing Loans By Mortgage Insurer.............................................51
Housing Loans By Mortgage Insurer and LVR PMI Mortgage Insurance..............52
Mortgage Loans By Mortgage Insurer and LVR PMI Indemnity......................53
Mortgage Loans By Mortgage Insurer and LVR HOUSING LOANS INSURANCE CORP.......53
Mortgage Loans By Mortgage Insurer and LVR GE Mortgage Insurance (HLIC).......54
Housing Loans By Current Coupon Rates.........................................54
Housing Loans By Months Remaining to Maturity.................................55
Housing Loans By Interest Only Period Remaining...............................55
Housing Loans By Loan Type....................................................55
i
TABLE OF CONTENTS
(continued)
PAGE
----
Interstar Residential Loan Program............................................56
The Mortgage Insurance Policies...............................................64
The Title Insurance Policies..................................................69
Description of the US$ Notes..................................................72
Description of the Transaction Documents.....................................101
The Servicer.................................................................122
Prepayment and Yield Considerations..........................................125
Use of Proceeds..............................................................132
Legal Aspects of the Housing Loans...........................................132
United States Federal Income Tax Matters.....................................139
Australian Tax Matters.......................................................143
Enforcement of Foreign Judgments in Australia................................150
Exchange Controls and Limitations............................................151
ERISA Considerations.........................................................152
Legal Investment Considerations..............................................153
Available Information........................................................153
Ratings of the Notes.........................................................154
Plan of Distribution.........................................................154
General Information..........................................................159
(a) the constitution of the issuer trustee;...........................159
(b) this prospectus;..................................................159
(c) the Note Trust Deed; and..........................................159
(d) the Subscription Agreement........................................159
Announcement.................................................................160
Legal Matters................................................................161
Glossary.....................................................................162
ii
IMPORTANT NOTICE
Application has been made by the manager for the US$ notes to be
admitted to the Official List of the Irish Stock Exchange Limited (IRISH STOCK
EXCHANGE). A copy of this prospectus, which comprises approved listing
particulars with regard to the issuer trustee and the US$ notes in accordance
with the provisions of the European Communities (Stock Exchange) Regulation,
1984 (as amended) (IRISH STOCK EXCHANGE REGULATIONS) has been sent to the
Registrar of Companies in Ireland in accordance with Regulation 13 of the Irish
Stock Exchange Regulations.
The trust manager accepts responsibility for the information contained
in this prospectus. To the best of the knowledge and belief of the trust
manager, the information contained in this prospectus is in accordance with the
facts and does not omit anything likely to affect the import of such
information.
However, the trust manager has relied upon information provided to it
by Perpetual Trustees Australia Limited in respect of Perpetual Trustees
Victoria Limited and the Perpetual Trustees Australia group, PMI Mortgage
Insurance Company Ltd in respect of itself and the PMI Group, First American
Title Insurance Company of Australia Pty Limited in respect of itself and the
First American Title Insurance Company group, and GE Capital Mortgage Insurance
Corporation (Australia) Pty Ltd in respect of itself and the General Electric
Company group, and the trust manager accepts no responsibility for such
information.
Perpetual Trustees Victoria Limited accepts responsibility for the
information contained in the prospectus under "The Issuer Trustee, the Trust
Manager and the Servicer - The Issuer Trustee" in respect of itself and the
Perpetual Trustees Australia group. To the best of the knowledge and belief of
Perpetual Trustees Victoria Limited, the information contained in respect of
itself and the Perpetual Trustees Australia group is in accordance with the
facts and does not omit anything likely to affect the import of such
information. Perpetual Trustees Victoria Limited does not accept responsibility
for any other information contained in this prospectus. No representation,
warranty or undertaking, expressed or implied, is made and no responsibility or
liability is accepted by Perpetual Trustees Victoria Limited as to the accuracy
or completeness of any of the information in this prospectus (other than the
section referred to in the first sentence of this paragraph) or any other
information supplied in connection with the US$ notes or their distribution.
[PMI Mortgage Insurance Company Ltd accepts responsibility for the
information contained in this prospectus under "The Mortgage Insurance Policies
- - Description of the Mortgage Insurers" in respect of itself and all members of
the PMI Group. To the best of the knowledge and belief of PMI Mortgage Insurance
Company Ltd, the information contained in respect of itself and all members of
the PMI Group is in accordance with the facts and does not omit anything likely
to affect the import of such information. PMI Mortgage Insurance Ltd does not
accept responsibility for any other information contained in this prospectus. No
representation, warranty or undertaking, expressed or implied, is made and no
responsibility or liability is accepted by PMI Mortgage Insurance Ltd as to the
accuracy or completeness of any of the information in this prospectus (other
than the sections referred to in the first sentence of this paragraph) or any
other information supplied in connection with the US$ notes or their
distribution.]
[GE Capital Mortgage Insurance Corporation (Australia) Pty Ltd accepts
responsibility for the information contained in this prospectus under "The
Mortgage Insurance Policies - Description of the Mortgage Insurers" in respect
of itself and all members of the General Electric Company group. To the best of
the knowledge and belief of GE Capital Mortgage Insurance Corporation
iii
(Australia) Pty Ltd, the information contained in respect of itself and all
members of the General Electric Company group is in accordance with the facts
and does not omit anything likely to affect the import of such information. GE
Capital Mortgage Insurance Corporation (Australia) Pty Ltd does not accept
responsibility for any other information contained in this prospectus. No
representation, warranty or undertaking, expressed or implied, is made and no
responsibility or liability is accepted by GE Capital Mortgage Insurance
Corporation (Australia) Pty Ltd as to the accuracy or completeness of any of the
information in this prospectus (other than the sections referred to in the first
sentence of this paragraph) or any other information supplied in connection with
the US$ notes or their distribution.]
[First American Title Insurance Company of Australia Pty Limited
accepts responsibility for the information contained in this prospectus under
"The Title Insurance Policies - Description of Title Insurer" in respect of
itself and all members of the First American Title Insurance Company group. To
the best of the knowledge and belief of First American Title Insurance Company
of Australia Pty Limited, the information contained in respect of itself and all
members of the First American Title Insurance Company group is in accordance
with the facts and does not omit anything likely to affect the import of such
information. First American Title Insurance Company of Australia Pty Limited
does not accept responsibility for any other information contained in this
prospectus. No representation, warranty or undertaking, expressed or implied, is
made and no responsibility or liability is accepted by First American Title
Insurance Company of Australia Pty Limited as to the accuracy or completeness of
any of the information in this prospectus (other than the sections referred to
in the first sentence of this paragraph) or any other information supplied in
connection with the US$ notes or their distribution.]
[Home Loans Insurance Corporation accepts responsibility for the
information contained in this prospectus under "The Title Insurance Policies -
Description of Title Insurer" in respect of itself and all members of the Home
Loans Insurance Corporation group. To the best of the knowledge and belief of
Home Loans Insurance Corporation, the information contained in respect of itself
and all members of the Home Loans Insurance Corporation group is in accordance
with the facts and does not omit anything likely to affect the import of such
information. Home Loans Insurance Corporation does not accept responsibility for
any other information contained in this prospectus. No representation, warranty
or undertaking, expressed or implied, is made and no responsibility or liability
is accepted by Home Loans Insurance Corporation as to the accuracy or
completeness of any of the information in this prospectus (other than the
sections referred to in the first sentence of this paragraph) or any other
information supplied in connection with the US$ notes or their distribution.]
iv
DISCLAIMERS WITH RESPECT TO SALES TO NON-U.S. INVESTORS
This section applies only to the offering of the US$ notes in
countries other than the United States of America. In this section, references
to Perpetual Trustees Victoria Limited are to that company only in its capacity
as trustee of the Interstar Millennium Series 2005-1G Trust, and not its
personal capacity or as trustee of any other trust. Perpetual Trustees Victoria
Limited is not responsible or liable for this prospectus in any capacity.
Interstar Securitisation Management Pty Limited is solely responsible for this
prospectus. Interstar Securitisation Management Pty Limited, as trust manager,
has taken all reasonable care to ensure that the information contained in this
prospectus is true and accurate in all material respects and that in relation to
this prospectus there are no material facts the omission of which would make
misleading any statement herein, whether fact or opinion.
Other than in the United States of America, no person has taken or
will take any action that would permit a public offer of the US$ notes in any
country or jurisdiction. The US$ notes may be offered non-publicly in other
jurisdictions. The US$ notes may not be offered or sold, directly or indirectly,
and neither this prospectus nor any form of application, advertisement or other
offering material may be issued, distributed or published in any country or
jurisdiction, unless permitted under all applicable laws and regulations. The
underwriters have represented that all offers and sales by them have been in
compliance, and will comply, with all applicable restrictions on offers and
sales of the US$ notes. You should inform yourself about and observe any of
these restrictions. For a description of further restrictions on offers and
sales of the US$ notes, see "Plan of Distribution -- Offering Restrictions".
Each underwriter has represented and agreed that (a) except in
circumstances which do not constitute an offer to the public within the meaning
of the Irish Companies Act 1963 to 2003 (as amended from time to time (the IRISH
ACTS), it has not offered or sold and will not offer or sell any US$ notes in
Ireland or elsewhere, by means of any documents prior to application for listing
of the US$ notes being made and the Irish Stock Exchange having approved the
relevant listing particulars in accordance with the European Communities (Stock
Exchange) Regulations 1984 (the 1984 REGULATIONS) and thereafter by means of any
document other than: (i) the relevant listing particulars; and/or (ii) a form of
application issued in connection with the US$ notes which indicates where the
relevant listing particulars can be obtained or inspected or which is issued
with the relevant listing particulars; (b) it has not made and will not make any
offer of the US$ notes which would require a prospectus to be issued under the
European Communities (Transferable Securities and Stock Exchange) Regulations
1992 of Ireland; and (c) it has complied with and will comply with all
applicable provisions of the Irish Acts, the 1984 Regulations and the Irish
Investment Intermediaries Act, 1995 (as amended) (including, without limitation,
Sections 9, 23 (including any advertising restrictions made thereunder) and 50
and will conduct itself in accordance with a code of conduct drawn up pursuant
to Section 37) with respect to anything done by it in relation to the US$ notes.
This prospectus does not and is not intended to constitute an offer to
sell or a solicitation of any offer to buy any of the US$ notes by or on behalf
of Perpetual Trustees Victoria Limited in any jurisdiction in which the offer or
solicitation is not authorized or in which the person making the offer or
solicitation is not qualified to do so or to any person to whom it is unlawful
to make an offer or solicitation in such jurisdiction.
None of Perpetual Trustees Victoria Limited, in its personal capacity
and as issuer trustee, Perpetual Trustee Company Limited, as security trustee,
Interstar Wholesale Finance Pty Limited, as servicer, The Bank of New York, as
note trustee, principal paying agent, calculation agent and
v
note registrar, the underwriters, National Australia Bank Limited, as
fixed-floating rate swap provider, the currency swap provider, or [PMI Mortgage
Insurance Ltd], [GE Capital Mortgage Insurance Corporation (Australia) Pty Ltd],
[PMI Indemnity Limited] or [GE Mortgage Insurance Pty Ltd] as mortgage insurers
accept any responsibility for any information contained in this prospectus and
none of them has separately verified the information contained herein except, in
each case, with respect to the information for which they are expressed to be
responsible under the Important Notice. No representation, warranty or
undertaking, express or implied, is made and no responsibility or liability is
accepted by any relevant party as to the accuracy or completeness of any
information contained in this prospectus (except, in each case, with respect to
the information for which they are expressed to be responsible in the Important
Notice) or any other information supplied in connection with the US$ notes or
their distribution.
Perpetual Trustees Victoria Limited, in its personal capacity and as
issuer trustee, Interstar Securitisation Management Pty Limited, as trust
manager, Interstar Wholesale Finance Pty Limited as servicer, Perpetual Trustee
Company Limited, as security trustee, The Bank of New York, as note trustee,
principal paying agent, calculation agent and note registrar, National Australia
Bank Limited, as fixed-floating rate swap provider, the currency swap provider,
[PMI Mortgage Insurance Ltd], [GE Capital Mortgage Insurance Corporation
(Australia) Pty Ltd] [PMI Indemnity Limited], [GE Mortgage Insurance Pty Ltd] or
[Home Loans Insurance Corporation] as mortgage insurers and the underwriters do
not recommend that any person should purchase any of the US$ notes and do not
accept any responsibility or make any representation as to the tax consequences
of investing in the US$ notes.
Each person receiving this prospectus acknowledges that he or she has
not relied on the entities listed in the preceding paragraph nor on any person
affiliated with any of them in connection with his or her investigation of the
accuracy of the information in this prospectus or his or her investment
decisions; acknowledges that this prospectus and any other information supplied
in connection with the US$ notes is not intended to provide the basis of any
credit or other evaluation; acknowledges that the underwriters have expressly
not undertaken to review the financial condition or affairs of the trust or any
party named in the prospectus during the life of the US$ notes; acknowledges
that the trust manager does not hold an Australian financial services license;
acknowledges that he or she should make his or her own independent investigation
of the trust and the US$ notes; and acknowledges that he or she should seek his
or her own tax, accounting and legal advice as to the consequences of investing
in any of the US$ notes.
No person has been authorized to give any information or to make any
representations other than those contained in this prospectus in connection with
the issue or sale of the US$ notes. If such information or representation is
given or received, it must not be relied upon as having been authorized by
Perpetual Trustees Victoria Limited or the underwriters.
Neither the delivery of this prospectus nor any sale made in
connection with this prospectus shall, under any circumstances, create any
implication that:
o there has been no material change in the affairs of the trust or
any party named in this prospectus since the date of this
prospectus; or
o any other information supplied in connection with the US$ notes
is correct as of any time subsequent to the date on which it is
supplied or, if different, the date indicated in the document
containing the same.
vi
Perpetual Trustees Victoria Limited's liability to make payments of
interest and principal on the notes is limited to its right of indemnity from
the assets of the trust. All claims against Perpetual Trustees Victoria Limited
in relation to the notes may only be satisfied out of the assets of the trust
and are limited in recourse to the assets of the trust.
None of the rating agencies have been involved in the preparation of
this prospectus.
NOTICE TO RESIDENTS OF THE UNITED KINGDOM
THIS DOCUMENT MAY NOT BE COMMUNICATED IN THE UNITED KINGDOM OTHER THAN
TO PERSONS AUTHORIZED TO CARRY ON A REGULATED ACTIVITY UNDER THE FINANCIAL
SERVICES AND MARKETS ACT 2000 OR OTHERWISE HAVING PROFESSIONAL EXPERIENCE IN
MATTERS RELATING TO INVESTMENTS AND QUALIFYING AS INVESTMENT PROFESSIONALS UNDER
ARTICLE 19, OR PERSONS QUALIFYING AS HIGH NET WORTH PERSONS UNDER ARTICLE 49, OF
THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2001, AS
AMENDED, OR TO ANY OTHER PERSON TO WHOM THIS DOCUMENT MAY OTHERWISE LAWFULLY BE
COMMUNICATED OR CAUSED TO BE COMMUNICATED NOR MAY ANY NOTES BE OFFERED OR SOLD
IN THE UNITED KINGDOM EXCEPT TO PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM
IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS, AS PRINCIPAL OR
AGENT, FOR THE PURPOSES OF THEIR BUSINESS OR WHO IT IS REASONABLE TO EXPECT WILL
ACQUIRE, HOLD, MANAGE OR DISPOSE OF INVESTMENTS, AS PRINCIPAL OR AGENT, FOR THE
PURPOSES OF THEIR BUSINESS OR OTHERWISE IN CIRCUMSTANCES THAT DO NOT RESULT IN
AN OFFER TO THE PUBLIC WITHIN THE MEANING OF THE PUBLIC OFFERS OF SECURITIES
REGULATIONS 1995, AS AMENDED. THIS DOCUMENT IS NOT AVAILABLE TO OTHER CATEGORIES
OF PERSONS IN THE UNITED KINGDOM AND NO ONE FALLING OUTSIDE SUCH CATEGORIES IS
ENTITLED TO RELY ON, AND MUST NOT ACT ON, ANY INFORMATION IN THIS DOCUMENT. THE
TRANSMISSION OF THIS DOCUMENT TO ANY PERSON IN THE UNITED KINGDOM OTHER THAN THE
CATEGORIES STATED ABOVE IS UNAUTHORIZED AND MAY CONTRAVENE THE FINANCIAL
SERVICES AND MARKETS ACT 2000.
vii
AUSTRALIAN DISCLAIMERS
o The notes do not represent deposits or other liabilities of
Interstar Securitisation Management Pty Limited or
associates of Interstar Securitisation Management Pty
Limited.
o The holding of the notes is subject to investment risk,
including possible delays in repayment and loss of income
and principal invested.
o None of Interstar Securitisation Management Pty Limited, any
associate of Interstar Securitisation Management Pty
Limited, Perpetual Trustees Victoria Limited, Perpetual
Trustee Company Limited, The Bank of New York, as note
trustee, principal paying agent, calculation agent and note
registrar, National Australia Bank Limited, as
fixed-floating rate swap provider, the currency swap
provider or the underwriters in any way stands behind the
capital value or the performance of the notes or the assets
of the trust except to the limited extent provided in the
transaction documents and the swap agreements for the trust.
o None of Perpetual Trustees Victoria Limited, Interstar
Securitisation Management Pty Limited, as trust manager,
Interstar Wholesale Finance Pty Limited, as a seller and as
servicer, Perpetual Trustee Company Limited, as security
trustee, The Bank of New York, as note trustee, principal
paying agent, calculation agent and note registrar, National
Australia Bank Limited, as fixed-floating rate swap
provider, the currency swap provider or any underwriter
guarantees the payment of interest or the repayment of
principal due on the notes.
o None of the obligations of Perpetual Trustees Victoria
Limited, in its capacity as trustee of the trust, are
guaranteed in any way by Interstar Securitisation Management
Pty Limited or any associate of Interstar Securitisation
Management Pty Limited or by any associate of Perpetual
Trustees Victoria Limited.
viii
[This page intentionally left blank.]
ix
- --------------------------------------------------------------------------------
SUMMARY
This summary highlights selected information from this document and
does not contain all of the information that you need to consider in making your
investment decision. This summary contains an overview of some of the concepts
and other information to aid your understanding. All of the information
contained in this summary is qualified by the more detailed explanations in
other parts of this prospectus.
PARTIES TO THE TRANSACTION
TRUST......................... Interstar Millennium Series 2005-1G Trust
ISSUER TRUSTEE................ Perpetual Trustees Victoria Limited (ABN 47 004
027 258), in its capacity as trustee of the
Trust
TRUST MANAGER................. Interstar Securitisation Management Pty Limited
(ABN 56 100 346 898), of Level 10, 101 Collins
Street, Melbourne, Victoria, 3000, telephone
(613) 8616 1600
NOTE TRUSTEE.................. The Bank of New York
SECURITY TRUSTEE.............. Perpetual Trustee Company Limited (ABN 42 000
001 007)
SERVICER...................... Interstar Wholesale Finance Pty Limited
(formerly, Interstar Securities (Australia) Pty
Limited) (ABN 72 087 271 109)
BACKUP SERVICER............... KPMG Corporate Finance (Aust) Pty Limited (ABN
43 007 363 215)
SELLER........................ Interstar Wholesale Finance Pty Limited
PRINCIPAL PAYING AGENT........ The Bank of New York
CALCULATION AGENT............. The Bank of New York
NOTE REGISTRAR................ The Bank of New York
RESIDUAL INCOME BENEFICIARY... Interstar Wholesale Finance Pty Limited
JOINT LEAD MANAGERS........... J.P. Morgan Securities Inc. and Deutsche Bank
Securities Inc.
UNDERWRITERS.................. J.P. Morgan Securities Inc., Deutsche Bank
Securities Inc., and Greenwich Capital Markets,
Inc.
MORTGAGE INSURERS............. [PMI Indemnity Limited (ABN 49 000 781 171)],
[PMI Mortgage Insurance Ltd (ABN 70 000 511
071)], [GE Capital Mortgage Insurance
Corporation (Australia) Pty Ltd (ABN 52 081 488
440)], [GE Mortgage Insurance Pty
- --------------------------------------------------------------------------------
1
- --------------------------------------------------------------------------------
Ltd (ABN 61 071 466 334)] and [Home Loans
Insurance Corporation] (ABN [___])
TITLE INSURER................. First American Title Insurance Company of
Australia Pty Limited (ABN 64 075 279 908)
FIXED-FLOATING RATE SWAP
PROVIDER...................... National Australia Bank Limited (ABN 12 004 044
937) or any other acceptable fixed-floating
rate swap provider
CURRENCY SWAP PROVIDER........ [*]
RATING AGENCIES............... Moody's Investors Service, Inc. (Moody's) and
Standard & Poor's Ratings Group (S&P)
- --------------------------------------------------------------------------------
2
- --------------------------------------------------------------------------------
STRUCTURAL DIAGRAM
---------
BORROWERS
---------
- --------------------------------------- -----------------
SELLER A$ Housing SECURITY TRUSTEE
Interstar Wholesale Finance Pty Limited Loan Payments Perpetual Trustee
- --------------------------------------- Company Limited
-----------------
------------------
COLLECTIONS BANK First ranking floating charge
National Australia over the assets of the trust
Bank Limited
------------------
- ------------------------ -------------------------------
TRUST MANAGER Equitable MORTGAGE INSURERS
Interstar Securitisation assignment of PMI Indemnity Limited
Management Pty Limited housing loans PMI Mortgage Insurance Ltd
- ------------------------ GE Capital Mortgage Insurance
Corporation (Australia) Pty Ltd
GE Mortgage Insurance Pty Ltd
-------------------------------
------------------
ISSUER TRUSTEE Payments from Mortgage
Perpetual Trustees Insurance Policies
Victoria Limited
------------------
------------------------------
----------- TITLE INSURER
SERVICER First American Title Insurance
Interstar -------------------- Company of Australia Pty
Wholesale Interstar Millennium Limited
Finance Pty Series 2005-1G Trust ------------------------------
Limited --------------------
----------- Payments from
Title Insurance
Policies
- ---------------
BACKUP -------------------------------
SERVICER RESIDUAL INCOME
KPMG Corporate Payments on the BENEFICIARY
Finance US$ notes Interstar Wholesale Finance Pty
(Australia) Pty Limited
Limited -------------------------------
- ---------------
-------------
CURRENCY SWAP
PROVIDER
[*]
-------------
- ------------------
FIXED-FLOATING
RATE SWAP PROVIDER ----------------------
National Australia PRINCIPAL PAYING AGENT
Bank Limited The Bank of New York
- ------------------ ----------------------
----------------------------
CLEARING SYSTEMS
The Depository Trust Company
Euroclear ---------
Clearstream, Luxembourg US$ NOTES
---------------------------- ---------
--------------- --------------------
US$ NOTE OWNERS NOTE TRUSTEE
--------------- The Bank of New York
--------------------
- --------------------------------------------------------------------------------
3
- --------------------------------------------------------------------------------
SUMMARY OF THE NOTES
In addition to the US$ notes, the issuer trustee will also issue Class
AB notes and Class B notes with an initial principal balance of A$[_] and A$[*],
respectively, collateralized by the same pool of housing loans as the US$ notes.
The Class AB notes and Class B notes have not been and will not be registered
under the Securities Act of 1933 and are not being offered by this prospectus
and are described herein solely for the information of investors in the Class A
notes. In addition to the US$ notes, the Class AB notes and the Class B notes,
the issuer trustee may issue Redraw notes collateralized by the same pool of
housing loans as the US$ notes, the Class AB notes and the Class B notes. The
Redraw notes, if and when issued, will not be registered under the Securities
Act of 1933, as amended, and are not being offered by this prospectus. When used
in this prospectus the term "US$ notes" will mean the Class A notes, and the
term "US$ noteholders" when used in this prospectus will mean the holders of any
Class A notes. The term "Class B notes" when used in this prospectus will mean
the Class B notes. The term "notes" when used in this prospectus will mean the
Redraw notes, the Class A notes, the Class AB notes and the Class B notes.
- --------------------------------------------------------------------------------------------------------------------
CLASS A CLASS AB CLASS B
- --------------------------------------------------------------------------------------------------------------------
Aggregate Initial Principal
Amount: US$[1,000,000,000] A$[*] A$[*]
- --------------------------------------------------------------------------------------------------------------------
% of Total: [*]% [*]% [*]%
- --------------------------------------------------------------------------------------------------------------------
Anticipated Ratings:
Moody's Aaa Aa1 Aa3
S&P AAA AAA AA-
- --------------------------------------------------------------------------------------------------------------------
Interest rate from the closing three-month LIBOR +[*]% three-month Australian three-month Australian
date up to but excluding the Bank Bill Rate + [*]% Bank Bill Rate + [*]%
step-up margin date
- --------------------------------------------------------------------------------------------------------------------
Interest rate from and three-month LIBOR + [*]% three-month Australian three-month Australian
including the step-up margin Bank Bill Rate + [*]% Bank Bill Rate + [*]%
date
- --------------------------------------------------------------------------------------------------------------------
Minimum Denominations: US$100,000 and minimum A$10,000 (with initial A$10,000 (with initial
increments of US$1,000 in minimum subscription of minimum subscription of
excess A$500,000) A$500,000)
- --------------------------------------------------------------------------------------------------------------------
Interest Accrual Method: actual/360 actual/365 actual/365
- --------------------------------------------------------------------------------------------------------------------
Payment Dates: The [10th] day or, if the The [10th] day or, if the The [10th] day or, if the
[10th] day is not a [10th] day is not a [10th] day is not a
business day, then the next business day, then the business day, then the
business day of each next business day of each next business day of each
[March], [June], [March], [June], [March], [June],
[September] and [December] [September] and [September] and
unless that day falls in [December] unless that [December] unless that
the next calendar month, in day falls in the next day falls in the next
which case the payment date calendar month, in which calendar month, in which
will be the preceding case the payment date case the payment date
business day. The first will be the preceding will be the preceding
payment date will be in [*] business day. The first business day. The first
2005. payment date will be in payment date will be in
[*] 2005. [*] 2005.
- --------------------------------------------------------------------------------------------------------------------
Clearance/Settlement: DTC/Euroclear/Clearstream, Austraclear Austraclear
Luxembourg
- --------------------------------------------------------------------------------------------------------------------
Initial Cut-Off Date:
- ------------------------------
Pricing Date:
- ------------------------------
Closing Date:
- ------------------------------
Step-Up Margin Date:
- ------------------------------
Final Maturity Date:
- ------------------------------
Pre-Funding Period:
- ------------------------------
- --------------------------------------------------------------------------------
4
STRUCTURAL OVERVIEW
The Interstar Millennium Trusts securitization program was established
pursuant to a master trust deed dated December 2, 1999 between Perpetual
Trustees Victoria Limited and Interstar Wholesale Finance Pty Limited (formerly
known as Interstar Securities (Australia) Pty Limited). The master trust deed
provides the general terms and structure for securitizations under the program.
A series notice among the issuer trustee, Interstar Wholesale Finance Pty
Limited, as seller and servicer, Interstar Securitisation Management Pty
Limited, as trust manager, The Bank of New York, as note trustee and Perpetual
Trustee Company Limited, as security trustee, will set out the specific details
of the Interstar Millennium Series 2005-1G Trust and the notes, which may vary
from the terms set forth in the master trust deed. Each securitization under the
program is a separate transaction with a separate trust. The assets of the
Interstar Millennium Series 2005-1G Trust will not be available to pay the
obligations of any other trust, and the assets of other trusts will not be
available to pay the obligations of Perpetual Trustees Victoria Limited as
trustee of the Interstar Millennium Series 2005-1G Trust. See "Description of
the Trust".
The Interstar Millennium Series 2005-1G Trust involves the
securitization of housing loans originated by Interstar Wholesale Finance Pty
Limited in the name of Perpetual Trustees Victoria Limited, as trustee of a
number of warehouse trusts, and secured by first ranking mortgages over
residential property located in Australia. Interstar Wholesale Finance Pty
Limited, as beneficiary of the relevant warehouse trusts, will equitably assign
its beneficial interest in the housing loans to Perpetual Trustees Victoria
Limited as trustee of the trust, which will in turn issue the notes to fund the
acquisition of the housing loans.
The issuer trustee will grant a first ranking floating charge over all
assets which are subject to the trust under the security trust deed in favor of
Perpetual Trustee Company Limited, as security trustee, to secure the issuer
trustee's payment obligations to the noteholders and its other creditors. A
first ranking floating charge is a first priority security interest over a class
of assets, but does not attach to specific assets unless or until it
crystallizes, which means it becomes a fixed charge. The charge will crystallize
if, among other events, an event of default occurs under the security trust
deed. Once the floating charge crystallizes, the issuer trustee will no longer
be able to dispose of or create interests in the assets of the trust without the
consent of the security trustee. For a description of floating charges and
crystallization see "Description of the Transaction Documents -- The Security
Trust Deed -- Nature of the Charge".
Payments of interest and principal on the notes will come only from
the housing loans and other assets of the trust. The assets of the parties to
the transaction are not available to meet the payments of interest and principal
on the notes. If there are losses on the housing loans, the trust may not have
sufficient assets to repay the notes.
CREDIT ENHANCEMENTS
Payments of interest and principal on the US$ notes will be supported
by the following forms of credit enhancement.
SUBORDINATION
The Class AB and Class B notes will be subordinated to the Redraw
notes and the Class A notes in their right to receive interest payments. If the
threshold requirements are satisfied, principal payments will be allocated
rateably between the Class A notes, the Class AB notes and the Class B notes
based on their principal balances. If the threshold requirements are satisfied
prior to the third anniversary of the issue date, the Class AB notes and the
Class B notes will be entitled only to 50% of their pro rata allocation, with
the balance applied to pay principal on the
5
Class A notes. On or after the third anniversary of the issue date, if the
threshold requirements are satisfied, the Class AB notes and the Class B notes
will be entitled to 100% of their pro rata allocation. However, if the threshold
requirements are not satisfied, the Class AB notes and the Class B notes will be
subordinated to the Redraw notes and the Class A notes in their right to receive
principal payments. No Redraw notes or Class A notes will be issued unless all
of the Class AB notes and the Class B notes are issued.
The credit support provided by the Class B notes and Class AB notes to
the Class A notes and Redraw notes is intended to enhance the likelihood that
the Class A notes and Redraw notes will receive expected quarterly payments of
interest and principal. The credit support provided by the Class B notes to the
Class AB notes is intended to enhance the likelihood that the Class AB notes
will receive expected quarterly payments of interest and principal. The
following chart describes the initial credit support provided by the Class B
notes to the Class AB notes, and by the Class B notes and Class AB notes to the
Class A notes:
INITIAL SUPPORT
CLASS CREDIT SUPPORT PERCENTAGE
- -------------- ------------------ ---------------
Class A notes Class AB notes and [*]%
Class B notes
Class AB notes Class B notes [*]%
The initial support percentages in the preceding table are the related
aggregate initial principal balances of (i) the Class AB notes and Class B notes
as a percentage of the initial principal balance of all of the notes on the
closing date and (ii) the Class B notes as a percentage of the initial principal
balance of all of the notes on the closing date.
The Class B notes will be subordinated to the Class AB notes in their
right to receive interest payments. If the threshold requirements are satisfied,
principal payments will be allocated rateably between the Class A notes, the
Class AB notes and the Class B notes based on their principal balances. If the
threshold requirements are satisfied prior to the third anniversary of the issue
date, the Class AB notes and the Class B notes will be entitled only to 50% of
their pro rata allocation, with the balance applied to pay principal on the
Class A notes. On or after the third anniversary of the issue date, if the
threshold requirements are satisfied, the Class AB notes and the Class B notes
will be entitled to 100% of their pro rata allocation. However, if the threshold
requirements are not satisfied, the Class B notes will be subordinated to the
Class AB notes in their right to receive principal payments. No Class AB notes
will be issued unless all of the Class B notes are issued.
In certain circumstances, the issuer trustee may issue Redraw notes.
See "-- Redraws" and "Interstar Residential Loan Program -- Special Features of
the Housing Loans -- Redraws".
If issued, Redraw notes will rank equally with the Class A notes in
their right to receive interest payments and, prior to the occurrence of an
event of default and enforcement of the charge under the security trust deed,
will rank senior in priority to the Class A notes, in their right to receive
principal payments. Following the occurrence of an event of default and
enforcement of the charge under the security trust deed, the Redraw notes will
rank equally with the Class A notes in their right to receive both interest and
principal payments.
To the extent that there is a principal loss on a housing loan not
covered by a mortgage insurance policy or a title insurance policy or by the
application of excess income, the amount of such loss will be borne first by the
Class B notes before it is borne by the Redraw notes, the Class A notes and the
Class AB notes and then by the Class AB notes before it is borne by the Redraw
notes and Class A notes. See "Description of the US$ Notes -- Charge Offs".
6
MORTGAGE INSURANCE POLICIES
Mortgage insurance policies issued by, or transferred to, [PMI
Indemnity Limited],[GE Capital Mortgage Insurance Corporation (Australia) Pty
Ltd], [PMI Mortgage Insurance Ltd] and [GE Mortgage Insurance Pty Ltd] will
provide full coverage for the principal balance, and interest, outstanding on
each housing loan irrespective of its LVR. The mortgage insurance policies are
subject to some exclusions from coverage and rights of termination which are
described in "The Mortgage Insurance Policies".
TITLE INSURANCE POLICIES
Some housing loans may be covered by title insurance policies issued
by First American Title Insurance Company of Australia Pty Limited. Title
insurance will provide 100% coverage for losses arising as a result of a
relevant mortgage being subject to a prior encumbrance, not being validly
registered or being invalid or unenforceable. The title insurance policies are
subject to some exclusions from coverage and rights of termination which are
described in "The Title Insurance Policies".
LIQUIDITY ENHANCEMENT
To cover possible liquidity shortfalls in the payment obligations of
the trust, the issuer trustee will have liquidity enhancement in the form of the
liquidity reserve, principal draws and mortgage insurance.
LIQUIDITY RESERVE
To enable the issuer trustee to make timely payments of interest on
the notes and other trust expenses payable from interest collections on the
housing loans, the trust manager is required to ensure that the trust has an
amount equal to at least one percent of the Australian dollar equivalent of the
outstanding principal amount of the notes invested in highly-rated, short-term
investments. These liquid authorized investments are available to make interest
payments on the notes and to pay primary expenses of the trust if there are not
enough interest collections from the housing loans available to make those
payments.
Any liquid authorized investments that are sold and used to make
interest payments on the notes or to pay other expenses of the trust will be
replenished on future payment dates from excess income, to the extent available.
PRINCIPAL DRAWS
Principal collections on the housing loans will be made available to
make interest payments on the notes and to pay primary expenses of the trust if
there are not enough interest collections from the housing loans and liquid
authorized investments to make those payments.
Any principal collections that are used to make interest payments on
the notes or to pay other expenses of the trust will be replenished on future
payment dates from excess income, to the extent available.
MORTGAGE INSURANCE
Each mortgage insurance policy includes timely payment cover for
losses as a result of a borrower under a housing loan failing to pay all or part
of a payment when due. This timely payment cover comprises at least twelve
months of missed payment installments for each housing loan.
REDRAWS
Under the terms of each variable rate housing loan, a borrower may, at
the absolute discretion of the servicer, redraw previously prepaid principal.
Provided the loan is not in arrears at the time of the request for a redraw, a
borrower may redraw an amount equal to the difference between the scheduled
principal balance of the loan and the current principal balance of the loan. The
issuer trustee will be reimbursed from
7
principal collections on the housing loans for any redraws it advances to
borrowers. The amount that the issuer trustee may advance to a borrower in
respect of a particular housing loan from time to time is limited to the
difference between the scheduled principal balance of the loan and the current
principal balance of the loan and may only be advanced in the circumstances
described under "Interstar Residential Loan Program -- Special Features of the
Housing Loans -- Redraws".
Any redraws of previously prepaid principal will be funded first from
principal collections on the housing loans. If, on a payment date, principal
collections on the housing loans for the collection period before that payment
date are insufficient to fund redraws for that collection period, then the trust
manager may give the issuer trustee a direction to, and the issuer trustee must,
issue a series of Redraw notes. The trust manager must not give this direction
unless it has received written confirmation from each rating agency that the
issue of the Redraw notes would not result in a downgrade or withdrawal of a
rating of any note then outstanding. See "Interstar Residential Loan Program --
Special Features of the Housing Loans".
HEDGING ARRANGEMENTS
To hedge its interest rate and currency exposures, the issuer trustee
will enter into the following hedging arrangements:
o fixed-floating rate swaps to hedge the basis risk between the
interest rate on the housing loans which are subject to a fixed
rate of interest and the floating rate obligations of the trust,
which includes the issuer trustee's interest payments to the
currency swap provider under the currency swaps. If any
fixed-rate housing loans are included in or added to the housing
loan pool or if a borrower converts a floating rate loan to a
fixed-rate loan, a fixed-floating rate swap will be entered into
by the issuer trustee; and
o the US$ currency swap, in respect of the Class A notes, to hedge
the currency risk between, on one hand, the collections on the
housing loans and the amounts received by the issuer trustee
under any fixed-floating rate swaps, which are denominated in
Australian dollars, and, on the other hand, the obligation of the
trust to pay interest and principal on the Class A notes, which
are denominated in U.S. dollars, together with the basis risk
between, on one hand, amounts in respect of interest calculated
under the floating rate housing loans or under any fixed-floating
rate swaps by reference to the Australian bank bill rate and, on
the other hand, amounts in respect of interest calculated under
the Class A notes by reference to LIBOR.
OPTIONAL REDEMPTION
The trust manager will have the option to direct the issuer trustee to
redeem all of the notes on any payment date when the total outstanding principal
amount of the notes is equal to or less than 10% of the total initial principal
amount of the notes. If the trust manager directs the issuer trustee to redeem
the notes, the issuer trustee must so redeem the notes and the noteholders will
receive a payment equal to the outstanding principal amount of the notes plus
any outstanding interest on the notes. The trust manager will also have the
option to direct the issuer trustee to, and upon being so directed the issuer
trustee must -- subject to ratings confirmation -- redeem all of a class of
notes on or after the step-up margin date. The issuer trustee must not redeem
the Class B notes unless the Redraw notes, the
8
Class A notes and the Class AB notes have been repaid in full or all notes are
to be redeemed and must not redeem the Class AB notes unless the Redraw notes
and the Class A notes have been repaid in full or all notes are to be redeemed.
If the issuer trustee so redeems a class of notes, the relevant noteholders will
receive a payment equal to the outstanding principal amount of the class of
notes plus any outstanding interest on the class of notes.
If the trust manager satisfies the issuer trustee and the note trustee
prior to giving notice to the noteholders that on the next payment date the
currency swap provider would be required to deduct or withhold from any payment
under a currency swap any amount on account of any taxes, duties, assessments or
governmental charges, then the issuer trustee must, when so directed by the
trust manager, in its sole discretion, redeem all of the notes at their
outstanding principal amount, together with accrued interest.
PREFUNDING
If on the closing date the total aggregate purchase price for the
housing loans is less than the amount received in Australian dollars by the
issuer trustee from the proceeds of the issue of the notes, the issuer trustee
will retain the difference between the two amounts, to the extent it is not
invested in liquid authorized investments, in the prefunding account. The
balance of the prefunding account must not at any time exceed the Australian
dollar equivalent of US$[*] or 25% of the sum of the Australian dollar
equivalent of the initial outstanding principal amount of the US$ notes and the
initial outstanding principal amount of the Class AB notes and the Class B notes
as of the closing date. See "Description of the Assets of the Trust --
Acquisition of Housing Loans after the Closing Date".
9
THE HOUSING LOAN POOL
The housing loan pool will consist of residential housing loans
bearing either a fixed rate or variable rate of interest, secured by first
ranking mortgages on owner occupied and non-owner occupied residential
properties. The housing loans will have original terms to stated maturity of no
more than 30 years. The pool of housing loans has the following characteristics:
SELECTED HOUSING LOAN POOL DATA AS OF
CLOSE OF BUSINESS ON APRIL 1, 2005
Housing Loan Pool Size.................................. A$1,327,685,362
Total Number of Housing Loans .......................... 7,243
Average Housing Loan Balance............................ A$ 183,306.00
Maximum Housing Loan Balance............................ A$ 1,375,266.75
Minimum Housing Loan Balance............................ $ 0
Total Valuation of the Properties....................... A$2,004,356,639
Maximum Remaining Term to Maturity in months ........... 355
Weighted Average Remaining Term to Maturity in months... 335.86
Weighted Average Seasoning in months ................... 9.82
Weighted Average Original Loan-to-Value Ratio .......... 76.64%
Weighted Average Current Loan-to-Value Ratio ........... 73.28%
Maximum Current Loan-to-Value Ratio .................... 95.00%
The original loan-to-value ratio of a housing loan is calculated by
comparing the initial principal amount of the housing loan to the most recent
valuation of the property that is currently securing the housing loan. Thus, if
collateral has been released from the mortgage securing a housing loan or if the
property securing the housing loan has been revalued, the original loan-to-value
ratio may not reflect the actual loan-to-value ratio at the origination of that
housing loan. The current loan-to-value ratio of a housing loan is calculated by
comparing the current principal amount of the housing loan to the most recent
valuation of the property that is currently securing the housing loan.
Before the issuance of the notes, housing loans may be added to or
removed from the housing loan pool. New housing loans may also be substituted
for housing loans that are removed from the housing loan pool. This addition,
removal or substitution of housing loans may result in changes in the housing
loan pool characteristics shown in the preceding table and could affect the
weighted average lives and yields of the notes. The seller will not add, remove
or substitute any housing loans prior to the closing date if this would result
in a change of more than 5% in any of the characteristics of the pool of housing
loans described in the above table, unless a revised prospectus is delivered to
prospective investors.
10
WITHHOLDING TAX
Payments of principal and interest on the US$ notes will be reduced by
any applicable withholding taxes assessed on the issuer trustee or any paying
agent and could be reduced if any withholding taxes are assessed in respect of
payments under the housing loans. Neither the issuer trustee nor any paying
agent nor any borrower is obliged to pay any additional amounts to the US$
noteholders to cover any withholding taxes.
If the Commonwealth of Australia or any other applicable jurisdiction
requires the withholding of amounts:
o from payments of principal or interest to the noteholders;
o from payments by the issuer trustee to the currency swap provider
under a currency swap; or
o from payments by borrowers under the housing loans,
due to taxes, duties, assessments or other governmental charges, the issuer
trustee must, when so directed by noteholders representing at least 75% of the
outstanding principal amount of the notes and provided the issuer trustee will
be in a position to discharge all of its liabilities in respect of the notes,
redeem all of the notes. See "Description of the US$ Notes -- Redemption of the
Notes for Taxation or Other Reasons".
U.S. TAX STATUS
In the opinion of Mayer, Brown, Rowe & Maw LLP, special U.S. tax
counsel to the trust manager, the US$ notes will be characterized as debt for
U.S. federal income tax purposes. Each US$ noteholder, by acceptance of a US$
note, agrees to treat the notes as indebtedness. See "United States Federal
Income Tax Matters".
AUSTRALIAN TAX STATUS
The US$ notes should be characterized as debt for Australian tax
purposes. See "Australian Tax Matters".
LEGAL INVESTMENT
The US$ notes will not constitute "mortgage-related securities" for
the purposes of the Secondary Mortgage Market Enhancement Act of 1984. No
representation is made as to whether the notes constitute legal investments
under any applicable statute, law, rule, regulation or order for any entity
whose investment activities are subject to investment laws and regulations or to
review by regulatory authorities. You are urged to consult with your own legal
advisors concerning the status of the US$ notes as legal investments for you.
See "Legal Investment Considerations".
ERISA CONSIDERATIONS
Subject to the considerations described below in "ERISA
Considerations", the US$ notes will be eligible for purchase by certain
retirement plans subject to the Employee Retirement Income Security Act of 1974,
as amended. Investors should consult their counsel with respect to the
consequences under ERISA and the United States Internal Revenue Code of 1986, as
amended, of the plan's acquisition and ownership of the US$ notes. See "ERISA
Considerations."
BOOK-ENTRY REGISTRATION
Persons acquiring beneficial ownership interests in the US$ notes will
hold their US$ notes through The Depository Trust Company in the United States
or Clearstream, Luxembourg or Euroclear outside of the United States. Transfers
within The Depository Trust Company, Clearstream, Luxembourg or Euroclear will
be in accordance with the usual rules and operating procedures of the relevant
system.
11
Crossmarket transfers between persons holding directly or indirectly through The
Depository Trust Company, on the one hand, and persons holding directly or
indirectly through Clearstream, Luxembourg or Euroclear, on the other hand, will
take place in The Depository Trust Company through the relevant depositories of
Clearstream, Luxembourg or Euroclear.
COLLECTIONS
The issuer trustee will receive for each collection period the
following amounts, which are known as collections:
o payments of interest, principal and fees, including prepayments
of principal under the housing loans;
o proceeds from the enforcement of the housing loans and registered
mortgages relating to those housing loans;
o amounts received under any fixed-floating rate swap and the
currency swaps;
o amounts received under mortgage insurance policies and title
insurance policies;
o income in respect of authorized investments of the trust; and
o interest on amounts in the collection account.
Collections will be allocated between income and mortgage principal
repayments. Collections attributable to interest and fees are known as income.
The collections attributable to principal are known as mortgage principal
repayments.
Income is normally used to pay fees and expenses of the issuer trustee
in connection with the trust, together with interest on the notes. Mortgage
principal repayments are normally used to pay principal on the notes. However,
if there is not enough income to pay senior fees and expenses of the issuer
trustee and interest on the notes for a period, the trust manager will direct
the issuer trustee to apply liquid authorized investments then mortgage
principal repayments to pay such unpaid fees, expenses and interest. Any liquid
authorized investments and mortgage principal repayments used to make interest
payments on the notes or to pay senior fees and expenses of the issuer trustee
will be replenished on future payment dates from excess income, to the extent
available. If there is excess income after payment of senior fees and expenses
of the issuer trustee, interest on the notes and replenishment of liquid
authorized investments and mortgage principal repayments such excess income will
first reimburse any charge-offs and then any carryover charge-offs on the
housing loans. Any remaining excess income will be distributed to the residual
income beneficiary at the end of each collection period.
INTEREST ON THE NOTES
Interest on the notes will be payable quarterly in arrears on each
payment date. Amounts available to make interest payments on the notes will be
allocated to pay interest on the Redraw notes and the Class A notes before any
allocation is made to pay interest on the Class AB notes and the Class B notes.
Amounts available to make interest payments on the notes will be allocated to
pay interest on the Class AB notes before any allocation is made to pay interest
on the Class B notes. Amounts available to make interest payments on the Redraw
notes and the Class A notes will be allocated rateably between the Redraw notes
and the Class A notes based on the amount of Australian dollar interest owed, in
relation to the Redraw notes, or related swap amounts, in relation to the Class
A notes. Interest on each class of notes is calculated for each interest period
at the note's interest rate:
12
o on the outstanding principal amount of that note at the beginning
of that interest period, after giving effect to any payments of
principal with respect to that note on that day; and
o on the basis of the actual number of days in that interest period
and a year of 360 days for the US$ notes, or 365 days for the
Redraw notes, the Class AB notes and the Class B notes.
PRINCIPAL ON THE NOTES
Principal on the notes will be payable on each payment date. On each
payment date prior to the enforcement of the charge under the security trust
deed, principal will be paid first on the Redraw notes, if any have been issued,
until the Redraw notes have been redeemed in full. If the threshold requirements
have been met, principal payments will then be allocated pro rata among the
Class A notes, the Class AB notes and the Class B notes based on their principal
balances. If the threshold requirements are satisfied prior to the third
anniversary of the issue date, the Class AB notes and the Class B notes will be
entitled only to 50% of their pro rata allocation, with the balance applied to
pay principal on the Class A notes. On or after the third anniversary of the
issue date, if the threshold requirements are satisfied, the Class AB notes and
the Class B notes will be entitled to 100% of their pro rata allocation. If the
threshold requirements have not been met, principal payments will then be paid
first pro rata among the Class A notes based on their principal balances until
such time as all the Class A notes have been redeemed in full, second pro rata
among the Class AB notes based on their principal balances until such time as
all the Class AB notes have been redeemed in full, and third pro rata among the
Class B notes based on their principal balances until such time as all the Class
B notes have been redeemed in full. If the security trust deed is enforced after
an event of default, the proceeds from the enforcement will be distributed pro
rata among all of the Redraw notes and the Class A notes prior to any
distributions to the Class AB notes or Class B notes and will be distributed pro
rata among all of the Class AB notes prior to any distributions to the Class B
notes.
ALLOCATION OF CASH FLOWS
On each payment date, the issuer trustee will repay principal and
interest to each noteholder to the extent that there are collections received
for those payments. The charts on the next two pages summarize the flow of
payments.
13
DISTRIBUTION OF INCOME
ON EACH PAYMENT DATE
- --------------------------------------------------------------------------------
Pay to the seller the Accrued Interest Adjustment
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pay any taxes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pay pro rata:
o the issuer trustee's fees
o any fees payable to the note trustee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pay pro rata:
o the fees payable pro rata to the paying agents
o any fees payable to the calculation agent
o any fees payable to the note registrar
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pay the expenses of the trust - other than any fees payable to the issuer
trustee, the note trustee, the paying agents, the calculation agent, the note
registrar, the servicer and the trust manager - in relation to the collection
period
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pay the expenses of the trust - other than any fees payable to the issuer
trustee, the note trustee, the paying agents, the calculation agent, the note
registrar, the servicer and the trust manager - which the trust manager or the
issuer reasonably anticipates will be incurred prior to the next payment date
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pay the expenses of the trust - other than any fees payable to the issuer
trustee, the note trustee, the paying agents, the calculation agent, the note
registrar, the servicer and the trust manager - not covered above which have
already been incurred prior to that payment date but which have not by the two
boxes previously been paid or reimbursed
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pay pro rata the trust manager's fee and the servicer's fee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pay pro rata:
o any amounts payable to the fixed-floating rate swap provider under any
fixed-floating rate swaps other than any break costs in respect of the
termination of the fixed-floating rate swap
o any interest for the interest period ending on that payment date to the
Redraw noteholders
o (1) the Class A A$ Interest Amount for that payment date to the currency
swap provider and the reciprocal payment by the currency swap provider is
thereafter to be applied towards payment of interest on the Class A notes,
including interest due but unpaid from any previous payment date or (2) if
the Class A currency swap is terminated an A$ amount that the trust manager
determines in good faith to be applied on that payment date in order to
enable the issuer trustee to meet its obligations to pay interest on the
Class A notes to the note trustee for purchase of U.S. dollars at the spot
exchange rate to be applied towards payment of interest on the Class A
notes on that payment date, including interest due but unpaid from any
previous payment date
o to the currency swap provider any break costs payable under the Class A
currency swap, other than in respect of the termination of the Class A
currency swap where the currency swap provider is the defaulting party
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pay any interest for the interest period ending on that payment date to the
Class AB noteholders
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pay any interest for the interest period ending on that payment date, including
any past due interest, to the Class B noteholders
- --------------------------------------------------------------------------------
14
DISTRIBUTION OF INCOME ON
EACH PAYMENT DATE (CONTINUED)
- --------------------------------------------------------------------------------
Apply as Mortgage Principal Repayments amounts previously used from Liquid
Authorized Investments and Mortgage Principal Repayments to make up any Income
Shortfalls to the extent such amount has not been previously repaid
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Reduce the Aggregate Principal Loss Amount in relation to the collection period
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Reduce the total amount of any Carryover Charge-offs
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pay pro rata break costs to:
o the fixed-floating rate swap provider
o the currency swap provider in respect of the termination of the currency
swaps where the currency swap provider is the defaulting party
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pay fees payable to the seller
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pay pro rata the balance to each holder of a residual income unit
- --------------------------------------------------------------------------------
15
DISTRIBUTION OF MORTGAGE PRINCIPAL REPAYMENTS, LIQUID AUTHORIZED
INVESTMENTS AND RECOVERY AMOUNTS ON EACH PAYMENT DATE
- --------------------------------------------------------------------------------
Apply for liquidity purposes in replenishing liquid authorized investments up to
the prescribed minimum level, in funding redraws or funding advances to
borrowers under the housing loans which are line of credit loans
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Apply first liquid authorized investments and then mortgage principal repayments
to Available Income to make up any Income Shortfall
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Replenish liquid authorized investments until the value of liquid authorized
investments equals the prescribed minimum level
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Payments of principal on the Redraw notes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If the Threshold Requirements are satisfied, pro rata:
o (A) to pay to (1) prior to the termination of the Class A currency swap,
the currency swap provider the Class A A$ Equivalent of the Principal
Amount of the Class A notes and the reciprocal payment by the currency swap
provider is thereafter to be applied towards payment of the Principal
Amount of the Class A notes on that payment date or (2) if the Class A
currency swap has been terminated, the note trustee for purchase of U.S.
dollars at the spot exchange rate to be applied in repaying principal on
the Class A notes on that payment date, in each case until such time as all
of the Class A notes have been redeemed in full;
o (B) to pay to the Class AB noteholders in payment of the Principal Amount
of the Class AB notes until such time as the Class AB notes have been
redeemed in full; and
o (C) to pay to the Class B noteholders in payment of the Principal Amount of
the Class B notes until such time as all Class B notes have been redeemed
in full;
provided that:
o (D) if the Threshold Requirements are satisfied on any payment date prior
to the third anniversary of the closing date, the issuer trustee will pay
on that payment date under each of sub-paragraphs (B) and (C) above 50% of
the amount that would otherwise have been payable if not for this
sub-paragraph (D), and will pay the balance of the amount otherwise so
payable in accordance with sub-paragraph (A). On or after the third
anniversary of the closing date, if the Threshold Requirements are
satisfied, the issuer trustee will pay 100% of the amount payable under
each of sub-paragraphs (B) and (C) above; and
o (E) each such amount in sub-paragraphs (B) and (C) above shall only be
distributed to the extent that such distribution will not result in a
breach of the Threshold Requirements; or
If the Threshold Requirements are not satisfied:
o first:
o to pay to (1) prior to the termination of the Class A currency swap, the
currency swap provider the Class A A$ Equivalent of the Principal Amount of
the Class A notes and the reciprocal payment by the currency swap provider
is thereafter to be applied towards payment of the Principal Amount of the
Class A notes on that payment date or (2) if the Class A currency swap has
been terminated, the note trustee for purchase of U.S. dollars at the spot
exchange rate to be applied in repaying principal on the Class A notes on
that payment date, in each case until such time as all Class A notes have
been redeemed in full;
o second:
o Pay to the Class AB noteholders in payment of the Principal Amount of the
Class AB notes until such time as all Class AB notes have been redeemed in
full;
o third, pro rata:
o Pay to the Class B noteholders in payment of the Principal Amount of the
Class B notes until such time as all Class B notes have been redeemed in
full.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Payment as a distribution to the holder of the residual capital unit as to A$10,
and the remaining balance pro rata to each holder of a residual income unit.
- --------------------------------------------------------------------------------
16
RISK FACTORS
The US$ notes are complex securities issued by a foreign entity and
secured by property located in a foreign jurisdiction. You should consider the
following risk factors in deciding whether to purchase any US$ notes. There may
be other unforeseen reasons why you might not receive principal or interest on
your US$ notes. You should also read the detailed information set out elsewhere
in the prospectus.
THE NOTES WILL BE PAID ONLY o The notes are debt obligations of the
FROM THE ASSETS OF THE TRUST issuer trustee only in its capacity as
trustee of the trust. The notes do not
represent an interest in or obligation of
any of the other parties to the
transaction. The assets of the trust will
be the sole source of payments on the
notes. The issuer trustee's other assets
will only be available to make payments on
the notes if the issuer trustee is
negligent or commits fraud or a wilful
default. Therefore, if the assets of the
trust are insufficient to pay the interest
and principal on your notes when due,
there will be no other source from which
to receive these payments and you may not
get back your entire investment or the
yield you expected to receive.
THERE IS NO WAY TO PREDICT THE o The rate of principal and interest
ACTUAL RATE AND TIMING OF payments on pools of housing loans varies
PAYMENTS ON THE HOUSING LOANS among pools, and is influenced by a
variety of economic, demographic, social,
tax, legal and other factors, including
prevailing market interest rates for
housing loans and the particular terms of
the housing loans. Australian housing
loans have features and options that are
different from housing loans in the United
States, and thus will have different rates
and timing of payments from housing loans
in the United States. There is no
guarantee as to the actual rate of
prepayment on the housing loans, or that
the actual rate of prepayments will
conform to any model described in this
prospectus. The rate and timing of
principal and interest payments on the
housing loans and the ability to redraw
principal on the housing loans will affect
the rate and timing of payments of
principal and interest on your notes. The
performance of relevant counterparties
under each mortgage insurance policy, each
title insurance policy, any fixed-floating
rate swap and the currency swaps will also
have a key impact on such payments in
terms of both the timeliness of such
payments and the amount of such payments.
Unexpected prepayment rates could have the
following negative effects:
17
o if you bought your notes for more
than their face amount, the yield on
your notes will drop if principal
payments occur at a faster rate than
you expect; or
o if you bought your notes for less
than their face amount, the yield on
your notes will drop if principal
payments occur at a slower rate than
you expect.
LOSSES AND DELINQUENT PAYMENTS o If borrowers fail to make payments of
ON THE HOUSING LOANS MAY interest and principal under the housing
AFFECT THE RETURN ON YOUR loans when due and the credit enhancements
NOTES described in this prospectus are not
enough to protect your notes from the
borrowers' failure to pay, then the issuer
trustee may not have enough funds to make
full payments of interest and principal
due on your notes. Consequently, the yield
on your notes could be lower than you
expect and you could suffer losses.
ENFORCEMENT ON THE HOUSING o Substantial delays could be encountered in
LOANS MAY CAUSE DELAYS IN connection with the liquidation of a
PAYMENT AND LOSSES housing loan, which may lead to shortfalls
in payments to you to the extent those
shortfalls are not covered by excess
income, a mortgage insurance policy or
title insurance policy or if the relevant
mortgage insurer or title insurer fails to
perform its obligations under the relevant
mortgage insurance policy or title
insurance policy.
o Further, enforcement expenses such as
legal fees, real estate taxes and
maintenance and preservation expenses, to
the extent not covered by a mortgage
insurance policy, a title insurance policy
or excess income, will reduce the net
amounts recoverable by the issuer trustee
from an enforced housing loan or mortgage.
If the proceeds of the sale of a mortgaged
property, net of these expenses, are less
than the amount due under the related
housing loan, the issuer trustee may not
have enough funds to make full payments of
interest and principal due to you, unless
the difference is covered under a mortgage
insurance policy or a title insurance
policy or by excess income. In addition,
even if these risks are covered by a
mortgage insurance policy or title
insurance policy there is no guarantee
that the mortgage insurer or title insurer
will promptly make any payment under any
mortgage insurance policy or title
insurance policy or that the mortgage
insurer or title insurer will have the
necessary financial capacity to make any
such payment at the relevant time.
18
CERTAIN PROVISIONS OF THE o The liability of a mortgage insurer is
MORTGAGE INSURANCE POLICIES governed by the terms of the relevant
MAY AFFECT THE RETURN ON YOUR mortgage issuance policy, which contains
NOTES certain exclusions that may allow that
mortgage insurer to reduce a claim or
terminate mortgage insurance cover in
respect of a housing loan in certain
circumstances. See "The Mortgage Insurance
Policies". Any such reduction or
termination may affect the ability of the
issuer trustee to pay you principal and
interest in full.
CERTAIN PROVISIONS OF THE o The liability of the title insurer is
TITLE INSURANCE POLICIES MAY governed by the terms of the title
AFFECT THE RETURN ON YOUR insurance policy, which contains certain
NOTES exclusions which may allow the title
insurer to reduce a claim or not provide
title insurance policy cover in respect of
a relevant mortgage relating to a housing
loan. See "The Title Insurance Policies".
Any such reduction or termination may
affect the ability of the issuer trustee
to recover all moneys secured by the
relevant mortgage and thereby affect the
ability of the issuer trustee to pay you
principal and interest in full.
THE SUBORDINATION OF THE CLASS o The amount of credit enhancement provided
B NOTES AND THE CLASS AB NOTES through the subordination of the Class B
PROVIDES ONLY LIMITED notes and the Class AB notes to the Redraw
PROTECTION AGAINST LOSSES ON notes and the Class A notes is limited and
THE REDRAW NOTES AND THE CLASS could be depleted prior to the payment in
A NOTES full of the Redraw notes and the Class A
notes. If principal losses incurred by the
trust exceed the principal amount of the
Class B notes and the Class AB notes, you
may suffer losses on your Class A notes.
THE SUBORDINATION OF THE CLASS o The amount of credit enhancement provided
B NOTES PROVIDES ONLY LIMITED through the subordination of the Class B
PROTECTION AGAINST LOSSES ON notes to the Class AB notes is limited and
THE CLASS AB NOTES could be depleted prior to the payment in
full of the Class AB notes. If principal
losses incurred by the trust exceed the
principal amount of the Class B notes, you
may suffer losses on your Class AB notes.
YOU MAY NOT BE ABLE TO RESELL o The underwriters are not required to
YOUR NOTES assist you in reselling your notes. A
secondary market for your notes may not
develop. If a secondary market does
develop, it might not continue or might
not be sufficiently liquid to allow you to
resell any of your notes readily or at the
price you desire. The market value of your
notes is likely to fluctuate, which could
result in significant losses to you.
THE TERMINATION OF ANY OF THE o The issuer trustee will exchange the
SWAPS MAY SUBJECT YOU TO interest payments from any fixed rate
LOSSES FROM INTEREST RATE OR housing loans for variable rate payments
CURRENCY FLUCTUATIONS based upon the three-month Australian bank
bill rate. If a fixed-floating rate swap
is terminated or the fixed-floating rate
swap provider
19
fails to perform its obligations, you will
be exposed to the risk that the floating
rate of interest payable with respect to
the notes will be greater than the
discretionary fixed rate set by the
servicer on the fixed rate housing loans,
which may lead to losses to you. See
"Description of the US$ Notes -- Fixed-
Floating Rate Swaps" below.
o The issuer trustee will receive payments
from the borrowers on the housing loans
and the fixed-floating rate swap provider
in Australian dollars-- calculated, in the
case of payments by the fixed-floating
rate swap provider, by reference to the
Australian bank bill rate-- and make
payments to you in U.S. dollars,
calculated, in the case of payments of
interest, by reference to LIBOR. Under the
Class A currency swap, the currency swap
provider will exchange Australian dollar
receipts for U.S. dollar payments, and in
the case of interest, amounts calculated
by reference to the Australian bank bill
rate for amounts calculated by reference
to LIBOR. If the currency swap provider
fails to perform its obligations or the
Class A currency swap is terminated, the
issuer trustee will have to exchange its
Australian dollars for U.S. dollars, and
its Australian bank bill rate obligations
for LIBOR obligations, at a relevant spot
exchange rate that may not provide
sufficient U.S. dollars to make payments
to you in full.
PREPAYMENTS DURING A o If a prepayment is received on a housing
COLLECTION PERIOD MAY RESULT loan during a collection period, interest
IN YOU NOT RECEIVING YOUR FULL on the housing loan will cease to accrue
INTEREST PAYMENTS on that portion of the housing loan that
has been prepaid, starting on the date of
prepayment. The amount prepaid will be
invested in investments that may earn a
rate of interest lower than that paid on
the housing loan. If it is less, the
issuer trustee may not have sufficient
funds to pay the full amount of interest
due on the next payment date.
THE PROCEEDS FROM THE o If the security trustee enforces the
ENFORCEMENT OF THE SECURITY security interest over the assets of the
TRUST DEED MAY BE INSUFFICIENT trust after an event of default under the
TO PAY AMOUNTS DUE TO YOU security trust deed, there is no assurance
that the market value of the assets of the
trust will be equal to or greater than the
outstanding principal and interest due on
the notes, or that the security trustee
will be able to realize the full value of
the assets of the trust. The issuer
trustee, the security trustee, the note
trustee, the swap providers and other
service providers will generally be
entitled to receive the proceeds of any
sale of the assets of the trust, to the
extent they are owed fees and expenses,
before you.
20
Consequently, the proceeds from the sale
of the assets of the trust after an event
of default under the security trust deed
may be insufficient to pay you principal
and interest in full.
IF THE TRUST MANAGER DIRECTS o If the trust manager directs the issuer
THE ISSUER TRUSTEE TO REDEEM trustee to redeem the notes early as
THE NOTES EARLY, THE YIELD ON described in "Description of the US$ Notes
YOUR NOTES MAY BE LOWER THAN -- Optional Redemption of the Notes", the
EXPECTED purchase of the housing loans will result
in the early retirement of your notes,
which will shorten their average lives and
potentially lower the yield on your notes.
THE IMPOSITION OF A o If a withholding tax is imposed on
WITHHOLDING TAX WILL REDUCE payments by the issuer trustee or any
PAYMENTS TO YOU AND MAY LEAD paying agent of interest on your notes,
TO AN EARLY REDEMPTION OF THE you will not be entitled to receive
NOTES grossed-up amounts to compensate for such
withholding tax. Thus, you will receive
less interest than is scheduled to be paid
on your notes.
o In addition, upon the occurrence of such
an event, the issuer trustee must, when so
directed by noteholders representing 75%
of the outstanding principal amount of the
notes, provided the issuer trustee will be
in a position to discharge all of its
liabilities in respect of the notes, on
the next payment date redeem in whole, but
not in part, the aggregate outstanding
principal amount plus accrued interest on
the notes. If the option to redeem the
notes affected by a withholding tax is
exercised, you may not be able to reinvest
the redemption payments at a comparable
interest rate.
THE FEATURES OF THE HOUSING o The features of the housing loans,
LOANS MAY CHANGE, WHICH COULD including their interest rates, may be
AFFECT THE TIMING AND AMOUNT changed by the servicer, either on its own
OF PAYMENTS TO YOU initiative or at a borrower's request.
Some of these changes may include the
addition of newly developed features which
are not described in this prospectus. As a
result of these changes and each
borrower's payments of principal, the
concentration of housing loans with
specific characteristics is likely to
change over time, which may affect the
timing and amount of payments you receive.
o If the servicer changes the features of
the housing loans, borrowers may elect to
refinance their loan with another lender
to obtain more favorable features. The
refinancing of housing loans could cause
you to experience higher rates of
principal prepayment than you expected,
which could affect the yield on your
notes.
21
THERE ARE LIMITS ON THE AMOUNT o If the interest collections during a
OF AVAILABLE LIQUIDITY TO collection period and liquid authorized
ENSURE PAYMENTS OF INTEREST TO investments are insufficient to cover
YOU fees, expenses and the interest payments
due with respect to the notes on the next
payment date, principal collections
collected during the collection period may
be used to cover these amounts. In the
event that there is not enough money
available from principal collections, you
may not receive a full payment of interest
on the relevant payment date, which will
reduce the yield on your notes.
THE USE OF LIQUID AUTHORIZED o If liquid authorized investments or
INVESTMENTS OR PRINCIPAL principal collections are drawn upon to
COLLECTIONS TO COVER LIQUIDITY cover shortfalls in interest, and there is
SHORTFALLS MAY LEAD TO insufficient excess income in succeeding
PRINCIPAL LOSSES collection periods to repay those liquid
authorized investments or principal
collections, you may not receive full
repayment of principal on your notes.
A DECLINE IN AUSTRALIAN o The Australian economy has been
ECONOMIC CONDITIONS MAY LEAD experiencing a prolonged period of
TO LOSSES OR DELAYS IN expansion with relatively low and stable
PAYMENTS ON YOUR NOTES interest rates and steadily increasing
property values. [However, there were two
25 basis point increases in interest rates
in Australia in the latter half of 2003.]
If the Australian economy were to
experience a downturn, an increase in
interest rates, an increase in
unemployment, a fall in property values or
any combination of these factors,
delinquencies or losses on the housing
loans may increase, which may cause losses
or delays in payments on your notes.
CONSUMER PROTECTION LAWS MAY o Some of the housing loans are regulated by
AFFECT THE TIMING OR AMOUNT OF the Consumer Credit Legislation. Under
INTEREST OR PRINCIPAL PAYMENTS that legislation, a borrower may have a
TO YOU right to apply to a court to:
o vary the terms of their housing loan
on the grounds of hardship or that it
is an unjust contract;
o reduce or cancel any interest rate
payable on the housing loan which is
unconscionable;
o have certain provisions of the
housing loan or relevant mortgage
which are in breach of the
legislation declared unenforceable;
o obtain an order for a civil penalty;
or
o obtain restitution or compensation,
in relation to any breaches of the
Consumer Credit Legislation in
relation to the housing loan or
relevant
22
mortgage.
o Any such order may affect the timing or
amount of interest or principal repayments
under the relevant housing loan, which may
in turn affect the timing or amount of
interest or principal payments to you
under the notes.
o In addition, a mortgagee's ability to
enforce a mortgage which is subject to the
Consumer Credit Legislation is limited by
various demand and notice procedures which
are required to be followed. For example,
as a general rule enforcement cannot occur
unless the relevant default is not
remedied within 30 days after a default
notice is given. Borrowers may also be
entitled to initiate negotiations with the
mortgagee for a postponement of
enforcement proceedings. Any order under
the Consumer Credit Legislation may affect
the timing or amount of interest or
principal payments or repayments under the
relevant housing loan, which may in turn
affect the timing or amount of interest or
principal payments or repayments to you
under the notes.
THE CONCENTRATION OF HOUSING o The trust contains a high concentration of
LOANS IN SPECIFIC GEOGRAPHIC housing loans secured by properties
AREAS MAY INCREASE THE located within New South Wales, Victoria
POSSIBILITY OF LOSS ON YOUR and Queensland. Any deterioration in the
NOTES real estate values or the economy of
either of those States could result in
higher rates of delinquencies,
foreclosures and loss than expected on the
housing loans. In addition, either of
these States may experience natural
disasters, which may not be fully insured
against and which may result in property
damage and losses on the housing loans.
These events may in turn have a
disproportionate impact on funds available
to the trust, which could cause you to
suffer losses.
23
YOU WILL NOT RECEIVE PHYSICAL o Your ownership of the notes will be
NOTES REPRESENTING YOUR NOTES, registered electronically through DTC,
WHICH CAN CAUSE DELAYS IN Euroclear and/or Clearstream, Luxembourg.
RECEIVING DISTRIBUTIONS AND The lack of physical certificates could:
HAMPER YOUR ABILITY TO PLEDGE
OR RESELL YOUR NOTES o cause you to experience delays in
receiving payments on the notes
because the principal paying agent
will be sending distributions on the
notes to DTC instead of directly to
you;
o limit or prevent you from using your
notes as collateral; and
o hinder your ability to resell the
notes or reduce the price that you
receive for them.
SINCE THE TRUST MANAGER, THE o Each of Interstar Securitisation
ISSUER TRUSTEE AND THE Management Pty Limited, Perpetual Trustees
SERVICER ARE AUSTRALIAN Victoria Limited and Interstar Wholesale
ENTITIES, THERE REMAINS Finance Pty AS Limited is an Australian
UNCERTAINTY TO THE company and has agreed to submit to the
ENFORCEABILITY OF JUDGMENTS jurisdiction of the New York State and
OBTAINED BY US$ NOTEHOLDERS IN United States federal courts for purposes
U.S. COURT BY AUSTRALIAN of any suit, action or proceeding arising
COURTS out of the offering of the US$ notes.
Generally, a final and conclusive judgment
obtained by noteholders in U.S. courts
would be recognized and enforceable
against the trust manager, the issuer
trustee or the servicer, as the case may
be, in the relevant Australian court
without reexamination of the merits of the
case. However, because of the foreign
location of the trust manager, the issuer
trustee and the servicer and their
directors, officers and employees and
their respective assets, it may be
difficult to effect service of process
over these persons or to enforce against
them judgments obtained in United States
courts based upon the civil liability
provisions of the U.S. federal securities
laws. See "Enforcement of Foreign
Judgments in Australia".
AN ISSUANCE OF REDRAW NOTES o The issuer trustee may issue Redraw notes
MAY AFFECT THE TIMING AND to fund redraws of previously prepaid
AMOUNT OF PAYMENTS MADE ON THE principal under the housing loans if
CLASS A, CLASS AB AND CLASS B principal collections on the housing loans
NOTES are not sufficient. See "Interstar
Residential Loan Program-- Special
Features of the Housing Loans -- Redraws".
The Redraw notes will be senior to the
Class A notes, the Class AB notes and the
Class B notes with respect to payments of
principal and rank equally with the Class
A notes with respect to payments of
interest before the enforcement of the
charge pursuant to the security trust deed
and rank equally with the Class A notes in
all respects thereafter. The Redraw notes
will be senior to the
24
Class AB notes and to the Class B notes
with respect to payments of interest both
before and after the enforcement of the
charge pursuant to the security trust
deed. If the proceeds of enforcement of
the charge pursuant to the security trust
deed are not sufficient to pay all
obligations of the issuer trustee under
the terms and conditions of the notes, the
risk to you of a loss on your investment
in any Class A notes, Class AB notes or
Class B notes is greater if any Redraw
notes are outstanding at that time.
THE CLASS AB NOTES ARE o Prior to the enforcement of the charge
SUBORDINATED TO THE REDRAW under the security trust deed, the Class
NOTES AND CLASS A NOTES AND AB notes will be subordinated to the
THEREFORE CLASS AB NOTEHOLDERS Redraw notes at all times in their right
MAY NOT BE PAID ALL PRINCIPAL to receive principal payments, will be
AND INTEREST ON THE CLASS AB subordinated to the Class A notes in some
NOTES circumstances in their right to receive
principal payments and will be
subordinated to the Redraw notes and the
Class A notes at all times in their right
to receive interest payments. Following
the occurrence of an event of default and
enforcement of the charge under the
security trust deed, the Class AB notes
will be fully subordinated to the Redraw
notes and the Class A notes in their right
to receive principal and interest
payments. Accordingly, Class AB
noteholders may not be paid principal and
interest in full in respect of the Class
AB notes. Therefore you may not receive
your entire investment or the yield you
expected to receive.
THE CLASS B NOTES ARE o Prior to the enforcement of the charge
SUBORDINATED TO THE REDRAW under the security trust deed, the Class B
NOTES, THE CLASS A NOTES AND notes will be subordinated to the Redraw B
THE CLASS AB NOTES AND notes at all times in their right to
THEREFORE CLASS B NOTEHOLDERS receive principal payments, will be
MAY NOT BE PAID ALL PRINCIPAL subordinated to the Class A notes and the
AND INTEREST ON THE CLASS B Class AB notes in some circumstances in
NOTES their right to receive principal payments
and will be subordinated to the Redraw
notes, the Class A notes and the Class AB
notes at all times in their right to
receive interest payments. Following the
occurrence of an event of default and
enforcement of the charge under the
security trust deed, the Class B notes
will be fully subordinated to the Redraw
notes, the Class A notes and the Class AB
notes in their right to receive principal
and interest payments. Accordingly, Class
B noteholders may not be paid principal
and interest in full in respect of the
Class B notes. Therefore you may not
receive your entire investment or the
yield you expected to receive.
25
PREPAYMENTS COULD RESULT FROM o If there is any principal amount remaining
PREFUNDING in the prefunding account following the
acquisition of additional housing loans by
the trust during the period from the
closing date up to but excluding the first
payment date, that amount will be applied
in repayment of principal to the
noteholders in the priority described in
"Description of the US$ Notes -- Principal
Distributions". Any prepayment will shorten
the average weighted life of the notes so
prepaid. The greater the prepayment, the
shorter the weighted average life of the
affected notes which may in turn affect the
yield on your US$ notes.
THE SERVICER'S RESPONSIBILITY o The servicer is obligated under the
TO MANAGE THE INTEREST RATE transaction documents to set the interest
EXPOSURE MAY AFFECT THE RATE rates on the housing loans at a rate to
OF REPAYMENTS AND THE YIELD ON ensure that at all times the issuer trustee
YOUR INVESTMENT has sufficient cash available to pay all
interest payable on the notes and otherwise
comply with its duties and obligations
under the transaction documents. If the
servicer increases the interest rates on
the housing loans, borrowers may be unable
to make their required payments under the
housing loans. In addition, if the interest
rates are increased above market rates,
borrowers may refinance their housing loans
with other lenders to obtain lower rates.
This could cause higher rates of principal
prepayment and delinquent payments by
borrowers than you expected and affect the
yield on your notes.
TERMINATION PAYMENTS RELATING o Upon termination of a swap, a termination
TO THE CURRENCY SWAPS OR A payment will be due either from the issuer
FIXED-FLOATING RATE SWAP ARE trustee to the swap provider or vice versa.
SUBJECT TO CREDIT RISKS If the swap provider is required to make a
termination payment to the issuer trustee
upon the termination of a swap, then the
trust will be exposed to credit risk in
relation to the capacity of that swap
provider to make that termination payment.
CURRENCY SWAP TERMINATION o If the Class A currency swap terminates
PAYMENT TO THE CURRENCY SWAP before its scheduled termination date, a
PROVIDER MAY REDUCE PAYMENTS termination payment by either the issuer
ON YOUR US$ NOTES trustee or the currency swap provider will
be payable based on the mid-market cost of
a replacement currency swap. Any
termination payment could, if the
Australian Dollar/United States dollar
exchange rate has changed significantly, be
substantial. Any termination payment owing
by the issuer trustee to the currency swap
provider will be payable out of assets of
the trust. If the Class A currency swap
terminates early under circumstances where
the currency swap provider is the
defaulting party, any payment due by the
issuer trustee under the relevant
26
currency swap will have a lower priority
than payments of interest on the notes. If
the Class A currency swap terminates early
under any other circumstances, any payment
due by the issuer trustee under the Class A
currency swap will have an equal priority
with interest payments on the Redraw notes
and the Class A notes.
THIS PROSPECTUS PROVIDES o This prospectus describes only the
INFORMATION REGARDING ONLY A characteristics of the housing loan pool as
PORTION OF THE HOUSING LOAN of [*] [*], 2005. While they must satisfy
POOL, AND ADDITIONAL HOUSING the criteria specified in this prospectus,
LOANS ADDED TO THE HOUSING the housing loans acquired on the closing
LOAN POOL COULD HAVE DIFFERENT date, and any additional housing loans
CHARACTERISTICS transferred to the trust during the
prefunding period, may not have the
characteristics or statistical composition
of the housing loan pool described in this
prospectus. For example, such housing loans
may be of a different credit quality or
seasoning. The trust manager does not
expect the characteristics or statistical
composition of the housing loan pool
acquired on the closing date or the
additional housing loans acquired after the
closing date to differ materially from the
characteristics of the housing loan pool
described in this prospectus. If you
purchase a note, you must not assume that
the characteristics of the housing loan
pool, including the additional housing
loans acquired after the closing date, will
be identical to the characteristics of the
housing loan pool disclosed in this
prospectus.
RATINGS OF THE US$ NOTES DO o It is a condition to the issuance of the
NOT INSURE THEIR PAYMENT AND Class A notes that they be rated [Aaa] by
WITHDRAWAL OF ANY RATINGS MAY Moody's and [AAA] by S&P, that the Class
AFFECT THE VALUE OF THE US$ AB notes be rated at least [Aa1] by
NOTES Moody's and [AAA] by S&P and that the
Class B notes be rated at least [Aa3] by
Moody's and [AA-] by S&P. See "Ratings of
the Notes" below.
o A rating is not a recommendation to
purchase, hold or sell the US$ notes,
inasmuch as such a rating does not address
the market price or the suitability for a
particular investor of a security. The
ratings of the US$ notes address the
likelihood of the payment of principal and
interest on the US$ notes pursuant to their
terms. There is no assurance that a rating
will remain for any given period of time or
that a rating will not be lowered or
withdrawn entirely by a rating agency, if
in its judgment circumstances in the future
so warrant. The ratings of the US$ notes
will be based primarily on the
creditworthiness of the housing loans, the
mortgage insurance polices, the title
insurance policies, the creditworthiness of
the mortgage insurers and the title
insurers, the
27
availability of income after payment of the
trust's expenses and interest on the notes,
the creditworthiness of the swap providers
and the subordination provided by the Class
B notes and by the Class AB notes with
respect to the Redraw notes and the Class A
notes. Any downgrade of the ratings of the
creditworthiness of the mortgage insurers
or the title insurer may result in the
downgrade of the ratings of the notes. Any
downgrade of the ratings of the notes may
affect the price at which purchasers will
pay for your notes.
FAILURE OF THE SERVICER TO o The servicer under the investment
PERFORM ITS OBLIGATIONS MAY management agreement has been appointed as
AFFECT THE TIMING OF PAYMENTS initial servicer of the housing loans.
ON YOUR NOTES Following a servicer event of default
under the investment management agreement,
the issuer trustee must immediately
terminate the investment management
agreement. Under the backup servicer
agreement, if Interstar Wholesale Finance
Pty Limited is removed as servicer, KPMG
Corporate Finance (Aust) Pty Limited has
agreed to carry out the duties of the
servicer. There is no guarantee that a
replacement servicer will be found who
would be willing to service the housing
loans on the terms of the investment
management agreement or that it will be
able to service the housing loans with the
same level of skill and competence as the
initial servicer. A failure by the
servicer to properly perform its servicing
obligations may have an impact on the
timing of funds received by the issuer
trustee in respect of the housing loans.
o The servicer is responsible for the day to
day verification and processing of checks
and direct entry paperless facilities under
the terms of the NBFI Agreement. While
providing these facilities to the borrowers
of the housing loans, the servicer may
process and authorize the issuer trustee to
pay forged or fraudulently drawn checks,
fail to comply with stop payment notices
made by the borrowers or breach other
covenants, representations and warranties
or other provisions of the NBFI Agreement
which may affect the timing of payments on
your notes. See "Description of the US$
Notes-- The Check Account and Direct
Paperless Entry Facilities Agreement".
28
CERTAIN HOUSING LOANS MAY NOT o The servicer will make certain
HAVE THE CHARACTERISTICS AS representations and warranties to the
SET OUT IN THE REPRESENTATIONS issuer trustee, to each noteholder and to
AND WARRANTIES MADE BY THE the security trustee in relation to the
SERVICER housing loans to be assigned to the issuer
trustee, as at the cut-off date and the
purchase date for those housing loans. The
issuer trustee has not investigated or
made any enquiries regarding the accuracy
of the representations and warranties.
o No independent investigation of whether
each and every housing loan offered for
sale at the closing date or any other date
complies with the eligibility requirements
set forth in "Description of the Assets of
the Trust -- Representations, Warranties
and Eligibility Criteria" has been
conducted.
ASSETS OF THE TRUST WILL NOT o The trust manager, not the issuer trustee,
BE AVAILABLE TO COVER ANY takes responsibility for this prospectus.
LOSSES SUFFERED BY YOU FOR ANY As a result, in the event that a person
MISLEADING STATEMENT OR suffers loss due to any information
OMISSION OF A MATERIAL MATTER contained in this prospectus that is
IN THIS PROSPECTUS inaccurate or misleading, or omitting a
material matter or thing, that person will
not have recourse to the assets of the
trust.
29
YOU MAY EXPERIENCE LOSSES ON o The verification requirements for LoDoc
YOUR NOTES DUE TO REDUCED Low Documentation Loans and EasyDoc Low
VERIFICATION REQUIREMENTS FOR Documentation Loans, both known as the Low
LOW DOCUMENTATION LOANS Documentation Loans, are less exhaustive
than the verification requirements for
housing loans originated through Interstar
Wholesale Finance Pty Limited's standard
approval and underwriting process. With
respect to housing loans originated under
Interstar Wholesale Finance Pty Limited's
standard approval and underwriting
process, verification of the borrower's
income is obtained through tax returns,
employer confirmation letters, credit
checks and a full and detailed current
assets and liabilities statement. However,
the only income verification made in
relation to a LoDoc Low Documentation Loan
is to confirm that the borrower's asset
and liability statement supports the
income disclosed by the borrower in his or
her loan application. There is no income
verification made in relation to an
EasyDoc Low Documentation Loan. The
reduced verification procedure for a Low
Documentation Loan will make it more
difficult to assess the credit quality of
a borrower and, in particular, the ability
of that borrower to make timely payments
of principal and interest under a Low
Documentation Loan. If a borrower fails to
make such payments or fails to make such
payments on a timely basis, the issuer
trustee may not have enough funds to make
full payments of interest and principal
due on your notes.
30
[RECENTLY PROPOSED CHANGES TO o [On February 14, 2005, the Australian
REGULATORY REQUIREMENTS MAY Prudential Regulatory Authority ("APRA")
AFFECT THE FINANCIAL outlined changes to its proposed reforms
PERFORMANCE OF LENDERS to the capital and reporting framework for
MORTGAGE INSURERS] lenders mortgage insurers. The proposed
reforms aim to strengthen the capital
framework for lenders mortgage insurers
and increase risk-sensitivity, while
reducing inconsistencies in prudential
requirements. Subject to consultations,
APRA intends for the proposed reforms to
be implemented on October 1, 2005 and will
apply to all lenders mortgage insurers.
APRA has stated that it will consider
transitional arrangements, where
appropriate, at its discretion. Although
management of the respective lenders
mortgage insurers do not believe that
these regulatory changes will have a
materially adverse affect on operations,
the potentially more stringent capital
adequacy requirements could affect the
financial strength of these entities. If
any of these entities encounter financial
difficulties which impede or prohibit the
performance of their obligations as
provided herein, the issuer trustee may
not have sufficient funds to timely pay
principal and interest on the notes.]
EU DIRECTIVE ON THE TAXATION o On June 3, 2003, the European Council of
OF SAVINGS INCOME MAY AFFECT Economics and Finance Ministers adopted a
PAYMENTS ON THE US$ NOTES Directive regarding the taxation of
savings income. Subject to a number of
important conditions being met, it is
proposed that Member States will be
required from July 1, 2005 to provide to
the tax authorities of other Member States
details of payments of interest and other
similar income paid by a person resident
within the EU to an individual resident in
another Member State, except that Austria,
Belgium and Luxembourg will instead impose
a withholding system for a transitional
period unless during such period they
elect to do otherwise.
31
CAPITALIZED TERMS
The capitalized terms used in this prospectus, unless defined
elsewhere in this prospectus, have the meanings set forth in the Glossary
starting on page [*].
U.S. DOLLAR PRESENTATION
In this prospectus, references to "U.S. dollars", "United States
dollars" and "US$" are references to U.S. currency and references to "Australian
dollars" and "A$" are references to Australian currency. Unless otherwise stated
in this prospectus, any translations of Australian dollars into U.S. dollars
have been made at a rate of US$[*] = A$1.0000, the exchange rate as displayed on
the Bloomberg Service under AUD currency HP on [*] [*], 2005. Use of such rate
is not a representation that Australian dollar amounts actually represent such
U.S. dollar amounts or could be converted into U.S. dollars at that rate.
32
THE ISSUER TRUSTEE, THE TRUST MANAGER AND THE SERVICER
THE ISSUER TRUSTEE
The issuer trustee was incorporated on October 21, 1884 as The
Australian Executors and Trustees Association Limited under the Companies
Statute 1864 of Victoria as a public company. The name was changed to Perpetual
Trustees Victoria Limited on June 30, 1989 and it now operates as a limited
liability company under the Corporations Act 2001 of Australia. The Australian
Business Number of Perpetual Trustees Victoria Limited is 47 004 027 258 and its
registered office is Level 28, 360 Collins Street, Melbourne, Victoria, 3000
Australia.
Perpetual Trustees Victoria Limited has 4,500,000 shares on issue with
a paid amount of A$0.50 each and an amount due and payable of A$0.50 each. The
shares are held by Perpetual Trustees Australia Limited.
The principal activities of Perpetual Trustees Victoria Limited are
the provision of trustee and other commercial services. Perpetual Trustees
Victoria Limited is an authorized trustee corporation.
Perpetual Trustees Victoria Limited and its related companies provide
a range of services including custodial and administrative arrangements to the
funds management, superannuation, property, infrastructure and capital markets.
Perpetual Trustees Victoria Limited and its related companies are leading
trustee companies in Australia with in excess of A$100 billion under
administration.
DIRECTORS
The directors of the issuer trustee are as follows:
NAME BUSINESS ADDRESS PRINCIPAL ACTIVITIES
- ------------------------ ------------------------------ --------------------
Phillip Vernon ......... Level 8, 9 Castlereagh Street, Director
Sydney, NSW, Australia
Patrick John Nesbitt.... Level 6, 39 Hunter Street, Director
Sydney, NSW, Australia
Jane Couchman........... Level 7, 39 Hunter Street Director
Sydney, NSW, Australia
THE TRUST MANAGER
Interstar Securitisation Management Pty Limited was incorporated on
April 26, 2002, and continues to exist and operate as a limited liability
company under the Corporations Act 2001 of Australia. The registered office of
Interstar Securitisation Management Pty Limited is Level 10, 101 Collins Street,
Melbourne, Victoria, 3000 Australia and the telephone and facsimile numbers for
its registered office are (613) 8616-1600 and (613) 8616-1688, respectively.
Interstar Securitisation Management Pty Limited has 1 share on issue
with a paid amount of A$1.00. The share is ultimately held by Challenger
Financial Services Group Limited.
33
DIRECTORS
The directors of Interstar Securitisation Management Pty Limited are
Sam Kyriacou, Brian Benari, Andrew Hall and Andrew Twyford.
o SAM KYRIACOU has been a Director and the Chief Financial Officer
of Interstar Wholesale Finance Pty Limited since its inception,
and was appointed Managing Director and Chief Executive Officer
on July 1, 1999. He holds a Bachelor of Commerce degree from
Melbourne University and is an Associate of the Institute of
Chartered Accountants in Australia. He is responsible for all
aspects of the operations of Interstar Wholesale Finance Pty
Limited, including wholesale mortgage loan origination, loan
product development, wholesale funding programs and the strategic
direction of the Interstar Securities Group.
o BRIAN BENARI is the Chief Executive of Challenger Wholesale
Finance and is responsible for the Group's Prime, Non Conforming
and Commercial lending businesses. He is a Chartered Accountant,
having trained with Andersens and subsequently working in
investment banking for JP Morgan, Bankers Trust, Macquarie Bank
and Zurich Capital Markets. He has over 12 years experience in
investment banking, across a range of retail and institutional
vanilla and structured products in markets including equities,
debt, foreign exchange, commodity and alternative assets.
o ANDREW HALL is the Chief Financial Officer Challenger Wholesale
Finance. He was Senior Vice President at Zurich Capital Markets
(ZCM) working in Structured Finance and Taxation and Joined
Challenger in late 2003 as part of the acquisition of ZCM's
Principal Finance business and Interstar. Mr Hall has worked in
the finance industry since 1995, working at Bankers Trust and
then Macquarie Bank as Division Director in Financial Operations
before joining Zurich Capital Markets in 2001. Mr. Hall started
his career as a chartered accountant at PriceWaterhouse in 1988.
o ANDREW TWYFORD has been Chief Financial Officer of Interstar
Wholesale Finance Pty Limited since 2000. He holds a Bachelor of
Business degree and is an Associate of the Institute of Chartered
Accountants in Australia. He is responsible for the finance,
treasury and trust servicing functions of Interstar Wholesale
Finance Pty Limited.
THE SERVICER
Interstar Wholesale Finance Pty Limited was incorporated on April 29,
1999, and continues to exist and operate as a limited liability company under
the Corporations Act 2001 of Australia. The registered office of Interstar
Wholesale Finance Pty Limited is Level 10, 101 Collins Street, Melbourne,
Victoria, 3000 Australia and the telephone and facsimile numbers for its
registered office are (613) 8616-1600 and (613) 8616-1688 respectively.
Interstar Wholesale Finance Pty Limited has 1 share on issue with a
paid amount of A$1.00. The share is ultimately held by Challenger Financial
Services Group Limited.
Interstar Wholesale Finance Pty Limited was incorporated as a result
of the corporate reconstruction of Interstar Securities Pty Limited (ABN 32 054
485 380), incorporated in 1992, and its parent, Stargate Corporation Pty Limited
(ACN 004 851 110), incorporated in 1970, which took place during 1999.
34
Interstar Wholesale Finance Pty Limited is an investment management
firm which specializes in the structuring and ongoing management of residential
mortgage loan portfolios and mortgage-backed securities.
The operations of Interstar Wholesale Finance Pty Limited are directed
by an experienced senior management team, comprising full-time directors and
divisional heads of loan origination, loan processing and compliance, customer
service, investment and credit management and information technology. This team
is supported by 170 administrative, marketing, and technical staff.
Since December 1989 and prior to this issue, Interstar Securities Pty
Limited and Interstar Wholesale Finance Pty Limited have issued approximately
A$14 billion of rated mortgage-backed securities.
As of December 31, 2003 Interstar Wholesale Finance Pty Limited
managed a housing loan portfolio of approximately A$12.5 billion.
The trust manager is a wholly owned direct subsidiary of the servicer.
The servicer is a wholly owned direct subsidiary of Interstar Securities
Holdings Pty Limited (INTERSTAR HOLDINGS). All shares in Interstar Holdings are
ultimately owned by Challenger Financial Services Group Limited.
DIRECTORS
The directors of Interstar Wholesale Finance Pty Limited are as
follows:
o BASIL CARIDAKIS has been a Director of Interstar Wholesale
Finance Pty Limited since its inception and is responsible for
retail loan origination and marketing. He has been involved with
mortgage lending and financial services for the past 27 years and
is an Associate of the Mortgage Industry Association of
Australia. He has been responsible for marketing and origination
of mortgage loan products, liaison with loan originators and
retailers and direct contact with borrowers for Interstar
Securities Pty Limited since 1992 and for Interstar Securities
(Australia) Pty Limited since its inception.
o ANDREW MOBILIA has been a Director of Interstar Wholesale Finance
Pty Limited since its inception and is responsible for lending
and loan administration. He has been involved with all aspects of
secured lending, administration and credit control for the past
27 years and is an Associate of the Mortgage Industry Association
of Australia. He has been responsible for all aspects of managed
asset compliance, loan review and underwriting and arrears
management for Interstar Securities Pty Limited since 1992 and
for Interstar Securities (Australia) Pty Limited since its
inception.
o BRUCE BAKER has been a Director of Interstar Wholesale Finance
Pty Limited since January 2001 and is responsible for all
business development activities. He has been involved with
lending and mortgage insurance for the past 23 years and is an
Associate of the Mortgage Industry Association of Australia. He
has been National Underwriting and Business Development manager
of Interstar Securities Pty Ltd since 1994 and for Interstar
Wholesale Finance Pty Limited since its inception.
o TIM FOSTER is the Chief Financial Officer of the Challenger
Financial Services Group. He joined challenger in May 2003 in
this role. Mr Foster was previously Chief Financial
35
Officer at Colonial First State, the Australian Funds Management
arm of the Commonwealth Bank. He joined the Colonial group in
January 1995 and held a number of senior positions before being
appointed Chief Financial Officer of Colonial First State in
August 2000. Prior to joining the Colonial Group, Mr Foster
worked for Coopers & Lybrand in the UK.
For a description of Sam Kyriacou and Brian Benari, please refer to
the section on directors of Interstar Securitisation Management Pty Limited
above.
Interstar Wholesale Finance Pty Limited is currently ranked as a
"Strong" residential loan servicer in Australia by S&P, and has been approved by
S&P as a "Global Select Servicer" for structured finance transactions.
THE SELLER
INTERSTAR WHOLESALE FINANCE PTY LIMITED
Interstar Wholesale Finance Pty Limited (formerly, Interstar
Securities (Australia) Pty Limited) is the residual income unitholder of the
Interstar Millennium Warehouse A Trust, the Interstar Millennium Warehouse B
Trust, the Interstar Millennium Warehouse J Trust, the Interstar Millennium
Warehouse M Trust, the Interstar Millennium Warehouse N Trust, the Interstar
Millennium Warehouse R Trust and the Interstar Millennium Warehouse S Trust,
each of which is a trust within the Interstar Millennium Trusts securitisation
program. Perpetual Trustees Victoria Limited is the trustee of each of these
trusts. In each of these capacities, Perpetual Trustees Victoria Limited borrows
money from Abel Tasman Holdings Pty Limited, Macquarie Bank Limited, National
Australia Bank Limited, Barclays Bank PLC, JPMorgan Chase Bank, N.A. or The
Royal Bank of Scotland plc, Australia Branch, as the case may be, to enable it
to fund the acquisition of housing loans.
THE BACKUP SERVICER
KPMG CORPORATE FINANCE (AUST) PTY LIMITED
KPMG Corporate Finance (Aust) Pty Limited is part of a global network
of professional advisory firms that have offices in 750 cities in 152 countries.
Its services include assurance, financial advisory services, tax and legal. KPMG
Corporate Finance (Aust) Pty Limited is contracted to be the backup servicer for
Interstar Wholesale Finance Pty Limited.
36
DESCRIPTION OF THE TRUST
INTERSTAR MILLENNIUM TRUSTS SECURITIZATION PROGRAM
The Interstar Millennium Trusts securitization program was established
pursuant to a master trust deed for the purpose of enabling Perpetual Trustees
Victoria Limited, as trustee of each trust established pursuant to the Interstar
Millennium Trusts securitization program, to invest in pools of housing loans
originated from time to time by the servicer. The master trust deed provides for
the creation of an unlimited number of trusts. The master trust deed establishes
the general framework under which trusts may be established from time to time.
It does not actually establish any trusts. The Interstar Millennium Series
2005-1G Trust is a separate and distinct trust from any other trust established
under the master trust deed. The assets of the Interstar Millennium Series
2005-1G Trust are not available to meet the liabilities of any other trust and
the assets of any other trust are not available to meet the liabilities of the
Interstar Millennium Series 2005-1G Trust.
INTERSTAR MILLENNIUM SERIES 2005-1G TRUST
The detailed terms of the Interstar Millennium Series 2005-1G Trust
will be as set out in the master trust deed and the series notice. To establish
the trust, Interstar Wholesale Finance Pty Limited, the trust manager and the
issuer trustee executed a notice of creation of trust on [*] [*] 2005.
The series notice, which supplements the general framework under the
master trust deed with respect to the trust, does, among other things, the
following:
o specifies the details of the notes;
o establishes the cash flow allocation;
o sets out the various representations and undertakings of the
parties specific to the housing loans, which supplement those in
the master trust deed; and
o amends the master trust deed to the extent necessary to give
effect to the specific aspects of the trust and the issue of the
notes.
37
DESCRIPTION OF THE ASSETS OF THE TRUST
ASSETS OF THE TRUST
The assets of the trust will include the following:
o the pool of housing loans, including all of the issuer trustee's
interest in and title to:
o principal payments paid or payable on the housing loans at
any time from and after the applicable cut-off date; and
o interest payments paid or payable on the housing loans after
the closing date;
o rights under the:
o mortgage insurance policies issued by, or transferred to,
[PMI Indemnity Limited], [GE Capital Mortgage Insurance
Corporation (Australia) Pty Ltd], [PMI Mortgage Insurance
Ltd], [GE Mortgage Insurance Pty Ltd] and [Home Loans
Insurance Corporation];
o the title insurance policies; and
o the individual property insurance policies covering the
mortgaged properties relating to the housing loans;
o amounts on deposit in the accounts established in connection with
the creation of the trust and the issuance of the notes,
including the collection account, and any instruments in which
these amounts are invested; and
o the issuer trustee's rights under the transaction documents, and
its rights under any fixed-floating rate swap and the currency
swaps.
THE HOUSING LOANS
The housing loans are secured by registered first ranking mortgages on
properties located in Australia. The housing loans have been originated in the
name of Perpetual Trustees Victoria Limited directly by Interstar Wholesale
Finance Pty Limited through an Australia-wide network of mortgage brokers,
accounting firms, legal firms, financial and investment advisors and other
sources referred to Interstar Wholesale Finance Pty Limited in the ordinary
course of its business under the Interstar Millennium Trusts securitisation
program. On the closing date, Perpetual Trustees Victoria Limited will cease to
hold the pool of housing loans for the various warehouse trusts and will instead
hold them for the trust. Each housing loan was funded by Perpetual Trustees
Victoria Limited in its capacity as trustee of a warehouse trust of which the
seller is the beneficiary, and so Perpetual Trustees Victoria Limited is the
legal owner of all relevant housing loans. Each housing loan will be one of the
types of products described in "Interstar Residential Loan Program -- General
Features of the Housing Loans". The housing loans bear either a fixed rate of
interest or a variable rate of interest, or a combination of both. Each housing
loan is secured by a registered first ranking mortgage over the related
mortgaged property. The mortgaged properties consist of owner-occupied
properties and non-owner occupied properties,
38
but do not include mobile homes which are not permanently affixed to the ground,
commercial properties or unimproved land.
ACQUISITION OF HOUSING LOANS AFTER THE CLOSING DATE
THE PRE-FUNDING PERIOD
If on the closing date the total aggregate purchase price for the
housing loans is less than the amount received in Australian dollars by the
issuer trustee from the proceeds of the issue of the notes, the issuer trustee
will retain the difference between the two amounts, to the extent it is not
invested in Liquid Authorized Investments, in an account in the name of the
Trust. Before amounts on deposit in the Prefunding Account are invested in
acquiring or originating additional housing loans as described below they will
be invested in Liquid Authorized Investments. The balance of the Prefunding
Account must not at any time exceed 25% of the sum of the Class A A$ Equivalent
of US$[1,000,000,000], A$[*] (being the initial outstanding Principal Amount of
the Class AB notes, and A$ [*] (being the initial outstanding Principal Amount
of the Class B notes or 25% of the sum of the Class A notes A$ Equivalent of the
initial outstanding Principal Amount of the Class A notes, the initial
outstanding Principal Amount of the Class AB notes and the initial outstanding
Principal Amount of the Class B notes. At any time during the period up to but
excluding the first payment date after the closing date the issuer trustee will
apply the money on deposit in the Prefunding Account to:
o acquire additional housing loans from the seller; or
o originate additional housing loans in the ordinary course of Interstar
Wholesale Finance Pty Limited's business, provided that any additional
housing loan acquired or originated must:
o comply with the eligibility criteria; and
o not result in a downgrade or withdrawal of the rating of any
notes by any rating agency.
On the first payment date after the closing date, the balance of the
Prefunding Account that has not been used to acquire or originate additional
housing loans as described above will be applied as Mortgage Principal
Repayments as described in the section headed "Description of the US$ Notes --
Principal Distributions".
TRANSFER AND ASSIGNMENT OF THE HOUSING LOANS
On the closing date, the housing loans purchased by the trust will be
specified in the sale notice from the seller, in its capacity as seller of the
housing loans, to the issuer trustee.
The seller will equitably assign its beneficial interest in the
housing loans, the mortgages securing those housing loans and the mortgage
insurance policies, title insurance policies and insurance policies on the
mortgaged properties relating to those housing loans to the issuer trustee
pursuant to the sale notice. Both before and after the assignment, Perpetual
Trustees Victoria Limited will hold legal title to the housing loans and the
ancillary rights specified in the sale notice. Before the assignment, Perpetual
Trustees Victoria Limited will hold each of the housing loans and ancillary
rights in its capacity as trustee of a warehouse trust. After the assignment, it
will hold the housing loans and ancillary rights in its capacity as trustee of
the Interstar Millennium Series 2005-1G Trust.
39
REPRESENTATIONS, WARRANTIES AND ELIGIBILITY CRITERIA
Interstar Wholesale Finance Pty Limited, as the servicer, will make
various representations and warranties to the issuer trustee, each noteholder
and the security trustee as of the closing date with respect to the housing
loans being equitably assigned to the issuer trustee, including that:
o it has not done, or omitted to do, anything which would prevent each
housing loan from being valid, binding and enforceable against the
relevant borrower in all material respects except to the extent that
it is affected by laws relating to creditors rights generally, or
doctrines of equity;
o it has not done, or omitted to do, anything which would prevent the
relevant borrower from being the sole legal owner of the mortgaged
property and registered as the sole proprietor of the mortgaged
property;
o each housing loan is the subject of a valid, binding and enforceable
mortgage insurance policy from [PMI Indemnity Limited], [GE Capital
Mortgage Insurance Corporation (Australia) Pty Ltd], [PMI Mortgage
Insurance Ltd], [GE Mortgage Insurance Pty Ltd] or [Home Loans
Insurance Corporation] for its scheduled term;
o the officers of the servicer who have responsibility for the
transactions contemplated by the transaction documents do not have
actual notice that any mortgage insurer under any mortgage insurance
policy or any title insurer under any title insurance policy in
relation to a housing loan is insolvent or will be unable to pay a
valid claim;
o there has been no fraud, dishonesty, material misrepresentation or
negligence on the part of the servicer in connection with the
selection and offer to the issuer trustee of any of the housing loans;
o as at the applicable cut-off date, none of the housing loans were
satisfied, cancelled, discharged or rescinded and the mortgaged
property relating to each housing loan had not been released from the
relevant mortgage;
o the housing loans are assignable and all consents required in relation
to the assignment of the housing loans and ancillary rights have been
obtained;
o between the applicable cut-off date and the closing date the servicer
dealt with the housing loans in the ordinary course of its business;
o as of the applicable cut-off date, each housing loan satisfies the
following eligibility criteria:
o it is denominated and payable only in Australian dollars in
Australia;
o the interest rate applicable to the housing loan is either:
o a variable rate based upon any determinant as may be
considered appropriate by the servicer in its absolute
discretion;
o a fixed rate provided that:
40
o the fixed rate does not apply for a continuous
period exceeding five years from:
o the settlement date of the housing loan,
where the housing loan bears a fixed rate of
interest from the date it is settled; or
o the date on which the housing loan starts to
bear a fixed rate of interest, where that
housing loan either:
o bears a floating rate of interest and is
converting to a fixed rate of interest;
or
o bears a fixed rate of interest which is
scheduled to convert to a floating rate
of interest but -- with the approval of
the relevant mortgage insurer -- the
borrower elects to pay a new fixed rate
of interest; and
o the fixed rate cash flows are swapped to a
floating rate pursuant to a fixed-floating rate
swap and the floating rate payable by the
fixed-floating rate swap provider is set on the
same dates as the interest rate is set on the
notes; or
o a combination of the variable rate and the fixed
rate described above;
o all security documents have been:
o prepared by law firms or title insurers appointed by and
acting for the seller and the servicer or, where housing
loans are originated in the name of the issuer trustee,
acting for the issuer trustee and the servicer; and
o prepared in accordance with applicable Consumer Credit
Legislation;
o with respect to housing loans acquired by the issuer trustee and
included in the housing loan pool:
o at least [90]% of the aggregate mortgaged property of all
housing loans held by the issuer trustee will be located in
metropolitan areas of the capital cities and major regional
centers of Australia; and
o not more than [15]% of the aggregate amount outstanding
under the housing loans will comprise individual housing
loans each with an amount outstanding exceeding A$500,000
and secured by a mortgage over a single property;
o the seller is the beneficial owner of the housing loan and mortgage at
the time of the equitable assignment;
o the issuer trustee will be the beneficial owner of the housing loan
and mortgage after that assignment, free of any encumbrances;
o the housing loan and mortgage are valid and enforceable;
41
o all applicable stamp duties have been paid on the mortgage securing
the housing loan;
o the housing loan and mortgage securing the housing loan will form part
of the assets of the trust;
o the whole of the right, title and interest of the mortgagee under the
mortgage securing the housing loan will be acquired by the issuer
trustee;
o the housing loan has been serviced and managed in accordance with the
requirements of the servicer's policy and procedures manual;
o the mortgage insurance policy and any title insurance policy in
relation to the housing loan and the mortgage securing the housing
loan does not restrict the assignment to the issuer trustee;
o the housing loan is not in arrears over 30 days at the applicable
cut-off date;
o the housing loan is subject to monthly, half-monthly, fortnightly or
weekly payments which fully amortize the housing loan over its term;
o the loan agreement and the mortgage securing the housing loan comply
in all material respects with all applicable laws, including any
Consumer Credit Legislation;
o the loan agreement and the mortgage securing the housing loan are
assignable by the seller in equity without prior consent being
required from, or notice of the assignment needing to be given to, the
mortgagor, the borrower or any other person;
o the loan agreement and the mortgage securing the housing loan have
been duly authorized and are in full force and effect and constitute
legal, valid and binding obligations of the relevant borrower and
mortgagor enforceable against that borrower and mortgagor in
accordance with their terms and are not subject to any dispute, offset
or counterclaim;
o the housing loan is covered by a valid, binding and enforceable
mortgage insurance policy;
o the housing loan has a borrower -- and where the servicer so requires,
a guarantor -- that is a natural person or a corporation;
o the housing loan was approved and originated by the servicer in the
ordinary course of its business;
o the borrower is required to repay the housing loan by no later than
October 15 2034;
o the housing loan does not require, nor does the relevant loan
agreement require, the issuer trustee to provide any redraws or other
advances once the initial funding has been provided under the relevant
loan agreement;
42
o the housing loan is secured by a mortgage that constitutes a first
ranking mortgage over freehold land or Crown leasehold land in
Australia which is or will be registered under the relevant law
relating to the registration, priority or effectiveness of any
mortgage over land in an Australian jurisdiction and satisfies the
following criteria:
o in the case of a housing loan other than a Low Documentation
Loan, the amount secured or to be secured by the mortgage
does not exceed A$1,500,000;
o in the case of a LoDoc Low Documentation Loan, the amount
secured or to be secured by the mortgage does not exceed
A$800,000;
o in the case of an EasyDoc Low Documentation Loan, the amount
secured or to be secured by the mortgage does not exceed:
o where the mortgaged property is property within the
metropolitan areas of Australia other than Tasmania,
the Northern Territory, South Australia, Western
Australia and the Australian Capital Territory --
A$800,000; or
o where the mortgaged property is property within the
metropolitan areas of Tasmania, the Northern Territory,
South Australia, Western Australia and the Australian
Capital Territory or within the regional centers of
Australia -- A$500,000;
o in respect of a mortgage:
o to secure a housing loan, other than a Low
Documentation Loan, for a principal amount:
o not exceeding A$500,000 -- the loan-to-value ratio
in respect of that housing loan does not exceed
95%; and
o exceeding A$500,000 but not exceeding A$1,000,000
-- the mortgaged property must constitute property
within the metropolitan areas of Sydney,
Melbourne, Brisbane, Adelaide or Perth and the
loan-to-value ratio in respect of that housing
loan does not exceed 80%; and
o exceeding A$1,000,000 but not exceeding
A$1,250,000 -- the mortgaged property must
constitute property within the metropolitan areas
of Melbourne or Sydney and the loan-to-value ratio
in respect of that housing loan does not exceed
75%; and
o exceeding A$1,250,000 -- the mortgaged property
must constitute property within the metropolitan
areas of Melbourne or Sydney and the loan-to-value
ratio in respect of that housing loan does not
exceed 65%;
o to secure a LoDoc Low Documentation Loan for a
principal amount of:
o not exceeding A$800,000 -- the mortgaged property
must constitute property within the metropolitan
areas or regional centers of Sydney, Melbourne or
Brisbane and the loan-to-value ratio in respect of
that housing loan does not exceed 80%;
43
o not exceeding A$600,000 -- the mortgaged property must
constitute property within the metropolitan areas or
regional centers of Tasmania, the Northern Territory,
South Australia, Western Australia and the Australian
Capital Territory and the loan-to-value ratio in
respect of that housing loan does not exceed 80%;
o to secure an EasyDoc Low Documentation Loan, the
loan-to-value ratio in respect of that housing loan does not
exceed 65%;
o the housing loan is secured by a mortgage over a property which has
erected on it a residential dwelling which dwelling is covered by fire
and general insurance and the insurance policy in respect of such
cover must be endorsed with the name of the issuer trustee as
mortgagee; and
o the mortgaged property is valued by a valuer approved by the servicer.
The issuer trustee has not investigated or made any inquiries
regarding the accuracy of these representations and warranties and has no
obligation to do so. The issuer trustee is entitled to rely entirely upon the
representations and warranties being correct, unless an officer involved in the
administration of the trust has actual notice to the contrary. See "Interstar
Residential Loan Program -- Approval and Underwriting Process" for a description
of Low Documentation Loans, LoDoc Low Documentation Loans and EasyDoc Low
Documentation Loans.
BREACH OF REPRESENTATIONS AND WARRANTIES
If the seller, the servicer or the issuer trustee becomes aware that a
representation or warranty relating to any housing loan or mortgage is
incorrect, it must notify the other parties and the rating agencies within 10
business days of becoming aware. If the breach is not waived or remedied to the
satisfaction of the issuer trustee within five business days of the notice or
such longer time as the issuer trustee permits then, without any action being
required by either party, the seller shall be obligated to repurchase the
affected housing loan for an amount equal to its Unpaid Balance. There can be no
assurance that the seller will have sufficient funds to repurchase such housing
loans in such event.
Upon payment of the Unpaid Balance, Perpetual Trustees Victoria
Limited will continue to hold a legal interest in the affected housing loan and
mortgage and the seller shall hold the beneficial interest in such housing loan
and mortgage and be entitled to all interest and fees that are paid in respect
of them from, and including, the date of repurchase.
OTHER FEATURES OF THE HOUSING LOANS
The housing loans have the following features:
o interest is calculated daily and charged monthly in arrears;
o payments can be on a monthly, half-monthly, bi-weekly or weekly basis.
All payments from borrowers are made by electronic funds transfer
directly from each borrower's bank account to a trust drawings account
at National Australia Bank Limited; and
44
o they are governed by the laws of the Commonwealth of Australia and one
of the following Australian States or Territories:
o New South Wales;
o Victoria;
o Western Australia;
o Queensland;
o South Australia;
o Northern Territory; or
o the Australian Capital Territory.
DETAILS OF THE HOUSING LOAN POOL
The information in the following tables set out statistical
information relating to the housing loans to be sold to the trust as of the
close of business on March 10, 2005. All amounts have been rounded to the
nearest Australian dollar. The sum in any column may not equal the total
indicated due to rounding.
Note that these details may not reflect the housing loan pool as of
the closing date because the seller may substitute loans proposed for sale with
other eligible housing loans or add additional eligible housing loans. The
seller may do this if, for example, the loans originally selected are repaid
early.
The seller will not add, remove or substitute any housing loans prior
to the closing date if this would result in a change of more than 5% in any of
the characteristics of the pool of housing loans described in the first table on
page [*], unless a revised prospectus is delivered to prospective investors.
45
HOUSING LOAN INFORMATION
ANALYSIS OF THE HOUSING LOAN POOL
(All amounts expressed in Australian dollars)
Total pool size............................................... $1,327,685,362
Total number of loans......................................... 7,243
Average loan size............................................. $ 183,306.00
Maximum loan size............................................. $ 1,375,266.75
Minimum loan size............................................. $ 0.00
Total property value (current)................................ $2,004,356,639
Weighted Average current LVR.................................. 73.28%
Weighted Average original LVR................................. 73.64%
Maximum current LVR........................................... 95.00%
% of pool with loans > 80% LVR................................ 31.47%
Weighted Average Term to Maturity (months).................... 335.86
Weighted Average Seasoning (months)........................... 9.82
Weighted Average Borrower Rate................................ 7.17%
Maximum Remaining Term to Maturity (months)................... 355
% of pool with loans > $300,000 (by number)................... 15.21%
% of pool with loans > $300,000 (by loan amount).............. 33.03%
% of pool in arrears (by loan amount):
1-30 days..................................................... 1.38%
31-60 days.................................................... 0.00%
61+ days...................................................... 0.00%
Total...................................................... 1.38%
HOUSING LOANS BY OCCUPANCY
NUMBER % OF % OF
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AVG
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
------ --------- ------------- -------- ------- --------
Owner Occupied - House........ 4,342 59.95% 743,504,112 56.00% 171,235 71.19%
Owner Occupied - Unit......... 521 7.19% 93,111,542 7.01% 178,717 75.60%
Investment - House............ 1,499 20.70% 302,356,631 22.77% 201,706 74.83%
Investment - Unit............. 881 12.16% 188,713,077 14.21% 214,203 77.91%
------ ------ ------------- ------ ------- ------
Total....................... 7,243 100.00% 1,327,685,362 100.00% 183,306 73.28%
====== ====== ============= ====== ======= ======
46
HOUSING LOANS BY LVR (LOAN-TO-VALUE RATIO)
NUMBER % OF % OF
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AVG
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
------ --------- ------------- ------- ------- -------
<=20%......................... 269 3.71% 9,518,843 0.72% 35,386 14.60%
>20% and =<25%................ 100 1.38% 7,967,156 0.60% 79,672 22.63%
>25% and =<30%................ 154 2.13% 13,492,407 1.02% 87,613 27.68%
>30% and =<35%................ 191 2.64% 18,801,021 1.42% 98,435 32.92%
>35% and =<40%................ 217 3.00% 24,668,201 1.86% 113,678 37.71%
>40% and =<45%................ 227 3.13% 27,934,514 2.10% 123,060 42.42%
>45% and =<50%................ 292 4.03% 40,737,852 3.07% 139,513 47.50%
>50% and =<55%................ 358 4.94% 52,399,647 3.95% 146,368 52.48%
>55% and =<60%................ 356 4.92% 57,956,876 4.37% 162,800 57.52%
>60% and =<65%................ 681 9.40% 112,183,035 8.45% 164,733 63.23%
>65% and =<70%................ 395 5.45% 68,945,007 5.19% 174,544 67.64%
>70% and =<75%................ 569 7.86% 111,486,292 8.40% 195,934 72.83%
>75% and =<80%................ 1,691 23.35% 363,818,181 27.40% 215,150 78.91%
>80% and =<85%................ 267 3.69% 62,025,260 4.67% 232,304 83.21%
>85% and =<90%................ 1,062 14.66% 254,606,122 19.18% 239,742 89.05%
>90% and =<95%................ 414 5.72% 101,144,948 7.62% 244,311 93.27%
>95%.......................... 0 0.00% 0 0.00% 0 0.00%
------ --------- ------------- ------- ------- -------
Total...................... 7,243 100.00% 1,327,685,362 100.00% 183,306 73.28%
====== ========= ============= ======= ======= =======
HOUSING LOANS BY PRODUCT TYPES
NUMBER % OF % OF
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AVG
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
------ --------- ------------- ------- ------- -------
Variable - Principal &
Interest...................... 3,378 46.64% 616,254,094 46.42% 182,432 72.93%
Variable - Interest Only...... 3,349 46.24% 671,188,806 50.55% 200,415 74.02%
Variable - Line of Credit..... 464 6.41% 30,824,136 2.32% 66,431 65.07%
Fixed......................... 52 0.72% 9,418,326 0.71% 181,122 70.68%
------ ------- ------------- ------ ------- ------
Total...................... 7,243 100.00% 1,327,685,362 100.00% 183,306 73.28%
====== ======= ============= ====== ======= ======
47
HOUSING LOANS BY GEOGRAPHICAL DISTRIBUTION
NUMBER % OF % OF
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AVG
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
------ --------- ------------- ------- ------- -------
NSW (Metro)................... 1,956 27.01% 447,743,988 33.72% 228,908 71.30%
NSW (Regional)................ 384 5.30% 69,417,849 5.23% 180,776 72.58%
NSW (Country)................. 204 2.82% 33,665,028 2.54% 165,025 71.42%
ACT (Metro)................... 125 1.73% 19,718,868 1.49% 157,751 71.28%
ACT (Regional)................ 0 0.00% 0 0.00% 0 0.00%
ACT (Country)................. 0 0.00% 0 0.00% 0 0.00%
VIC (Metro)................... 1,547 21.36% 279,055,618 21.02% 180,385 75.40%
VIC (Regional)................ 52 0.72% 6,536,822 0.49% 125,708 0.00%
VIC (Country)................. 227 3.13% 31,160,732 2.35% 137,272 74.13%
QLD (Metro)................... 665 9.18% 129,079,807 9.72% 194,105 76.20%
QLD (Regional)................ 534 7.37% 97,541,292 7.35% 182,662 72.10%
QLD (Country)................. 140 1.93% 20,557,240 1.55% 146,837 78.71%
SA (Metro).................... 769 10.62% 100,211,122 7.55% 130,314 72.40%
SA (Regional)................. 0 0.00% 0 0.00% 0 0.00%
SA (Country).................. 104 1.44% 11,372,573 0.86% 109,352 73.34%
WA (Metro).................... 446 6.16% 69,448,709 5.23% 155,715 74.96%
WA (Regional)................. 0 0.00% 0 0.00% 0 0.00%
WA (Country).................. 31 0.43% 4,055,107 0.31% 130,810 78.33%
TAS (Metro)................... 23 0.32% 3,160,117 0.24% 137,396 69.85%
TAS (Regional)................ 20 0.28% 2,262,594 0.17% 113,130 0.00%
TAS (Country)................. 3 0.04% 330,114 0.02% 110,038 0.00%
NT (Metro).................... 13 0.18% 2,367,781 0.18% 182,137 86.55%
NT (Regional)................. 0 0.00% 0 0.00% 0 0.00%
NT (Country).................. 0 0.00% 0 0.00% 0 0.00%
----- ------ ------------- ------ ------- ------
Total...................... 7,243 100.00% 1,327,685,362 100.00% 183,306 73.28%
===== ====== ============= ====== ======= ======
HOUSING LOANS BY LOAN SIZE
NUMBER % OF % OF
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AVG
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
------ --------- ------------- ------- --------- -------
<=100,000........................ 1,998 27.59% 99,265,082 7.48% 49,682 56.99%
> 100,000 and <= 150,000......... 1,150 15.88% 144,290,702 10.87% 125,470 64.03%
> 150,000 and <= 200,000......... 1,243 17.16% 217,115,738 16.35% 174,671 71.42%
> 200,000 and <= 250,000......... 1,021 14.10% 228,703,990 17.23% 224,000 75.96%
> 250,000 and <= 300,000......... 729 10.06% 199,801,906 15.05% 274,077 77.40%
> 300,000 and <= 350,000......... 422 5.83% 136,690,953 10.30% 323,912 78.53%
48
> 350,000 and <= 400,000...... 305 4.21% 113,521,963 8.55% 372,203 79.94%
> 400,000 and <= 500,000...... 254 3.51% 112,486,676 8.47% 442,861 77.37%
> 500,000 and <= 750,000...... 106 1.46% 61,975,656 4.67% 584,676 73.69%
> 750,000 and <= 950,000...... 10 0.14% 8,029,341 0.60% 802,934 73.58%
> 950,000..................... 5 0.07% 5,803,355 0.44% 1,160,671 67.00%
----- ------- ------------- ------ -------- ------
Total...................... 7,243 100.00% 1,327,685,362 100.00% 183,306 73.28%
===== ======= ============= ====== ======== ======
HOUSING LOANS BY POSTCODE CONCENTRATION --
TOP 10 BY LOAN AMOUNT
NUMBER % OF % OF
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AVG
POST-CODE LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
--------- ------ --------- ------------- ------- ------- -------
Liverpool South............... 2170 46 0.64% 11,458,862.93 0.86% 249,106 77.54%
Craigieburn................... 3064 50 0.69% 9,998,332.48 0.75% 199,967 84.90%
Ten Mile Hollow............... 2250 58 0.80% 9,352,155.97 0.70% 161,244 74.14%
Cabramatta.................... 2166 43 0.59% 8,636,399.05 0.65% 200,846 75.42%
Meadow Heights................ 3048 50 0.69% 8,737,273.20 0.66% 174,745 88.15%
Kerrydale..................... 4226 38 0.52% 7,939,710.82 0.60% 208,940 70.09%
St Johns Park................. 2176 30 0.41% 7,664,834.69 0.58% 255,494 78.56%
Benowa........................ 4217 33 0.46% 7,322,438.70 0.55% 221,892 71.59%
Arndell Park.................. 2148 43 0.59% 7,271,456.93 0.55% 169,104 73.37%
Bradbury...................... 2560 37 0.51% 7,122,702.80 0.54% 192,505 73.59%
----- ------- ------------- ---- ------- ------
Total...................... 428 5.91% 85,504,168 6.44% 199,776 77.10%
===== ======= ============= ==== ======= ======
HOUSING LOANS BY LOAN SEASONING
NUMBER % OF % OF
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AVG
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
------ --------- ------------- ------- ------- -------
<= 3 months................... 3,433 47.40% 641,252,684 48.30% 186,791 73.67%
> 3 and <= 6 months........... 1,864 25.74% 362,182,610 27.28% 194,304 76.24%
> 6 and <= 12 months.......... 440 6.07% 99,959,433 7.53% 227,181 75.97%
> 12 and <= 18 months......... 249 3.44% 45,654,889 3.44% 183,353 72.53%
> 18 and <= 24 months......... 103 1.42% 14,474,730 1.09% 140,531 67.89%
> 24 and <= 36 months......... 114 1.57% 19,590,812 1.48% 171,849 69.25%
> 36 and <= 48 months......... 212 2.93% 30,716,189 2.31% 144,888 67.86%
> 48 and <= 60 months......... 638 8.81% 91,320,109 6.88% 143,135 63.02%
> 60.......................... 190 2.62% 22,533,906 1.70% 118,600 60.33%
------ ------- ------------- ------ ------- ------
Total...................... 7,243 100.00% 1,327,685,362 100.00% 183,306 73.28%
====== ======= ============= ====== ======= ======
49
HOUSING LOANS BY MATURITY
NUMBER % OF % OF
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AVG
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
------ --------- ------------- ------- ------- -------
15-Oct-12..................... 0 0.00% 0 0.00% 0 0.00%
15-Oct-13..................... 0 0.00% 0 0.00% 0 0.00%
15-Oct-14..................... 1 0.01% 106,307 0.01% 106,307 58.60%
15-Oct-20..................... 2 0.03% 418,865 0.03% 209,433 50.30%
15-Oct-22..................... 12 0.17% 1,238,007 0.09% 103,167 56.95%
15-Oct-23..................... 156 2.15% 20,477,886 1.54% 131,268 64.74%
15-Oct-28..................... 755 10.42% 103,772,718 7.82% 137,447 62.70%
15-Oct-30..................... 349 4.82% 54,456,305 4.10% 156,035 69.36%
15-Oct-31..................... 388 5.36% 75,672,609 5.70% 195,032 74.29%
15-Oct-32..................... 432 5.96% 87,462,031 6.59% 202,458 75.18%
15-Oct-33..................... 3,273 45.19% 627,638,558 47.27% 191,762 75.22%
15-Oct-34..................... 1,875 25.89% 356,442,075 26.85% 190,102 73.46%
------ ------- ------------- ------ ------- ------
Total...................... 7,243 100.00% 1,327,685,362 100.00% 183,306 73.28%
====== ======= ============= ====== ======= ======
HOUSING LOANS BY MORTGAGE INSURER
NUMBER % OF % OF
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AVG
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
------ --------- ------------- ------- ------- -------
PMI Mortgage Insurance........ 1,617 22.33% 326,065,869 24.56% 201,649 75.13%
GE Mortgage Insurance (HLIC).. 5,067 69.96% 925,118,000 69.68% 182,577 73.52%
Housing Loans Insurance Corp.. 3 0.04% 578,569 0.04% 192,856 53.72%
PMI Indemnity................. 556 7.68% 75,922,924 5.72% 136,552 62.61%
------ ------- ------------- ------ ------- ------
Total...................... 7,243 100.01% 1,327,685,362 100.00% 183,306 73.28%
====== ======= ============= ====== ======= ======
50
HOUSING LOANS BY MORTGAGE INSURER AND LVR
PMI MORTGAGE INSURANCE
NUMBER % OF % OF
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AVG
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
------ --------- ----------- ------- ------- -------
<=20%......................... 41 2.54% 1,367,751 0.42% 33,360 15.45%
>20% and =<25%................ 12 0.74% 1,005,988 0.31% 83,832 22.30%
>25% and =<30%................ 31 1.92% 3,153,745 0.97% 101,734 27.33%
>30% and =<35%................ 33 2.04% 3,203,171 0.98% 97,066 32.42%
>35% and =<40%................ 49 3.03% 6,022,439 1.85% 122,907 38.11%
>40% and =<45%................ 37 2.29% 4,962,386 1.52% 134,119 42.47%
>45% and =<50%................ 57 3.53% 8,604,589 2.64% 150,958 47.81%
>50% and =<55%................ 59 3.65% 10,120,071 3.10% 171,527 51.91%
>55% and =<60%................ 82 5.07% 15,206,519 4.66% 185,445 57.44%
>60% and =<65%................ 115 7.11% 20,712,713 6.35% 180,111 63.15%
>65% and =<70%................ 69 4.27% 13,025,447 3.99% 188,775 67.79%
>70% and =<75%................ 155 9.59% 30,263,381 9.28% 195,248 72.84%
>75% and =<80%................ 412 25.48% 93,387,786 28.64% 226,669 78.84%
>80% and =<85%................ 83 5.13% 19,270,481 5.91% 232,174 83.35%
>85% and =<90%................ 268 16.57% 68,102,499 20.89% 254,114 89.11%
>90% and =<95%................ 114 7.05% 27,656,903 8.48% 242,604 93.24%
>95%.......................... 0 0.00% 0 0.00% 0 0.00%
------ ------- ----------- ------ ------- ------
Total...................... 1,617 100.00% 326,065,869 100.00% 201,649 75.13%
====== ======= =========== ====== ======= ======
51
HOUSING LOANS BY MORTGAGE INSURER AND LVR
PMI INDEMNITY
NUMBER
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AVG
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
------ --------- ----------- ------- ------- -------
<=20%......................... 42 7.55% 1,340,394 1.77% 31,914 14.66%
>20% and <=<25%............... 15 2.70% 577,062 0.76% 38,471 22.17%
>25% and =<30%................ 20 3.60% 1,374,364 1.81% 68,718 27.56%
>30% and =<35%................ 33 5.94% 2,738,357 3.61% 82,981 32.22%
>35% and =<40%................ 25 4.50% 2,364,324 3.11% 94,573 37.79%
>40% and =<45%................ 29 5.22% 3,315,789 4.37% 114,338 42.21%
>45% and =<50%................ 32 5.76% 4,290,173 5.65% 134,068 47.43%
>50% and =<55%................ 42 7.55% 6,894,329 9.08% 164,151 52.91%
>55% and =<60%................ 29 5.22% 4,682,260 6.17% 161,457 57.61%
>60% and =<65%................ 53 9.53% 8,049,952 10.60% 151,886 62.57%
>65% and =<70%................ 73 13.13% 11,543,317 15.20% 158,128 66.78%
>70% and =<75%................ 60 10.79% 9,669,523 12.74% 161,159 72.71%
>75% and =<80%................ 58 10.43% 11,427,393 15.05% 197,024 78.60%
>80% and =<85%................ 27 4.86% 4,958,824 6.53% 183,660 83.12%
>85% and =<90%................ 14 2.52% 2,225,258 2.93% 158,947 88.38%
>90% and =<95%................ 4 0.72% 471,605 0.62% 117,901 91.04%
>95%.......................... 0 0.00% 0 0.00% 0 0.00%
--- ------ ---------- ------ ------- -----
Total...................... 556 100.00% 75,922,924 100.00% 136,552 62.61%
=== ====== ========== ====== ======= =====
MORTGAGE LOANS BY MORTGAGE INSURER AND LVR
HOUSING LOANS INSURANCE CORP.
NUMBER % OF % OF
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AVG
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
------ --------- ------- ------- ------- -------
<=20%......................... 0 0.00% 0 0.00% 0 0.00%
>20% and =<25%................ 0 0.00% 0 0.00% 0 0.00%
>25% and =<30%................ 0 0.00% 0 0.00% 0 0.00%
>30% and =<35%................ 0 0.00% 0 0.00% 0 0.00%
>35% and =<40%................ 0 0.00% 0 0.00% 0 0.00%
>40% and =<45%................ 1 33.33% 365,767 63.22% 365,767 43.85%
>45% and =<50%................ 0 0.00% 0 0.00% 0 0.00%
>50% and =<55%................ 0 0.00% 0 0.00% 0 0.00%
>55% and =<60%................ 1 33.33% 106,307 18.37% 106,307 58.60%
>60% and =<65%................ 0 0.00% 0 0.00% 0 0.00%
>65% and =<70%................ 0 0.00% 0 0.00% 0 0.00%
>70% and =<75%................ 0 0.00% 0 0.00% 0 0.00%
>75% and =<80%................ 0 0.00% 0 0.00% 0 0.00%
>80% and =<85%................ 1 33.33% 106,495 18.41% 106,495 82.75%
>85% and =<90%................ 0 0.00% 0 0.00% 0 0.00%
>90% and =<95%................ 0 0.00% 0 0.00% 0 0.00%
>95%.......................... 0 0.00% 0 0.00% 0 0.00%
-- ------- ------- ------ ------- ------
Total...................... 3 100.00% 578,569 100.00% 192,856 53.72%
== ======= ======= ====== ======= ======
52
MORTGAGE LOANS BY MORTGAGE INSURER AND LVR
GE MORTGAGE INSURANCE (HLIC)
NUMBER % OF % OF
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AVG
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
------ --------- ----------- ------- ------- -------
<=20%......................... 160 3.18% 6,941,100 0.75% 42,846 14.41%
>20% and =<25%................ 99 1.97% 6,511,653 0.70% 65,117 22.76%
>25% and =<30%................ 103 2.04% 9,040,990 0.97% 86,933 27.81%
>30% and =<35%................ 125 2.48% 12,859,492 1.39% 102,059 33.20%
>35% and =<40%................ 143 2.81% 16,281,438 1.75% 113,856 37.55%
>40% and =<45%................ 160 3.14% 19,290,572 2.08% 120,566 42.41%
>45% and =<50%................ 203 3.99% 27,843,090 3.00% 137,158 47.42%
>50% and =<55%................ 257 5.05% 35,385,247 3.81% 137,686 52.56%
>55% and =<60%................ 244 4.80% 37,961,789 4.09% 155,581 57.54%
>60% and =<65%................ 513 10.14% 84,050,215 9.06% 162,888 63.30%
>65% and =<70%................ 253 4.97% 44,376,243 4.78% 175,400 67.81%
>70% and =<75%................ 354 6.96% 71,553,388 7.71% 202,128 72.84%
>75% and =<80%................ 1,221 24.25% 260,773,424 28.11% 211,324 78.95%
>80% and =<85%................ 156 3.07% 37,689,460 4.06% 241,599 83.14%
>85% and =<90%................ 780 15.33% 184,278,365 19.86% 236,254 89.04%
>90% and =<95%................ 296 5.82% 73,016,440 7.87% 246,677 93.30%
>95%.......................... 0 0.00% 0 0.00% 0 0.00%
------ ------- ----------- ------ ------- ------
Total...................... 5,067 100.00% 925,118,000 100.00% 182,577 73.52%
====== ======= =========== ====== ======= ======
HOUSING LOANS BY CURRENT COUPON RATES
NUMBER % OF % OF AVERAGE WGT AVG
OF TOTAL NO. TOTAL $ BALANCE CURRENT
LOANS OF LOANS DOLLAR AMOUNT AMOUNT A$ LVR %
------ --------- ------------- ------- ------- -------
<= 5.00....................... 0 0.00% 0 0.00% 0 0.00%
> 5.01 and <= 5.50............ 0 0.00% 0 0.00% 0 0.00%
> 5.51 and <=6.00............. 2 0.03% 368,917 0.03% 184,459 53.02%
> 6.01 and <= 6.50............ 164 2.26% 36,240,401 2.73% 220,978 73.40%
> 6.51 and <= 7.00............ 2,592 35.79% 518,073,462 39.02% 199,874 72.85%
> 7.01 and <= 7.50............ 3,171 43.78% 582,256,197 43.85% 183,619 75.94%
> 7.51 and <= 8.00............ 890 12.29% 129,407,927 9.75% 145,402 65.79%
> 8.00........................ 424 5.85% 61,338,457 4.62% 144,666 67.58%
------ ------- ------------- ------ ------- ------
Total...................... 7,243 100.00% 1,327,685,362 100.00% 183,306 73.28%
====== ======= ============= ====== ======= ======
53
HOUSING LOANS BY MONTHS REMAINING TO MATURITY
NUMBER % OF DOLLAR % OF AVERAGE WGT AVG
OF TOTAL NO. AMOUNT TOTAL A$ BALANCE CURRENT
LOANS OF LOANS A$ AMOUNT A$ LVR %
------ --------- ------------- -------- -------- -------
0-240 Months.................. 171 2.36% 22,241,065 1.68% 130,065 64.01%
241-252 Months................ 0 0.00% 0 0.00% 0 0.00%
253-264 Months................ 0 0.00% 0 0.00% 0 0.00%
265-276 Months................ 0 0.00% 0 0.00% 0 0.00%
277-288 Months................ 755 10.42% 103,772,718 7.82% 137,447 62.70%
289-300 Months................ 0 0.00% 0 0.00% 0 0.00%
301-312 Months................ 349 4.82% 54,456,305 4.10% 156,035 69.36%
313-324 Months................ 388 5.36% 75,672,609 5.70% 195,032 74.29%
325-336 Months................ 432 5.96% 87,462,031 6.59% 202,458 75.18%
337-348 Months................ 3,273 45.19% 627,638,558 47.27% 191,762 75.22%
349-360 Months................ 1,875 25.89% 356,442,075 26.85% 190,102 73.46%
------ ------- ------------- ------- -------- ------
Total...................... 7,243 100.00% 1,327,685,362 100.00% 183,306 73.28%
====== ======= ============= ======= ======== ======
HOUSING LOANS BY INTEREST ONLY PERIOD REMAINING
NUMBER % OF % OF
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AVG
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
------ --------- ------------- -------- ------- -------
0-1 Years..................... 323 8.38% 58,855,929 8.28% 182,216 69.68%
1-2 Years..................... 119 3.09% 22,877,376 3.22% 192,247 75.23%
2-3 Years..................... 133 3.45% 23,846,550 3.36% 179,297 78.25%
3-4 Years..................... 1,327 34.44% 261,297,204 36.78% 196,908 78.06%
4-5 Years..................... 639 16.58% 114,057,235 16.05% 178,493 76.98%
5-6 Years..................... 19 0.49% 2,830,093 0.40% 148,952 68.56%
6-7 Years..................... 19 0.49% 2,926,002 0.41% 154,000 68.24%
7-8 Years..................... 64 1.66% 10,462,756 1.47% 163,481 66.58%
8-9 Years..................... 711 18.45% 130,561,359 18.38% 183,631 67.24%
9-10 Years.................... 499 12.95% 82,739,794 11.65% 165,811 67.17%
------ ------- ------------ ------- ------- ------
Total...................... 3,853 100.00% 710,454,298 100.00% 184,390 73.60%
====== ======= ============ ======= ======= ======
HOUSING LOANS BY LOAN TYPE
NUMBER % OF % OF
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE WGT AGT
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
------ --------- ------------- -------- ------- -------
LoDoc......................... 1,066 14.72% 157,255,833 11.84% 147,520 70.84%
EasyDoc....................... 664 9.17% 91,384,373 6.88% 137,627 55.24%
FullDoc....................... 5,513 76.11% 1,079,045,156 81.27% 195,727 75.17%
------ ------- ------------- ------- -------- -----
Total...................... 7,243 100.00% 1,327,685,362 100.00% 183,306 73.28%
====== ======= ============= ======= ======== =====
54
INTERSTAR RESIDENTIAL LOAN PROGRAM
ORIGINATION PROCESS
The housing loans included in the assets of the trust were originated
by Interstar Wholesale Finance Pty Limited from loan applications received
through its national network of independent accredited mortgage managers and
funded by the seller as described above. The mortgage managers may elect to
receive an originator's fee for approved loans at settlement, which will equal a
portion of the interest payments on the housing loans, throughout the term of
such approved housing loan. The originator's fee is an obligation of Interstar
Wholesale Finance Pty Limited and does not evidence an interest in the housing
loan. Interstar Wholesale Finance Pty Limited accepts applications for both the
purchase of acceptable residential security properties and the refinance of
existing housing loans.
APPROVAL AND UNDERWRITING PROCESS
Each lending services officer must attend ongoing in-house training
courses conducted by Interstar Wholesale Finance Pty Limited. This program
covers the duties, requirements and office procedures expected of each lending
services officer with particular emphasis on regulatory matters such as the
Consumer Credit Legislation and the Privacy Act. The lending services officer's
performance is constantly monitored and reviewed by his or her superiors to
ensure the maintenance of quality in the underwriting process. As part of his or
her ongoing review, the lending services officer is also provided with further
staff training particularly highlighting any changes to information technology
or legislative aspects that would impact on the day to day operation of the
business.
Housing loan applications are assessed by a lending services officer
and where an application is outside the current authority of the lending
services officer or the file has been declined it is referred to the lending
services officer's immediate superior for review. Where it is considered
appropriate, approval may be granted subject to the provision of further
information.
All housing loan applications, including the applications relating to
the housing loans included in the assets of the trust, must satisfy Interstar
Wholesale Finance Pty Limited's credit policy and procedures described in this
section. Interstar Wholesale Finance Pty Limited, like lenders in the Australian
residential housing loan market, does not divide its borrowers into groups of
differing credit quality for the purposes of setting standard interest rates for
its residential housing loans. All borrowers must satisfy Interstar Wholesale
Finance Pty Limited's underwriting criteria described in this section. Borrowers
are not charged different rates of interest based on their credit quality.
The approval process consists of determining the value of the proposed
security property, verifying the borrower's financial, as required, and credit
history details and ensuring these details satisfy Interstar Wholesale Finance
Pty Limited's underwriting criteria. However, the level of verification will be
less for Low Documentation Loans, as described below. The initial assessment of
the applicant is conducted by the Mortgage Manager on behalf of Interstar
Wholesale Finance Pty Limited, with the application then being submitted for
approval, to Interstar Wholesale Finance Pty Limited based upon it meeting
satisfactory credit standards. Approval of the loan application is at the total
discretion of Interstar Wholesale Finance Pty Limited.
55
All proposed security properties are required to be valued by a valuer
approved by Interstar Wholesale Finance Pty Limited. See "Description of the
Assets of the Trust -- Representations, Warranties and Eligibility Criteria".
The valuer must be a current member of the Australian Property Institute and
have the necessary professional indemnity insurance policy in force.
The valuation report must include the following details:
o the age, condition, size and suitability of the security
property;
o certificate of title details;
o the value of the land as distinct from the improvements;
o comparable sale prices to other similar properties within the
area within the last three months;
o if the security property is being purchased, how long the
property has been on the market;
o an assessment of the current market rental;
o the cost of any repair work required to the security property;
o the insurance replacement value of the security property; and
o any environmental factor, or if it is or may be subject at a
future date to any provisions of environmental legislation, that
would have an adverse effect on the value of the security
property.
Where more than one property is provided as security, the combined
value of the properties is taken into account.
The prospective borrower must have a satisfactory credit history,
stable employment, evidence of a genuine savings pattern and a minimum 5%
deposit in genuine savings. Gifts, inheritance and money borrowed from other
sources are not genuine savings and are not considered as part of the minimum
"5% deposit" requirement.
Interstar Wholesale Finance Pty Limited requires all borrowers to
satisfy a minimum disposable income level after all commitments, including
allowances for living expenses of the borrower and all dependents and the
proposed housing loan. To further safeguard that the borrower has the capacity
to meet all of his or her commitments, the assessment of the home loan
application is calculated at a rate 2% higher than the applicable rate.
Verification of an applicant's information is central to the approval
process. The Mortgage Manager obtains such information as:
o in the case of all housing loans apart from Low Documentation
Loans, tax returns, recent payslips and/or an employer
confirmation letter;
o in the case of all housing loans, credit checks; and
56
o in the case of all housing loans other than EasyDoc Low
Documentation Loans (previously known as Retro Low Doc Loans), a
full and detailed current assets and liabilities statement.
This information is then submitted to Interstar Wholesale Finance Pty
Limited for assessment within its current lending criteria.
57
The LoDoc Low Documentation Loans and EasyDoc Low Documentation Loans
(previously known as Latinum Low Doc Loans and Retro Low Doc Loans,
respectively) together, the Low Documentation Loans, are made available by
Interstar Wholesale Finance Pty Limited to self-employed borrowers and full-time
investors who are unable to provide financial statements or tax returns at the
time of applying for a housing loan. In the case of a LoDoc Low Documentation
Loan, an applicant must have been self-employed or a full-time investor for at
least 2 years and must have net assets, post-settlement of the housing loan, of
not less than A$50,000. There are no such minimum requirements in relation to an
EasyDoc Low Documentation Loan. The income verification requirements for a Low
Documentation Loan are less exhaustive than the verification requirements for
housing loans originated through Interstar Wholesale Finance Pty Limited's
standard (i.e., Full Documentation) approval and underwriting process.
In a LoDoc Low Documentation Loan application, the applicant must
disclose his or her income and is required to execute a declaration stating that
the information in the application is accurate. The applicant is also required
to acknowledge in the application that Interstar Wholesale Finance Pty Limited
will rely on the information in the application in making a decision as to
whether to approve the housing loan. The only income verification made in
relation to a LoDoc Low Documentation Loan is to confirm that the applicant's
asset and liability statement supports the income disclosed by the applicant in
the loan application.
There is no income verification made in relation to a EasyDoc Low
Documentation Loan.
The lending criteria for Low Documentation Loans are the same as the
lending criteria for other standard (i.e., Full Documentation) housing loans
originated through Interstar Wholesale Finance Pty Limited's standard
underwriting process, with the exception of limitations placed on maximum loan
amounts and loan-to-value ratios. See "-- Representations, Warranties and
Eligibility Criteria".
Upon acceptance of the loan application by Interstar Wholesale Finance
Pty Limited, mortgage insurance coverage is obtained. All loans through
Interstar Wholesale Finance Pty Limited must have 100% mortgage insurance
coverage with the appropriate cash flow cover. This mortgage insurance coverage
remains in force from the date of settlement until the earliest of discharge,
full repayment of the housing loan or payment of a claim. Full details of the
mortgage insurance companies and their respective ratings are set out separately
in this prospectus.
All borrowers in respect of housing loans are natural persons or
corporations. Housing loans to corporations may also be secured by guarantees
from directors. Guarantees may also be obtained in other circumstances.
Upon acceptance of the risk by the mortgage insurer, Interstar
Wholesale Finance Pty Limited then instructs one of its panel solicitors or
settlement agents to prepare the necessary mortgage documentation and forward
same to the borrower for execution. The mortgage documents comprise a mortgage
and memorandum of common provisions, loan agreement/offer together with a
general Terms and Conditions booklet and guarantee (if applicable). Upon receipt
of the executed mortgage documentation, certification of title will then occur
and settlement will take place. Upon settlement, the mortgage is registered and
the documents stored in the safe custody of the issuer trustee. A condition of
settlement is that the mortgagor establish and maintain full replacement
property insurance on the security property for the term of the housing loan.
58
Interstar Wholesale Finance Pty Limited's credit policies and approval
procedures are subject to constant review. Improvements in procedures are
continuous. Credit policy may change from time to time due to business
conditions and legal or regulatory changes.
59
GENERAL FEATURES OF THE HOUSING LOANS
The housing loans may consist of one or more of the following types:
NAME OF HOUSING LOAN GENERAL CHARACTERISTICS OF HOUSING LOAN
Interstar "Premium"
Facility Amortizing principal and interest repayment (P&I)
loans with an interest rate variable at the
discretion of the servicer and incorporating
limited "redraw" facilities that will be available
to borrowers only at the sole discretion of the
trust manager.
Interstar "Fix'n Float"
Facility Amortizing "P&I" loans with an interest rate fixed
for a specific initial period of up to five years
after which the interest rate converts to a
variable rate at the discretion of the servicer.
Interstar "IO Float"
Facility Non-amortizing loans requiring interest only
repayments by the borrowers for a specific initial
period of up to ten years with an interest rate
variable at the discretion of the servicer. At the
expiration of the initial period the loans convert
to the standard amortizing "P&I" loans with an
interest rate variable at the discretion of the
servicer.
Interstar "IO Fixed"
Facility Non-amortizing loans requiring interest only
repayments by the borrowers for a specific initial
period of up to five years with an interest rate
fixed for this initial period. At the expiration of
the initial period the loans convert to the
standard amortizing "P&I" loans with an interest
rate variable at the discretion of the servicer.
Interstar "Line of Credit"
Facility Initially-amortizing loans requiring interest only
repayments by the borrowers for a specific period
of up to ten years with an interest rate variable
at the discretion of the servicer, and
incorporating facilities that allow borrowers to:
o draw funds up to a pre-determined limit;
o repay some or all of those funds; and
o redraw those funds again up to the
then-current amortized limit subject always to
such right to redraw funds being at the
absolute discretion of the servicer, during
the life of the loan facility.
At the expiration of the initial period the loans
convert to the standard amortizing "P&I" loans with
an interest rate variable at the discretion of the
servicer.
Interstar "Split" Facility
A combined facility which:
60
o as to a specified Australian dollar proportion
of the facility has the general
characteristics of one type of housing loan as
referred to above; and
o as to the remaining Australian dollar
proportion of the facility has the general
characteristics of another type of housing
loan as referred to above.
Each housing loan may have some or all of the features described in
this section. In addition, during the term of any housing loan the servicer may
agree to change any of the terms of that housing loan from time to time at the
request of the borrower.
SPECIAL FEATURES OF THE HOUSING LOANS
REDRAWS
Most housing loans, excluding fixed rate loans, provide borrowers with
a facility which allows borrowers to be provided with redraws. These redraws may
be accessed by way of direct credit to the relevant borrower's nominated bank
account by electronic funds transfer or by check payments. This facility is
provided to a borrower at the absolute discretion of the servicer.
If a borrower makes any repayments under its housing loan which are in
addition to those that he or she is legally obliged to make under the terms of
the housing loan agreement on application by the borrower, the issuer trustee
must provide a redraw of principal repayments made in excess of the scheduled
principal repayments to the borrower, upon being so directed by the trust
manager in its absolute discretion, and subject to the trust manager certifying
to the issuer trustee that:
o the redraw to be provided to the borrower together with the
current Unpaid Balance of the housing loan will not exceed the
scheduled balance of the housing loan;
o after allowing for all payments which the issuer trustee is then
required to make or which the trust manager reasonably expects
that the issuer trustee will be required to make, there is or
will be sufficient cash in the assets of the trust for the issuer
trustee to provide that redraw; and
o the housing loan is not in arrears or default at the time of the
request for the redraw by the borrower.
A redraw will not result in the housing loan being removed
from the trust.
DIRECT DEBIT AUTHORITY
The servicer has arranged for the borrowers to execute a direct debit
authority so that payments under the borrower's mortgage loan will be directly
debited from the borrower's designated statement account. In certain cases the
servicer has arranged for National Australia Bank Limited to provide checking
account and direct entry paperless services in order to offer borrowers an
expanded range of financial services that are directly linked to the borrower's
mortgage loan facility. The provision of these facilities has been documented in
a Check Deposit and Direct Paperless Entry Facilities Agreement between National
Australia Bank Limited, the servicer and the issuer trustee. All mortgage loan
payments deducted from a borrower's
61
statement account, whether with National Australia Bank Limited, another bank or
other financial institutions, will be credited to a trust account in Perpetual
Trustees Victoria Limited's name established with National Australia Bank
Limited.
PAYMENT HOLIDAY
There is no provision for payment holidays to be granted to borrowers
in circumstances where excess principal has been repaid by the borrowers.
EARLY REPAYMENT
Partial repayments, or early repayments, can be made by borrowers in
respect of all housing loans, excluding fixed rate loans. Early repayment fees
will apply if a borrower discharges the housing loan within the first 5 years of
its term. Fixed rate loans will also incur break costs should any early
repayment occur prior to the expiration of the fixed rate period.
INTEREST RATE SWITCHING
A borrower may elect, in respect of a housing loan, to switch from a
variable rate of interest to a fixed rate of interest at any time, provided that
the relevant housing loan will bear a fixed rate of interest for a maximum
period of 5 years. While the interest rate of the housing loan remains fixed,
the borrower is not entitled to make any additional principal repayments, and
the payments from the borrower will consist solely of interest or, in the case
of the Interstar "Fix'n Float" Facility, principal and interest. At the end of
that period, the housing loan will bear a variable rate of interest and
principal repayments will recommence, calculated to ensure that the entire loan
balance is repaid in full no later than the maturity date of the mortgage,
unless the relevant mortgage insurer so approves and the trust manager offers a
further fixed rate of interest in relation to the housing loan and such rate is
accepted by the relevant borrower.
ADDITIONAL FEATURES OF THE HOUSING LOANS
As part of its policy of continuous loan product improvement and
development, the servicer may from time to time offer additional features and
products not referred to in this prospectus. Before doing so, the servicer must
ensure that the introduction of any additional features and/or products would
not affect any relevant mortgage insurance policy and would not cause the
downgrade or withdrawal of the rating of any notes.
62
THE MORTGAGE INSURANCE POLICIES
GENERAL
Each housing loan acquired by the trust will be insured by one of PMI
Indemnity Limited, GE Capital Mortgage Insurance Corporation (Australia) Pty
Ltd, PMI Mortgage Insurance Ltd or GE Mortgage Insurance Pty Ltd. The mortgage
insurance policy in relation to each housing loan is provided by the mortgage
insurer at the time that the housing loan is originated. The issuer trustee is
the insured party under each mortgage insurance policy in respect of each
housing loan. The insurance provided under each mortgage insurance policy covers
100% of the principal balance and any unpaid interest on the housing loan
insured regardless of the LVR of that housing loan. This section is a summary of
the general provisions of the mortgage insurance policies.
CERTAIN PROVISIONS OF MORTGAGE INSURANCE POLICIES
RESTRICTIONS AND CANCELLATION
The amount recoverable under each mortgage insurance policy will
generally be:
o the whole of the loan amount due under the housing loan;
o any reasonable expenses incurred in enforcing the housing loan
and any mortgage and/or guarantee securing that housing loan;
o any unpaid interest calculated at the interest rate applicable if
interest is paid on the due date; and
o the timely payment for a period of at least 12 months after the
date upon which a claim is made under that contract of interest
payments under the housing loan which remain outstanding for a
period of 14 days.
The actual amounts recoverable, and the amounts to be deducted, vary
between the policies. For example, rent on the mortgaged property and insurance
proceeds not spent on restoration or repair which are received by the issuer
trustee may reduce amounts payable by the insurer under a mortgage insurance
policy.
There are a number of requirements and restrictions imposed on the
insured under each mortgage insurance policy which may entitle the relevant
insurer to cancel the policy or reduce the amount of a claim. Depending on the
mortgage insurance policy, these may include:
o the existence of an encumbrance or other interest which affects
or has priority over the relevant mortgage;
o the relevant mortgage, the relevant housing loan or a guarantee
or indemnity relating to the housing loan ceasing to be
effective;
o if there is a material omission or misstatement by the insured in
relation to the policy;
o that any premium is not paid when due or within the relevant
grace period, if any;
o if there is physical damage to the relevant mortgaged property;
63
o a breach by the insured of the policy; and
o certain circumstances which affect the insured's rights or
recoveries under the relevant housing loan or mortgage.
EXCLUSIONS
A mortgage insurance policy may not, depending on its terms, cover any
loss arising from specified events, such as war, nuclear occurrence and
contamination.
UNDERTAKING
Under a mortgage insurance policy, the insured may have an obligation
to, among other things:
o report arrears or other defaults on the relevant housing loan;
o report amounts outstanding under that relevant housing loan;
o report procedures being taken in respect of a defaulted housing
loan, including enforcement of the relevant mortgage or the
taking of possession of any relevant mortgaged property;
o make all claims within a particular period and in a particular
form; and
o ensure that the terms of the relevant housing loan require that a
general insurance policy is in place in respect of the relevant
mortgaged property.
PERIOD OF COVER
All mortgage insurance policies provide cover with effect from the
date of settlement of a housing loan until the discharge, the full repayment of
the housing loan or payment of a claim, whichever is the earliest. See
"Interstar Residential Loan Program -- Approval and Underwriting Process".
VARIATIONS
Variations in respect of a mortgage insurance policy may be made with
the approval of the relevant mortgage insurer.
VARIANCE BETWEEN POLICIES
Each mortgage insurance policy has different provisions. The above is
a summary of certain provisions -- some may not relate to, or may differ from, a
particular mortgage insurance policy.
64
TRUST MANAGER UNDERTAKINGS WITH RESPECT TO INSURANCE POLICIES
Under the series notice, the trust manager undertakes:
o not to take any action in respect of a housing loan which is
contrary to the terms of any mortgage insurance policy without
the approval of the relevant mortgage insurer; and
o to take such steps as are reasonably available to it to ensure
that a mortgage insurer is not relieved from its liability under
a mortgage insurance policy.
DESCRIPTION OF THE MORTGAGE INSURERS
PMI MORTGAGE INSURANCE LTD AND PMI INDEMNITY LIMITED)
PMI Mortgage Insurance Ltd, previously known as MGICA Ltd, has been
providing lenders' mortgage insurance in Australia since 1965 and in New Zealand
since 1988.
PMI Mortgage Insurance Ltd's parent is PMI Mortgage Insurance
Australia (Holdings) Pty Ltd, a subsidiary of PMI Mortgage Insurance Co. which
is a subsidiary of the PMI Group Inc. PMI Mortgage Insurance Co. is a leading
monoline mortgage insurer in the United States currently having an insurer
financial strength rating of AA by Standard & Poor's, AA+ by Fitch Ratings and
Aa2 by Moody's.
As of December 31, 2003, the audited financial statements of PMI
Mortgage Insurance Ltd had total assets of A$691 million and shareholder's
equity of A$347 million. PMI Mortgage Insurance Ltd currently has a claims
paying ability rating by Standard and Poor's of AA, by Fitch of AA and by
Moody's of Aa2.
As of May 17, 2004 S&P has revised its outlook on The PMI Group Inc.
and its rated subsidiaries, including PMI Mortgage Insurance Ltd and PMI
Indemnity Limited, from "negative" to "stable". No assurances are given
regarding any future outlook or the future levels of the credit ratings of each
of The PMI Group Inc., PMI Mortgage Insurance Ltd and PMI Indemnity Limited by
any of S&P, Moody's or Fitch Ratings.
PMI Indemnity Limited, previously named CGU Lenders Mortgage Insurance
Limited, was formed in 1971 as a specialist insurer to provide mortgage
insurance. PMI Indemnity Limited was acquired by PMI Mortgage Insurance
Australia (Holdings) Pty Ltd, described above, on September 14, 2001.
As of December 31, 2003, the audited financial statements of PMI
Indemnity Limited had total assets of A$182 million and shareholders' equity of
A$131 million. PMI Indemnity Limited currently has an insurer financial strength
rating of Aa3 by Moody's, AA by Fitch Ratings and AA- by Standard & Poor's.
PMI Indemnity Limited ceased writing new business from July 1, 2002
with all new business now being written by PMI Mortgage Insurance Limited.
65
The business address of each of PMI Mortgage Insurance Ltd and PMI
Indemnity Limited is Level 23, 50 Bridge Street, Sydney, New South Wales.
GENERAL ELECTRIC GROUP
GE Capital Mortgage Insurance Corporation (Australia) Pty Limited
("GEMICO") commenced operations in March 1998 and was established by GE as a
sister company to GEMI. It is also a wholly owned subsidiary of GE Capital
Australia.
Together GEMI and GEMICO insured all loans between 15 December 1997
and 31 March 2004.
On 31 March 2004 the lenders mortgage insurance ("LMI") businesses
(including all of the LMI policies written during such period) of GEMI and
GEMICO were transferred to a new entity - GE Mortgage Insurance Company Pty
Limited ("GENWORTH GEMICO").
The transfer of the LMI policies was made pursuant to two separate
schemes under the Insurance Act 1973 (Cth) ("INSURANCE Act") approved by both
APRA and the Federal Court of Australia. One scheme effected the transfer of LMI
policies issued by GEMI and the other scheme effected the transfer of LMI
policies issued by GEMICO.
Upon the completion of the transfer, the then current claims paying
ratings for both GEMI and GEMICO ("AA" by S&P and Fitch and "Aa2" by Moody's)
were withdrawn and identical ratings were issued by all three local ratings
agencies in respect of Genworth GEMICO.
As at 1 April 2004, Genworth GEMICO had total assets of
A$1,662,413,000 and shareholder's equity of A$1,066,603,000
LOANS INSURED BY THE GENWORTH FINANCIAL GROUP
On or about 24 May 2004, New GEMICO became a wholly owned subsidiary
of a newly incorporated and U.S. domiciled entity, Genworth Financial, Inc.
(NYSE: GNW). Genworth Financial, Inc. is a leading insurance holding company,
serving the lifestyle protection, retirement income, investment and mortgage
insurance needs of more than 15 million customers, and has operations in 22
countries, including the U.S., Canada, Australia, the U.K. and more than a dozen
other European countries. Genworth Financial, Inc.'s rated mortgage insurance
companies have financial strength ratings of "AA" (Very Strong) from Standard &
Poor's, "Aa2" (Excellent) from Moody's and "AA" (Very Strong) from Fitch.
General Electric Company is currently the majority owner of Genworth
Financial, Inc. General Electric Company is a diversified industrial and
financial services company with operations in over 100 countries. General
Electric Company is rated AAA by Standard & Poor's and Aaa by Moody's. General
Electric Company is the indirect owner of lenders mortgage insurance business in
the United States, United Kingdom, Canada, New Zealand and Australia.
The principal place of business of GE Mortgage Insurance Pty Ltd, GE
Capital Mortgage Insurance Corporation (Australia) Pty Ltd and GE Mortgage
Insurance Company Pty Limited is Level 23, 259 George Street, Sydney, New South
Wales, Australia
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HOUSING LOANS INSURANCE CORPORATION
Housing Loans Insurance Corporation ("HLIC" or the "STATUTORY
AUTHORITY") was a Commonwealth Government statutory authority established under
the Housing Loans Insurance Act 1965 (Cth). With effect from 15 December 1997
the Commonwealth Government:
(a) transferred to the Commonwealth Government (pursuant to the
Housing Loans Insurance Corporation (Transfer of Assets and Abolition)
Act 1996) (Cth) the liabilities of the Statutory Authority in relation
to contracts of insurance to which the Statutory Authority was a party
immediately before that day;
(b) established a new corporation, Housing Loans Insurance Corporation
Limited (ACN 071 466 334), which has since changed its name to GE
Mortgage Insurance Pty Limited ("GEMI"), to manage these contracts of
insurance on behalf of the Commonwealth of Australia; and
(c ) sold that new corporation (including the assets and
infrastructure of the Statutory Authority) to GE Capital Australia,
which is a wholly owned subsidiary of General Electric Company ("GE").
References in this Offering Circular to "HLIC" are, with respect to
contracts of insurance to which the Statutory Authority was a party on or before
12 December 1997 and which are now vested in the Commonwealth of Australia.
THE TITLE INSURANCE POLICIES
COVER
Some housing loans that are acquired may be secured by mortgages which
will be the subject of a title insurance policy. Title insurance provides 100%
coverage for losses arising, among other things, as a result of a relevant
mortgage:
o being subject to any prior encumbrance;
o not being validly registered; or
o being invalid or unenforceable.
The issuer trustee will be the insured party under each title
insurance policy in respect of each mortgage securing a housing loan.
The insurer for any housing loan insured under a title insurance
policy will be:
o First American Title Insurance Company of Australia Pty Limited;
or
o any other entity approved from time to time by the trust manager
and which each rating agency has confirmed will not cause a
downgrade or withdrawal of the rating of any note.
The trust manager will undertake:
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o not to take any action in respect of a housing loan where such
action would be contrary to the terms of the title insurance
policy covering that housing loan unless it is approved by the
relevant title insurer; and
o to take such steps as are reasonably available to it to ensure
that a title insurer is not relieved from its liability under its
title insurance policy.
PERIOD OF COVER
o The title insurance policy in respect of each mortgage securing a
housing loan commences on the date that the relevant title
insurance policy for that mortgage is issued and continues for so
long as:
o the issuer trustee owns the relevant mortgage;
o the issuer trustee retains an estate or interest in the relevant
mortgage; or
o the issuer trustee, as a mortgagee exercising its power of sale,
has a liability to a purchaser regarding the title to the land
under a contract of sale for the land or the issuer trustee holds
a debt secured by a mortgage given to the issuer trustee by a
purchaser of the land.
The policy also continues to provide protection if:
o the issuer trustee acquires all or part of the estate or interest
in the relevant property by foreclosure or any other legal manner
which discharges the relevant mortgage;
o a successor acquires an interest in the relevant mortgage; or
o a successor acquires the relevant mortgage or the estate or
interest in the relevant property by operation of law and not
purchase.
REFUSAL OR REDUCTION IN CLAIM
Title insurance policies may not provide cover, or may provide a
reduced amount of cover, for losses arising as a result of, among other things:
o any material misstatement, omission or misrepresentation in
connection with obtaining the policies; or
o any material breach of the terms and conditions of the policies.
EXCLUSIONS
The title insurer will not provide cover under the title insurance
policy resulting from, among other things:
o restrictions or rights that are noted on the title to the land on the
policy date;
o the existence of laws which restrict or prohibit the use of the land or the
breach of those laws;
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o environmental contaminants or hazardous waste under the land;
o native title claims in relation to the land;
o risks which:
o the insured at any time created, allowed or agreed to;
o were known to the insured but not to the title insurer on or
prior to the policy date;
o cause no loss to the insured;
o come into existence or are recorded in any public records after
the date upon which the relevant mortgage is registered; or
o result in any loss of priority because the insured makes further
advances despite knowing the existence of subsequent charges;
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o if the relevant mortgage is or is claimed to be unenforceable or
otherwise affected because the insured failed to comply with or
breached the Consumer Credit Legislation or laws relating to the
doing of business and the providing of credit; or
o if the insured is liable to pay compensation, penalties, etc., to
any person because the insured failed to comply with or breached
any credit laws.
DESCRIPTION OF TITLE INSURER
First American Title Insurance Company of Australia Pty Limited ABN 64
075 279 908 is a subsidiary of First American Title Insurance Company, a
specialist title insurer and a diversified provider of business information and
related products and services in the United States. First American Title
Insurance Company of Australia Pty Limited trades as First Title in Australia
under the following brand:-
[First Title LOGO]
First American Title Insurance Company was founded over 113 years ago
with revenues of US$6.21 billion and approximately 30,000 employees worldwide in
2003. First American Title Insurance Company is publicly traded on the New York
Stock Exchange through its holding company, the First American Financial
Corporation.
A.M. Best Company, an insurance company ratings and information
agency, affirmed in 2002 the current rating for First American Title Insurance
Company of Australia Pty Limited of A+ (Superior). A.M. Best Company evaluates
title insurers from both an insurance and general industry perspective.
Currently, First American Title Insurance Company and First American
Financial Corporation have a rating of "A-" from S&P. First American Financial
Corporation's senior debt is rated "stable" by S&P.
70
DESCRIPTION OF THE US$ NOTES
GENERAL
The issuer trustee will issue the US$ notes on the closing date
pursuant to a direction from the trust manager to the issuer trustee to issue
the notes and the terms of the master trust deed, the series notice and the note
trust deed. The notes will be governed by the laws of New South Wales,
Australia. The following summary describes the material terms of the notes
(including the US$ notes). The summary does not purport to be complete and is
subject to the terms and conditions of the transaction documents, any
fixed-floating rate swaps and the currency swaps.
FORM OF THE US$ NOTES
BOOK-ENTRY REGISTRATION
The US$ notes will be issued only in registered book-entry form in
minimum denominations of US$100,000 and multiples of US$1,000 in excess of that
amount. Unless definitive notes are issued, all references to actions by the US$
noteholders will refer to actions taken by The Depository Trust Company (DTC)
upon instructions from its participating organizations and all references in
this prospectus to distributions, notices, reports and statements to US$
noteholders will refer to distributions, notices, reports and statements to DTC
or its nominee, as the registered noteholder, for distribution to owners of the
US$ notes in accordance with DTC's procedures.
US$ noteholders may hold their interests in the notes through DTC, in
the United States, or through Clearstream Banking, societe anonyme (CLEARSTREAM,
LUXEMBOURG) or the Euroclear System (EUROCLEAR), in Europe, if they are
participants in those systems, or indirectly through organizations that are
participants in those systems. Cede & Co., as nominee for DTC, will be the
registered noteholder of the US$ notes. Clearstream, Luxembourg and Euroclear
will hold omnibus positions on behalf of their respective participants, through
customers' securities accounts in Clearstream, Luxembourg's and Euroclear's
names on the books of their respective depositaries. The depositaries in turn
will hold the positions in customers' securities accounts in the depositaries'
names on the books of DTC.
DTC has advised the trust manager and the underwriters that it is:
o limited-purpose trust company organized under the New York
Banking Law;
o "banking organization" within the meaning of the New York Banking
Law;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the New York
Uniform Commercial Code; and
o a "clearing agency" registered under the provisions of Section
17A of the United States Securities Exchange Act of 1934, as
amended (the EXCHANGE ACT).
DTC holds securities for its participants and facilitates the
clearance and settlement among its participants of securities transactions,
including transfers and pledges, in deposited securities through electronic
book-entry changes in its participants' accounts. This eliminates the need for
physical movement of securities. DTC participants include securities brokers and
dealers, banks,
71
trust companies, clearing corporations and other organizations. Indirect access
to the DTC system is also available to others including securities brokers and
dealers, banks, and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. The rules
applicable to DTC and its participants are on file with the Securities and
Exchange Commission (the SEC).
Transfers between participants on the DTC system will occur in
accordance with DTC's rules. Transfers between participants on the Clearstream,
Luxembourg system and participants on the Euroclear system will occur in
accordance with their rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream,
Luxembourg participants or Euroclear participants, on the other, will be
effected by DTC in accordance with DTC's rules on behalf of the relevant
European international clearing system by that system's depositary. However,
these cross-market transactions will require delivery of instructions to the
relevant European international clearing system by the counterparty in that
system in accordance with its rules and procedures and within its established
deadlines, European time. The relevant European international clearing system
will, if the transaction meets its settlement requirements, deliver instructions
to its depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Clearstream, Luxembourg participants and Euroclear participants may not
deliver instructions directly to their system's depositary.
Because of time-zone differences, credits of securities in
Clearstream, Luxembourg or Euroclear as a result of a transaction with a DTC
participant will be made during the subsequent securities settlement processing,
dated the business day following the DTC settlement date. The credits for any
transactions in these securities settled during this processing will be reported
to the relevant Clearstream, Luxembourg participant or Euroclear participant on
that business day. Cash received in Clearstream, Luxembourg or Euroclear as a
result of sales of securities by or through a Clearstream, Luxembourg
participant or a Euroclear participant to a DTC participant will be received and
available on the DTC settlement date. However, it will not be available in the
relevant Clearstream, Luxembourg or Euroclear cash account until the business
day following settlement in DTC.
Purchases of US$ notes held through the DTC system must be made by or
through DTC participants, which will receive a credit for the US$ notes on DTC's
records. The ownership interest of each actual US$ noteholder is in turn to be
recorded on the DTC participants' and indirect participants' records. US$
noteholders will not receive written confirmation from DTC of their purchase.
However, noteholders are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the DTC participant or indirect participant through which the noteholder
entered into the transaction. Transfers of ownership interests in the US$ notes
are to be accomplished by entries made on the books of DTC participants acting
on behalf of the US$ noteholders. US$ noteholders will not receive definitive
notes representing their ownership interest in US$ notes unless use of the
book-entry system for the US$ notes is discontinued.
To facilitate subsequent transfers, all securities deposited by DTC
participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of securities with DTC and their registration in the name of Cede &
Co. effects no change in beneficial ownership. DTC has no knowledge of the
actual holders of the US$ notes; DTC's records reflect only the identity of the
DTC participants to whose accounts the US$ notes are credited, which may or may
not be the
72
actual beneficial owners of the US$ notes. The DTC participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to DTC
participants, by DTC participants to indirect participants, and by DTC
participants and indirect participants to US$ noteholders will be governed by
arrangements among them and by any statutory or regulatory requirements as may
be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote on behalf of the
notes. Under its usual procedures, DTC mails an omnibus proxy to the issuer
trustee as soon as possible after the record date, which assigns Cede & Co.'s
consenting or voting rights to those DTC participants to whose accounts the US$
notes are credited on the record date, identified in a listing attached to the
proxy.
Principal and interest payments on the US$ notes will be made to DTC.
DTC's practice is to credit its participants' accounts on the applicable payment
date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on that payment date.
Standing instructions, customary practices, and any statutory or regulatory
requirements as may be in effect from time to time will govern payments by DTC
participants to US$ noteholders. These payments will be the responsibility of
the DTC participant and not of DTC, the issuer trustee, the note trustee or the
principal paying agent. Payment of principal and interest to DTC is the
responsibility of the issuer trustee, disbursement of the payments to DTC
participants is the responsibility of DTC, and disbursement of the payments to
US$ noteholders is the responsibility of DTC participants and indirect
participants.
DTC may discontinue providing its services as securities depository
for the notes at any time by giving reasonable notice to the principal paying
agent. Under these circumstances, if a successor securities depository is not
obtained, definitive notes are required to be printed and delivered.
According to DTC, the foregoing information about DTC has been
provided for informational purposes only and is not intended to serve as a
representation, warranty, or contract modification of any kind.
Clearstream, Luxembourg is a company with limited liability
incorporated under the laws of Luxembourg. Clearstream, Luxembourg holds
securities for its participating organizations and facilitates the clearance and
settlement of securities transactions between Clearstream, Luxembourg
participants through electronic book-entry changes in accounts of Clearstream,
Luxembourg participants, thereby eliminating the need for physical movement of
notes. Transactions may be settled in Clearstream, Luxembourg in [multiple] [any
of 31] currencies, including U.S. dollars.
Clearstream, Luxembourg participants are financial institutions around
the world, including underwriters, securities brokers and dealers, banks, trust
companies, and clearing corporations. Indirect access to Clearstream, Luxembourg
is also available to others, including banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Clearstream, Luxembourg participant, either directly or indirectly.
73
Euroclear was created in 1968 to hold securities for its participants
and to clear and settle transactions between Euroclear participants through
simultaneous electronic book-entry delivery against payment. This eliminates the
need for physical movement of notes. Transactions may be settled in [multiple]
[any of 32] currencies, including U.S. dollars.
Euroclear is owned by Euroclear Clearance System Public Limited
Company and operated through a license agreement by Euroclear Bank S.A./N.V., a
bank incorporated under the laws of the Kingdom of Belgium, the EUROCLEAR
OPERATOR. The Euroclear Operator is regulated and examined by the Belgian
Banking and Finance Commission and the National Bank of Belgium.
Euroclear participants include banks, including central banks,
securities brokers and dealers and other professional financial intermediaries.
Indirect access to Euroclear is also available to other firms that maintain a
custodial relationship with a Euroclear participant, either directly or
indirectly.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the "Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System". These terms and
conditions govern transfers of securities and cash within Euroclear, withdrawal
of securities and cash from Euroclear, and receipts of payments for securities
in Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific notes to specific securities clearance accounts. The
Euroclear Operator acts under these terms and conditions only on behalf of
Euroclear participants and has no record of or relationship with persons holding
through Euroclear participants.
Distributions on the US$ notes held through Clearstream, Luxembourg or
Euroclear will be credited to the cash accounts of Clearstream, Luxembourg
participants or Euroclear participants in accordance with the relevant system's
rules and procedures, to the extent received by its depositary. Clearstream,
Luxembourg or the Euroclear Operator, as the case may be, will take any other
action permitted to be taken by a US$ noteholder on behalf of a Clearstream,
Luxembourg participant or Euroclear participant only in accordance with its
rules and procedures, and depending on its depositary's ability to effect these
actions on its behalf through DTC.
Although DTC, Clearstream, Luxembourg and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of US$ notes among
participants of DTC, Clearstream, Luxembourg and Euroclear, they are under no
obligation to perform or continue to perform these procedures and these
procedures may be discontinued at any time.
DEFINITIVE NOTE
Notes issued in definitive form are referred to in this prospectus as
"definitive notes". US$ notes will be issued as definitive notes, rather than in
book entry form to DTC or its nominees, only if one of the following events
occurs:
o the principal paying agent advises the trust manager in writing
that DTC is no longer willing or able to discharge properly its
responsibilities as depository for the US$ notes, and the trust
manager is not able to locate a qualified successor;
o the issuer trustee, at the direction of the trust manager,
advises the principal paying agent in writing that it elects to
terminate the book-entry system through DTC; or
74
o after the occurrence of an event of default, the note trustee, at
the written direction of noteholders holding a majority of the
outstanding principal balance of the US$ notes, advises the
issuer trustee and the principal paying agent, that the
continuation of a book-entry system is no longer in the best
interest of the US$ noteholders.
Definitive notes will be transferable and exchangeable at the offices
of the note registrar, which is initially the principal paying agent located at
101 Barclay Street, 21st Floor West, New York, New York 10286. The note
registrar will not impose a service charge for any registration of transfer or
exchange, but may require payment of an amount sufficient to cover any tax or
other governmental charge.
A definitive note may be transferred in whole or in part in an
authorized denomination upon the surrender of the definitive note, at the office
of the note registrar together with the form of transfer endorsed on it duly
completed and executed.
The note registrar shall not be required to register the transfer or
exchange of any definitive notes within 10 [calendar days] [business days]
preceding a payment date.
DISTRIBUTIONS ON THE NOTES
Collections in respect of interest and principal will be received
during each Collection Period. Collections include the following:
o payments of interest, principal and fees, including prepayments
of principal under the housing loans;
o proceeds from the enforcement of the housing loans and registered
mortgages relating to those housing loans;
o amounts received under mortgage insurance policies and title
insurance policies;
o amounts received under any fixed-floating rate swaps and the
currency swaps;
o income in respect of authorized investments of the trust; and
o interest on amounts in the collection account.
The issuer trustee will make payments on a quarterly basis on each
payment date. On each payment date, the principal paying agent will distribute,
indirectly through DTC and/or the depositaries, principal and interest, to the
owners of record of the US$ notes as of the date which is 4 business days prior
to that payment date if the US$ notes are held in book-entry form, or, if the
US$ notes are held in definitive form, the last day of the prior calendar month.
Payments on the definitive notes will be made to the US$ noteholder of record by
US$ check drawn on a bank in New York City and either mailed to the address of
the US$ noteholder shown on the register as of 4:00 p.m. Melbourne time on the
date that is 4 business days before the payment date or transferred to a US$
account maintained by the US$ noteholder with a bank in New York City.
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KEY DATES AND PERIODS
The following are the relevant dates and periods for the allocation of
cashflows and their payments.
COLLECTION PERIOD............. with respect to a payment date, the period
from, and including, the date which is 4
business days before the payment date preceding
that payment date to, but excluding, the date
which is 4 business days before that payment
date. However, the first and last Collection
Periods are as follows:
o first: period from and excluding the
initial cut-off date to and including [*]
[*], 2005; and
o last: period from and including the date
which is 6 business days before the
payment date immediately prior to the
final payment date to and excluding the
day which is 6 business days before that
final payment date.
INTEREST PERIOD............... with respect to a note, each period from and
including a payment date to and excluding the
next payment date. However, the first and last
Interest Periods for each note are as follows:
o first: period from and including the
closing date to and excluding the first
payment date; and
o last: period from and including the
payment date prior to the earlier of the
final maturity date and the date on which
the relevant note is redeemed in full to
and excluding the final maturity date or
the date on which the relevant note is so
redeemed.
DETERMINATION DATE............ with respect to a payment date, the date which
is 4 business days before that payment date or,
if that date is not a business day, then the
next business day unless that day falls in the
next calendar month, in which case the
Determination Date will be the preceding
business day.
PAYMENT DATE.................. the [10th] day or, if the [10th] day is not a
business day, then the next business day of
each [March], [June], [September] and
[December] unless that day falls in the next
calendar month, in which case the payment date
will be the preceding business day. The first
payment date will be in [*] 2005.
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EXAMPLE CALENDAR
The following example calendar for a quarter assumes that all relevant
days are business days.
COLLECTION PERIOD............. March [6th] to June [30th]
INTEREST PERIOD .............. March [10th] to June [9th]
DETERMINATION DATE ........... June [6th]
PAYMENT DATE ................. June [10th]
CALCULATION OF INCOME
On each Determination Date, the trust manager will calculate the
Income for the immediately preceding Collection Period.
INCOME
INCOME for a Collection Period means all moneys, rights and property
which is received by the issuer trustee during that Collection Period by way of
interest or otherwise in the nature of income in respect of the Authorized
Investments, including the housing loans, of the trust including:
o amounts attributable to interest received under any
fixed-floating rate swaps and the currency swaps;
o interest on income and any other monies received;
o amounts in the nature of, or attributable to, interest derived
under a mortgage insurance policy or title insurance policy;
o interest and fees received from borrowers under the housing
loans; and
o break payments received from mortgage insurers or borrowers under
the housing loans.
APPLICATION OF MORTGAGE PRINCIPAL REPAYMENTS AND LIQUID AUTHORIZED INVESTMENTS
TO AVAILABLE INCOME
The Trust Manager must ensure that, subject to the paragraph below,
the trust will at all times have Liquid Authorized Investments at any time not
less than 1% or such other percentage as determined by the trust manager and
confirmed by each rating agency of the sum of the outstanding Principal Amount
of any Redraw notes, the Class A A$ Equivalent of the outstanding Principal
Amount of the Class A notes, the outstanding Principal Amount of the Class AB
notes, notes and the outstanding Principal Amount of the Class B notes. Such
amount shall be known as the PRESCRIBED MINIMUM LEVEL. At closing, the Liquid
Authorized Investments will be acquired with the net proceeds from the sale of
77
the notes and will, to the extent necessary, be replenished on each payment date
with Mortgage Principal Repayments to the extent they are available as described
below under "-- Additional Income Payments" and "-- Principal Distributions".
If the trust manager determines on any Determination Date that the
Income of the trust for the Collection Period ending immediately prior to that
Determination Date is insufficient to meet the Primary Expenses of the trust for
that Collection Period, then the trust manager will direct the issuer trustee to
apply, first, the Liquid Authorized Investments and, then, if the Liquid
Authorized Investments are insufficient, Mortgage Principal Repayments, to cover
such INCOME SHORTFALL to the extent available.
Income received during a Collection Period and any Mortgage Principal
Repayments and Liquid Authorized Investments applied as described above will
constitute AVAILABLE INCOME.
DISTRIBUTION OF AVAILABLE INCOME
On each payment date prior to the enforcement of the security trust
deed, based on the calculations, instructions and directions provided to it by
the trust manager on or before the date which is 4 business days before that
payment date, the issuer trustee must pay or cause to be paid out of the
Available Income for the Collection Period ending immediately before that
payment date, the following amounts, which together constitute the PRIMARY
EXPENSES, in the following order of priority:
o first, an amount equal to the Accrued Interest Adjustment to the seller;
o second, any taxes payable in relation to the trust;
o third, in the following order of priority, in payment of:
o pro rata:
o the issuer trustee's fee for the Collection Period; and
o any fees payable to the note trustee for the Collection
Period;
o pro rata:
o any fees payable pro rata to the paying agents for the
Collection Period;
o any fees payable to the calculation agent for the Collection
Period;
o any fees payable to the note registrar for the Collection
Period;
o the expenses of the trust -- other than any fees payable to the
issuer trustee, the note trustee, the paying agents, the
calculation agent, the note registrar, the trust manager and the
servicer -- in relation to the Collection Period;
o the expenses of the trust -- other than any fees payable to the
issuer trustee, the note trustee, the paying agents, the
calculation agent, the note registrar, the trust manager and the
servicer -- which the trust manager or the issuer trustee
reasonably anticipates will be incurred prior to the next payment
date; and
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o the expenses of the trust -- other than any fees payable to the
issuer trustee, the note trustee, the paying agents, the
calculation agent, the note registrar, the trust manager and the
servicer -- not covered by the two previous bullet points above
which have already been incurred prior to the payment date but
which have not previously been paid or reimbursed;
o fourth, pro rata:
o the trust manager's fee for the Collection Period; and
o the servicer's fee for the Collection Period;
o fifth, pro rata:
o any amounts payable to the fixed-floating rate swap provider
under any fixed-floating rate swaps other than any break costs in
respect of the termination of a fixed floating rate swap;
o any interest on any Redraw notes for the Interest Period ending
on that payment date to the Redraw noteholders;
o (1) the Class A A$ Interest Amount for that payment date to the
currency swap provider and the reciprocal payment by the currency
swap provider is thereafter to be applied towards payment of
interest on the Class A notes, including interest due but unpaid
from any previous payment date or (2) if the Class A currency
swap is terminated, an A$ amount that the trust manager
determines in good faith to be applied on that payment date in
order to enable the issuer trustee to meet its obligations to pay
interest on the Class A notes, to the note trustee for purchase
of U.S. dollars at the spot exchange rate to be applied towards
payment of interest on the Class A notes on that payment date,
including interest due but unpaid from any previous payment date;
and
o to the currency swap provider any break costs payable to the
currency swap provider under the Class A currency swap other than
in respect of the termination of the Class A currency swap where
the currency swap provider is the defaulting party, as such term
is defined in the Class A currency swap;
o sixth:
o any interest on the Class AB Notes for the Interest Period ending
on that payment date, including any past due interest, to the
Class AB noteholders; and
o seventh:
o any interest on the Class B notes for the Interest Period ending
on that payment date, including interest due but unpaid from any
previous payment date, to the Class B noteholders.
The issuer trustee shall only make a payment described in any of the
preceding bullet points in this section to the extent that any Available Income
remains from which to make the payment after amounts with priority to that
payment have been fully paid.
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ADDITIONAL INCOME PAYMENTS
On each payment date prior to the enforcement of the security trust
deed, based on the calculations, instructions and directions provided to it by
the trust manager, the issuer trustee must pay or cause to be paid out of any
Income for the Collection Period available after paying the Primary Expenses
referred to above the following amounts in the following order of priority:
o first, to be applied by the issuer trustee as Mortgage Principal Repayments
for the corresponding Collection Period, of an amount equal to all amounts
previously applied under the first bullet point under the heading "--
Principal Distributions", to the extent not previously so replenished;
o second, to reduce the Aggregate Principal Loss Amount for the corresponding
Collection Period until the Aggregate Principal Loss Amount is reduced to
zero;
o third, to reduce any Carryover Charge-Offs that have not been reduced on
prior payment dates until the Carryover Charge-Offs are reduced to zero;
o fourth, pro rata any break costs to:
o the fixed-floating rate swap provider in respect of the
termination of any fixed-floating swap; and
o the currency swap provider in respect of the termination of a
currency swap where the currency swap provider is the defaulting
party, as such term is defined in the relevant currency swap;
o fifth, any fees payable to the seller; and
o sixth, the balance, if any, pro rata to each holder of a residual income
unit.
The issuer trustee shall only make a payment described in the bullet
points in this section to the extent that any Income remains from which to make
the payment after amounts with priority to that payment have been fully paid.
The aggregate amount of Income applied on a payment date under the second and
third bullet points above is called the RECOVERY AMOUNT for that payment date
and will be applied to make principal payments on the notes as described below
under "-- Principal Distributions."
INTEREST ON THE NOTES
CALCULATION OF INTEREST PAYABLE ON THE NOTES
Up to, and including, the Step-Up Margin Date, the interest rate the
US$ notes for any Interest Period will be equal to LIBOR on the related rate
reset date plus a margin of [*]% per annum in respect of the Class A notes. If
the issuer trustee has not redeemed all of the US$ notes by the Step-Up Margin
Date then the interest rate for any Interest Period commencing on or after that
date for such US$ notes will be equal to LIBOR on the related rate reset date
plus a margin of [*]% per annum in respect of the Class A notes.
The STEP-UP MARGIN DATE means the payment date falling in [May 2011].
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The interest rate for the Redraw notes will be as specified on the
date the Redraw notes are issued. No Redraw notes may be issued unless the
rating agencies have confirmed that the issue of the Redraw notes will not
result in a reduction or withdrawal of the rating of any note outstanding.
With respect to any payment date, interest on the notes will be
calculated as the product of:
o the outstanding Principal Amount of such class as of the first
day of the applicable Interest Period, after giving effect to any
payments of principal made or to be made with respect to such
class on such day; and
o the interest rate for such class of notes; and
o a fraction, the numerator of which is the actual number of days
in the applicable Interest Period and the denominator of which is
360 days for the US$ notes, or 365 days for the Class A A$
Interest Amount, the Class AB notes and the Class B notes and the
Redraw notes.
A note will bear interest until the date that note is finally
redeemed. See "-- Final Redemption of the Notes" below.
CALCULATION OF LIBOR
On the second banking day in London and New York before the beginning
of each Interest Period, the calculation agent will determine LIBOR for the next
Interest Period. This will be the rate reset date for LIBOR.
MORTGAGE PRINCIPAL REPAYMENTS
On each Determination Date, the trust manager must determine the
Mortgage Principal Repayments for the Collection Period ending immediately prior
to that Determination Date.
MORTGAGE PRINCIPAL REPAYMENTS for a Collection Period are all amounts
received by the issuer trustee during that Collection Period in connection with
a housing loan or mortgage securing that housing loan which are:
o in respect of the repayment of any part of the principal
outstanding under the housing loan;
o any net receipts of a principal or capital nature received in
respect of any enforcement or recovery proceedings in respect of
the housing loan or mortgage securing that housing loan;
o any net receipts of a principal or capital nature received under
a mortgage insurance policy or title insurance policy in respect
of the housing loan or mortgage securing that housing loan;
o any balance of the Prefunding Account on the first payment date
after the closing date which is to be treated as a Mortgage
Principal Repayment received by the issuer trustee during that
Collection Period;
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o any other amount which, under the first bullet point under the
heading "-- Additional Income Payments", is to be treated as a
Mortgage Principal Repayment received by the issuer trustee
during that Collection Period; and
o any other amount received on, under or in relation to the housing
loan or mortgage securing that housing loan and which is not
Income.
PRINCIPAL DISTRIBUTIONS
On each payment date prior to the enforcement of the security trust
deed, in accordance with the calculations, instructions and directions provided
to it by the trust manager and except to the extent the trust manager directs
the issuer trustee that such moneys be applied or retained for Liquidity
Purposes, as described below, the issuer trustee must distribute or cause to be
distributed out of the Mortgage Principal Repayments in relation to the
Collection Period ending immediately before that payment date, any Liquid
Authorized Investments and any Recovery Amount for the corresponding payment
date, the following amounts in the following order of priority:
o first, to make up any Income Shortfall. See "--Application of
Mortgage Principal Repayments and Liquid Authorized Investments
to Available Income" above;
o second, to replenish Liquid Authorized Investments (after giving
effect to the use of Liquid Authorized Investments to cure any
Income Shortfall pursuant to the bullet point above) until the
value of Liquid Authorized Investments equals the Prescribed
Minimum Level;
o third, to Redraw noteholders in payment of the Principal Amount
of the Redraw notes until such time as the Redraw notes have been
redeemed in full;
o fourth:
o if the Threshold Requirements have been met on the payment
date, pro rata:
o (A) to pay to (1) prior to the termination of the Class
A currency swap, the currency swap provider the Class A
A$ Equivalent of the Principal Amount of the Class A
notes and the reciprocal payment by the currency swap
provider is thereafter to be applied towards payment of
the Principal Amount of the Class A notes on that
payment date or (2) if the Class A currency swap has
been terminated, the note trustee for purchase of U.S.
dollars at the spot exchange rate to be applied in
repaying principal on the Class A notes on that payment
date, in each case until such time as all of the Class
A notes have been redeemed in full;
o (B) to pay the Class AB noteholders the payment of the
Principal Amount of the Clas AB notes until such time
as all of the Class AB notes have been redeemed in
full; and
o (C) to pay the Class B noteholders in payment of the
Principal Amount of the Class B notes until such time
as all Class B notes have been redeemed in full,
provided that:
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o (D) if the Threshold Requirements are satisfied on any
payment date prior to the third anniversary of the
closing date, the issuer trustee will pay on that
payment date under each of sub-paragraphs (B) and (C)
above 50% of the amount that would otherwise have been
payable if not for this sub-paragraph (D), and will pay
the balance of the amount otherwise so payable in
accordance with sub-paragraph (A). On or after the
third anniversary of the closing date, if the Threshold
Requirements are satisfied, the issuer trustee will pay
100% of the amount payable under each of sub-paragraphs
(B) and (C) above; and
o (E) each such amount in sub-paragraphs (B) and (C)
above shall only be distributed to the extent that such
distribution will not result in a breach of the
Threshold Requirements; or
o if the Threshold Requirements have not been met on the
payment date, in the following order of priority:
o first:
o to pay to (1) prior to the termination of the
Class A currency swap, the currency swap provider
the Class A A$ Equivalent of the Principal Amount
of the Class A notes and the reciprocal payment by
the currency swap provider is thereafter to be
applied towards payment of the Principal Amount of
the Class A notes on that payment date or (2) if
the Class A currency swap has been terminated, the
note trustee for purchase of U.S. dollars at the
spot exchange rate to be applied in repaying
principal on the Class A notes on that payment
date, in each case until such time as all Class A
notes have been redeemed in full; and
o second:
o to pay to the Class AB noteholders in payment of
the Principal Amount of the Class AB notes until
such time as all Class AB notes have been redeemed
in full; and
o third:
o to pay the Class B noteholders in payment of the
Principal Amount of the Class B notes until such
time as all Class B notes have been redeemed in
full.
o fifth, the balance as a distribution to the holder of the
residual capital unit as to A$10, and the remaining balance pro
rata to each holder of a residual income unit.
The issuer trustee, pursuant to the directions provided by the trust
manager, will only make a payment described in any of the preceding bullet
points above in this section to the extent that any Mortgage Principal
Repayments and Recovery Amounts remain from which to make the payment after
amounts with priority to that payment have been fully paid. The issuer trustee
will only use Liquid Authorized Investments in the third, fourth and fifth
bullet points above to the extent that the application of Liquid Authorized
Investments will not reduce the value of Liquid Authorized Investments to less
than the Prescribed Minimum Level.
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The THRESHOLD REQUIREMENTS will be met, at any time, if each of the
following conditions are satisfied:
o there are no Carryover Charge-Offs at that time;
o no more than 5% of the housing loans (by unpaid principal
balance) are in arrears by an amount equal to two or more monthly
payments at that time;
o an amount equal to the aggregate of:
1. the Principal Amount of all Class AB notes outstanding at
that time; plus
2. the Principal Amount of all Class B notes outstanding at
that time; plus
is not less than 0.25% of the amount equal to the aggregate of:
1. the Class A A$ Equivalent of the Initial Principal Amount of
all Class A notes; plus
2. the Initial Principal Amount of all Class AB notes; plus
3. the Initial Principal Amount of all Class B notes; and
o an amount equal to the aggregate of:
1. the Principal Amount of all Class AB notes outstanding at
that time; plus
2. the Class B A$ Equivalent of the Principal Amount of all
Class B notes outstanding at that time;
is not less than [*]% of the amount equal to the aggregate of:
1. the Class A A$ Equivalent of the Principal Amount of all
Class A notes outstanding at that time; plus
2. the Principal Amount of all Class AB notes outstanding at
that time; plus
3. the Principal Amount of all Class B notes outstanding at
that time.
LIQUIDITY PURPOSES include:
o replenishing Liquid Authorized Investments to maintain the
Prescribed Minimum Level. See "--Application of Mortgage
Principal Repayments and Liquid Authorized Investments to
Available Income";
o the provision by the issuer trustee of redraws in the manner
described under "Interstar Residential Loan Program -- Special
Features of the Housing Loans -- Redraws" above; and
o the provision by the issuer trustee of advances to borrowers
under housing loans which provide for a line of credit facility
or revolving credit facility.
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CHARGE-OFFS
If, on any payment date, the Aggregate Principal Loss Amount for the
related Collection Period exceeds the amount allocated or available for
allocation on that payment date under the second bullet point under the heading
"-- Additional Income Payments", the amount of the excess will be the CHARGE-OFF
for that payment date. The trust manager will notify the issuer trustee and the
note trustee of the amount of any Charge-Offs for any payment date. The total of
the Charge-Offs from prior payment dates that have not been reduced from Income
as described above under "-- Additional Income Payments" are called CARRYOVER
CHARGE-OFFS.
PAYMENTS INTO US$ ACCOUNT
The principal paying agent shall open and maintain a US$ account into
which the currency swap provider shall deposit on each payment date amounts
denominated in US$. The issuer trustee shall direct the currency swap provider
to pay all amounts denominated in US$ payable to the issuer trustee by the
currency swap provider under the relevant currency swaps into the US$ account or
to the principal paying agent on behalf of the issuer trustee. If any of the
issuer trustee, the trust manager or the servicer receives any amount
denominated in US$ from the currency swap provider under the relevant currency
swaps, they will also promptly pay that amount to the credit of the US$ account.
PAYMENTS OUT OF US$ ACCOUNT
At the direction of the trust manager, the issuer trustee shall, or
shall require that the principal paying agent, on behalf of the issuer trustee,
distribute the following amounts from the US$ account in accordance with the
note trust deed and the agency agreement on each payment date pro rata between
the relevant notes of a class and to the extent payments relating to the
following amounts were made to the currency swap provider:
o interest on the Class A notes; and
o principal on the Class A notes, until their outstanding
principal amount is reduced to zero.
NOTICES
Where the note trust deed provides for notice to US$ noteholders of
any event, such notice shall be sufficiently given, unless otherwise provided by
law or otherwise expressly stated in the note trust deed, for so long as the US$
notes are listed on the Irish Stock Exchange if published in a leading newspaper
having general circulation in Australia. This notice will be deemed to be given
on the date of the first publication.
Any notice to US$ noteholders specifying a payment date, an interest
rate, interest payable, a principal payment -- or the absence of a principal
payment -- and the Principal Amount of the US$ notes after giving effect to such
payment, will be deemed to have been properly given if the information contained
in the notice appears on the relevant page of the Reuters Screen or the
electronic information system made available to its subscribers by Bloomberg,
L.P. or any other similar electronic reporting service as may be approved by the
note trustee in writing and notified to US$ noteholders. This notice will be
considered to have been given on the first date on which it appears on the
relevant electronic reporting service. If it is
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impossible or impracticable to give notice as stated in this paragraph, then
notice of the matters discussed in this paragraph will be given in the manner
stated in the paragraph above.
FIXED-FLOATING RATE SWAPS
The issuer trustee will in the future enter into a swap governed by an
ISDA Master Agreement, as amended by a supplementary schedule and confirmed by a
written confirmation, with the fixed-floating rate swap provider, each time a
fixed-rate housing loan is added to the housing loan pool or if a borrower
converts a floating rate loan to a fixed rate loan, to hedge the basis risk
between the interest rate on the fixed rate housing loans and the floating rate
obligations of the trust, including the interest due on the notes. Such
fixed-floating rate swaps will cover the housing loans which bear a fixed rate
of interest as of the applicable cut-off date and those variable rate housing
loans which at a later date convert to a fixed rate of interest.
The issuer trustee will pay the fixed-floating rate swap provider on
each payment date an amount calculated by reference to the applicable fixed rate
on the housing loans which are subject to a fixed rate of interest. The issuer
trustee will also pay the fixed-floating rate swap provider all break fees from
borrowers with fixed rate loans received during the related Collection Period.
The issuer trustee will receive from the fixed-floating rate swap
provider on each payment date an amount calculated by reference to the Bank Bill
Rate.
The terms of each fixed-floating rate swap allow for netting of swap
payments for transactions under the one confirmation.
FIXED-FLOATING RATE SWAP DOWNGRADE
If the fixed-floating rate swap provider's rating falls below:
o a short term credit rating of A-1 by S&P; or
o a long term credit rating of A2 or a short term credit rating of
P-1 by Moody's, the fixed-floating rate swap provider must:
o immediately, at its cost, novate its obligations to a replacement
fixed-floating rate swap provider with a short term credit rating
of at least A-1 by S&P and a long term credit rating of at least
A2 and a short term credit rating of P-1 by Moody's; and
o if the fixed-floating rate swaps are not novated to a replacement
fixed-floating rate swap provider within:
o 30 days, if the fixed-floating rate swap provider is
downgraded to less than a short term credit rating of
A-1 by S&P or less than a short term credit rating of
P-1 by Moody's or not less than a long term credit
rating of A-3 by Moody's; or
o 5 business days, if the fixed-floating rate swap
provider is downgraded to less than a long term credit
rating of A3 by Moody's,
then the fixed-floating rate swap provider must cash collateralize its
obligations.
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Where the fixed-floating rate swap provider must or elects to cash
collateralize its obligations, it will, at its own cost, deposit into a swap
collateral account sufficient funds to ensure that the amount standing to the
credit of that account is equal to the greater of the following -- unless
otherwise agreed by the rating agencies:
o an amount sufficient to maintain the rating of the notes at the
rating that was applicable to those notes immediately prior to
the rating downgrade of the fixed-floating rate swap provider;
o the amount of the next swap payment due by the fixed-floating
rate swap provider; and
o 1% of the aggregate Principal Amount of the notes -- or as
applicable the Australian dollar equivalent -- at that time.
TERMINATION BY THE FIXED-FLOATING RATE SWAP PROVIDER
The fixed-floating rate swap provider will have the right to terminate
a fixed-floating rate swap in the following circumstances:
o the issuer trustee fails to make a payment under the
fixed-floating rate swap within 10 business days after notice of
failure is given to the issuer trustee by the fixed-floating rate
swap provider;
o if due to a change in law it becomes illegal for either party to
make or receive payments, perform its obligations or comply with
any material provision of the fixed-floating rate swap;
o an Insolvency Event has occurred with respect to the issuer
trustee and the issuer trustee has not novated its obligations
within 30 days of the Insolvency Event and such substitution will
not have caused a downgrade or withdrawal of the rating of the
notes; or
o an event of default has occurred and the security trustee has
exercised its rights to enforce the charge under the security
trust deed.
The issuer trustee will have the right to terminate a fixed-floating
rate swap in the following circumstances:
o the fixed-floating rate swap provider fails to make a payment
under the fixed-floating rate swap within 10 business days after
notice of failure is given to the fixed-floating rate swap
provider by the issuer trustee;
o if due to a change in law it becomes illegal for either party to
make or receive payments, perform its obligations or comply with
any material provision of the fixed-floating rate swap; or
o an Insolvency Event has occurred with respect to the
fixed-floating rate swap provider.
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THE CURRENCY SWAPS
Collections on the housing loans and payments to the issuer trustee
under any fixed-floating rate swaps will be denominated in Australian dollars.
The payments to the issuer trustee under any fixed-floating rate swaps will be
calculated by reference to the Bank Bill Rate. However, the payment obligations
of the issuer trustee on the US$ notes are denominated in U.S. dollars and the
US$ notes bear interest at a rate calculated by reference to LIBOR. The issuer
trustee will enter into the Class A currency swap to hedge its interest rate and
currency exposure in relation to the Class A notes. This currency swap is called
the US$ CURRENCY SWAP and will be governed by the laws of England and Wales.
The US$ currency swap will be governed by a standard form ISDA Master
Agreement, as amended by their respective supplementary schedules and confirmed
by separate written confirmations relating to the Class A notes.
Under the Class A currency swap, the issuer trustee will pay to the
currency swap provider on each payment date an amount in Australian dollars
equal to the lesser of (1) its pro rata share of the Mortgage Principal
Repayments -- except to the extent applied or retained for Liquidity Purposes --
any available Liquid Authorized Investments and Recovery Amounts remaining after
making the distributions to make up any Income Shortfalls or to pay principal on
the Redraw notes, if any -- see "-- Principal Distributions" above -- and (2)
the Class A A$ Equivalent of the Principal Amount of the Class A notes. The
currency swap provider will pay directly to the US$ account of the principal
paying agent on the related payment date an amount denominated in United States
dollars which is equivalent to such Australian dollar payment. Under the Class A
currency swap, the equivalent United States dollar payment will be calculated
using an exchange rate of US$[*]=A$1.00. Under the Class AB currency swap, the
equivalent United States dollar payment will be calculated using an exchange
rate of US$[*]=A$1.00. This exchange rate will be fixed for the term of the US$
currency swap.
In addition, under the Class A currency swap, on each payment date the
issuer trustee will pay to the currency swap provider the Class A A$ Interest
Amount, for that payment date. The currency swap provider will pay directly to
the US$ account of the principal paying agent on the related payment date an
amount equal to the interest payable in US$ to the US$ noteholders. The currency
swap provider will be required to gross-up payments to the principal paying
agent in respect of any withholding taxes levied on payments by it under a US$
currency swap. However, the issuer trustee will not be required to pay
grossed-up amounts to the currency swap provider under the US$ currency swap.
If on any payment date the issuer trustee does not or is unable to
make the full floating rate payment under a currency swap, the US$ floating rate
payment to be made by the currency swap provider with respect to such Australian
dollar floating rate payment will be reduced by the same proportion as the
reduction in such payment from the issuer trustee.
The purchase price for the US$ notes will be paid by investors in U.S.
dollars, but the consideration for the purchase by the issuer trustee of an
equitable interest in the housing loans will be in Australian dollars. On the
closing date, the issuer trustee will pay to the currency swap provider the
proceeds of the issue of the US$ notes in U.S. dollars. In return the issuer
trustee will be paid by the currency swap provider the Class A A$ Equivalent of
that U.S. dollar amount.
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TERMINATION BY THE CURRENCY SWAP PROVIDER
With respect to each of the Class A currency swap, the currency swap
provider shall have the right to terminate such currency swap in the following
circumstances:
o if the issuer trustee fails to make a payment under the relevant
currency swap within ten business days of its due date;
o an Insolvency Event with respect to the issuer trustee occurs or
the issuer trustee merges into another entity without that entity
properly assuming responsibility for the obligations of the
issuer trustee under the relevant currency swap;
o if due to a change in law it becomes illegal for either party to
make or receive payments or comply with any other material
provision of the relevant currency swap. Each of the currency
swaps requires such party to make efforts to transfer its rights
and obligations to another office or another affiliate to avoid
this illegality, so long as the transfer would not result in a
downgrade or withdrawal of the rating of the notes. If those
efforts are not successful, then the currency swap provider will
have the right to terminate the relevant currency swap. These
provisions relating to termination following an illegality have
been modified so that they are not triggered by the introduction
of certain exchange controls by any Australian government body;
or
o an event of default has occurred and the security trustee has
exercised its rights to enforce the charge under the security
trust deed.
TERMINATION BY THE ISSUER TRUSTEE
There are a number of circumstances in which the issuer trustee has
the right to terminate the Class A currency swap. In each of these cases and
with respect to the currency swap it is only permitted to exercise that right
with the prior written consent of the note trustee:
o where the currency swap provider fails to make a payment under
the currency swap within ten business days of its due date or the
currency swap provider becomes insolvent or merges into another
entity without that entity properly assuming responsibility for
the obligations of the currency swap provider under such currency
swap;
o if due to a change in law it becomes illegal for either party to
make or receive payments or comply with any other material
provision of the currency swap. The currency swap requires such
party to make efforts to transfer its rights and obligations to
another office or another affiliate to avoid this illegality, so
long as the transfer would not result in a downgrade or
withdrawal of the rating of the notes. If those efforts are not
successful, then the issuer trustee will have the right to
terminate. These provisions relating to termination following an
illegality have been modified so that they are not triggered by
the introduction of certain exchange controls by any Australian
government body;
o if the issuer trustee becomes obligated to make a withholding or
deduction in respect of the notes or in respect of payments under
the relevant currency swap or borrowers under the housing loans
become obliged to make a withholding or deduction in
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respect of payments under the housing loans and the notes are
redeemed as a result. See "-- Redemption of Notes for Taxation or
Other Reasons" below; or
o the currency swap provider breaches its obligation to deposit
cash collateral with the issuer trustee or to transfer the
currency swap to a replacement currency swap provider or to enter
into another arrangement required by the rating agencies in
accordance with the currency swap.
The issuer trustee may only terminate a relevant currency swap with
the prior written consent of the note trustee. Each party may terminate a
relevant currency swap only after consulting with the other party as to the
timing of the termination. The issuer trustee will exercise such right to
terminate at the direction of the trust manager.
CURRENCY SWAP DOWNGRADE
If, as a result of the withdrawal or downgrade of its credit rating by
any rating agency, the currency swap provider does not have a short term credit
rating of A-1+ by S&P and a long term credit rating of at least A2 and a short
term credit rating of at least P-1 by Moody's the currency swap provider must
within:
o 30 days of a downgrade of the currency swap provider's short term
credit rating by S&P to not lower than A-1 or the downgrade of
its short term credit rating by Moody's to lower than P-1 or the
downgrade of its long term credit rating by Moody's to not lower
than A3; or
o 5 business days of any other such withdrawal or downgrade:
or, in either case, such greater period as is agreed to in writing by
the relevant rating agency, at the currency swap provider's cost:
o transfer to the issuer trustee such amount of cash and/or
securities as agreed in the credit support documentation in a
form and substance approved by each rating agency;
o procure a novation of the rights and obligations of the currency
swap provider under the currency swaps to one or more replacement
currency swap providers each with a credit rating not less than
A-1+ (short term) from S&P and A2 (long term) and P-1 (short
term) from Moody's;
o procure another person with a credit rating not less than A-1+
(short term) from S&P and A2 (long term) and P-1 (short term)
from Moody's to become a co-obligor in respect of its obligations
under the currency swaps; or
o enter into such other arrangements which each rating agency has
confirmed will result in there not being a withdrawal or
downgrade of the then current credit ratings assigned by it to
the notes.
If, at any time, the currency swap provider's obligations under the
Class A currency swap are novated or the currency swap provider is otherwise
replaced as currency swap provider, the currency swap provider shall be
immediately entitled to any cash and/or securities which it has
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transferred to the issuer trustee pursuant to such currency swap and related
credit support documentation.
TERMINATION PAYMENTS
On the date of termination of the Class A currency swap, a termination
payment will be due from the issuer trustee to the currency swap provider or
from the currency swap provider to the issuer trustee. The termination of a
currency swap where a replacement currency swap, on terms that will not lead to
a withdrawal or downgrade of the then current rating assigned by either rating
agency to the notes, is not put in place, is an event of default under the
security trust deed.
The termination payment in respect of a currency swap will be
determined on the basis of quotations from four leading dealers in the relevant
market selected by the currency swap provider to enter into a replacement
transaction that would have the effect of preserving the economic equivalent of
any payment that would, but for the early termination, have been required under
the terms of the relevant currency swap.
REPLACEMENT OF A CURRENCY SWAP
If the Class A currency swap is terminated, the issuer trustee must,
at the direction of the trust manager, enter into one or more replacement
currency swaps which replace such currency swap, but only on the condition that:
o the termination payment, if any, which is payable by the issuer
trustee to the currency swap provider on termination of the
currency swap will be paid in full when due in accordance with
the series notice and such currency swap;
o the then current ratings assigned to the notes by either rating
agency will not be withdrawn or downgraded; and
o the liability of the issuer trustee under that replacement
currency swap is limited to at least the same extent that its
liability is limited under the currency swap.
If the preceding conditions are satisfied, the issuer trustee must, at
the direction of the trust manager, enter into a replacement currency swap, and
if it does so it must direct the provider of the replacement currency swap to
pay any up-front premium to enter into the replacement currency swap due to the
issuer trustee directly to the currency swap provider in satisfaction of and to
the extent of the issuer trustee's obligation to pay the termination payment to
the currency swap provider. To the extent that such premium is not greater than
or equal to the termination payment, the balance must be paid by the issuer
trustee as an expense of the trust.
CURRENCY SWAP PROVIDER
The currency swap provider will be [*].
[DESCRIPTION TO BE INSERTED]
SWAP COLLATERAL ACCOUNT
If a swap provider provides cash collateral to the issuer trustee:
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o the trust manager must direct the issuer trustee, and the issuer
trustee must, as soon as practicable, establish and maintain in the
name of the issuer trustee a swap collateral account with an Approved
Bank such that the deposit does not cause a downgrade or withdrawal of
the rating of any notes; and
o the swap provider must deposit the cash collateral in the swap
collateral account.
o The issuer trustee may only make withdrawals from a collateral account
upon the direction of the trust manager and only for the purpose of:
o entering into a substitute swap;
o refunding to that swap provider the amount of any reduction in the
swap collateral amount, but only if the ratings of the notes are not
thereby withdrawn or reduced;
o withdrawing any amount which has been incorrectly deposited into the
swap collateral account;
o paying bank accounts debit tax or equivalent taxes payable in respect
of the swap collateral account; or
o funding the amount of any payment due to be made by that swap provider
under the relevant swap following the failure by that swap provider to
make that payment.
WITHHOLDING OR TAX DEDUCTIONS
All payments in respect of the notes will be made without withholding
or tax deduction for, or on account of, any present or future taxes, duties or
charges of whatever nature unless the issuer trustee or any paying agent is
required by applicable law to make any such payment in respect of the notes
subject to any withholding or deduction for, or on account of, any present or
future taxes, duties or charges of whatsoever nature. In the event that the
issuer trustee or the paying agents, as the case may be, shall make such payment
after such withholding or deduction has been made, it shall account to the
relevant authorities for the amount so required to be withheld or deducted.
Neither the issuer trustee nor any paying agent will be obligated to make any
additional payments to holders of the notes with respect to that withholding or
deduction.
REDEMPTION OF THE NOTES FOR TAXATION OR OTHER REASONS
AT THE OPTION OF NOTEHOLDERS
If the trust manager satisfies the issuer trustee and the note
trustee, immediately prior to giving the notice to the noteholders as described
in this section, that:
o on the next payment date the issuer trustee or any paying agent
would be required to deduct or withhold from any payment:
o of principal or interest in respect of the notes; or
o by the issuer trustee to the currency swap provider under a
currency swap, or
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o any amount for or on account of any present or future taxes,
duties, assessments or governmental charges of whatever
nature imposed, levied, collected, withheld or assessed by
any government agency, or
o a government agency requires the deduction or withholding from
payments by borrowers under the housing loans of any amount for
or on account of any taxes, duties, assessments or governmental
charges of whatever nature imposed, levied, collected, withheld
or assessed by that government agency,
then the issuer trustee must, when so directed by noteholders representing at
least 75% of the outstanding Principal Amount of the notes provided that the
issuer trustee will be in a position on the next payment date to discharge, and
the trust manager will so certify to the issuer trustee and the note trustee,
all its liabilities in respect of the notes and any amounts required under the
security trust deed to be paid in priority to or equal with the notes, redeem
all, but not some, of the notes at their outstanding Principal Amount, together
with accrued interest to the date of redemption on any subsequent payment date.
Noteholders must be given notice of a redemption not more than 60 nor less than
45 days prior to the date of redemption.
AT THE OPTION OF THE TRUST MANAGER
If the trust manager satisfies the issuer trustee and the note
trustee, immediately prior to giving the notice to the noteholders as described
in this section, that on the next payment date the currency swap provider would
be required to deduct or withhold from any payment under a currency swap any
amount for or on account of any present or future taxes, duties, assessments or
governmental charges of whatever nature imposed, levied, collected, withheld or
assessed by any government agency, then the issuer trustee must, when so
directed by the trust manager, in its sole discretion, provided that the issuer
trustee will be in a position on such payment date to discharge and the trust
manager will so certify to the issuer trustee and the note trustee, all its
liabilities in respect of the notes and any amounts required under the security
trust deed to be paid in priority to or equal with the notes, redeem all, but
not some, of the notes at their outstanding Principal Amount, together with
accrued interest to the date of redemption on any subsequent payment date.
Noteholders must be given notice of a redemption not more than 60 nor less than
45 days prior to the date of redemption.
REDEMPTION OF THE NOTES UPON AN EVENT OF DEFAULT
If an event of default occurs under the security trust deed while the
notes are outstanding, the security trustee may, subject in some circumstances
to the prior written consent of the Noteholder Mortgagees in accordance with the
provisions of the security trust deed, and will, if so directed by the
Noteholder Mortgagees where they are the only Voting Mortgagees, or, otherwise
by a resolution of 75% of the Voting Mortgagees, enforce the security created by
the security trust deed. That enforcement can include the sale of some or all of
the housing loans. If the trust terminates while notes are outstanding, the
seller has a right of first refusal to acquire the housing loans. Any proceeds
from the enforcement of the security will be applied in accordance with the
order of priority of payments as set out in the security trust deed. See
"Description of the Transaction Documents -- The Security Trust Deed".
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OPTIONAL REDEMPTION OF THE NOTES
ON STEP-UP MARGIN DATE
At the trust manager's direction, to be given not later than four
business days before the relevant payment date, the issuer trustee must redeem
all of the notes in a class by repaying the outstanding Principal Amount of the
notes in that class, together with accrued interest to, but excluding, the date
of redemption, on any payment date falling on or after the Step-Up Margin Date,
being the [May 2011] payment date, provided that:
o the trust manager has provided to:
o each relevant noteholder, in accordance with the notice
provisions set forth under the heading "-- Notices", the
note trustee and the issuer trustee, 30 days prior notice;
and
o each rating agency, 30 days prior written notice,
of the trust manager's intention to direct the issuer trustee to
redeem the relevant notes;
o the trust manager has received from each rating agency written
confirmation that the repayment will not result in a downgrade or
withdrawal of the rating of any other notes;
o the issuer trustee has sufficient cash to make such repayment, in
respect of which the issuer trustee may rely conclusively on a
certification from the trust manager;
o the issuer trustee retains such amount as the trust manager or
the issuer trustee reasonably determines will be necessary to
satisfy any outstanding or anticipated expenses of the trust,
payment to any noteholder in respect of a note which is not to be
so redeemed or payment to any swap provider;
o in no circumstance may the trust manager give such a direction in
relation to Class AB noteholders or Class B noteholders unless:
o there are at that time no Redraw notes or Class A notes
outstanding; or
o the trust manager at the same time gives or has given a
direction to redeem the Redraw notes and the Class A notes;
and
o in no circumstances may the trust manager give such a direction
in relation to Class B noteholders unless:
o there are at that time no Class AB notes outstanding; or
o the trust manager at the same time gives or has given a
direction to redeem the Class AB notes.
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WHEN 10% OF NOTES OUTSTANDING
If the total outstanding Principal Amount of all notes in all classes
does not exceed 10% of the Initial Principal Amount of all notes the issuer
trustee must, if so directed in writing by the trust manager, repay the whole of
the Principal Amount of all notes together with any outstanding interest in
relation to those notes on the next payment date provided that:
o the trust manager has provided to:
o each noteholder, in accordance with the notice provisions
set forth under the heading "-- Notices", the note trustee
and the issuer trustee, 30 days prior notice; and
o each rating agency, 30 days prior written notice,
of the trust manager's intention to direct the issuer trustee to
redeem the notes;
o the issuer trustee has sufficient cash to make such repayment, in
respect of which the issuer trustee may rely conclusively on a
certification from the trust manager;
o the issuer trustee retains such amount as the trust manager or
the issuer trustee reasonably determines will be necessary to
satisfy any outstanding or anticipated expenses of the trust or
payment to any swap provider; and
o the repayment of principal on the notes is made in the order of
priority described under "-- Principal Distributions" above.
FINAL MATURITY DATE
The issuer trustee must pay the Principal Amount in relation to each
note on or by the final maturity date relating to that note. The failure of the
issuer trustee to pay the Principal Amount within ten business days of the final
maturity date, or within any other applicable grace period agreed upon with the
Mortgagees, will be an event of default under the security trust deed. The final
maturity date for the notes is the payment date falling in [March 2038].
FINAL REDEMPTION OF THE NOTES
Each note will be finally redeemed, and the obligations of the issuer
trustee with respect to the payment of the Principal Amount of that note will be
finally discharged, upon the first to occur of:
o the date on which the Principal Amount of the note is reduced to
zero;
o the date upon which the relevant noteholder renounces in writing
all of its rights to any amounts payable under or in respect of
that note;
o the date on which all amounts received by the note trustee with
respect to the enforcement of the security trust deed are paid to
the principal paying agent;
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o the payment date immediately following the date on which the
issuer trustee completes a sale and realization of all of the
assets of the trust in accordance with the master trust deed and
the series notice;
o the date on which all of the principal of the notes is repaid in
accordance with "--Principal Distributions" described above;
o the date on which the notes are redeemed for taxation or other
reasons; and
o the date on which optional redemption of the notes is exercised.
TERMINATION OF THE TRUST
TERMINATION EVENTS
The trust shall continue until, and shall terminate on the later of:
o the Termination Date; and
o the date on which the assets of the trust have been sold or
realized, which shall be within 180 days after the Termination
Date so far as reasonably practicable and reasonably commercially
viable.
REALIZATION OF TRUST ASSETS
On the Termination Date, subject to the seller's right of first
refusal, the issuer trustee must sell and realize the assets of the trust within
180 days. During the 180-day period, performing housing loans may not be sold
for less than their Unpaid Balance, and non-performing housing loans may not be
sold for less than the fair market value of such housing loans and their related
security, as agreed upon by the issuer trustee, based on appropriate expert
advice, and the seller; provided that the issuer trustee may not sell any
performing housing loan within the 180-day period for less than its fair market
value without the consent of the holders of 75% of the aggregate outstanding
Principal Amount of the notes. The trust manager will determine whether a
housing loan is performing or non-performing.
SELLER'S RIGHT OF FIRST REFUSAL
As soon as practical after the Termination Date, the trust manager
will direct the issuer trustee to offer to assign to the seller, its entire
right, title and interest in and to the housing loans sold by it for their
Unpaid Balance, for performing housing loans, and their fair market value, for
non-performing housing loans; provided that, if the fair market value of a
housing loan is less than its Unpaid Balance, the sale requires the consent of
the holders of 75% of the aggregate outstanding Principal Amount of the notes.
The issuer trustee is not entitled to sell any housing loans unless
the seller has failed to accept the offer made to it within 180 days after the
occurrence of the Termination Date by paying to the issuer trustee the purchase
price.
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DISTRIBUTION OF PROCEEDS FROM REALIZATION OF TRUST ASSETS
After deducting expenses, the trust manager shall direct the issuer
trustee to distribute the proceeds of realization of the assets of the trust in
accordance with the cashflow allocation methodology set out in "-- Distribution
of Available Income", "-- Additional Income Payments" and "-- Principal
Distributions", and in accordance with any directions given to it by the trust
manager. If all of the notes have been fully redeemed and the trust's other
creditors have been paid in full, the issuer trustee shall distribute the assets
of the trust to the residual beneficiary.
PRESCRIPTION
A US$ note will be void in its entirety if not surrendered for payment
within ten years of the relevant date in respect of any payment on the note, the
effect of which would be to reduce the principal amount of such note to zero.
The relevant date is the date on which a payment first becomes due but, if the
full amount of the money payable has not been received in New York City by the
principal paying agent or the note trustee on or prior to that date, it means
the date on which the full amount of such money having been so received and
notice to that effect is duly given in accordance with the terms of the relevant
note. After the date on which a US$ note becomes void in its entirety, no claim
may be made in respect of it.
REPORTS TO NOTEHOLDERS
On each payment date, the trust manager will, in respect of the
Collection Period ending before that payment date, deliver to the principal
paying agent and the note trustee a noteholders' report containing the following
information:
o the aggregate Principal Amount of each class of notes as at the
first day after the payment date occurring during that Collection
Period;
o the aggregate amount of interest payable on each class of notes
on the corresponding payment date, if any;
o the aggregate of all principal payments to be made in respect of
each class of notes on the corresponding payment date, if any;
o the Income for the Collection Period;
o the Mortgage Principal Repayments for the Collection Period;
o the expenses of the trust for the Collection Period;
o the aggregate of all redraws on the housing loans made during the
Collection Period;
o the interest rate for each class of notes for the Interest Period
ending on the day before the next payment date;
o the scheduled and unscheduled payments of principal on the
housing loans during the Collection Period;
o the Aggregate Principal Loss Amounts, if any, for the Collection
Period;
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o the aggregate of the outstanding balances of the housing loans as
at the last day of the Collection Period;
o the Charge-Off and Carryover Charge-Offs, if any, for the
corresponding payment date;
o the Recovery Amount for the corresponding payment date, if any;
and
o delinquency and loss statistics with respect to the housing loans
during the Collection Period.
Unless and until definitive US$ notes are issued, beneficial owners
will receive noteholders' reports and other information provided for under the
transaction documents only if, when and to the extent provided by DTC and its
participating organizations.
Unless and until definitive US$ notes are issued, quarterly and annual
unaudited reports containing information concerning the trust and the US$ notes
will be prepared by the trust manager and sent to DTC. DTC and its participants
will make such reports available to holders of interests in the US$ notes in
accordance with the rules, regulations and procedures creating and affecting
DTC. However, such reports will not be sent directly to each beneficial owner
while the US$ notes are in book-entry form. Upon the issuance of fully
registered, definitive notes, such reports will be sent directly to each US$
noteholder. Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. The trust manager will
file with the SEC such reports as are required under the Exchange Act, and the
rules and regulations of the SEC thereunder. However, in accordance with the
Exchange Act and the rules and regulations of the SEC thereunder, the trust
manager expects that the obligation to file such reports will be terminated
following the end of [*] [2006].
VOTING AND CONSENT OF NOTEHOLDERS
The note trustee is not bound to:
o vote under the security trust deed;
o direct the security trustee to enforce the security under the
security trust deed; or
o otherwise take any proceedings, actions or steps pursuant to or
in connection with the security trust deed, the note trust deed
or the US$ notes,
unless the note trustee is directed or requested to do so by
noteholders of at least 75% of the outstanding Principal Amount of the
US$ notes, and then, only if the note trustee is indemnified to its
satisfaction in accordance with the note trust deed.
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DESCRIPTION OF THE TRANSACTION DOCUMENTS
The following summary, together with the information above under the
heading "Description of the US$ Notes", describes the material terms of the
master trust deed, the series notice, the note trust deed, the security trust
deed, the agency agreement, the investment management agreement and the backup
servicer agreement, collectively called the TRANSACTION DOCUMENTS. The summary
does not purport to be complete and is subject to the provisions of the
transaction documents. All of the transaction documents, except for the note
trust deed and the backup servicer agreement are governed by the laws of the
State of New South Wales, Australia. The note trust deed is governed by the laws
of the State of New South Wales, Australia and the administration of the trust
is governed by New York law. The backup servicer agreement is governed by the
laws of the State of Victoria, Australia. A copy of the master trust deed and
the investment management agreement and a form of each of the other transaction
documents have been filed as exhibits to the registration statement of which
this prospectus is a part.
TRUST ACCOUNTS
The issuer trustee will establish and maintain the collection account
with an Approved Bank. The collection account will initially be established with
National Australia Bank Limited, which has a short term rating of P-1 from
Moody's and A-1+ from S&P. The bank account shall be opened by the issuer
trustee in its name and in its capacity as trustee of the trust. This account
will not be used for any purpose other than for the trust.
The trust manager shall have the discretion and duty to recommend to
the issuer trustee, in writing, the manner in which any moneys forming part of
the trust shall be invested in Authorized Investments and what purchases, sales,
transfers, exchanges, collections, realizations or alterations of assets of the
trust shall be effected and when and how the same should be effected.
MODIFICATIONS
The issuer trustee, the trust manager and the servicer, with respect
to the master trust deed, the series notice and the investment management
agreement, after giving notice to the rating agencies, or the note trustee, the
trust manager and the issuer trustee with respect to the note trust deed or any
other transaction document, may by way of supplemental deed alter, add to or
modify the master trust deed, the series notice, the note trust deed or any
other transaction document so long as such alteration, addition or modification
was effected upon -- in the case of the master trust deed or the series notice
- -- the consent of the noteholders or residual beneficiary or -- in the case of
the note trust deed -- the consent of the US$ noteholders as described in the
following paragraph or is:
o to correct a manifest error or ambiguity or is of a formal,
technical or administrative nature only;
o necessary to comply with the provisions of any law or regulation
or with the requirements of any Australian governmental agency;
o appropriate or expedient as a consequence of an amendment to any
law or regulation or altered requirements of the government of
any jurisdiction, any department, commission, office of any
government or any corporation or controlled by any government,
including, without limitation, an addition or modification which
is appropriate or expedient as consequence of the enactment of a
statute or regulation
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or an amendment any statute or regulation or ruling by the
Australian Commissioner or Commissioner of Taxation or any
governmental announcement or statement, in any case which has or
may have the effect of altering the manner or basis of taxation
of trusts generally or of trusts similar to of the Interstar
Millennium Trusts;
o in the case of the master trust deed only, in the opinion of the
issuer trustee, desirable to enable the provisions of the master
trust deed to be more conveniently, advantageously, profitably or
economically administered or is otherwise desirable for any
reason.
Except for an alteration, addition or modification as described in the
preceding section, where, in the opinion of the issuer trustee -- in the case of
the master trust deed or the series notice -- or the note trustee -- in the case
of the note trust deed -- a proposed alteration, addition or modification to the
master trust deed, the series notice or the note trust deed is prejudicial or
likely to be prejudicial to the interests of the noteholders or a class of
noteholders or the residual beneficiary, such alteration, addition or
modification may only be effected with the prior consent of the holders of at
least 75% of the aggregate outstanding Principal Amount of the relevant class or
classes of notes or with the prior written consent of the residual beneficiary,
as the case may be.
THE ISSUER TRUSTEE
The issuer trustee is appointed as trustee of the trust on the terms
set out in the master trust deed and the series notice. The issuer trustee has
all the rights, powers and discretions over and in respect of the assets of the
trust in accordance with the transaction documents, any fixed floating rate swap
and the currency swaps.
The issuer trustee must act honestly and in good faith in performance
of its duties and in exercising its discretions under the master trust deed, use
its best endeavors to carry on and conduct its business in so far as it relates
to the master trust deed in a proper and efficient manner and to exercise such
diligence and prudence as a prudent person of business would exercise in
performing its express functions and in exercising its discretions under the
master trust deed.
DELEGATION
In exercising its powers and performing its obligations and duties
under the master trust deed, the issuer trustee may, with the approval of the
trust manager, delegate any or all of the duties, powers, discretion or other
functions of the issuer trustee.
TRUST INDENTURE ACT
Under the note trust deed, the issuer trustee, or the trust manager on
its behalf, must deliver to the note trustee, within 120 days after the end of
each fiscal year of the trust, commencing on [March 31, 2006] and otherwise in
compliance with the requirements of section 314(a)(4) of the United States Trust
Indenture Act of 1939, as amended, a certificate stating that:
o a review of the activities of the issuer trustee in respect of
the trust during such year and of performance under the
transaction documents, any fixed floating rate swap and the
currency swaps, has been made under supervision of the person
signing the certificate; and
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o to the best of the knowledge of the person signing the
certificate, based on the review referred to in the above bullet
point, the issuer trustee has complied with all conditions and
covenants under the transaction documents, any fixed floating
rate swap and the currency swaps, throughout the relevant year,
or, if there has been a default in the compliance of any such
condition or covenant, specifying each such default known to that
person of the nature and status of the default.
The issuer trustee, or the trust manager, on its behalf, must deliver
to the note trustee on the closing date, an opinion stating that the security
trust deed and any other requisite documents have been properly recorded and
filed. Within 120 days after the end of each fiscal year commencing on [March
31, 2007] the issuer trustee, or the trust manager, on its behalf, must deliver
an opinion stating that action has been taken with respect to the recording and
filing of the security trust deed and any other requisite document or that no
action is required to maintain the security interest created by the security
trust deed.
ISSUER TRUSTEE AND SECURITY TRUSTEE FEES AND EXPENSES
The issuer trustee, the security trustee and the trust manager are
collectively entitled to a fee for each Collection Period equal to 0.1% per
annum of the aggregate outstanding Principal Amount of the notes on the first
day of each Collection Period payable in arrears on the next payment date.
Each of the issuer trustee and the security trustee will be
indemnified out of the assets of the trust for any liability, cost or expense
incurred by it in its capacity as issuer trustee or security trustee, as
applicable, except to the extent that such liability, cost or expense is caused
by the fraud, negligence or wilful default of the issuer trustee or security
trustee, as applicable.
REMOVAL OF THE ISSUER TRUSTEE
The issuer trustee is required to retire as trustee after a direction
from the trust manager in writing following an Issuer Trustee's Default.
If the issuer trustee does not retire within 30 days of being directed
by the trust manager to do so, the trust manager shall have the right to remove
the issuer trustee from office as trustee of the Interstar Millennium Trusts.
On the retirement or removal of the issuer trustee the trust manager,
subject to giving prior notice to each rating agency shall be entitled to
appoint in writing some other statutory trustee to be the issuer trustee
provided that appointment will not in the reasonable opinion of the trust
manager materially prejudice the interests of any noteholders. Until the
appointment is completed, the trust manager shall act as issuer trustee and will
be entitled to the trustee's fee for the period it so acts as issuer trustee.
VOLUNTARY RETIREMENT OF THE ISSUER TRUSTEE
The issuer trustee may resign on giving to the trust manager, with a
copy to the rating agencies, not less than three months' notice in writing, or
such other period as the trust manager and the issuer trustee may agree, of its
intention to do so.
Before retirement, the issuer trustee must appoint a successor trustee
who is approved by the trust manager, or who may be the trust manager, and whose
appointment will not materially
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prejudice the interests of noteholders. If a successor trustee has not been
appointed by the end of the three months' notice period, the trust manager shall
act as trustee until a successor trustee is appointed.
LIMITATION OF THE ISSUER TRUSTEE'S LIABILITY
The issuer trustee enters into the transaction documents, any
fixed-floating rate swap and the currency swaps, and issues the notes only in
its capacity as trustee of the trust and in no other capacity. A liability
incurred by the issuer trustee acting in its capacity as trustee of the trust
arising under or in connection with the transaction documents, any
fixed-floating rate swap and the currency swaps, or the trust or in respect of
the notes is limited to and can be enforced against the issuer trustee only to
the extent to which it can be satisfied out of the assets of the trust out of
which the issuer trustee is actually indemnified for the liability. This
limitation of the issuer trustee's liability applies despite any other provision
of the transaction documents, any fixed-floating rate swap and the currency
swaps, and extends to all liabilities and obligations of the issuer trustee in
any way connected with any representation, warranty, conduct, omission,
agreement or transaction related to the transaction documents, any
fixed-floating rate swap and the currency swaps, or the trust.
No noteholder nor any party to any transaction document, any
fixed-floating rate swap and the currency swaps, may sue the issuer trustee in
any capacity other than as trustee of the trust or seek the appointment of a
receiver, liquidator, administrator or similar person to the issuer trustee --
except in relation to the assets of the trust -- or prove in any liquidation,
administration or arrangements of or affecting the issuer trustee -- except in
relation to the assets of the trust.
The other paragraphs in this section do not apply to any obligation or
liability of the issuer trustee to the extent that it is not satisfied because
under a transaction document, any fixed-floating rate swap and the currency
swaps, or by operation of law there is a reduction in the extent of the issuer
trustee's indemnification out of the assets of the trust as a result of the
issuer trustee's fraud, negligence, or wilful default.
Each of the trust manager, the servicer, the calculation agent, the
paying agents and the swap providers are responsible under the transaction
documents for performing a variety of obligations relating to the trust. No act
or omission of the issuer trustee, including any related failure to satisfy its
obligations or breach of representation or warranty under the transaction
documents, any fixed-floating rate swap and the currency swaps, will be
considered fraud, negligence or wilful default of the issuer trustee to the
extent to which the act or omission was caused or contributed to by any failure
by such person -- other than a person whose acts or omissions the issuer trustee
is liable for in accordance with the transaction documents, any fixed-floating
rate swap and the currency swaps -- to fulfill its obligations relating to the
trust or by any other act or omission of any such person -- other than a person
whose acts or omissions the issuer trustee is liable for in accordance with the
transaction documents, any fixed-floating rate swap and a currency swap --
regardless of whether or not that act or omission is purported to be done on
behalf of the issuer trustee.
No attorney, agent, receiver or receiver and trust manager appointed
in accordance with a transaction document has authority to act on behalf of the
issuer trustee in a way which exposes the issuer trustee to any personal
liability and no act or omission of any such person will be considered fraud,
negligence or wilful default of the issuer trustee provided, in the case of any
person selected and appointed by the issuer trustee, that the issuer trustee has
exercised reasonable care in the selection of such persons.
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RIGHTS OF INDEMNITY OF ISSUER TRUSTEE
The issuer trustee will be indemnified out of the assets of the trust
against all losses and liabilities properly incurred by the issuer trustee in
performing its duties or exercising its powers under the transaction documents,
any fixed-floating rate swap and the currency swaps in relation to the trust
except to the extent that such losses and liabilities arose as a result of the
issuer trustee's fraud, negligence or wilful default.
The issuer trustee is indemnified out of the assets of the trust
against certain payments it may be liable to make under any Consumer Credit
Legislation. The trust manager also indemnifies the issuer trustee in relation
to such payments and the issuer trustee is required to first call on the
indemnity from the trust manager before calling on the indemnity from the assets
of the trust.
THE TRUST MANAGER
POWERS
The trust manager will have full and complete powers of management of
the trust, including the administration and servicing of the assets which are
not serviced by the servicer, borrowings and other liabilities of the trust and
the conduct of the day to day operation of the trust.
The issuer trustee has no duty to supervise the trust manager in the
performance of its functions and duties, or the exercise of its discretions.
The trust manager has the absolute discretion to recommend Authorized
Investments to the issuer trustee and direct the issuer trustee in relation to
those Authorized Investments.
DELEGATION
The trust manager may, in carrying out and performing its duties and
obligations contained in the master trust deed, delegate to any of the trust
manager's associates officers, or employees all acts, matters and things,
whether or not requiring or involving the trust manager's judgment or
discretion, or appoint any person to be its attorney, agent, delegate or sub
contractor for such purposes and with such powers as the trust manager thinks
fit.
Notwithstanding any such delegation or appointment, Interstar
Securitisation Management Pty Limited will continue to be liable for the acts
and omissions of any such associates, officers, employees, attorneys, agents,
delegates or subcontractors in respect of the performance of the trust manager's
obligations under and in connection with the transaction documents, any
fixed-floating rate swap and the currency swaps.
TRUST MANAGER'S FEES, EXPENSES AND INDEMNIFICATION
The trust manager is entitled to a fee for each Collection Period, see
"The Issuer Trustee -- Issuer Trustee and Security Trustee Fees and Expenses" --
on the first day of each Collection Period payable in arrears on the next
payment date.
The trust manager will be indemnified out of the assets of the trust
for any liability, cost or expense properly incurred by it in its capacity as
trust manager of the trust except to the extent
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that such liability, cost or expense is caused by the fraud, negligence or
wilful default of the trust manager.
REMOVAL OR RETIREMENT OF THE TRUST MANAGER
The trust manager shall retire as trust manager if the issuer trustee
so directs in writing following a Trust Manager's Default.
The trust manager may resign on giving to the issuer trustee, with a
copy to each rating agency, not less than 90 days, or another period as the
trust manager and the issuer trustee may agree, notice in writing of its
intention to do so.
On retirement or removal of the trust manager, the issuer trustee may
appoint another trust manager, or may act as trust manager, on such terms as the
issuer trustee sees fit, provided the appointment will not materially prejudice
the interests of noteholders. Until a replacement trust manager is appointed, or
the issuer trustee agrees to act as trust manager, the trust manager must
continue as trust manager. If a replacement trust manager is not appointed
within 90 days of the issuer trustee electing to appoint a new trust manager,
the issuer trustee will be the new trust manager.
LIMITATION OF TRUST MANAGER'S LIABILITY
The principal limitations on the trust manager's liability are set out
in full in the master trust deed. These include the following limitations:
o the trust manager will be indemnified out of the trust in respect
of any liability, cost or expense properly incurred by it in its
capacity as trust manager of the trust; and
o subject to the master trust deed, the trust manager is not
responsible for any act, omission, misconduct, mistake,
oversight, error of judgment, forgetfulness or want of prudence
on the part of the issuer trustee or any agent appointed by the
issuer trustee or on whom the trust manager is entitled to rely
under the master trust deed, other than a related company,
attorney, banker, receiver, barrister, solicitor, agent or other
person acting as agent or adviser to the trust manager, except to
the extent of losses, costs, claims or damages caused or
contributed to by the breach of its obligations under any
transaction documents, any fixed-floating rate swap and the
currency swaps.
THE NOTE TRUSTEE
The Bank of New York will serve as the note trustee. The corporate
trust office of the note trustee responsible for the administration of the trust
is located at 101 Barclay Street, 21st Floor West, New York, New York 10286. The
note trustee will be entitled to execute any of its trusts or powers under the
note trust deed either directly or through agents or attorneys that the note
trustee has selected with reasonable care. The note trustee and every other
person properly appointed by it under the note trust deed will be entitled to
indemnification from the assets of the trust against all loss, liability,
expense, costs, damages, actions, proceedings, claims and demands incurred by,
or made against, the note trustee in connection with its execution of the trusts
under the note trust deed or of their powers or in respect of any matter or
thing done or omitted in any way relating to it, provided that the
indemnification will not extend to any loss,
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liability or expense arising from any fraud, negligence or wilful default by the
note trustee or any other person properly appointed by the note trustee.
The note trustee will at all times be a corporation or association,
organized and doing business under the laws of the United States of America, any
individual state or the District of Columbia, authorized under those laws to
exercise corporate trust powers, having a combined capital and surplus of at
least US$50,000,000, as set forth in its most recent published annual report of
condition, and subject to supervision or examination by federal, state or
District of Columbia authority. The note trustee may also, if permitted by the
SEC, be organized under the laws of a jurisdiction other than the United States,
provided that it is authorized under such laws to exercise corporate trust
powers and is subject to examination by authority of such jurisdictions
substantially equivalent to the supervision or examination applicable to a
trustee in the United States.
The note trustee may resign after giving three months' written notice
to the issuer trustee, the trust manager, the security trustee and each rating
agency. The issuer trustee may also remove the note trustee in the following
circumstances:
o if the note trustee becomes insolvent;
o if the note trustee ceases its business;
o if the note trustee fails to comply with any of its obligations
under any transaction document and the issuer trustee determines
that this failure has had, or if continued, will have, a Material
Adverse Effect, and if capable of remedy, the note trustee does
not remedy this failure within 14 days after the earlier of the
following:
o the note trustee becoming aware of this failure; and
o receipt by the note trustee of written notice with respect
to this failure from either the issuer trustee or the trust
manager; or
o if the note trustee fails to satisfy any obligation imposed on it
under the United States Trust Indenture Act of 1939 with respect
to the trust or the note trust deed.
Holders of 75% of the aggregate outstanding Principal Amount of the
US$ notes may require the issuer trustee to remove the note trustee.
Any resignation or removal of the note trustee and appointment of a
successor note trustee will not become effective until acceptance of the
appointment by a successor note trustee.
NOTE TRUSTEE'S ANNUAL REPORT
To the extent required by the United States Trust Indenture Act of
1939, as amended, the note trustee will mail each year to all US$ noteholders a
report concerning:
o its eligibility and qualifications to continue as trustee under
the note trust deed;
o any amounts advanced by it under the note trust deed;
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o the amount, interest rate and maturity date of indebtedness owing
by the issuer trustee to it in the note trustee's individual
capacity;
o the property and funds physically held by it as note trustee;
o any release or release and substitution of collateral subject to
the lien of the security trust deed that has not previously been
reported; and
o any action taken by it that materially affects the US$ notes and
that has not previously been reported.
LIST OF NOTEHOLDERS
Three or more beneficial holders of US$ notes, each of whom has owned
a US$ note for at least six months, may, upon written request to the note
trustee, obtain access to the current list of US$ noteholders of the issuer
trustee for purposes of communicating with other US$ noteholders concerning
their rights under the note trust deed or the US$ notes. The note trustee may
elect not to give the requesting noteholders access to the list if it agrees to
mail the desired communication or proxy to all applicable noteholders.
REPORTS
On or before January 31 of each calendar year, the principal paying
agent, on behalf of the note trustee, will furnish to each person who at any
time during the prior calendar year was a US$ noteholder, a statement containing
the information required to be provided by an issuer of indebtedness under the
Code.
THE SECURITY TRUST DEED
GENERAL
Perpetual Trustee Company Limited of Level 7, 9 Castlereagh Street,
Sydney, New South Wales, Australia will be the security trustee. Perpetual
Trustee Company Limited's principal activities are the provision of services as
trustee, executors, administrators, attorneys and agents and other fiduciary
services. The issuer trustee will grant a first ranking floating charge,
registered with the Australian Securities and Investments Commission, over all
of the trust assets in favor of the security trustee. The floating charge will
secure the issuer trustee's obligations to the noteholders, the trust manager,
the security trustee, the servicer, the note trustee, the underwriters, each
paying agent, the calculation agent, the mortgage insurers, the underwriters,
the seller with respect to the Accrued Interest Adjustment and seller's fees and
each provider of a support facility. These secured parties are collectively
known as the MORTGAGEES.
NATURE OF THE CHARGE
A company may not deal with its assets over which it has granted a
fixed charge without the consent of the relevant mortgagee. Fixed charges are
usually given over real property, marketable securities and other assets which
will not be dealt with by the company.
A floating charge, like that created by the security trust deed, does
not attach to specific assets but instead "floats" over a class of assets which
may change from time to time. The company granting the floating charge may deal
with those assets and give third parties title to
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those assets free from any encumbrance, provided such dealings and transfers of
title are in the ordinary course of the company's business. The issuer trustee
has agreed not to dispose of or create interests in the assets of the trust
subject to the floating charge except in the ordinary course of its business and
the trust manager has agreed not to direct the issuer trustee to take any such
actions. If the issuer trustee disposes of any of the trust assets, including
any housing loan, in the ordinary course of its business, the person acquiring
the property will take it free of the floating charge. The floating charge
granted over the trust assets will crystallize, which means it becomes a fixed
charge, upon the occurrence of specific events set out in the security trust
deed, including notice to the issuer trustee following an event of default under
the security trust deed. On crystallization of the floating charge, the issuer
trustee may not deal with the assets of the trust without the consent of the
security trustee.
THE SECURITY TRUSTEE
The security trustee is appointed to act as trustee on behalf of the
Mortgagees and holds the benefit of the charge over the trust assets in trust
for each Mortgagee on the terms and conditions of the security trust deed. If
there is a conflict between the duties owed by the security trustee to any
Mortgagees or class of Mortgagees, the security trustee must give priority to
the interests of the noteholders, as determined by the noteholders or the note
trustee acting on their behalf. In addition, the security trustee must give
priority to the interests of the Redraw noteholders and the Class A noteholders
if, in the security trustee's opinion, there is a conflict between the interests
of the Redraw noteholders, the interests of the Class A noteholders, the
interests of the Class AB noteholders and the interests of the Class B
noteholders or other Mortgagees. The security trustee must give priority to the
interests of the Class AB noteholders if, in the security trustee's opinion,
there is a conflict between the interests of the Class AB noteholders and the
interests of the Class B noteholders or other Mortgagees (other than the Redraw
noteholders and the Class A noteholders).
DUTIES AND LIABILITIES OF THE SECURITY TRUSTEE
The security trust deed contains a range of provisions regulating the
scope of the security trustee's duties and liabilities. These include the
following:
o The security trustee is not required to monitor compliance by the
issuer trustee or trust manager with the transaction documents or
their other activities.
o Unless required by a transaction document, the security trustee
need not give Mortgagees information concerning the issuer
trustee which comes into the possession of the security trustee.
o The security trustee has no duties or responsibilities except
those expressly set out in the security trust deed or any
collateral security.
o Any action taken by the security trustee under the security trust
deed or any collateral security binds all the Mortgagees.
o The security trustee in its capacity as a Mortgagee can exercise
its rights and powers as such as if it were not acting as the
security trustee. It and its associates may engage in any kind of
business with the issuer trustee, the trust manager, Mortgagees
and others as if it were not security trustee and may receive
consideration for services
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in connection with any transaction document or otherwise without
having to account to the Mortgagees.
EVENTS OF DEFAULT
Each of the following is an event of default under the security trust
deed:
o the issuer trustee fails to pay:
o any interest within 10 business days of the relevant payment
date on which the interest was due to be paid to
noteholders; or
o any other amount owing to a Mortgagee within 10 business
days of the due date for payment, or within any applicable
grace period agreed with the relevant Mortgagee, or where
the Mortgagee is a US$ noteholder, with the note trustee;
o the issuer trustee fails to perform or observe any other provisions,
other than the obligations already referred to in this section, of a
transaction document, any fixed-floating rate swap or the currency
swaps and that default is not remedied within 30 days after written
notice from the security trustee requiring the failure to be remedied;
o an Insolvency Event occurs relating to the issuer trustee, in its
capacity as trustee of the trust;
o the charge created by the security trust deed is not or ceases to be a
first ranking charge over the assets of the trust, or any other
obligation of the issuer trustee, other than as mandatorily preferred
by law, ranks ahead of or equal with any of the moneys secured by the
security trust deed;
o any security interest over the trust assets is enforced;
o for so long as any Secured Monies are owed to the Redraw noteholders
and the Class A noteholders, a fixed-floating rate swap or the Class A
currency swap is terminated and a replacement fixed-floating rate swap
or Class A currency swap, as the case may be, on terms that will not
lead to a withdrawal or downgrade of the rating of any notes, is not
put in place;
o all or any part of any transaction document, other than a
fixed-floating rate swap or a currency swap, is terminated or is or
becomes void, illegal, invalid, unenforceable or of limited force and
effect or a party becomes entitled to terminate, rescind or avoid all
or part of any transaction document, other than or a fixed-floating
rate swap or a currency swap; or
o without the prior consent of the security trustee, that consent being
subject in accordance with the terms of the security trust deed to the
prior written consent of the Noteholder Mortgagees:
o the trust is wound up, or the issuer trustee is required to
wind up the trust under the master trust deed or applicable
law, or the winding up of the trust commences;
o the trust is held or is conceded by the issuer trustee not
to have been constituted or to have been imperfectly
constituted; or
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o unless another trustee is appointed to the trust under the
transaction documents, the issuer trustee ceases to be
authorized under the trust to hold the property of the trust
in its name and to perform its obligations under the
transaction documents, any fixed-floating rate swap or the
currency swaps.
Where the security trustee has notified the rating agencies, obtained
the written consent of the relevant Noteholder Mortgagees and, in its reasonable
opinion, considers that it would not be materially prejudicial to the interests
of the Mortgagees, it may elect to treat an event that would otherwise be an
event of default as not being an event of default for the purpose of the
security trust deed. Unless the security trustee has made such an election and
provided the security trustee is actually aware of the occurrence of an event of
default, the security trustee must promptly convene a meeting of the Voting
Mortgagees at which it shall seek directions from the Voting Mortgagees by way
of Extraordinary Resolution of Voting Mortgagees regarding the action it should
take as a result of that event of default.
MEETINGS OF VOTING MORTGAGEES
The security trust deed contains provisions for convening meetings of
the Voting Mortgagees to enable the Voting Mortgagees to direct or consent to
the security trustee taking or not taking certain actions under the security
trust deed, including directing the security trustee to enforce the security
trust deed. VOTING MORTGAGEES are:
o with respect only to the enforcement of the charge under the
security trust deed, for as long as amounts outstanding under the
Redraw notes, the Class A notes and the Class AB notes are 75% or
more of the total Secured Monies, the Noteholder Mortgagees; and
o otherwise, the note trustee, acting on behalf of the US$
noteholders and each other Mortgagee.
The security trustee must promptly convene a meeting of the Voting
Mortgagees after it receives notice, or has actual knowledge of, an event of
default under the security trust deed.
VOTING PROCEDURES
Every question submitted to a meeting of Voting Mortgagees shall be
decided in the first instance by a show of hands. If a show of hands results in
a tie, the chairman shall both on a show of hands and on a poll have a casting
vote in addition to the vote or votes, if any, to which he may be entitled as
Voting Mortgagee or as a representative. A representative is, in the case of any
noteholder, a person or body corporate appointed as a proxy for that noteholder.
On a show of hands, every person holding, or being a representative holding or
representing other persons who hold, Secured Monies shall have one vote except
that the note trustee shall represent each US$ noteholder who has directed the
note trustee to vote on its behalf under the note trust deed. On a poll, every
person who is present shall have one vote for every US$10,000 or it's A$
equivalent, but not part thereof, of the Secured Monies that he holds or in
respect of which he is a representative. Any person entitled to more than one
vote need not use all of those votes in the same way.
A resolution of all the Voting Mortgagees, including an Extraordinary
Resolution, may be passed, without any meeting or previous notice being
required, by an instrument or notes in writing which have been signed by all of
the Voting Mortgagees.
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ENFORCEMENT OF CHARGE
At any time after an event of default occurs, a resolution passed at a
duly convened meeting by a majority consisting of not less than 75% of the votes
capable of being cast by Voting Mortgagees present in person or by proxy or a
written resolution signed by all of the Voting Mortgagees may direct the
security trustee to do any or all of the following:
o declare the charge to be enforceable;
o declare all Secured Monies immediately due and payable;
o convert the floating charge to a fixed charge over any or all of
the trust assets; or
o appoint a receiver over the trust assets or itself exercise the
powers that a receiver would otherwise have under the security
trust deed.
If the Noteholder Mortgagees are the only Voting Mortgagees, they may
direct the security trustee to do any act which the security trustee is required
to do, or may only do, at the direction of an Extraordinary Resolution of Voting
Mortgagees, including enforcing the charge.
THE NOTE TRUSTEE AS VOTING MORTGAGEE
If an event of default under the security trust deed occurs and is
continuing, the issuer trustee and the trust manager will promptly notify the
note trustee of such an occurrence and the note trustee shall deliver to each
US$ noteholder notice of such event of default within 90 days of the date that
the note trustee became aware of such event of default. However in the case of a
default in payment of interest and principal on the notes, the note trustee may
withhold such notice if and so long as it determines in good faith that
withholding the notice is in the interests of US$ noteholders.
The rights, remedies and discretion of the US$ noteholders under the
security trust deed, including all rights to vote or give instructions or
consents to the security trustee and to enforce its undertakings and warranties,
may only be exercised by the note trustee on behalf of the US$ noteholders, and
the security trustee may rely on any instructions or directions given to it by
the note trustee as being given on behalf of the US$ noteholders without inquiry
about compliance with the note trust deed.
The note trustee shall not be bound to vote under the security trust
deed, or otherwise direct the security trustee under the security trust deed or
to take any proceedings, actions or steps under, or any other proceedings
pursuant to or in connection with the security trust deed, the note trust deed
or any notes unless directed or requested to do so by the holders of at least
75% of the aggregate outstanding Principal Amount of the relevant class of US$
notes and then only if the note trustee is indemnified to its satisfaction
against all action, proceedings, claims and demands to which it may render
itself liable and all costs, charges, damages and expenses which it may incur by
so doing.
If any of the US$ notes remain outstanding and are due and payable
otherwise than by reason of a default in payment of any amount due on the US$
notes, the note trustee must not vote under the security trust deed to, or
otherwise direct the security trustee to, dispose of the mortgaged property
unless either:
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o the note trustee is of the opinion, reached after considering at
any time and from time to time the advice of a merchant bank or
other financial adviser selected by the note trustee, a
sufficient amount would be realized to discharge in full all
amounts owing to the US$ noteholders, and any other amounts
payable by the issuer trustee ranking in priority to or equal
with the US$ notes; or
o the note trustee is of the opinion, reached after considering at
any time and from time to time the advice of a merchant bank or
other financial adviser selected by the note trustee, that the
cash flow receivable by the issuer trustee or the security
trustee under the security trust deed will not, or that there is
a significant risk that it will not, be sufficient, having regard
to any other relevant actual, contingent or prospective
liabilities of the issuer trustee, to discharge in full in due
course all the amounts referred to in the preceding paragraph.
LIMITATIONS OF ACTIONS BY THE SECURITY TRUSTEE
The security trustee is not obliged to take any action, give any
consent or waiver or make any determination under the security trust deed
without being directed to do so by the note trustee or by Extraordinary
Resolution of the Voting Mortgagees in accordance with the security trust deed.
The security trustee is not obligated to act unless it obtains an indemnity from
the Voting Mortgagees and funds have been deposited on behalf of the security
trustee to the extent to which it may become liable for the relevant enforcement
actions.
If the security trustee convenes a meeting of the Voting Mortgagees,
or is required by an Extraordinary Resolution to take any action under the
security trust deed, and advises the Voting Mortgagees that it will not act in
relation to the enforcement of the security trust deed unless it is personally
indemnified by the Voting Mortgagees to its reasonable satisfaction against all
actions, proceedings, claims and demands to which it may render itself liable,
and all costs, charges, damages and expenses which it may incur in relation to
the enforcement of the security trust deed and is put in funds to the extent to
which it may become liable, including costs and expenses, and the Voting
Mortgagees refuse to grant the requested indemnity, and put the security trustee
in funds, then the security trustee is not obliged to act in relation to that
enforcement under the security trust deed. In those circumstances, the Voting
Mortgagees may exercise such of those powers conferred on them by the security
trust deed as they determine by Extraordinary Resolution.
The security trustee will not be liable for any decline in the value,
nor any loss realized upon any sale or other dispositions made under the
security trust deed, of any mortgaged property or any other property which is
charged to the security trustee by any other person in respect of or relating to
the obligations of the issuer trustee or any third party in respect of the
issuer trustee or the secured moneys or relating in any way to the mortgaged
property or for any such decline or loss directly or indirectly arising from its
acting, or failing to act, as a consequence of an opinion reached by it, except
for the fraud, negligence or wilful default of the security trustee.
PRIORITIES UNDER THE SECURITY TRUST DEED
The proceeds from the enforcement of the security trust deed are to be
applied in the order of priority set forth in this subsection, subject to any
other priority which may be required by statute or law. Certain federal taxes,
unpaid wages, long service leave, annual leave and similar employee benefits and
certain auditor's fees, if any, will be paid prior to the Mortgagees. Subject
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to the foregoing, the proceeds from enforcement of the security trust deed over
the trust assets will be distributed as follows:
o first, to the extent required by law, to pay the holder of any
prior ranking security interest of which the security trustee has
notice;
o second, to pay all costs, charges, expenses and disbursements
properly incurred in the exercise of any power by the security
trustee, the note trustee, a receiver or an attorney and other
amounts, other than those payable under the fourth bullet point,
payable to the security trustee or note trustee under the
security trust deed or the note trust deed;
o third, to the extent that any monies received by the security
trustee represent the proceeds of any cash collateral lodged by a
support facility provider, to pay that support facility provider;
o fourth, to pay pro rata:
o any fees and other expenses due to the security trustee, the
note trustee, a paying agent, the calculation agent or the
note registrar;
o any fees and expenses incurred in relation to the operation
and administration of the trust, including the issuer
trustee's fees and expenses; and
o the receiver's remuneration;
o fifth, to pay pro rata the unpaid Accrued Interest Adjustment due
to the seller;
o sixth, to pay pro rata:
o monetary liabilities of the issuer trustee to all providers
of support facilities;
o monetary liabilities of the issuer trustee to the Redraw
noteholders and the Class A noteholders, pro rata between
each class;
o monetary liabilities owing in relation to any redraws;
o seventh, to pay pro rata:
o monetary liabilities of the issuer trustee to Class AB
noteholders, pro rata;
o eighth, to pay pro rata:
o monetary liabilities of the issuer trustee to Class B
noteholders, pro rata;
o ninth, to pay pro rata any amounts not covered in this section
owing to any Mortgagee under any transaction document, any
fixed-floating rate swap or the currency swap;
o tenth, to pay the holder of any subsequent security interest over
the assets charged by the security trust deed of which the
security trustee has notice of the amount properly secured by the
security interest; and
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o eleventh, to pay any surplus to the issuer trustee to be
distributed in accordance with the master trust deed.
The surplus will not carry interest. If the security trustee pays the
surplus to the credit of an account in the name of the issuer trustee with any
bank carrying on business in Australia, the security trustee, receiver,
Mortgagee or attorney, as the case may be, will be under no further liability in
respect of it.
Upon enforcement of the security created by the security trust deed,
the net proceeds thereof may be insufficient to pay all amounts due on
redemption to the noteholders. Any claims of the noteholders remaining after
realization of the security and application of the proceeds as aforesaid shall,
except in limited circumstances, be extinguished.
SECURITY TRUSTEE'S FEES AND EXPENSES
The issuer trustee shall reimburse the security trustee for all costs
and expenses of the security trustee properly incurred in acting as security
trustee. The fee payable to the issuer trustee and the security trustee shall be
as described in the section entitled "-- Issuer Trustee and Security Trustee
Fees and Expenses".
If, at any time, the security trustee is required to take any action
relating to the enforcement of the terms of the transaction documents, any fixed
- -floating rate swap or the currency swaps upon default by any other party, the
security trustee shall be entitled to additional remuneration.
INDEMNIFICATION
The issuer trustee has agreed to indemnify the security trustee from
and against all losses, costs, liabilities, expenses and damages arising out of
or in connection with the transaction documents, any fixed-floating rate swap or
the currency swaps except to the extent that they result from the fraud,
negligence or wilful default of the security trustee.
RETIREMENT AND REMOVAL OF THE SECURITY TRUSTEE
The security trustee may retire on three months' notice in writing to
the issuer trustee, the trust manager and each rating agency if a successor
security trustee is appointed.
Subject to the appointment of a successor security trustee and prior
notice being given to each rating agency, an Extraordinary Resolution of the
Voting Mortgagees may remove the security trustee at any time and the trust
manager may remove the security trustee if:
o an Insolvency Event occurs in relation to the security trustee in
its personal capacity;
o the security trustee ceases business;
o the security trustee fails to remedy within 14 days after written
notice from the trust manager any material breach of duty by it;
or
o there occurs a change in the control of the security trustee from
that existing on the date of the security trust deed, unless
approved by the trust manager.
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Upon notice of resignation or removal of the security trustee, the
trust manager has the right to appoint a successor security trustee who has been
previously approved by an Extraordinary Resolution of the Voting Mortgagees and
who accepts the appointment. If no successor security trustee is appointed
within 30 days after notice, the retiring security trustee may on behalf of the
Mortgagees appoint a successor security trustee, other than the trust manager or
its affiliates.
AMENDMENT
The issuer trustee and the security trustee may, following written
notice to each rating agency and with the written approval of the trust manager
and the note trustee, amend the security trust deed to, among other things,
correct a manifest error or ambiguity or which in the opinion of the security
trustee is necessary to comply with the provisions of any law or regulation. If
the amendment is prejudicial or likely to be prejudicial to the interests of the
Mortgagees or a class of Mortgagees, an Extraordinary Resolution of the Voting
Mortgagees or that class of Voting Mortgagees is required.
THE CHECK ACCOUNT AND DIRECT PAPERLESS ENTRY FACILITIES AGREEMENT
The servicer has arranged for National Australia Bank Limited to
provide borrowers with an option to utilize a check account and direct entry
paperless facility which provides borrowers with an expanded range of financial
services that are directly linked to the borrower's mortgage loan account. The
provision of these facilities has been documented in a check deposit and direct
paperless entry facilities agreement between National Australia Bank Limited,
the servicer and the issuer trustee known as the NBFI AGREEMENT.
The facilities under the NBFI Agreement are being provided to both:
o borrowers in relation to the trust; and
o borrowers under other Interstar mortgage backed securities
programs which are funded by various warehouse funding trusts,
other Interstar Millennium Trusts and other trusts which issue
mortgage backed securities. Perpetual Trustees Victoria Limited
is the trustee of each of these other trusts.
Under the terms of the NBFI Agreement, the servicer is responsible for
the day to day verification and processing of checks and direct entry paperless
facilities. In providing these facilities to borrowers, there is a possibility
that the servicer may:
o process and authorize the issuer trustee to pay forged or
fraudulently drawn checks or entries;
o fail to comply with stop payment notices made by borrowers; or
o breach other covenants, representations and warranties or other
provisions of the NBFI Agreement.
The NBFI Agreement also requires the issuer trustee to place monies
from the trust into an account known as the TRUST DRAWINGS ACCOUNT which is
maintained with National Australia Bank Limited in the name of Perpetual
Trustees Victoria Limited -- Interstar Securities MBS Program
114
Distribution Account. The other trusts are also required to deposit monies into
this account thereby resulting in co-mingling of part of the assets of the trust
with assets of other trusts.
National Australia Bank Limited may, in accordance with the terms of
the NBFI Agreement, be entitled to withdraw monies out of that Trust Drawings
Account to the limit of moneys held in that account. National Australia Bank
Limited may withdraw those monies even though the legal entitlement of National
Australia Bank Limited in that regard relates to a matter or thing concerning
one of the other trusts and not the trust. In those circumstances, the other
trust would be required to replenish the Trust Drawings Account. There is no
guarantee that the other trusts will have the financial capacity at the relevant
time to replenish the Trust Drawings Account in these circumstances.
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THE INVESTMENT MANAGEMENT AGREEMENT
SERVICING OF HOUSING LOANS
The servicer is required to administer the housing loans in the
following manner:
o in accordance with the investment management agreement;
o to the highest standard of accepted servicing practice of prudent
mortgage lending and investment management institutions;
o exercising a high degree of skill and care in respect thereof;
and
o in compliance with all relevant legislation.
In performing any services under the investment management agreement
the servicer shall take into account whether its performance of such services
may adversely affect the rating of any notes. The servicer is entitled to
delegate its duties under the investment management agreement. The servicer at
all times remains liable for servicing the housing loans and the acts or
omissions of any delegate.
POWERS
The servicer has the express power, among other things:
o to waive any fees which may be collected in the ordinary course
of servicing the housing loans or arrange the rescheduling of
interest due and unpaid following a default under any housing
loans;
o to waive any right in respect of the housing loans and mortgages
in the ordinary course of servicing the housing loans and
mortgages; and
o to extend the maturity date of a housing loan beyond 30 years
from the date of origination when required to do so by law or a
government agency. This extension is not subject to the
requirement that the action not have a Material Adverse Effect.
With respect to these express powers set forth in the first and second
bullet points above, the servicer shall take into account whether its
performance will have a Material Adverse Effect.
UNDERTAKINGS BY THE SERVICER
The servicer has undertaken, among other things, the following:
o to collect all monies due under the housing loans and related
mortgages and pay them into the collection account;
o if a default occurs in respect of a housing loan, to take action
in accordance with its normal enforcement procedures to enforce
the relevant housing loan and the related mortgage to the extent
it determines to be appropriate;
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o to act in accordance with the terms of any mortgage insurance
policies or title insurance policies, not do or omit to do
anything which could be reasonably expected to prejudicially
affect or limit its rights or the rights of the issuer trustee
under or in respect of a mortgage insurance policy or title
insurance policy;
o not consent to the creation or existence of any security interest
in favor of a third party in relation to any mortgaged property
which would rank before or equal with the related housing loan
and mortgage or allow the creation or existence of any other
security interest in the mortgaged property unless priority
arrangements are entered into with such third party under which
the third party acknowledges that the housing loan and the
related mortgage rank ahead in priority to the third party's
security interest on enforcement for an amount not less than the
Unpaid Balance of the housing loan plus such other amount as the
servicer determines in accordance with the servicer's ordinary
course of business;
o to ensure that the authorized investments held by the issuer
trustee yield an amount which is [0.25]% per annum greater than
the amount required to ensure that the issuer trustee has
sufficient cash at all times to enable the issuer trustee to pay
all payments of interest in respect of the notes and otherwise to
comply with all of the issuer trustee's duties and obligations
under the transaction documents, any fixed-floating rate swap and
the currency swaps as and when they fall due;
o to give notice in writing to the issuer trustee and each rating
agency if it becomes aware of the occurrence of any Servicer
Transfer Event;
o to maintain in effect all qualifications, consents, licenses,
permits, approvals, exemptions, filings and registrations as may
be required under any applicable law in order properly to service
the housing loans and mortgages and to perform or comply with its
obligations under the investment management agreement;
o to notify the issuer trustee and the trust manager of any event
which it reasonably believes is likely to have a Material Adverse
Effect promptly after becoming aware of such event; and to notify
the trust manager of anything else which the trust manager
reasonably requires regarding any proposed modification to any
housing loan or related mortgage; and
o to provide information reasonably requested by the issuer trustee
or the trust manager, with respect to all matters relating to the
trust and the assets of the trust that the issuer trustee or the
trust manager believes reasonably necessary for it to perform its
obligations under the transaction documents, any fixed-floating
rate swaps and the currency swaps and upon reasonable notice and
at reasonable times permit the issuer trustee to enter the
premises and inspect the data and records in relation to the
trust and the housing loan agreements, mortgages, certificates of
title and other documents related to the housing loans.
SERVICING COMPENSATION AND EXPENSES
The servicer will receive a fee for servicing the housing loans equal
to [*]% per annum of the aggregate outstanding Principal Amount of the notes --
with respect to the US$ notes, the A$ Equivalent -- on the first day of each
Collection Period payable in arrears on the next payment date.
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The servicer must pay from such fee all expenses incurred in
connection with servicing the housing loans, except for expenses relating to the
enforcement of a housing loan or its related mortgaged property or any amount
repaid to a liquidator or trustee in bankruptcy pursuant to any applicable law,
binding code, order or decision of any court, tribunal or the like or based on
advice of the servicer's legal advisers.
LIABILITY OF THE SERVICER
The servicer fully indemnifies the issuer trustee against all losses,
liabilities, costs and expenses incurred as a result of the failure by the
servicer to perform its duties under the investment management agreement or any
action or conduct undertaken or not taken by the servicer, including as a
consequence of a Servicer Transfer Event.
TERMINATION OF THE SERVICER
The issuer trustee must terminate the servicer's appointment if the
issuer trustee determines that any of the following SERVICER TRANSFER EVENTS
occurs:
o an Insolvency Event occurs with respect to the servicer;
o the servicer fails to pay any amount within 5 business days
of receipt of a notice to do so from the issuer trustee or
the trust manager;
o the servicer fails to comply with any of its other
obligations under any transaction document and such action
has had, or, if continued will have, a Material Adverse
Effect, as determined by the issuer trustee and that failure
is not remedied within the earlier of 30 days after the
servicer becomes aware of that failure and receipt of a
notice from either the issuer trustee or the trust manager;
o any representation, warranty or certification made by the
servicer is incorrect when made and is not waived by the
issuer trustee or remedied to the issuer trustee's
reasonable satisfaction within 90 days after notice from the
issuer trustee, and the issuer trustee determines that
breach would have a Material Adverse Effect; or
o it becomes unlawful for the servicer to perform the services
under the investment management agreement.
The servicer will indemnify the issuer trustee against all losses,
costs and expenses incurred as a result of a Servicer Transfer Event.
RESIGNATION
The servicer may voluntarily resign after giving 90 days notice to
each rating agency, the trust manager and the issuer trustee.
REPLACEMENT OF THE SERVICER
The trust manager and the issuer trustee shall use reasonable efforts
to find an eligible successor servicer. Until a successor servicer is appointed,
the servicer must continue to act as the servicer and will be paid the servicing
fee. If an eligible successor servicer is not appointed by
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the expiration of the 90 day notice period, the issuer trustee itself will act
as servicer and be entitled to the servicing fee.
TERMINATION OF INVESTMENT MANAGEMENT AGREEMENT
The investment management agreement will terminate on the earlier of:
o the date on which the investment management agreement is
terminated pursuant to a Servicer Transfer Event;
o the date which is one month after the notes have been
redeemed in full in accordance with the transaction
documents and the issuer trustee ceases to have any
obligation to any creditor in relation to any trust;
o the date on which the issuer trustee replaces the servicer
with a successor servicer; and
o the date on which the servicer is replaced after resigning.
AMENDMENT
The servicer and the issuer trustee may amend the investment
management agreement provided that each rating agency has confirmed that the
amendment will not have an adverse effect on the rating of any notes and the
trust manager certifies to the issuer trustee that, in the trust manager's
opinion the amendment will not adversely effect the rights of the noteholders.
THE BACKUP SERVICER AGREEMENT
The issuer trustee, the backup servicer and the servicer have entered
into the backup servicer agreement. Under the backup servicer agreement, the
issuer trustee has agreed that in the event the servicer is removed or retires
as a servicer of certain trusts, including the trust, it will request the backup
servicer to become the servicer of the trust. The backup servicer is obliged to
become servicer at the request of the issuer trustee.
The backup servicer will act as servicer of the trust from the date of
its appointment until such time as the backup servicer is removed or retires in
accordance with the backup servicer agreement. The issuer trustee cannot appoint
the backup servicer as servicer unless the rating agencies have confirmed in
writing to the issuer trustee that such appointment will not have an adverse
effect on the credit ratings of the notes.
Once the backup servicer has been appointed, it will be bound by and
must observe the obligations and shall be entitled to exercise all the rights
and discretions conferred on the servicer under the investment management
agreement as if it were named in the investment management agreement as the
original servicer. Upon the appointment of the backup servicer as servicer,
Interstar Wholesale Finance Pty Limited will immediately provide to the backup
servicer all accounts, books, documents, records or other property relating to
the trust which are in its possession or control. The issuer trustee will
promptly arrange to provide the backup servicer with such accounts or
information relating to the trust which are in the possession or control of the
issuer trustee to enable the backup servicer to fulfill its duties, obligations
and discretions as servicer. The issuer trustee may remove the backup servicer
as servicer after providing the
119
backup servicer with written notice and in accordance with the provisions of the
investment management agreement.
The backup servicer agreement will be governed by the laws of the
State of Victoria.
120
THE SERVICER
SERVICING OF HOUSING LOANS
Under the investment management agreement, Interstar Wholesale Finance
Pty Limited has been appointed as the initial servicer of the housing loans. The
day to day servicing of the housing loans will be performed by the servicer at
its head office in Melbourne. Servicing procedures include managing customer
inquiries, monitoring compliance with the loan features and rights applicable to
these loans, and the arrears management of delinquent loans. See "Description of
the Transaction Documents -- The Investment Management Agreement".
COLLECTION AND ENFORCEMENT PROCEDURES
Pursuant to the terms of the housing loans, borrowers must make the
minimum repayment due under the terms and conditions of the housing loans, on or
before each monthly installment due date. Interstar Wholesale Finance Pty
Limited gives credit to repayments to an individual housing loan on the date of
its receipt. Interest is accrued daily on the balance outstanding after close of
business and charged monthly to each relevant loan account.
When a housing loan is 1 day delinquent, it is identified in the
mortgage service system. At the close of business on the last business day of
the month each delinquent account is transferred to the collection system. The
collection system identifies all accounts which are overdue and provides
detailed lists of those loans for action and follow-up.
The collection system allocates overdue loans to designated collection
officers at close of business on the third business day of each month.
Actions taken by the servicer in relation to delinquent accounts will
vary depending on the following elements and, if applicable, with the input of
the mortgage insurer:
o arrears history;
o loan size;
o equity in the property -- LVR; and
o arrangements made with the borrower to clear arrears and maintain
future minimum installments while arrears exist.
If satisfactory arrangements cannot be made to rectify a delinquent
housing loan, the servicer will instruct a panel solicitor to issue legal
notices and institute recovery action by enforcing the mortgage security.
Collection officers, under legal assistance, manage this process and pursue many
sources of recovery including the following:
o guarantees;
o government assistance schemes;
o mortgagee sale;
o claims on title insurance, and
121
o claims on mortgage insurance.
It should be noted that Interstar Wholesale Finance Pty Limited
reports all actions that it takes on overdue housing loans to its respective
mortgage insurer in accordance with the terms of the mortgage insurance
policies.
COLLECTION AND FORECLOSURE PROCESS
Subject to the paragraph below, when a housing loan is 3 months
delinquent, a letter of demand is sent to the borrower advising of the situation
and requesting that payment be made to rectify the situation. If a response has
not been received within 15 days of the letter of demand, instructions are sent
to Interstar Wholesale Finance Pty Limited's panel solicitor to commence
recovery action by issuing the relevant default notices pursuant to the
registered mortgage and statutory time allowed in that state or territory.
Recovery action continues until such time as the borrower pays the
amount noted in the default notices, plus interest, legal fees etc., or vacant
possession of the security property is obtained. If a borrower does not respond
to any of the notices issued or served upon him or her, a notice for vacant
possession may be obtained within 45 days of issuing the default notice.
For housing loans:
o with an original loan balance in excess of A$300,000; or
o which, based on the characteristics of the borrower, the
loan-to-value ratio and payment history, the servicer determines
to have a particular risk profile,
the servicer will issue a letter of demand when the loan is 1 month delinquent.
These time frames assume that the borrower has taken no action to
remedy the default.
Upon gaining possession of the security property, two marketing
appraisals and an updated valuation are requested, with one of the marketing
appraisals selected to market and sell the property via auction or private
treaty. A reserve price/list price is determined with reference to the marketing
appraisals and valuation. Once a figure has been reached, this is submitted to
the mortgage insurer for approval. After the security property is sold and funds
received and an outstanding loan balance remains, a claim for the shortfall is
submitted to the mortgage insurer for processing.
It should also be noted that the mortgagee's ability to exercise its
power of sale on the mortgaged property is dependent upon the statutory
restrictions of the relevant State or Territory as to notice requirements. In
addition, there may be factors outside the control of the mortgagee such as
whether the mortgagor contests the sale and the market conditions at the time of
sale. These issues may affect the length of time between the decision of the
mortgagee to exercise its power of sale and final completion of the sale.
The arrears and security enforcement procedures may change over time
as a result of business changes, or legislative and regulatory changes.
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SERVICER DELINQUENCY EXPERIENCE [TO BE UPDATED]
The table below summarizes the delinquency and foreclosure experience
of housing loans serviced by Interstar Wholesale Finance Pty Limited.
INTERSTAR MORTGAGE BACKED PROGRAM -- TOTAL PORTFOLIO HISTORICAL DELINQUENCIES
MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
2000 2000 2001 2001
----------------- ----------------- ----------------- -----------------
Outstanding Balance........ $2,609,611,105.11 $3,344,250,484.60 $4,021,142,286.04 $4,820,490,560.20
Number of Loans
Outstanding............. 18,579 23,091 27,406 32,114
Percentage of Delinquent
Loans*..................
31 - 60 Days............... 0.43% 0.35% 0.33% 0.28%
61 - 90 Days............... 0.24% 0.16% 0.14% 0.12%
91 Days Plus............... 0.13% 0.10% 0.06% 0.06%
Total Delinquencies
over 30 Days............ 0.80% 0.61% 0.53% 0.46%
MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
2002 2002 2003 2003
----------------- ----------------- ----------------- ------------------
Outstanding Balance........ $5,864,319,193.21 $7,436,170,410.31 $8,997,021,037.72 $11,245,965,054.01
Number of Loans
Outstanding............. 38,133 46,825 56,322 68,364
Percentage of Delinquent
Loans*..................
31 - 60 Days............... 0.40% 0.58% 0.40% 0.39%
61 - 90 Days............... 0.19% 0.18% 0.17% 0.17%
91 Days Plus............... 0.10% 0.12% 0.15% 0.16%
Total Delinquencies
over 30 Days............ 0.70% 0.89% 0.71% 0.72%
MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
2003 2003 2004 2004
--------- ------------- --------- -------------
Outstanding Balance........
Number of Loans
Outstanding.............
Percentage of Delinquent
Loans*..................
31 - 60 Days...............
61 - 90 Days...............
91 Days Plus...............
Total Delinquencies
over 30 Days............
MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
SIX MONTH PERIOD ENDING 1999 1999 2000 2000
--------- ------------- --------- -------------
Loan Losses as a % of Total
Outstanding
Balance**............... 0.00% 0.00% 0.00% 0.00%
MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
SIX MONTH PERIOD ENDING 2001 2001 2002 2002
--------- ------------- --------- -------------
Loan Losses as a % of Total
Outstanding Balance**... 0.00% 0.00% 0.00% 0.00%
MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
SIX MONTH PERIOD ENDING 2003 2003 2004 2004
--------- ------------- --------- -------------
Loan Losses as a % of Total
Outstanding Balance**... 0.00% 0.00% 0.00% 0.00%
* Totals may not sum exactly due to rounding
** Net loss after any claim under Mortgage Insurance
There can be no assurance that the delinquency and foreclosure
experience with respect to the housing loans comprising the housing loan pool
will correspond to the delinquency and foreclosure experience of the servicer's
mortgage portfolio set forth in the foregoing table. Indeed, the statistics
shown in the preceding table represent the delinquency and foreclosure
experience for the total residential mortgage portfolios for each of the years
presented, whereas the aggregate delinquency and foreclosure experience on the
housing loans will depend on the results obtained over the life of the housing
loan pool. In addition, the foregoing statistics include housing loans with a
variety of payment and other characteristics that may not correspond to those of
the housing loans in the pool. Moreover, if the real estate market should
experience an overall decline in property values such that the principal
balances of the housing loans comprising the housing loan pool become equal to
or greater than the value of the related mortgaged properties, the actual rates
of delinquencies and foreclosures could be significantly higher than those
previously experienced by the servicer. In addition, adverse economic
conditions, which may or may not affect real property values, may affect the
timely payment by borrowers of scheduled payments of principal and interest on
the housing loans and, accordingly, the rates of delinquencies, foreclosures,
bankruptcies and losses with respect to the housing loan pool.
123
PREPAYMENT AND YIELD CONSIDERATIONS
The following information is given solely to illustrate the effect of
prepayments of the housing loans on the weighted average life of the US$ notes
under the stated assumptions and is not a prediction of the prepayment rate that
might actually be experienced.
GENERAL
The rate of principal payments and aggregate amount of distributions
on the notes and the yield to maturity of the notes will relate to the rate and
timing of payments of principal and the amount and timing of redraws on the
housing loans. The rate of principal payments on the housing loans will in turn
be affected by the amortization schedules of the housing loans and by the rate
of principal prepayments, including for this purpose prepayments resulting from
refinancing, liquidations of the housing loans due to defaults, casualties,
condemnations and repurchases by a seller. Subject, in the case of fixed rate
housing loans, to the payment of applicable fees, the housing loans may be
prepaid by the mortgagors at any time.
PREPAYMENTS
Prepayments, liquidations and purchases of the housing loans,
including optional purchase of the remaining housing loans in connection with
the termination of the trust, will result in early distributions of principal
amounts on the notes. Prepayments of principal may occur in the following
situations:
o refinancing by borrowers with other financiers;
o receipt by the issuer trustee of enforcement proceeds due to a
borrower having defaulted on its housing loan;
o receipt by the issuer trustee of insurance proceeds in relation to a
claim under a mortgage insurance policy in respect of a housing loan;
o repurchase of the housing loans by a seller as a result of a breach by
it of certain representations;
o repurchase of the housing loans as a result of an optional termination
or a redemption for taxation or other reasons;
o receipt of proceeds of enforcement of the security trust deed prior to
the final maturity date of the notes; or
o receipt of proceeds of the sale of housing loans if the trust is
terminated while notes are outstanding, for example, if required by
law, and the housing loans are then either:
o repurchased by a seller under its right of first refusal; or
o sold to a third party.
124
Since the rate of payment of principal of the housing loans cannot be
predicted and will depend on future events and a variety of factors, no
assurance can be given to you as to this rate of payment or the rate of
principal prepayments. The extent to which the yield to maturity of any note may
vary from the anticipated yield will depend upon the following factors:
o the degree to which a note is purchased at a discount or premium; and
o the degree to which the timing of payments on the note is sensitive to
prepayments, liquidations and purchases of the housing loans.
A wide variety of factors, including economic conditions, the
availability of alternative financing and homeowner mobility may affect the
trust's prepayment experience with respect to the housing loans. In particular,
under Australian law, unlike the law of the United States, interest on loans
used to purchase a principal place of residence is not ordinarily deductible for
taxation purposes.
WEIGHTED AVERAGE LIVES
The weighted average life of a note refers to the average amount of
time that will elapse from the date of issuance of the note to the date each
U.S. dollar in respect of principal repayable under the note is reduced to zero.
Prepayments of principal on the housing loans will tend to shorten the weighted
average lives of the US$ notes, while redraws will tend to extend the weighted
average lives of the US$ notes.
Usually, greater than anticipated principal prepayments will increase
the yield on notes purchased at a discount and will decrease the yield on notes
purchased at a premium. The effect on your yield due to principal prepayments
occurring at a rate that is faster or slower than the rate you anticipated will
not be entirely offset by a subsequent similar reduction or increase,
respectively, in the rate of principal payments. The amount and timing of
delinquencies and defaults on the housing loans and the recoveries, if any, on
defaulted housing loans and foreclosed properties will also affect the weighted
average lives of the notes.
The following table is based on a constant prepayment rate model.
Constant prepayment rate represents an assumed constant rate of prepayment each
month, expressed as a per annum percentage of the principal balance of the pool
of mortgage loans for that month. Constant prepayment rate does not purport to
be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any pool of housing loans, including the
housing loans in your pool. Neither the seller nor the trust manager believes
that any existing statistics of which it is aware provide a reliable basis for
noteholders to predict the amount or timing of receipt of housing loan
prepayments.
The following table is based upon the assumptions in the following
paragraph, and not upon the actual characteristics of the housing loans. Any
discrepancies between characteristics of the actual housing loans and the
assumed housing loans may have an effect upon the percentages of the principal
balances outstanding and weighted average lives of the notes set forth in the
table. Furthermore, since these discrepancies exist, principal payments on the
notes may be made earlier or later than the table indicates.
125
The following tables were prepared based on the characteristics of the
housing loan pool as described in "Description of the Assets of the Trust"
expected to be acquired by the issuer trustee and the following additional
assumptions:
o the initial cut-off date is the close of business on [*] [*], 2005;
o closing date for the notes is [*] [*], 2005;
o on the closing date the issuer trustee will purchase housing loans
with an aggregate principal balance of A$[*];
o payments on the US$ notes are made on each payment date, regardless of
the day on which payment actually occurs, commencing in [*] 2005, and
are made in accordance with the priorities described in this
prospectus;
o the housing loans' prepayment rates are equal to the respective
percentages of constant prepayment rate indicated in the tables;
o the scheduled payments of principal and interest on the housing loans
will be paid monthly and will be timely delivered on the [10th] day of
each month, with no defaults or arrears;
o loans in the initial pool are assumed to have 3 monthly collection
periods prior to the first payment date. Additional loans purchased by
the proceeds of the Prefunding Account are assumed to have 2 monthly
collection periods prior to the first payment date;
o all prepayments are received on the [10th] day of each month and
include the full month's interest on the prepayment;
o there are no redraws, principal increases, substitutions or payment
holidays with respect to the housing loans and, accordingly, no Redraw
notes will be issued;
o housing loans bearing a variable rate of interest maintain the rate
set as at the cut-off date;
o Liquid Authorized Investments are maintained at the Prescribed Minimum
Level throughout the life of the notes and the Prescribed Minimum
Level at any time is 1% of the then current sum of the outstanding
Principal Amount of the Class A A$ Equivalent of the outstanding
Principal Amount of the Class A notes, the Class AB A$ Equivalent of
the outstanding Principal Amount of the Class AB notes and outstanding
Principal Amount of the Class B notes.
o principal collections are distributed according to the rules of
distribution set forth in this prospectus;
o all payments under the swaps are made as scheduled;
o the trust manager does not direct the issuer trustee to exercise its
right of optional redemption of the notes, except, with respect to the
line titled "Weighted Average Life -- To Earlier of Clean Up Call and
Step-Up Margin Date (Years)", in respect of which the trust manager
exercises its right to redeem the notes on the earlier to occur of the
Step-Up Margin Date and the payment date on which the total
outstanding Principal Amount of all notes in all classes does not
exceed 10% of the Initial Principal Amount of all notes; and
126
o borrowers in relation to any interest only housing loans in the
portfolio are assumed to pay no principal for a period of fifty-nine
months and will pay principal and interest thereafter.
It is not likely that the housing loans will pay at any constant
prepayment rate to maturity or that all housing loans will prepay at the same
rate. In addition, the diverse remaining terms to maturity of the housing loans
could produce slower or faster distributions of principal than indicated in the
tables at the assumed constant prepayment rate specified, even if the weighted
average remaining term to maturity of the housing loans is the same as the
assumed weighted average remaining term to maturity as described in this
section. You are urged to make your investment decisions on a basis that
includes your determination as to anticipated prepayment rates under a variety
of the assumptions discussed in this prospectus as well as other relevant
assumptions.
In the following tables, the percentages have been rounded to one
decimal place and the weighted average life of a class of notes is determined by
the following three step process:
o multiplying the amount of each payment of principal thereof by the
number of years from the date of issuance to the related payment date,
o summing the results, and
o dividing the sum by the aggregate distributions of principal referred
to in the first clause above and rounding to two decimal places.
127
PERCENTAGE OF INITIAL PRINCIPAL AMOUNT OUTSTANDING OF THE CLASS A NOTES AT THE
FOLLOWING PERCENTAGES OF CONSTANT PREPAYMENT RATE
DATE 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
- ---- ----- ----- ----- ----- ----- ----- -----
Closing Date.................. 100.0 100.0 100.0 100.0 100.0 100.0 100.0
[March 14], 2006..............
[March 14], 2007..............
[March 14], 2008..............
[March 14], 2009..............
[March 14], 2010..............
[March 14], 2011..............
[March 14], 2012..............
[March 14], 2013..............
[March 14], 2014..............
[March 14], 2015..............
[March 14], 2016..............
[March 14], 2017..............
[March 14], 2018..............
[March 14], 2019..............
[March 14], 2020..............
[March 14], 2021..............
[March 14], 2022..............
[March 14], 2023..............
[March 14], 2024..............
[March 14], 2025..............
[March 14], 2026..............
[March 14], 2027..............
[March 14], 2028..............
[March 14], 2029..............
[March 14], 2030..............
[March 14], 2031..............
[March 14], 2032..............
[March 14], 2033..............
[March 14], 2034..............
[March 14], 2035..............
Weighted Average Life -
To earlier of Clean Up Call
and Step-Up Margin Date
(Years).......................
To Maturity (Years)...........
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USE OF PROCEEDS
The proceeds from the issue of the US$ notes, after being exchanged
pursuant to the currency swaps, will amount to A$[*]. These issue proceeds, will
be used by the issuer trustee, in most part, to acquire from the seller the
seller's beneficial interest in the housing loans and related mortgages, to make
a deposit in the prefunding account, if applicable, and to acquire Liquid
Authorized Investments. See "Description of the Assets of the Trust --
Acquisition of Housing Loans after the Closing Date" and "Description of the US$
Notes -- Application of Mortgage Principal Repayments and Liquid Authorized
Investments to Available Income".
LEGAL ASPECTS OF THE HOUSING LOANS
The following discussion is a summary of the material legal aspects of
Australian retail housing loans and mortgages. It is not an exhaustive analysis
of the relevant law. Some of the legal aspects are governed by the law of the
applicable State or Territory of Australia. Laws may differ between such States
and Territories. The summary does not reflect the laws of any particular
jurisdiction or cover all relevant laws of all jurisdictions in which a
mortgaged property may be situated, although it reflects the material aspects of
the laws of New South Wales, without referring to any specific legislation of
that State.
GENERAL
There are two parties to a mortgage. The first party is the mortgagor,
who is either the borrower and homeowner or, where the relevant loan is
guaranteed and the guarantee is secured by a mortgage, the guarantor. The
mortgagor grants the mortgage over their property. The second party is the
mortgagee, who is the lender. Each housing loan will be secured by a mortgage
which has a first ranking priority over all other mortgages granted by the
relevant borrower and over all unsecured creditors of the borrower, except in
respect of certain statutory rights such as some rates and taxes, which are
granted statutory priority.
NATURE OF HOUSING LOANS AS SECURITY
There are a number of different forms of title to land in Australia.
The most common form of title in Australia is "Torrens title". The housing loans
in the proposed housing loan pool are to be predominantly secured by Torrens
title land.
TORRENS TITLE land is freehold or leasehold title, interests in which
are created by registration in one or more central land registries of the
relevant State or Territory of Australia. Each parcel of land is represented by
a specific certificate of title. The central registry retains details and copies
of registered dealings affecting the title and, in most States, the original
certificate is retained by the owner. Any dealing with the relevant land is
carried out by instruments which are registered on the title to the land and, on
registration, become legally effective.
Ordinarily the relevant certificate of title, or any registered plan
and instruments referred to in it, will reveal the position and dimensions of
the land, the present owner, and any registered leases, registered mortgages,
registered easements and other dealings to which it is subject.
The Torrens Title system provides that the certificate of title is
conclusive evidence, except in limited circumstances such as fraud, of the
matters stated in it. This means that lenders and
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home owners do not need to make historical searches and enquiries about the
title, as a search of the relevant title register is sufficient.
Some Torrens title property securing housing loans and thus comprised
in the mortgaged property, will be "strata title" or "urban leasehold".
STRATA TITLE
STRATA TITLE is an extension of the Torrens system and was developed
to enable the creation of, and dealings with, various parts of multi-story
buildings, commonly referred to as apartment units or strata lots, which are
similar to condominiums in the United States, and is governed by the legislation
of the State or Territory of Australia in which the property is situated. Under
strata title, each proprietor has title to, and may freely dispose of, their
strata lot. Certain parts of the property, such as the land on which the
building is erected, the walls, roof, stairwells, entrance lobbies and the like,
are known as "common property" and are held by an "owners corporation" for the
benefit of the individual proprietors. All proprietors are members of the owners
corporation, which is vested with the control, management and administration of
the common property and the strata scheme generally, for the benefit of the
proprietors, including the rules governing the apartment block.
Only Torrens title land can be the subject of strata title in this
way, and so the provisions referred to in this section in relation to Torrens
title also apply to the title in an apartment unit held by a strata proprietor.
URBAN LEASEHOLD
All land in the Australian Capital Territory is owned by the
Commonwealth of Australia and is subject to a leasehold system of land title
known as urban leasehold. Mortgaged property in that jurisdiction comprises a
Crown lease and developments on the land are subject to the terms of that lease.
Any such lease:
o cannot have a term exceeding 99 years, although the term can be
extended under a straightforward administrative process in which
the only qualification to be considered is whether the land may
be required for a public purpose; and
o where it involves residential property, is subject to a nominal
rent of A$0.05 per annum on demand.
As with Torrens title land, the proprietor's leasehold interest in the
land is entered in a central register and the proprietor may deal with their
leasehold interest, including granting a mortgage over the property, without
consent from the government.
In all cases where mortgaged property consists of a leasehold
interest, the unexpired term of the lease exceeds the term of the housing loan
secured by that mortgaged property.
Leasehold property may become subject to native title claims. Native
title has only quite recently been recognized by Australian courts. Native title
to particular property is based on the traditional laws and customs of
indigenous Australians and is not necessarily extinguished by grants of Crown
leases over that property. The extent to which native title exists over
property, including property subject to a Crown lease, depends on how that
property was previously used by the indigenous claimants asserting native title,
and whether the native title has been extinguished
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by the granting of the leasehold interest. If the lease confers the right of
exclusive possession over the property, which is typically the case with
residential leases, the current view is that native title over the relevant
property would be extinguished. Whether a lease confers exclusive possession
will depend on a construction of the lease and the legislation under which the
lease was granted.
TAKING SECURITY OVER LAND
The law relating to the granting of security over real property is
made complex by the fact that each State and Territory of Australia has separate
governing legislation. The following is a brief overview of some issues involved
in taking security over land.
Under Torrens title, registration of a mortgage using the prescribed
form executed by the mortgagor is required in order for the mortgagee to obtain
both the remedies of a mortgagee granted by statute and the relevant priorities
against other secured creditors. To this extent, the mortgagee is said to have a
legal or registered title. However, registration does not transfer title in the
property and the mortgagor remains as legal owner. Rather, the Torrens title
mortgage takes effect as a statutory charge or security only. The Torrens title
mortgagee does not obtain an "estate" in the property but does have an interest
in the land which is recorded on the register and the certificate of title for
the property. A search of the register by any subsequent creditor or proposed
creditor will reveal the existence of the prior registered mortgage.
In most States and Territories of Australia, a mortgagee will retain
the certificate of title, if one is issued by the land registry office. Failure
to retain the certificate may in certain circumstances constitute negligent
conduct resulting in a postponement of the mortgagee's priority to a later
secured creditor.
In Queensland and Victoria, duplicate certificates of title are no
longer issued to mortgagees as a matter of practice. A record of the title is
stored on computer at the land registry office and the mortgage is registered on
that computerized title.
Once the mortgagor has repaid the loan, a discharge of mortgage
executed by the mortgagee is lodged with the relevant land registry office by
the mortgagor or the mortgagee and the mortgage will then be removed from the
certificate of title for the property.
ENFORCEMENT OF REGISTERED MORTGAGES
Subject to the discussion in this section, if a borrower defaults
under a housing loan the loan documents provide that all monies under the
housing loan may be declared immediately due and payable. In Australia, a lender
may sue to recover all outstanding principal, interest and fees under the
personal covenant of a borrower contained in the loan documents to repay those
amounts. In addition, the lender may enforce a registered mortgage in relation
to the defaulted loan. Enforcement may occur in a number of ways, including the
following:
o The mortgagee may enter into possession of the property. If
it does so, it does so in its own right and not as agent of
the mortgagor, and so may be personally liable for
mismanagement of the property and to third parties as
occupier of the property.
o The mortgagee may sell the property, subject to various
duties to ensure that the mortgagee exercises proper care in
relation to the sale. This power of sale is usually
expressly contained in the mortgage documents, and is also
implied in
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registered mortgages under the relevant Torrens title
legislation. The Torrens title legislation prescribes
certain forms and periods of notice to be given to the
mortgagor prior to enforcement. A sale under a mortgage may
be by public auction or private treaty. Once registered, the
purchaser of property sold pursuant to a mortgagee's power
of sale becomes the absolute owner of the property.
o The mortgagee may, in limited circumstances, lease the
property to third parties.
o The mortgagee may foreclose on the property. Under
foreclosure procedures, the mortgagee extinguishes the
mortgagor's title to the property so that the mortgagee
becomes the absolute owner of the property, a remedy that
is, because of procedural constraints, rarely used. If the
mortgagee forecloses on the property, it loses the right to
sue the borrower under the personal covenant to repay and
can only look to the value of the property for satisfaction
of the debt.
o The mortgagee may appoint a receiver to deal with income
from the property or exercise other rights delegated to the
receiver by the mortgagee. A receiver is the agent of the
mortgagor and so, unlike when the mortgagee enters
possession of property, in theory the mortgagee is not
liable for the receiver's acts or as occupier of the
property. In practice, however, the receiver will require
indemnities from the mortgagee that appoints it.
A mortgagee's ability to call in all amounts under a housing loan or
enforce a mortgage which is subject to the Consumer Credit Legislation is
limited by various demand and notice procedures which are required to be
followed. For example, as a general rule enforcement cannot occur unless the
relevant default is not remedied within 30 days after a default notice is given.
Borrowers may also be entitled to initiate negotiations with the mortgagee for a
postponement of enforcement proceedings.
PENALTIES AND PROHIBITED FEES
Australian courts will not enforce an obligation of a borrower to pay
default interest on delinquent payments if the court determines that the
relevant default interest rate is a penalty. Certain jurisdictions prescribe a
maximum recoverable interest rate, although in most jurisdictions there is no
specified threshold rate to determine what is a penalty. In those circumstances,
whether a rate is a penalty or not will be determined by reference to such
factors as the prevailing market interest rates. The Consumer Credit Legislation
does not impose a limit on the rate of default interest, but a rate which is too
high may entitle the borrower to have the loan agreement re-opened on the ground
that it is unjust. Under the Corporations Act 2001 of Australia, the liquidator
of a company may avoid a loan under which an extortionate interest rate is
levied.
The Consumer Credit Legislation requires that any fee or charge to be
levied by the lender must be provided for in the contract, otherwise it cannot
be levied. The regulations under the Consumer Credit Legislation may also from
time to time prohibit certain fees and charges. The Consumer Credit Legislation
also requires that establishment fees, termination fees and prepayment fees must
be reasonable otherwise they may be reduced or set aside.
BANKRUPTCY
The insolvency of a natural person is governed by the provisions of
the Bankruptcy Act 1966 of Australia, which is a federal statute. Generally,
secured creditors of a natural person,
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such as mortgagees under real property mortgages, stand outside the bankruptcy.
The secured creditor may, if it wishes, prove, or file a claim, in the
bankruptcy proceeding as an unsecured creditor in a number of circumstances,
including if they have realized the related mortgaged property and their debt
has not been fully repaid, in which case they can prove for the unpaid balance.
Certain dispositions of property by a bankrupt may be avoided by the trustee in
bankruptcy. These include where:
o the disposition was made to defraud creditors; or
o the disposition was made by an insolvent debtor within 6
months of the commencement of bankruptcy and that
disposition gave a preference to an existing creditor over
at least one other creditor; or
o the disposition was made within 5 years of the commencement
of bankruptcy for no consideration or consideration of less
than market value.
The insolvency of a company is governed by the Corporations Act 2001
of Australia. Again, secured creditors generally stand outside the insolvency.
However, a liquidator may avoid a mortgage which is voidable under the
Corporations Act because it is an uncommercial transaction, or an unfair
preference to a creditor or a transaction for the purpose of defeating
creditors, and that transaction occurred:
o when the company was insolvent, or an act is done to give
effect to the transaction when the company is insolvent, or
the company becomes insolvent because of the transaction or
the doing of an act to give effect to the transaction; and
o within a prescribed period prior to the commencement of the
winding up of the company.
ENVIRONMENTAL
Real property which is mortgaged to a lender may be subject to
unforeseen environmental problems, including land contamination. Environmental
legislation which deals with liability for such problems exists at both State
and Federal levels, although the majority of relevant legislation is imposed by
the States. Liability in respect of environmentally damaged land, which
liability may include the cost of rectifying the damage, may attach to a person
who is, for instance, an owner, occupier or person in control of the relevant
property. In some but not all States, lenders are expressly excluded from the
definitions of one or more of these categories.
Merely holding security over property will not convert a lender into
an occupier. However, a lender or receiver who takes possession of contaminated
mortgaged property or otherwise enforces its security may be liable as an
occupier.
Some environmental legislation provides that security interests may be
created over contaminated or other affected property to secure payment of the
costs of any necessary rectification of the property. The security interests may
have priority over pre-existing mortgages. To the extent that the issuer trustee
or a receiver appointed on its behalf incurs any such liabilities, it will be
entitled to be indemnified out of the assets of the trust.
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INSOLVENCY CONSIDERATIONS
The current transaction is designed to mitigate insolvency risk. For
example, the assignment of the beneficial interest of the seller in the housing
loans to the issuer trustee should ensure that the housing loans are not assets
available to the liquidator or creditors of the seller in the event of an
insolvency of the seller. Similarly, the assets in the trust should not be
available to other creditors of the issuer trustee in its personal capacity or
as trustee of any other trust in the event of an insolvency of the issuer
trustee.
If any Insolvency Event occurs with respect to the issuer trustee in
its capacity as trustee of the trust, the security trust deed may be enforced by
the security trustee at the direction of the Voting Mortgagees. See "Description
of the Transaction Documents -- The Security Trust Deed -- Enforcement of the
Charge". The security created by the security trust deed will stand outside any
liquidation of the issuer trustee, and the assets the subject of that security
will not be available to the liquidator or any creditor of the issuer trustee,
other than a creditor which has the benefit of the security trust deed until the
secured obligations have been satisfied. The proceeds of enforcement of the
security trust deed are to be applied by the security trustee as set out in
"Description of the Transaction Documents -- The Security Trust Deed --
Priorities Under the Security Trust Deed". If the proceeds from enforcement of
the security trust deed are not sufficient to redeem the notes in full, some or
all of the noteholders will incur a loss.
TAX TREATMENT OF INTEREST ON AUSTRALIAN HOUSING LOANS
Under Australian law, interest on loans used to purchase a person's
primary place of residence is not ordinarily deductible for taxation purposes.
Conversely, interest payments on loans and other non-capital expenditures
relating to non-owner occupied properties that generate taxable income are
generally allowable as tax deductions.
CONSUMER CREDIT LEGISLATION
The majority of the housing loans are regulated by the Consumer Credit
Legislation. This legislation significantly regulates the entire life of a
typical housing loan. It imposes significant obligations on the lender regarding
pre-contract disclosure. It regulates the form of the credit contract and
mortgage and imposes obligations on the lender during the life of the loan
including restrictions on enforcement.
Under the Consumer Credit Legislation a borrower has the right to
apply to a court to do the following, among other things:
o vary the terms of a housing loan on the grounds of hardship
or that it is an unjust contract;
o reduce or cancel any interest rate payable on a housing loan
if the interest rate is changed in a way which is
unconscionable;
o have certain provisions of a housing loan which are in
breach of the legislation declared unenforceable;
o obtain an order for a civil penalty; or
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o obtain additional restitution or compensation in relation to
breaches of the Consumer Credit Legislation in relation to a
housing loan or a mortgage.
Any order under the Consumer Credit Legislation may affect the timing
or amount of interest or principal payments or repayments under the relevant
housing loan, which might in turn affect the timing or amount of interest or
principal payments or repayments to you under the notes.
At the time the issuer trustee acquires the beneficial interest in the
housing loans, the trust manager and the servicer represent and warrant that the
housing loans and related mortgages complied in all material respects with the
Consumer Credit Legislation at the applicable cut-off date. Under the investment
management agreement, the servicer has undertaken to comply with the Consumer
Credit Legislation in connection with servicing the housing loans and related
mortgages.
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UNITED STATES FEDERAL INCOME TAX MATTERS
OVERVIEW
The following is a summary of the material United States federal
income tax consequences of the purchase, ownership and disposition of the US$
notes by investors who are subject to United States federal income tax. This
summary is based upon current provisions of the Internal Revenue Code of 1986,
as amended (the CODE), proposed, temporary and final Treasury regulations under
the Code, and published rulings and court decisions, all of which are subject to
change, possibly retroactively, or to a different interpretation at a later date
by a court or by the Internal Revenue Service. The parts of this summary which
relate to matters of law or legal conclusions represent the opinion of Mayer,
Brown, Rowe & Maw LLP, special United States federal tax counsel for the trust
manager, and are as qualified in this summary. We have not sought and will not
seek any rulings from the Internal Revenue Service about any of the United
States federal income tax consequences we discuss, and we cannot assure you that
the Internal Revenue Service will not take contrary positions.
Mayer, Brown, Rowe & Maw LLP has prepared or reviewed the statements
under the heading "United States Federal Income Tax Matters" and is of the
opinion that these statements discuss the material United States federal income
tax consequences to investors generally of the purchase, ownership and
disposition of the US$ notes. However, the following discussion does not discuss
and Mayer, Brown, Rowe & Maw LLP is unable to opine as to the unique tax
consequences of the purchase, ownership and disposition of the US$ notes by
investors that are given special treatment under the United States federal
income tax laws, including:
o banks and thrifts;
o insurance companies;
o regulated investment companies;
o dealers in securities;
o investors that will hold the notes as a position in a "straddle"
for tax purposes or as a part of a "synthetic security",
"conversion transaction" or other integrated investment comprised
of the notes and one or more other investments;
o foreign investors, except as specifically set forth below;
o trusts and estates; and
o pass-through entities, the equity holders of which are any of the
foregoing.
Additionally, the discussion regarding the US$ notes is limited to the
United States federal income tax consequences to the initial investors and not
to a purchaser in the secondary market and is limited to investors who will hold
the US$ notes as "capital assets" within the meaning of Section 1221 of the
Code. It is suggested that prospective investors consult their own tax advisors
about the United States federal, state, local, foreign and any other tax
consequences to them of the purchase, ownership and disposition of the US$
notes, including the advisability of making any election discussed under "--
Market Discount".
136
The issuer trustee will be reimbursed for any United States federal
income taxes imposed on it in its capacity as trustee of the trust out of the
assets of the trust. Also, based on the representation of the trust manager that
the trust does not and will not have an office in the United States, the trust
does not and will not avail itself of the office of an agent in the United
States, and the trust is not conducting, and will not conduct, either directly
or through an agent, any activities in the United States, other than in
connection with its issuance of the US$ notes, in the opinion of Mayer, Brown,
Rowe & Maw LLP, the issuer trustee and the trust will not be subject to United
States federal income tax.
In the opinion of Mayer, Brown, Rowe & Maw LLP, special tax counsel
for the trust manager, the US$ notes will be characterized as debt for United
States federal income tax purposes. Each US$ noteholder, by acceptance of a US$
note, agrees to treat the notes as indebtedness.
Under Treasury regulations, called the "OID Regulations," relating to
original issue discount, a US$ note will be considered issued with original
issue discount if its "stated redemption price at maturity" exceeds its "issue
price" (i.e., the price at which a substantial portion of the US$ notes is first
sold (not including sales to the Underwriters)). In general, a US$ note's
"stated redemption price at maturity" is the sum of all payments to be made on
the US$ note other than payments of "qualified stated interest." Further, if the
US$ notes have any original issue discount, it will be de minimis if it is less
than 1/4% of the principal amount of the offered notes multiplied by the number
of full years included in their term.
INTEREST INCOME ON THE US$ NOTES
Based on the above assumption, except as discussed below, Mayer,
Brown, Rowe & Maw LLP is of the opinion that you will be required to report as
ordinary interest income, the stated interest and original issue discount, if
any, on the US$ notes you hold in accordance with your method of tax accounting.
Under the OID Regulations, if you hold a US$ note issued with a de minimis
amount of original issue discount, you must include this original issue discount
in income, on a pro rata basis, as principal payments are made on the note. If
you purchase a US$ note for more or less than its principal amount, you will
generally be subject, respectively, to the premium amortization or market
discount rules of the Code, discussed below.
SALE OF NOTES
Mayer, Brown, Rowe & Maw LLP is of the opinion that if you sell a US$
note, you will recognize gain or loss equal to the difference between the amount
realized on the sale, other than amounts attributable to, and taxable as,
accrued interest, and your adjusted tax basis in the US$ note. Your adjusted tax
basis in a note will equal your cost for the US$ note, decreased by any
amortized premium and any payments other than interest made on the US$ note and
increased by any market discount or original issue discount previously included
in your income. Any gain or loss will generally be a capital gain or loss, other
than amounts representing accrued interest or market discount, and will be
long-term capital gain or loss if the US$ note was held as a capital asset for
more than one year. In the case of an individual taxpayer, the maximum long-term
capital gains tax rate is lower than the maximum ordinary income tax rate. Any
capital losses realized may be deducted by a corporate taxpayer only to the
extent of capital gains and by an individual taxpayer only to the extent of
capital gains plus US$3,000 of other United States income.
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MARKET DISCOUNT
In the opinion of Mayer, Brown, Rowe & Maw LLP, you will be considered
to have acquired a US$ note at a "market discount" to the extent the remaining
principal amount of the note exceeds your tax basis in the note, unless the
excess does not exceed a prescribed de minimis amount. If the excess exceeds the
de minimis amount, you will be subject to the market discount rules of Sections
1276 and 1278 of the Code with regard to the note.
In the case of a sale or other disposition of a US$ note subject to
the market discount rules, Section 1276 of the Code requires that gain, if any,
from the sale or disposition be treated as ordinary income to the extent the
gain represents market discount accrued during the period the note was held by
you, reduced by the amount of accrued market discount previously included in
income.
In the case of a partial principal payment of a US$ note subject to
the market discount rules, Section 1276 of the Code requires that the payment be
included in ordinary income to the extent the payment does not exceed the market
discount accrued during the period the note was held by you, reduced by the
amount of accrued market discount previously included in income.
Generally, market discount accrues under a straight line method, or,
at the election of the taxpayer, under a constant interest rate method. However,
in the case of bonds with principal payable in two or more installments, such as
the US$ notes, the manner in which market discount is to be accrued will be
described in Treasury regulations not yet issued. Until these Treasury
regulations are issued, you should follow the explanatory Conference Committee
Report to the Tax Reform Act of 1986 for your accrual of market discount. This
Conference Committee Report indicates that holders of these obligations may
elect to accrue market discount either on the basis of a constant interest rate
or as follows:
o for those obligations that have original issue discount, market
discount shall be deemed to accrue in proportion to the accrual
of original issue discount for any accrual period; and
o for those obligations which do not have original issue discount,
the amount of market discount that is deemed to accrue is the
amount of market discount that bears the same ratio to the total
amount of remaining market discount that the amount of stated
interest paid in the accrual period bears to the total amount of
stated interest remaining to be paid on the obligation at the
beginning of the accrual period.
Under Section 1277 of the Code, if you incur or continue debt that is
used to purchase a US$ note subject to the market discount rules, and the
interest paid or accrued on this debt in any taxable year exceeds the interest
and original issue discount currently includible in income on the note,
deduction of this excess interest must be deferred to the extent of the market
discount allocable to the taxable year. The deferred portion of any interest
expense will generally be deductible when the market discount is included in
income upon the sale, repayment, or other disposition of the indebtedness.
Section 1278 of the Code allows a taxpayer to make an election to
include market discount in gross income currently. If an election is made, the
previously described rules of Sections 1276 and 1277 of the Code will not apply
to the taxpayer.
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Due to the complexity of the market discount rules, we suggest that
you consult your tax advisors as to the applicability and operation of these
rules.
PREMIUM
In the opinion of Mayer, Brown, Rowe & Maw LLP, you will generally be
considered to have acquired a US$ note at a premium if your tax basis in the
note exceeds the remaining Principal Amount of the note. In that event, if you
hold a US$ note as a capital asset, you may amortize the premium as an offset to
interest income under Section 171 of the Code, with corresponding reductions in
your tax basis in the note if you have made an election under Section 171 of the
Code. Generally, any amortization is on a constant yield basis. However, in the
case of bonds with principal payable in two or more installments, like the US$
notes, the previously discussed conference report, which indicates a
Congressional intent that amortization be in accordance with the rules that will
apply to the accrual of market discount on these obligations, should be followed
for the amortization of such premium. We suggest that you consult your tax
advisor as to the applicability and operation of the rules regarding
amortization of premium.
BACKUP WITHHOLDING
Mayer, Brown, Rowe & Maw LLP is of the opinion that, backup
withholding will be imposed on payments to you of interest paid, and original
issue discount accrued, if any, on the US$ notes if, upon issuance, you fail to
supply the trust manager or its broker with a certified statement, under
penalties of perjury, containing your name, address, correct taxpayer
identification number, and a statement that you are not required to pay backup
withholding. The backup withholding rate is currently 28% for payments made
during the taxable years through 2010. For payments made after 2010, the backup
withholding rate will be increased to 31%. Exempt investors, such as
corporations, tax-exempt organizations, qualified pension and profit sharing
trusts, individual retirement accounts or non-resident aliens who provide
certification of their status as non-resident are not subject to backup
withholding. Information returns will be sent annually to the Internal Revenue
Service by the trust manager and to you stating the amount of interest paid,
original issue discount accrued, if any, and the amount of tax withheld from
payments on the US$ notes. We suggest that you consult your tax advisors about
your eligibility for, and the procedure for obtaining, exemption from backup
withholding.
A foreign investor generally will be exempt from backup withholding
and information reporting requirements, assuming payments on the US$ notes are
otherwise exempt from United States federal income tax, provided that such
foreign investor complies with certain certification and identification
procedures in order to prove its exemption. In order for a foreign investor to
prove its exemption, such foreign investor should submit the appropriate
Internal Revenue Service Form W-8, attesting to such foreign investor's foreign
status. We suggest that you consult your tax advisors about your eligibility
for, and the procedure for obtaining, such an exemption.
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AUSTRALIAN TAX MATTERS
The following statements with respect to Australian taxation are only
general summaries and are based on advice received by the issuer trustee on the
basis of Australian law as in effect on the date of this Prospectus and which is
subject to change possibly with retrospective effect. Purchasers of the notes
should consult their own tax advisors concerning the consequences, in their
particular circumstances, under Australian tax laws, and the laws of any other
taxing jurisdiction, of the purchase, ownership, disposal or any dealing of or
in the notes. Any such dealing would need to comply with the selling
restrictions and securities law generally.
PAYMENTS OF PRINCIPAL, PREMIUMS AND INTEREST
Under existing Australian tax law, non-resident holders of notes or
interests in any global note, other than persons holding such securities or
interest as part of a business carried on, at or through a permanent
establishment in Australia, are not subject to Australian income tax, on
payments of interest or amounts in the nature of interest other than interest
withholding tax, which is currently 10% of the gross amount of interest.
Australia's double tax treaties may reduce the amount of interest withholding
tax in some cases.
For the purposes of withholding tax, interest includes amounts in the
nature of interest (such as a discount in respect of a bill or a premium on
redemption of a note), amounts paid in substitution for interest and amounts
received in exchange for interest in connection with a "washing arrangement". A
washing arrangement is an arrangement under which title to a security is
transferred to a resident shortly before an interest payment is made and the
sole or dominant purpose of the arrangement is to reduce the amount of
withholding tax payable.
An exemption from interest withholding tax is available under section
128F of the Income Tax Assessment Act 1936 of the Commonwealth of Australia (the
TAX ACT) if notes are offered in accordance with the terms prescribed in section
128F. Under current law, conditions for such exemption are:
o the issuer trustee is a company that is a resident of Australia
or a non-resident that acquires notes at or through a permanent
establishment in Australia, when it issues the notes and when
interest is paid;
o the notes, or a global bond or note or interests in such a global
bond or note, are issued in a manner which satisfies the public
offer test as prescribed under section 128F of the Tax Act; and
o if the issuer trustee is a company acting in the capacity of a
trustee, the trust is not established for charitable purposes and
the only persons capable of benefiting under the trust are
companies that are not acting in the capacity of a trustee.
It is the issuer trustee's intention to issue the notes and interests
in the global notes in a way that will satisfy the public offer test and
otherwise meet the requirements of section 128F of the Tax Act.
Section 126 of the Tax Act imposes a withholding tax at a rate of 47%
on the payment of interest on notes payable to bearer if the issuer trustee
fails to disclose the names and addresses of the holders of those notes to the
Australian Taxation Office. Section 126 does not apply to the payment of
interest on notes by non-residents who do not carry on business at or through a
140
permanent establishment in Australia where the issue of those notes satisfied
the requirements of section 128F of where interest withholding tax is payable.
This withholding tax exemption will not apply where, at the time of
issue, the issuer trustee knew or had reasonable grounds to suspect that the
notes, or an interest in the notes, was being or would later be acquired, either
directly or indirectly, by an offshore associate of the issuer trustee, other
than in the capacity of a dealer, manager or underwriter in relation to a
placement of the notes or in the capacity of a clearing house, custodian, funds
manager or responsible entity of a registered scheme. The exemption will also
not apply to interest actually paid by the issuer trustee to an offshore
associate of the issuer trustee -- other than in the capacity of a clearing
house, paying agent, custodian, funds manager or responsible entity of a
registered scheme -- if, at the time of the payment, the issuer trustee knows,
or has reasonable grounds to suspect, that the payee is such an offshore
associate.
If the requirements for exemption under section 128F of the Tax Act
are met with respect to the notes, payments of principal, interest and any
premium made to a holder of the notes who is not a resident of Australia and who
does not hold the notes in the course of carrying on business through a
permanent establishment in Australia, will not be subject to Australian income
or withholding tax.
Subject to certain statutory exceptions, tax will be deducted, at the
highest marginal tax rate plus medicare levy, from payments to resident
noteholders who do not provide the issuer trustee with a tax file number or
Australian Business Number. Resident noteholders may also be subject to
Australian income tax in respect of interest on the notes
TAXATION OF FINANCIAL ARRANGEMENTS
The Tax Act contains measures dealing with the taxation of financial
arrangements. The provisions apply to foreign currency gains and losses on
transactions entered into on or after the first income year commencing on or
after July 1, 2003. In addition, the rules will also apply, at the option of the
taxpayer, to foreign currency gains and losses on transactions entered into
prior to the first income year commencing after July 1, 2003 but realized after
that time.
The rules codify the timing and appropriate rates for the taxation of
foreign exchange gains and losses. The rules generally apply to recognize
foreign exchange gains and losses on a realization basis.
The specific taxation implications of these measures will vary as
between noteholders.
The measures should not impact non-resident noteholders who do not
have a permanent establishment in Australia.
The Australian Federal Government has announced ongoing reforms to the
Taxation of Financial Arrangements. Legislation to give effect to the proposed
reforms has not been released. The status of the proposed measures and the
impact on noteholders will need to be monitored.
Noteholders should seek their own advice in relation to the specific
taxation consequences of these measures.
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NOTE TRANSFERS
A noteholder may be subject to taxation in respect of any gain made on
the transfer of notes. The specific taxation implications in respect of the
transfer depends on the nature of the gain which will vary as between
noteholders. Broadly, the taxation consequences will depend on whether
noteholders own the notes on revenue or capital account.
Noteholders should seek their own advice in relation to the specific
taxation consequences of the transfer of their notes.
In addition, noteholders should also seek their own advice regarding
the goods and services tax (GST) implications of the transfer of their notes.
PROFIT ON SALE BY NON-RESIDENT NOTEHOLDERS
Under existing Australian law, non-resident holders of notes will not
be subject to Australian income tax on profits derived from the sale or disposal
of an interest in the notes if the profits do not have an Australian source (see
below). If the profits are Australian sourced, an exclusion from Australian
income tax may be available if the non-resident is entitled to the benefit of a
double taxation agreement and the notes are not held as part of a business
carried on, at or through a permanent establishment in Australia.
The source of any profit on the disposal of notes will depend on the
factual circumstances of the actual disposal. Where the notes are acquired and
disposed of pursuant to contractual arrangements entered into and concluded
outside Australia, and the seller and the purchaser are non-residents of
Australia and do not have a business carried on, at or through a permanent
establishment in Australia, the profit should not have an Australian source.
There are however specific withholding tax rules that may apply to
treat a portion of the sale price of notes as interest for withholding tax
purposes. However, such amounts of deemed interest will be covered by the
exemption in section 128F of the Tax Act provided that all of the requirements
of that section are satisfied.
GOODS AND SERVICES TAX
GST is a transactions based tax and accordingly may impact various
transactions in which the issuer trustee is involved. Broadly, the impact of GST
will depend on the type of supply made by the issuer trustee.
Where the supply by the issuer trustee is a "taxable supply", the
issuer trustee will have to remit GST equal to 1/11th of the total consideration
received for the supply to the ATO. The issuer trustee can obtain full input tax
credits for GST paid on things acquired to make the taxable supply, i.e., to the
extent that those things are not acquired in relation to the issuer trustee
making input taxed supplies such as issuing notes to Australian resident note
holders.
Where the supply by the issuer trustee is a "GST free supply" (e.g.,
an issue of notes to non-Australian noteholders who are not in Australia in
relation to the supply at the time the supply is made), the issuer trustee does
not remit GST on the supply to the ATO. The issuer trustee can obtain full input
tax credits for GST paid on things acquired to make GST free supplies, i.e., to
the extent that those things are not acquired in relation to the issuer trustee
making input taxed supplies.
142
Where the supply by the issuer trustee is an "input taxed supply",
which includes financial supplies, the issuer trustee is not required to remit
GST on the supply. The issuer trustee is generally not entitled to input tax
credits for GST paid on things acquired to make input taxed supplies. In some
circumstances, however, "reduced input tax credits" may be available.
On the basis of the current GST legislation, the issue of the notes
would constitute either a financial supply or a GST-free supply depending on the
status and location of the noteholders. In either case GST is not required to be
remitted (i.e., there is no need to charge an amount of GST) in respect of the
supply. Payments made to noteholders would not constitute a separate supply for
GST purposes nor consideration for a supply by noteholders.
The acquisition of notes by a noteholder may, in certain
circumstances, be considered by the Australian Commissioner of Taxation to
constitute the making of a financial supply by the noteholder. This is based on
a view expressed by the Australian Commissioner of Taxation in GST Ruling GSTR
2002/2. In any event, this will not give rise to a liability for GST on the part
of noteholders but may affect their entitlement to input tax credits on
acquisitions which relate to acquiring notes. Noteholders should seek their own
advice in relation to the GST treatment of the notes and any transactions that
they enter into associated with the notes.
FIXED-FLOATING RATE SWAPS AND GST
Where the fixed-floating rate swap provider is an Australian resident,
the GST implications under current Australian law are as follows:
o the exchange of fixed interest rate obligations for floating interest
rate obligations by the issuer trustee would constitute a financial
supply. Accordingly, the issuer trustee would not be obliged to remit
GST to the ATO and would not be entitled to claim full input tax
credits in relation to the costs associated with making the supply
(although the issuer trustee may be entitled to claim a reduced input
tax credit in certain circumstances); and
o the exchange of floating interest rate obligations for fixed interest
rate obligations by the fixed-floating rate swap provider would also
involve financial supplies.
o Where the fixed-floating rate swap provider is not an Australian
resident and is not in Australia in relation to the supply at the time
the supply is made, the GST implications under current Australian law
are as follows:
o the supply of fixed interest rate obligations for floating interest
rate obligations by the issuer trustee to the non-resident
fixed-floating rate swap provider, constitutes a GST-free supply.
Accordingly, the issuer trustee is not required to remit GST to the
ATO, however, the issuer trustee is entitled to claim input taxed
credits in relation to the costs associated with making this supply;
and
o the supply of floating interest rate obligations for fixed interest
rate obligations by the non-resident fixed-floating rate swap provider
to the issuer trustee has no impact for GST purposes.
143
CURRENCY SWAPS AND GST
Where the currency swap provider is an Australian resident, the GST
implications under current Australian law are as follows:
o the exchange of currency denominations by the issuer trustee would
involve the making of financial supplies. Accordingly, the issuer
trustee would not be obliged to remit GST to the ATO and would not be
entitled to claim full input tax credits in relation to the costs
associated with making the supply (although the issuer trustee may be
entitled to claim a reduced input tax credit in certain
circumstances); and
o the exchange of currency denominations by the currency swap provider
would also involve the making of financial supplies.
Where the currency swap provider is not an Australian resident, and is
not in Australia in relation to the supply at the time the supply is made, the
GST implications under current Australian law are as follows:
o the supply of currency denominations by the issuer trustee to the
non-resident currency swap provider, constitutes a GST-free supply.
Accordingly, the issuer trustee is not required to remit GST to the
ATO, however, the issuer trustee is entitled to claim input taxed
credits in relation to the costs associated with making this supply;
and
o the supply of currency denominations by the non-resident currency swap
provider to the issuer trustee has no impact for GST purposes.
DEBT AND EQUITY
Based on Australia's current taxation law, the notes issued by the
issuer trustee will constitute debt interests for Australian tax purposes.
Accordingly, interest paid by the issuer trustee in respect of the notes will be
tax deductible to the issuer trustee. Interest derived by Australian tax
resident holders of the notes or non-residents that hold such notes through a
permanent establishment in Australia should be included in the assessable income
of the holder.
Returns paid on the notes will also not be disqualified from being
"interest" for the purposes of section 128F of the Tax Act.
OTHER TAXES
No stamp, issue, registration or similar taxes are payable in
Australia in connection with the issue of the notes. Furthermore, a transfer of,
or agreement to transfer, notes executed outside Australia should not be subject
to Australian stamp duty.
NON-COMPLIANCE WITHHOLDING REGULATIONS
The Tax Administration Act requires that an entity making a payment on
or after July 1, 2003 to a non-resident must withhold an amount. The payment
that is the subject of these rules is prescribed by regulations.
The rules state that regulations may only be made in respect of
payments of a kind that could reasonably be related to assessable income of
non-residents. Also, the explanatory
144
memorandum to the rules states that regulation will only be made where there is
a demonstrated compliance risk and after consultation with affected taxpayer
groups.
The Australian Federal Government has released regulations in relation
to specific payments that will be the subject of withholding under these rules.
These regulations do not cover any payments made in respect of the notes.
In addition, having regard to the types of payments that the Federal
Government has introduced and announced so far, it seems unlikely that any of
the amounts payable in respect of the offered notes will be covered by further
regulations of this kind. The progress of any further regulations will, however,
need to be monitored.
TAXATION OF THE TRUST
The net income of the trust for a given year of income will be
determined after deducting from the assessable income of the trust any allowable
deductions incurred by the trust. The assessable income will primarily be the
interest income that is derived by the trust from the provision of mortgage
finance. Subject to certain exceptions, the allowable deductions of the trust
will primarily be the expenses which are incurred for the purpose of deriving
assessable income or necessarily incurred in carrying on a business for the
purpose of gaining or producing assessable income. Expenses which are capital in
nature will not be allowable as deductions.
As noted above, the notes should be treated as debt interest and
interest paid by the trust should be tax deductible to the trust.
Under the current taxation law, the net income of the trust should be
included in the assessable income of the beneficiaries of the trust who are
presently entitled to the income. This will be so whether or not the income is
actually paid to the beneficiaries, where the beneficiaries are presently
entitled to the net income of the trust. Where the net income is paid to a
beneficiary, it will be assessable to the beneficiary in the year to which the
distribution relates notwithstanding that it may be paid in the following year
of income.
In the case of the trust, the residual income unit is held by
Interstar Wholesale Finance Pty Limited who will be presently entitled to the
net income of the trust. The trustee should not currently be liable to income
tax on the net income derived by the trust.
THIN CAPITALISATION
The thin capitalisation rules in the Australian tax legislation
provide an exemption for most securitization vehicles from their operation. It
is expected that the Trust would meet the criteria for this exemption.
Even if the thin capitalisation rules did apply to the Trust, on the
basis that the Residual Income Beneficiary of the Trust will be presently
entitled to all income of the Trust, any resultant tax liability would be met by
the Residual Income Beneficiary. Accordingly, the thin capitalisation rules
would not adversely affect the ability of the issuer trustee to pay principle
and interest on the notes.
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TAX REFORM PROPOSALS
TAX CONSOLIDATION
Australia has introduced a tax consolidation regime that applies to
wholly-owned corporate groups from July 1, 2002. Entry into this system is
optional, however the choice by a head company to consolidate brings all of its
wholly-owned subsidiaries, which are companies, partnership or trusts, into the
regime. An entity is wholly-owned for these purposes if all of the membership
interests in it are held directly or indirectly by the head company.
The head company of a tax consolidated group will be liable for income
tax in respect of itself and all of its wholly-owned group members. The
legislation provides that where, however, the head company fails to meet its
income tax liabilities, each wholly-owned group member is, but for the operation
of a valid tax sharing agreement, jointly and severally liable to pay the
consolidated group's income tax liabilities. Thus, there is a contingent risk
that the members of a consolidated group may be liable to contribute to a
consolidated group's income tax liabilities.
The Trust will not qualify as a wholly-owned subsidiary of a head
company as all of the units in the Trust will not be owned, directly or
indirectly, by a single holding company. Specifically, a single residual capital
unit in the Trust will be held by an entity which is not related to any
consolidatable group of which the Residual Income Beneficiary may be a member.
Accordingly, the Trust cannot be a member of a consolidated group for the
purposes of the consolidation rules and cannot therefore be jointly and
severally liable for any of the consolidated group's income tax liabilities.
146
ENFORCEMENT OF FOREIGN JUDGMENTS IN AUSTRALIA
Interstar Securitisation Management Pty Limited is an Australian
private company incorporated with limited liability under the Corporations Act
2001 of Australia. Any final and conclusive judgment of any New York State or
United States Federal Court sitting in the Borough of Manhattan in the City of
New York having jurisdiction recognized by the relevant Australian jurisdiction
in respect of an obligation of Interstar Securitisation Management Pty Limited
in respect of a note, which is for a fixed sum of money and which has not been
stayed or satisfied in full, would be enforceable by action against Interstar
Securitisation Management Pty Limited in the courts of the relevant Australian
jurisdiction without a re-examination of the merits of the issues determined by
the proceedings in the New York State or United States Federal Court, as
applicable, unless:
o the proceedings in New York State or United States Federal Court,
as applicable, involved a denial of the principles of natural
justice;
o the judgment is contrary to the public policy of the relevant
Australian jurisdiction;
o the judgment was obtained by fraud or duress or was based on a
clear mistake of fact;
o the judgment is a penal or revenue judgment; or
o there has been a prior judgment in another court between the same
parties concerning the same issues as are dealt with in the
judgment of the New York State or United States Federal Court, as
applicable.
A judgment by a court may be given in some cases only in Australian
dollars. Interstar Securitisation Management Pty Limited expressly submits to
the jurisdiction of New York State and United States Federal Courts sitting in
the Borough of Manhattan in the City of New York for the purpose of any suit,
action or proceeding arising out of this offering. Interstar Securitisation
Management Pty Limited has appointed CT Corporation System, 111 Eighth Avenue,
13th Floor, New York, New York 10011, as its agent upon whom process may be
served in any such action.
All of the directors and executive officers of Interstar
Securitisation Management Pty Limited, and certain experts named in this
prospectus, reside outside the United States in the Commonwealth of Australia.
Substantially all or a substantial portion of the assets of all or many of such
persons are located outside the United States. As a result, it may not be
possible for holders of the notes to effect service of process within the United
States upon such persons or to enforce against them judgments obtained in United
States courts predicated upon the civil liability provisions of federal
securities laws of the United States. Interstar Securitisation Management Pty
Limited has been advised by its Australian counsel, Allens Arthur Robinson,
that, based on the restrictions discussed in this section, there is doubt as to
the enforceability in the Commonwealth of Australia, in original actions or in
actions for enforcement of judgments of United States courts, of civil
liabilities predicated upon the federal securities laws of the United States.
147
EXCHANGE CONTROLS AND LIMITATIONS
ANTI-TERRORISM RESTRICTIONS
The written approval of the Australian Minister of Foreign Affairs is
required for transactions involving the control or ownership of assets by
persons or entities linked to terrorist activities and identified by the United
Nations and the Commonwealth of Australia under the Charter of the United
Nations (Anti-terrorism -- Persons and Entities) List, as published from time to
time in the Commonwealth Government Gazette. This includes individuals or
entities linked with the Taliban, Osama bin Laden and other terrorist
organizations. Transactions involving persons published in the Commonwealth
Government Gazette without the permission of the Australian Minister for Foreign
Affairs are a criminal offence.
PROHIBITED TRANSACTIONS
[The specific prior approval of the Reserve Bank of Australia or the
Minister for Foreign Affairs of the Commonwealth of Australia must be obtained
for certain transactions involving or connected with individuals or entities
listed in the relevant Commonwealth Government Gazette as persons or entities
identified with terrorism or to which financial sanctions apply, including:
o certain Yugoslav entities or individuals; and
o the Government of Zimbabwe, any public authority or controlled entity of
the Government of Zimbabwe and certain other individuals identified by the
Reserve Bank of Australia.
Any person holding financial or other assets of persons or entities listed as
terrorists by the Minister for Foreign Affairs in the Commonwealth Gazette is
prohibited from using or dealing with those assets. It is a criminal offence to
make assets available to such persons. The persons or entities listed as
terrorists under the Charter of the United Nations (Terrorism and Dealings with
Assets) Regulation 2002 and the Iraq (Reconstruction and Repeal of Sanctions)
Regulations 2003 include:
o the Taliban (also known as the Islamic Emirate of Afghanistan) or any
undertaking owned or controlled, directly or indirectly, by the Taliban;
o Osama bin Laden, the Al-Qaeda organization and certain other individuals
identified by the Reserve Bank of Australia as being linked to terrorism;
o Jemiah Islamiah; and
o the previous Government of Iraq, Saddam Hussein, other senior officials of
his regime and their immediate families.]
TRANSACTIONS WHICH MAY BE APPROVED BY THE RESERVE BANK OF AUSTRALIA
Transactions over A$100,000 involving the Embassy of the Federal
Republic of Yugoslavia, the Consulate-General of the Federal Republic of
Yugoslavia and Narodna Banka Jugoslavije (including Banque Nationale de
Yugoslavie) require prior approval from the Reserve Bank of Australia.
Specific prior approval of the Reserve Bank of Australia or the
Minister for Foreign Affairs must be obtained for certain payments or other
dealings involving or connected in certain ways with Iraq, Zimbabwe, certain
Yugoslav entities or individuals, the Taliban, or associated parties, or other
parties to whom financial sanctions applies.
148
ERISA CONSIDERATIONS
Subject to the considerations discussed in this section, the US$ notes
are eligible for purchase by Benefit Plans.
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended (ERISA) and Section 4975 of the Code prohibit a pension, profit-sharing
or other employee benefit plan, as well as individual retirement accounts and
certain types of Keogh plans from engaging in certain transactions with persons
that are "parties in interest" under ERISA or "disqualified persons" under
Section 4975 of the Code with respect to these Benefit Plans. A violation of
these "prohibited transaction" rules may result in an excise tax or other
penalties and liabilities under ERISA and the Code for these persons or the
fiduciaries of the Benefit Plan. Title I of ERISA also requires that fiduciaries
of a Benefit Plan subject to ERISA make investments that are prudent,
diversified, except if prudent not to do so, and in accordance with governing
plan documents.
Some transactions involving the purchase, holding or transfer of the
US$ notes might be deemed to constitute prohibited transactions under ERISA and
Section 4975 of the Code if assets of the trust were deemed to be assets of a
Benefit Plan. Under a regulation issued by the United States Department of Labor
(the REGULATION), the assets of the trust would be treated as plan assets of a
Benefit Plan for the purposes of ERISA and Section 4975 of the Code only if the
Benefit Plan acquires an "equity interest" in the trust and none of the
exceptions contained in the Regulation is applicable. An equity interest is
defined under the Regulation as an interest in an entity other than an
instrument which is treated as indebtedness under applicable local law and which
has no substantial equity features. Although there is no specific guidance in
the Regulation regarding whether a principal charge-off feature under the
circumstances described herein would constitute a "substantial equity feature,"
the Regulation does state that an instrument will not fail to be treated as
indebtedness merely because it has certain equity features, such as additional
variable interest or conversion rights, that are incidental to the instrument's
primary fixed obligation. Although there can be no assurances in this regard, it
appears, at the time of their initial issuance that the US$ notes should be
treated as debt without substantial equity features for purposes of the
Regulation and that the US$ notes do not constitute equity interests in the
trust for purposes of the Regulation. The debt characterization of the US$ notes
could change after their initial issuance if the trust incurs losses or the
rating of US$ notes changes. The risk of recharacterization is enhanced for the
US$ notes if Redraw notes are issued because the US$ notes are subordinated to
the Redraw notes. This risk of recharacterization is further enhanced for the
Class B notes and the Class AB notes because they are subordinated to the Class
A notes.
However, without regard to whether the US$ notes are treated as an
equity interest for purposes of the Regulation, the acquisition or holding of
the US$ notes by or on behalf of a Benefit Plan could be considered to give rise
to a prohibited transaction if the trust, the issuer trustee, the servicer, the
backup servicer, the trust manager, the note trustee, the seller, a swap
provider, the underwriters or the security trustee is or becomes a party in
interest or a disqualified person with respect to these Benefit Plans. In such
case, certain exemptions from the prohibited transaction rules could be
applicable depending on the type and circumstances of the plan fiduciary making
the decision to acquire a US$ note. Included among these exemptions are:
o Prohibited Transaction Class Exemption 96-23, regarding
transactions effected by "in-house asset managers";
o Prohibited Transaction Class Exemption 95-60, regarding
transactions effected by "insurance company general accounts";
149
o Prohibited Transaction Class Exemption 91-38, regarding
investments by bank collective investment funds;
o Prohibited Transaction Class Exemption 90-1, regarding
investments by insurance company pooled separate accounts; and
o Prohibited Transaction Class Exemption 84-14, regarding
transactions effected by "qualified professional asset managers".
By your acquisition of a US$ note, you shall be deemed to represent
and warrant that either (a) you are not acquiring a US$ note with the assets of
a Benefit Plan or any other retirement plan that is subject to a law that is
substantially similar to ERISA or Section 4975 of the Code or (b) your purchase
and holding of the note will not result in a non-exempt prohibited transaction
under ERISA, Section 4975 of the Code or any substantially similar applicable
law.
Employee benefit plans that are governmental plans, as defined in
Section 3(32) of ERISA, and certain church plans, as defined in Section 3(33) of
ERISA, are not subject to ERISA requirements; however, governmental plans may be
subject to comparable statutory restrictions.
If you are a plan fiduciary considering the purchase of any of the US$
notes, you should consult your tax and legal advisors regarding whether the
assets of the Trust would be considered plan assets, the possibility of
exemptive relief from the prohibited transaction rules and other issues and
their potential consequences.
LEGAL INVESTMENT CONSIDERATIONS
The US$ notes will not constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, because the
originator of the housing loans was not subject to United States state or
federal regulatory authority. Accordingly, some United States institutions with
legal authority to invest in comparably rated securities based on such housing
loans may not be legally authorized to invest in the US$ notes. No
representation is made as to whether the notes constitute legal investments
under any applicable statute, law, rule, regulation or order for any entity
whose investment activities are subject to investment laws and regulations or to
review by any regulatory authorities. You are urged to consult with your counsel
concerning the status of the US$ notes as legal investments for you.
AVAILABLE INFORMATION
Interstar Securitisation Management Pty Limited, as trust manager, has
filed with the SEC a registration statement under the United States Securities
Act of 1933 (SECURITIES ACT) with respect to the US$ notes offered pursuant to
this prospectus. For further information, reference should be made to the
registration statement and amendments thereof and to the exhibits thereto, which
are available for inspection without charge at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies
of the registration statement, including any amendments or exhibits, may be
obtained from the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The SEC also maintains a World Wide
Web site which provides on-line access to reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC at the address "http://www.sec.gov".
150
RATINGS OF THE NOTES
The issuance of the Class A notes and the Class AB notes will be
conditional on obtaining a rating of [AAA] by S&P and [Aaa] by Moody's, in the
case of the Class A notes, and [AAA] by S&P and [Aa1] by Moody's, in the case of
the Class AB notes. The issuance of the Class B notes will be conditional on
obtaining a rating of [AA-] by S&P and [Aa3] by Moody's.
You should independently evaluate the security ratings of each class
of notes from similar ratings on other types of securities. A security rating is
not a recommendation to buy, sell or hold securities. A rating does not address
the market price or suitability of the notes for you. A rating may be subject to
revision or withdrawal at any time by the rating agencies. The rating does not
address the expected schedule of principal repayments other than to say that
principal will be returned no later than the final maturity date of the notes.
The ratings of the US$ notes will be based primarily on the creditworthiness of
the housing loans, the subordination provided by the Class AB notes and the
Class B notes with respect to the Redraw notes and the Class A notes and the
subordination provided by the Class B notes with respect to the Class AB notes,
the availability of income after payment of interest on the notes and the
trust's expenses, the mortgage insurance policies and title insurance policies,
the creditworthiness of the swap providers and the mortgage insurers and the
foreign currency rating of Australia. The Commonwealth of Australia's current
foreign currency long term debt rating is AAA by S&P and Aaa by Moody's. In the
context of an asset securitisation, the foreign currency rating of a country
reflects, in general, a rating agency's view of the likelihood that cash flow on
the assets in such country's currency will be permitted to be sent outside of
that country. None of the rating agencies have been involved in the preparation
of this prospectus.
PLAN OF DISTRIBUTION
UNDERWRITING
Under the terms and subject to the conditions contained in the
underwriting agreement among the underwriters, the issuer trustee, the servicer
and the trust manager, the issuer trustee has agreed to sell to the
underwriters, and each underwriter severally has agreed to purchase from the
issuer trustee, the class and Principal Amount of the US$ notes set forth
opposite each underwriters' name in the tables below:
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PRINCIPAL AMOUNT OF
CLASS A NOTES
UNDERWRITERS OF THE CLASS A NOTES (US$)
--------------------------------- -------------------
J.P. Morgan Securities Inc................................ $[*]
Deutsche Bank Securities Inc.............................. $[*]
Greenwich Capital Markets, Inc............................ $[*]
----
Total .................................................... $[*]
The underwriting agreement provides that the underwriters are
obligated to purchase all of the US$ notes if any are purchased.
The underwriters propose to offer the Class A notes, the Class AB
notes and the Class B notes initially at the public offering prices on the cover
page of this prospectus and to selling group members at the price less a
concession not in excess of the respective amounts set forth in the following
table, expressed as a percentage of the principal balance of each class of US$
notes. The underwriters and selling group members may reallow a discount not in
excess of the respective amounts set forth in the following table to other
brokers and dealers. After the initial public offering, the public offering
price and concessions and discounts to brokers and dealers may be changed by the
representative of the underwriters.
SELLING REALLOWANCE
CONCESSIONS DISCOUNT
----------- -----------
Class A notes....................................... [*]% [*]%
The trust manager estimates that the out-of-pocket expenses for this
offering will be approximately US$[*].
The trust manager has agreed to indemnify the underwriters against
civil liabilities under the Securities Act, or contribute to payments which the
underwriters may be required to make in that respect.
The total underwriting discounts and commissions for the US$ notes
will be equal to US$[*]. The underwriting discounts and commissions will be paid
separately by Interstar Wholesale Finance Pty Limited and not from the proceeds
of the issuance of the US$ notes.
The underwriters may engage in over-allotment, stabilizing
transactions, syndicate covering transactions and penalty bids in accordance
with Regulation M under the Exchange Act.
o Over-allotment involves syndicate sales in excess of the offering
size, which creates a syndicate short position.
o Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a
specified maximum.
o Syndicate covering transactions involve purchases of the US$
notes in the open market after the distribution has been
completed in order to cover syndicate short positions.
o Penalty bids permit the underwriters to reclaim a selling
concession from a syndicate member when the US$ notes originally
sold by a syndicate member are purchased in a syndicate covering
transaction to cover syndicate short positions.
152
Stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the US$ notes to be higher than it would otherwise
be in the absence of these transactions. These transactions, if commenced, may
be discontinued at any time.
OFFERING RESTRICTIONS
THE UNITED KINGDOM
The US$ notes have only been offered or sold and, prior to the expiry
of six months from the closing date, will only be offered or sold in or from the
United Kingdom: (a) to persons (i) whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments, as principal or agent,
for the purposes of their businesses; or (ii) to persons who it is reasonable to
expect will acquire, hold, manage or dispose of investments, as principal or
agent, for the purposes of their businesses; or (iii) otherwise in circumstances
that have not resulted and will not result in an offer to the public under the
Public Offers of Securities Regulations 1995 (as amended); and (b) in compliance
with all applicable provisions of the Financial Services and Markets Act 2000
(FSMA), and rules and regulations made thereunder with respect to anything done
in relation to the US$ notes in, from or otherwise involving the United Kingdom.
Any invitation or inducement to engage in investment activity, within the
meaning of Section 21 of FSMA, will only be communicated or caused to be
communicated in circumstances when Section 21 of FSMA does not apply, including
to persons authorized under FSMA or otherwise any professional with experience
on matters relating to investments and qualifying as investment professionals
under Article 19 or to high net worth persons under Article 49 of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2001, as amended or to
any other person to whom an invitation or inducement to enter into investment
activity of this type may otherwise lawfully be communicated.
Neither this prospectus nor the US$ notes have been, or will be,
available to other categories of persons in the United Kingdom and no one
falling outside such categories is entitled to rely on, and must not act on, any
information in this prospectus. The communication of this prospectus to any
person in the United Kingdom other than the categories stated above is
unauthorized and may contravene FSMA.
AUSTRALIA
No offering circular, prospectus or other disclosure document in
relation to any notes has been lodged with the Australian Securities and
Investments Commission. The US$ notes may not, in connection with their initial
distribution, be offered or sold, directly or indirectly, in the Commonwealth of
Australia, its territories or possessions, or to any resident of Australia.
Each underwriter severally has agreed that it:
o has not, directly or indirectly, offered for issue or sale or
invited applications for the issue of or for offers to purchase
nor has it sold the US$ notes;
o will not, directly or indirectly, offer for issue or sale or
invite applications for the issue of or for offers to purchase
nor will it sell the US$ notes; and
o has not distributed and will not distribute any draft,
preliminary or definitive offering circular, or any advertisement
or other offering material,
153
in Australia, its territories or possessions unless:
o the amount payable for the US$ notes on acceptance of the offer
by each offeree or invitee is a minimum amount of A$500,000, or
its equivalent in another currency -- disregarding amounts, if
any, lent by the issuer trustee or other person offering the
notes or any associate of them -- or the offer or invitation is
otherwise an offer or invitation for which no disclosure is
required to be made under Part 6D.2 of the Corporations Act 2001
of Australia; and
o the offer, invitation or distribution complies with all
applicable laws, regulations and directives in relation to the
offer, invitation or distribution and does not require any
document to be lodged with the Australian Securities and
Investments Commission.
In addition, each underwriter severally has agreed that, in connection
with the primary distribution of the US$ notes, it will not sell any US$ notes
to any person if, at the time of such sale, the employees of the underwriter
directly involved in the sale know, or have reasonable grounds to suspect that,
as a result of such sale, such US$ notes or any interest in such US$ notes will
be, or will later be acquired, directly or indirectly, by an offshore associate
of the issuer trustee--as identified on a list provided by the trust
manager--other than in the capacity of a dealer, manager or underwriter in
relation to the placement of the US$ notes or in the capacity of a clearing
house, custodian, funds manager or responsible entity of a registered scheme.
An OFFSHORE ASSOCIATE OF THE ISSUER TRUSTEE means an associate (within
the meaning of section 128F of the Tax Act) of the issuer trustee that is either
a non-resident of Australia that does not acquire the US$ notes in carrying on a
business at or through a permanent establishment in Australia or, alternatively,
a resident of Australia that acquires the US$ notes in carrying on a business at
or through a permanent establishment outside Australia.
Each underwriter severally has agreed that it must offer the US$ notes
for which it subscribes for sale within 30 days of the issue of those US$ notes.
Such offer must only be by one of the following means, or a combination thereof:
o as a result of negotiations being initiated by the underwriter in
electronic form on Reuters or the electronic information system
made available to its subscribers by Bloomberg, L.P., specifying
in such offer the name of the issuer and the price at which the
US$ notes are offered for sale; or
o by the underwriter offering those US$ notes for sale to at least
10 persons, each of whom must be:
o carrying on a business of providing finance, or investing or
dealing in securities, in the course of operating in the
financial markets; and
o not known by the employees of the underwriter directly
involved in the sale to be an associate of any of the
others; or
o by the underwriter offering those US$ notes as a result of the
US$ notes being accepted for listing on a stock exchange where
the issuer trustee has previously entered into an agreement with
the underwriter in relation to the placement of the US$ notes
requiring the issuer trustee to seek such listing; or
154
o by the underwriter offering those US$ notes to at least 100
persons who it would be reasonable to regard as either having
acquired instruments similar to the US$ notes in the past or as
likely to be interested in acquiring US$ notes.
155
GENERAL INFORMATION
LISTING
An application will be made to list the US$ notes on the Irish Stock
Exchange.
AUTHORIZATION
The issuer trustee has obtained all necessary consents, approvals and
authorizations in connection with the issue and performance of the US$ notes.
The issue of the US$ notes has been authorized by the resolutions of the board
of directors of Perpetual Trustees Victoria Limited passed on [*] [*], 2005.
LITIGATION
The issuer trustee is not, and has not been, involved in any
litigation or arbitration proceedings that may have, or have had during the
twelve months preceding the date of this prospectus, a significant effect on its
financial position nor, so far as it is aware, are any such litigation or
arbitration proceedings pending or threatened.
For 14 days from the date of any listing particulars subsequently
produced, copies of the following documents may be inspected during usual
business hours for the term of the US$ notes at the registered office of the
issuer trustee, Level 7, Perpetual Trustee Building, 39 Hunter Street, Sydney
NSW 2000, Australia and also at the offices of the Irish paying agent, AIB/BNY
Fund Management (Ireland) Limited, Guild House, Guild Street, Dublin 1, Republic
of Ireland:
(a) the constitution of the issuer trustee;
(b) this prospectus;
(c) the Note Trust Deed; and
(d) the Subscription Agreement.
[From the date of the creation of Interstar Millennium Series 2005-IG Trust, to
the date of issue of the US$ notes, the issuer trustee has not, in its capacity
as trustee of Interstar Millennium Series 2005-IG Trust, carried on any
business. Interstar Millennium Series 2005-IG Trust is not required by
Australian law and does not intend to publish annual reports and accounts, and
no accounts with respect to Interstar Millennium Series 2005-IG Trust have been
prepared prior to the date of this prospectus.]
EUROCLEAR AND CLEARSTREAM, LUXEMBOURG
The US$ notes have been accepted for clearance through Euroclear and
Clearstream, Luxembourg with the common code number [*], CUSIP [*] and ISIN
[*] for the Class A notes.
156
ANNOUNCEMENT
By distributing or arranging for the distribution of this prospectus
to the underwriters and the persons to whom this prospectus is distributed, the
issuer trustee announces to the underwriters and each such person that:
o the US$ notes will initially be issued in the form of registered,
book-entry notes and will be registered in the name of Cede &
Co., as nominee of DTC;
o in connection with the issue, DTC will confer rights in the US$
notes to the noteholders and will record the existence of those
rights; and
o as a result of the issue of the US$ notes in this manner, these
rights will be created.
157
LEGAL MATTERS
Mayer, Brown, Rowe & Maw LLP, New York, New York, will pass upon some
legal matters with respect to the US$ notes, including the material U.S. federal
income tax matters, for Interstar Securitisation Management Pty Limited. Allens
Arthur Robinson, Sydney, Australia, will pass upon some legal matters, excluding
any Australian tax matters, with respect to the US$ notes for Interstar
Securitisation Management Pty Limited. KPMG will pass upon the Australian tax
matters with respect to the US$ notes for Interstar Securitisation Management
Pty Limited. McKee Nelson LLP will act as United States legal counsel to the
underwriters.
158
GLOSSARY
ACCRUED INTEREST ADJUSTMENT .. means, in relation to the seller, the amount
equal to any interest and fees accrued on the
housing loans purchased from the seller up to,
but excluding, the closing date and which were
unpaid as of the close of business on the
closing date.
AGGREGATE PRINCIPAL LOSS
AMOUNT ....................... means, in relation to a Collection Period, the
aggregate amount of Principal Losses which are
attributable to principal in relation to the
housing loans for that Collection Period.
APPROVED BANK ................ means a bank which has a short term rating of
A-1+ from S&P and P-1 from Moody's and which is
approved by the trust manager in writing.
AUTHORIZED INVESTMENTS ....... means any investments which at their date of
acquisition are:
o housing loans secured by mortgages, those
mortgages and any other related securities
and rights;
o bills, promissory notes or other negotiable
instruments accepted, drawn or endorsed by
an Approved Bank;
o cash and/or deposits with an Approved Bank
or deposits with, or the acquisition of
certificates of deposit or any other debt
security issued by an Approved Bank;
o loan securities issued, secured, or
guaranteed by the Commonwealth of Australia
or any State or Territory within the
Commonwealth of Australia; and
o any mortgage-backed security issued by any
entity,
which satisfy the following conditions:
o unless otherwise advised in writing by each
rating agency:
o each proposed investment falling
within bullet points 2, 3 and 4 must
have a credit rating issued by S&P of
A-1+ or AAA and by Moody's of P-1 or
Aaa;
o each proposed investment falling
within bullet point 5 must have a
credit rating issued by S&P
159
of AAA and Moody's of Aaa;
o each proposed investment falling
within bullet points 2, 3 and 4 must
mature by the earlier of the following
dates:
o the payment date following the
date on which it was acquired; or
o such other date as the issue
trustee and the trust manager may
determine to be necessary to
enable the issuer trustee to have
sufficient cash to meet any
expenses of the trust which may
be payable prior to that payment
date;
o unless the series notice
otherwise provides, all
Authorized Investments must be
denominated in Australian
currency and held in Australia;
and
o all Authorized Investments must
be held in the name of the issuer
trustee or in the name of such
other person or persons as
approved by the issuer trustee
from time to time.
AVAILABLE INCOME ............. see page [*].
BANK BILL RATE ............... means as at any date the rate per cent per
annum being the average of the buying and
selling rates for a three-month bill or, in the
case of the first Interest Period, the linear
interpolation of the average of the buying and
selling rates for three and a four-month bill,
in each case quoted on the page designated
"BBSW" of the Reuters Monitor System at or
about 10:30 a.m., Melbourne time, on that date
by each person so quoting, but not less than
five, and rounding the resultant figure upwards
to four decimal places, provided that if in
respect of any date the Bank Bill Rate cannot
be determined because fewer than five persons
have quoted rates or a rate is not displayed
for a term equivalent to that period, then the
Bank Bill Rate for that date shall mean such
rate as determined by a financial advisor
nominated by the trust manager or by the trust
manager having regard to comparable indices
then available. In the event that any such date
is not a business day, then the Bank Bill Rate
applicable on that date shall be deemed to be
the Bank Bill Rate which is applicable on the
business day next succeeding that date. A
certificate signed by a financial advisor
nominated by the trust manager or the trust
manager certifying as to the Bank Bill Rate on
any
160
date shall be final and conclusive evidence
thereof in the absence of manifest error.
BENEFIT PLAN ................. means an employee benefit plan as defined in
Section 3(3) of ERISA that is subject to Title
I of ERISA, a plan described in Section
4975(e)(1) of the Code or an entity deemed to
hold plan assets of any of the foregoing by
reason of an employee benefit plan's or plan's
investment in the entity.
CARRYOVER CHARGE-OFF ......... see page [*].
CHARGE-OFF ................... see page [*].
CLASS A A$ EQUIVALENT ........ means, in relation to an amount denominated or
to be denominated in US$:
o prior to the termination of the Class A
currency swap, the amount converted to and
denominated in A$ at the rate of exchange
set forth in the Class A currency swap for
the exchange of United States dollars for
Australian dollars; and
o after the termination of the Class A
currency swap, the amount that, when
converted into US$ at the then prevailing
spot exchange rate in New York City for A$
purchases of US$, will equal the US$ amount
owing in respect of principal or interest,
as applicable, on the Class A notes to be
paid from or by reference to such amount.
CLASS A A$ INTEREST AMOUNT ... means, in relation to a payment date, the
amount in A$ calculated as follows:
o on a daily basis at a rate equal at the
Bank Bill Rate on that day plus a margin
set forth in the Class A currency swap that
will increase after the Step-Up Margin
Date;
o on the Class A A$ Equivalent of the
Principal Amount of the Class A notes as at
the first day of the Interest Period ending
on that payment date; and
o on the basis of the actual number of days
in the relevant payment period and a year
of 365 days,
together with any unpaid Class A A$ Interest
Amount in respect of previous payment dates.
161
o swap, the amount converted to and
denominated in A$ at the rate of exchange
set forth in the Class AB currency swap
for the exchange of United States dollars
for Australian dollars; and
o after the termination of the Class AB
currency swap, the amount that, when
converted into US$ at the then prevailing
spot exchange rate in New York City for A$
purchases of US$, will equal the US$
amount owing in respect of principal or
interest, as applicable, on the Class AB
notes to be paid from or by reference to
such amount.
CODE.......................... see page [*].
COLLECTION PERIOD............. see page [*].
CONSUMER CREDIT LEGISLATION... means any legislation relating to consumer
credit, including the Credit Act of any
Australian jurisdiction, the Consumer Credit
Code (VIC) 1996 and any other equivalent
legislation of any Australian jurisdiction.
DETERMINATION DATE............ see page [*].
EXTRAORDINARY RESOLUTION...... means a resolution passed at a duly convened
meeting by a majority consisting of not less
than 75% of the votes capable of being cast by
Voting Mortgagees present in person or by proxy
or a written resolution signed by all of the
Voting Mortgagees.
INCOME........................ see page [*].
INCOME SHORTFALL.............. see page [*].
INITIAL PRINCIPAL AMOUNT...... means the principal amount of the note on the
date it is issued.
INSOLVENCY EVENT.............. means with respect to the issuer trustee, in
its personal capacity and as trustee of the
trust, the trust manager, the servicer, a
seller or a mortgage insurer (each a Relevant
Corporation), the happening of any of the
following events:
o an administrator of the relevant
corporation is appointed;
o except for the purpose of a solvent
reconstruction or amalgamation:
o an application or an order is made,
proceedings are commenced, a
resolution is passed or
162
proposed in a notice of proceedings
or an application to a court or other
steps, other than frivolous or
vexatious applications, proceedings,
notices and steps, are taken for:
o the winding up, dissolution or
administration of the relevant
corporation; or
o the relevant corporation to
enter into an arrangement,
compromise or composition with
or assignment for the benefit of
its creditors or a class of
them; or
o the relevant corporation ceases, suspends
or threatens to cease or suspend the
conduct of all or substantially all of its
business or disposes of or threatens to
dispose of substantially all of its
assets;
o the relevant corporation is, or under
applicable legislation is taken to be,
unable to pay its debts, other than as the
result of a failure to pay a debt or claim
the subject of a good faith dispute, or
stops or suspends or threatens to stop or
suspend payment of all or a class of its
debts, except, in the case of the issuer
trustee where this occurs in relation to
another trust of which it is the trustee;
o a receiver, receiver and trust manager or
administrator is appointed by the relevant
corporation or by any other person, to all
or substantially all of the assets and
undertaking of the relevant corporation or
any part thereof, except, in the case of
the issuer trustee where this occurs in
relation to another trust of which it is
the trustee;
o the relevant corporation is or makes a
statement from which it may be reasonably
deduced that the relevant corporation is,
the subject of an event described in
section 459C(2)(b) or section 585 of the
Corporations Act 2001 of Australia;
o the relevant corporation takes any step to
obtain protection or is granted protection
from its creditors, under any applicable
legislation; or
o anything analogous to an event referred to
in the seven preceding paragraphs or
having a substantially similar effect
occurs with respect to the relevant
corporation.
163
INTEREST PERIOD............... see page [*].
ISDA.......................... means the International Swaps and Derivatives
Association, Inc.
ISDA DEFINITIONS.............. means the 2000 ISDA definitions, as amended and
updated as at the Note Issue Date.
ISSUER TRUSTEE'S DEFAULT...... means:
o an Insolvency Event has occurred and is
continuing in relation to the issuer
trustee;
o any action is taken in relation to the
issuer trustee which causes the rating of
any notes to be downgraded or withdrawn;
o the issuer trustee, or any employee or
officer of the issuer trustee, breaches
any obligation or duty imposed on the
issuer trustee under any transaction
document, any fixed-floating rate swap or
the Class A currency swap currency swap in
relation to the trust where the trust
manager reasonably believes it may have a
Material Adverse Effect and the issuer
trustee fails or neglects after 30 days'
notice from the trust manager to remedy
that breach;
o the issuer trustee merges or consolidates
with another entity without ensuring that
the resulting merged or consolidated
entity assumes the issuer trustee's
obligations under the transaction
documents; or
o there is a change in control of the issuer
trustee from that existing on the date of
the master trust deed unless approved by
the trust manager.
LIBOR......................... means, in relation to any Interest Period for
US $notes, the rate applicable for deposits in
U.S. dollars for a period of 3 months or, in
the case of the first Interest Period, the
linear interpolation of the rates applicable
for deposits in U.S. dollars for 3 and 4 months
which appears on the Telerate Page 3750 as of
11:00 a.m., London time, on the relevant rate
reset date. If such rate does not appear on the
Telerate Page 3750, the rate for that Interest
Period will be determined as if the issuer
trustee and the calculation agent had specified
USD-LIBOR-REFERENCE BANKS as the applicable
Floating Rate Option under the ISDA
Definitions. USD-LIBOR- Reference Banks means
that the rate for an Interest Period for US$
notes will be determined on the
164
basis of the rates at which deposits in U.S.
dollars are offered by four major banks in the
London interbank market agreed to by the
calculation agent and the currency swap
provider (the REFERENCE BANKS) at approximately
11:00 a.m., London time, on the relevant rate
reset date to prime banks in the London
interbank market for a period of 3 months
commencing on the first day of the Interest
Period and in a Representative Amount, as
defined in the ISDA Definitions. The
calculation agent will request the principal
London office of each of the Reference Banks to
provide a quotation of its rate. If at least
two such quotations are provided by Reference
Banks to the calculation agent, the rate for
that Interest Period will be the arithmetic
mean of the quotations. If fewer than two
quotations are provided by Reference Banks to
the calculation agent following the calculation
agent's request, the rate for that Interest
Period will be the arithmetic mean of the rates
quoted by four major banks in New York City,
selected by the calculation agent and the
currency swap provider, at approximately 11:00
a.m., New York City time, on that rate reset
date for loans in U.S. dollars to leading
European banks for a period of 3 months
commencing on the first day of the Interest
Period and in a Representative Amount. If no
such rates are available in New York City, then
the rate for such Interest Period will be the
most recently determined rate in accordance
with this definition.
LIQUID AUTHORIZED
INVESTMENTS................... as at any date means any of the following
Authorized Investments:
o bills, promissory notes or other
negotiable instruments accepted drawn or
endorsed by an Approved Bank;
o cash and/or deposits with an Approved
Bank, or the acquisition of certificates
of deposit or any other debt security
issued by an Approved Bank;
o loan securities issued, secured or
guaranteed by the Government of Australia
or any State or Territory within the
Commonwealth of Australia; and
o any other Authorized Investments approved
by the rating agencies.
LIQUIDATION LOSSES............ means, with respect to any housing loan that
becomes a liquidated loan during a Collection
Period, the Unpaid Balance of that liquidated
loan, after the application of all Liquidation
Proceeds relating to that liquidated loan,
165
including any enforcement expenses in respect
of that liquidated loan.
LIQUIDATION PROCEEDS.......... means, in relation to a housing loan, the
amount received by or on behalf of the issuer
trustee in connection with the liquidation of
such housing loan including, without
limitation:
o proceeds arising from the enforcement of
the mortgage in relation to that housing
loan and sale of the land subject to such
mortgage;
o proceeds arising from the enforcement of
any loan security in relation to that
housing loan;
o proceeds of any claim under the relevant
mortgage insurance policy or title
insurance policy; and
o proceeds arising from any taking or
compulsory acquisition of the land in
relation to such housing loan by any
government agency.
LIQUIDITY PURPOSES............ see page [*].
LOW DOCUMENTATION LOAN........ see page [*].
LVR........................... means in relation to a housing loan, the ratio,
expressed as a percentage, which the
outstanding amount of the housing loan secured
or to be secured by the related mortgage bears
to the value of the land mortgaged or to be
mortgaged at the date of the valuation of the
subject property.
MATERIAL ADVERSE EFFECT....... means an event which will materially and
adversely affect the amount or the timing of a
payment to a noteholder.
MORTGAGE PRINCIPAL
REPAYMENTS.................... see page [*].
MORTGAGEES.................... see page [*].
NOTEHOLDER MORTGAGEES......... means the Redraw noteholders and the note
trustee, on behalf of the Class A noteholders
and the Class AB noteholders.
PAYMENT DATE.................. see page [*].
PREFUNDING ACCOUNT............ see page [*].
PRESCRIBED MINIMUM LEVEL...... see page [*].
166
PRIMARY EXPENSES.............. see page [*].
PRINCIPAL AMOUNT.............. means, on any date in relation to a note, the
Initial Principal Amount of that note minus the
aggregate of repayments of principal made in
respect of the note on or before that date.
PRINCIPAL LOSSES.............. means, for any Collection Period, the amount of
those Liquidation Losses which is attributable
to principal, calculated on the basis that all
Liquidation Proceeds actually received by or on
behalf of the issuer trustee in relation to a
housing loan are applied first against
interest, fees and other enforcement expenses
relating to that housing loan and then against
the principal relating to that housing loan.
RECOVERY AMOUNT............... see page [*].
SECURED MONIES................ means all money which the issuer trustee is or
at any time may become actually or contingently
liable to pay to or for the account of any
Mortgagee for any reason whatsoever under or in
connection with a transaction document, any
fixed-floating rate swap, the Class A currency
swap, the Class AB currency swap or the Class B
currency swap.
SERVICER TRANSFER EVENT....... see page [*].
STEP-UP MARGIN DATE........... means the payment date falling in [May 2011].
TAX ACT....................... see page [*].
TERMINATION DATE.............. with respect to the trust shall be the earlier
to occur of:
o the date which is 80 years after the date
of creation of the trust;
o the termination of the trust under statute
or general law;
o full and final enforcement by the security
trustee of its rights under the security
trust deed after the occurrence of an
event of default under the security trust
deed; or
o at any time after all creditors of the
trust have been repaid in full, the
business day immediately following that
date.
THRESHOLD REQUIREMENTS........ see page [*].
167
TRUST MANAGER'S DEFAULT....... means:
o the trust manager fails to make any
payment required by it within the time
period specified in a transaction
document, any fixed-floating rate swap,
the Class A currency swap and that failure
is not remedied within 5 business days of
receipt from the issuer trustee of notice
of that failure;
o an Insolvency Event has occurred and is
continuing in relation to the trust
manager;
o the trust manager breaches any obligation
or duty imposed on the trust manager under
the master trust deed, any other
transaction document, any fixed-floating
rate swap, the Class A currency swap or
any other deed, agreement or arrangement
entered into by the trust manager under
the master trust deed in relation to the
trust, the issuer trustee reasonably
believes that such breach has a Material
Adverse Effect and the breach is not
remedied within 30 days' notice being
given by the issuer trustee to the trust
manager, except in the case of reliance by
the trust manager on the information
provided by, or action taken by, the
servicer, or if the trust manager has not
received information from the servicer
which the trust manager requires to comply
with the obligation or duty; or
o a representation, warranty or statement by
or on behalf of the trust manager in a
transaction document, any fixed-floating
rate swap, the Class A currency swap or a
document provided under or in connection
with a transaction document, any
fixed-floating rate swap or the Class A
currency swap is not true in a material
respect or is misleading when repeated and
is not remedied to the issuer trustee's
reasonable satisfaction within 90 days
after notice from the issuer trustee
where, as determined by the issuer
trustee, it has a Material Adverse Effect.
UNPAID BALANCE................ means, at any time, the unpaid principal amount
of the housing loan plus the unpaid amount of
all finance charges, interest payments and
other amounts accrued on or payable under or in
connection with the housing loan or the related
mortgage at that time.
VOTING MORTGAGEES............. see page [*].
168
================================================================================
US$[__________________]
INTERSTAR MILLENNIUM SERIES 2005-1G TRUST
CLASS A MORTGAGE BACKED FLOATING RATE NOTES
----------
PROSPECTUS
----------
UNDERWRITERS
JPMORGAN DEUTSCHE BANK SECURITIES
RBS GREENWICH CAPITAL
You should rely only on the information contained in this prospectus.
No one has been authorized to provide you with any other, or different,
information.
This document may only be used where it is legal to sell these
securities. The information in this document may be accurate only on the date of
this document.
Until [*] [*], 2005, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealer's obligation to deliver
a prospectus when acting as an underwriter and with respect to unsold allotments
or subscriptions.
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 31. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
The following table sets forth the estimated expenses in connection with
the issuance and distribution of the notes being registered under this
registration statement, other than underwriting discounts and commissions:
SEC Registration Fee....................................... $ 126.70
Printing and Engraving..................................... $
=================
Legal Fees and Expenses.................................... $
=================
Trustee Fees and Expenses.................................. $
=================
Rating Agency Fees......................................... $
=================
Accounting Fees & Expenses................................. $
=================
Miscellaneous.............................................. $
=================
=================
Total...................................................... $
- ------------------------
* All amounts except the SEC Registration Fee are estimates of expenses
incurred in connection with the issuance and distribution of the Notes.
ITEM 33. RECENT SALES OF UNREGISTERED SECURITIES.
1. The registrant was incorporated on April 26, 2002. One fully paid share
of A$1.00 was allotted to Interstar Wholesale Finance Pty Limited (formerly,
Interstar Securities (Australia) Pty Limited).
2. The following information relates to securities of the registrant issued
or sold by the registrant that were not registered under the Securities Act:
II-1
- -----------------------------------------------------------------------------------------------------------------------------
INTERSTAR INTERSTAR INTERSTAR INTERSTAR INTERSTAR
MILLENNIUM SERIES MILLENNIUM SERIES MILLENNIUM SERIES MILLENNIUM SERIES MILLENNIUM SERIES
2002-1G TRUST 2003-1G TRUST 2003-3G TRUST 2003-5G TRUST 2004-2G TRUST
- -----------------------------------------------------------------------------------------------------------------------------
DATE OF SALE July 17, 2002 February 27, 2003 July 9, 2003 October 28, 2003 March 11, 2004
- -----------------------------------------------------------------------------------------------------------------------------
TITLE OF Mortgage Backed Mortgage Backed Mortgage Backed Mortgage Backed Mortgage Backed
SECURITIES SOLD Floating Rate Notes Floating Rate Notes Floating Rate Notes Floating Rate Floating Rate Notes
Notes
- -----------------------------------------------------------------------------------------------------------------------------
AMOUNT OF U.S.$1,000,000,000 U.S.$750,000,000 U.S.$600,000,000 U.S.$675,000,000 U.S.$1,000,000,000
SECURITIES SOLD Class A2 Notes; Class A2 Notes; Class A2 Notes; Class A2 Notes; Class A Notes;
and U.S.$15,500,000 A$225,000,000 A$110,000,000 U.S.$49,000,000
A$135,000,000 Class B1 Notes; and Class A3 Notes; Class A3 Notes; Class AB Notes; and
Class B Notes A$73,000,000 U.S.$25,000,000 U.S.$41,000,000 U.S.$17,100,000
Class B2 Notes Class B1 Notes; Class B1 Notes; Class B Notes
and and
A$47,000,000 A$15,000,000
Class B2 Notes Class B2 Notes
- -----------------------------------------------------------------------------------------------------------------------------
EXEMPTION FROM Class A2 Notes were Class A2 Notes and Class A2 Notes and Class A2 Notes Class A Notes,
REGISTRATION registered in the Class B1 Notes Class B1 Notes and Class B1 Class AB Notes, and
USA; and Class B were registered in were registered in Notes were Class B Notes were
Notes were domestic the USA; and Class the USA; and registered in the registered in the
issue, not offered B2 Notes were Class A3 Notes and USA; Class A3 USA.
in the USA. domestic issue, Class B2 Notes were Notes and Class
not offered in the domestic issue, B2 notes were
USA. not offered in the domestic issue,
USA. not offered in
the USA.
- -----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL Barclays Capital Barclays Capital Barclays Capital Barclays Capital Barclays Capital
UNDERWRITERS Inc.; Inc.; and Inc.; Deutsche Inc.; and J.P. Inc.; J.P. Morgan
J.P. Morgan Deutsche Bank Bank Securities Morgan Securities
Securities Inc.; Securities Inc.; Inc.; and Securities Inc. Inc. and
and Macquarie Bank Macquarie Bank Deutsche Bank
Limited Limited London Securities Inc.
Branch
- -----------------------------------------------------------------------------------------------------------------------------
II-2
- -----------------------------------------------------------------------------------------------------------------------------
UNDERWRITING U.S.$1,650,000 or U.S.$1,050,000 or U.S.$840,000 or U.S.$945,000 or U.S.$1,200,000 or
DISCOUNTS AND 0.165% re: Class 0.14% re: Class 0.14% re: Class 0.14% re: Class 0.12% re: Class A
COMMISSIONS A2 Notes A2 Notes; and A2 Notes; and A2 Notes; and Notes; U.S. $58,800
U.S.$21,700 or U.S.$35,000 or U.S.$57,400 or or 0.12% re: Class
0.14% re: Class 0.14% re: Class 0.14% re: Class AB Notes; and
B1 Notes. B1 Notes B1 Notes U.S.$20,520 or
0.12% re: Class B
Notes
- -----------------------------------------------------------------------------------------------------------------------------
II-3
ITEM 34. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to Constitution of the Registrant, every director, agent, auditor,
secretary and other officer for the time being of the Registrant shall be
indemnified out of the assets of the Registrant against any liability incurred
by him as such director, agent, auditor, secretary or other officer in defending
any proceedings whether civil or criminal in which judgment is given in his
favor or in which he is acquitted or in connection with any application under
the Corporations Act 2001 in which relief is granted to him by the court in
respect of any negligence, default, breach of duty or breach of trust. However,
the right of indemnity against the Registrant may, in certain circumstances, be
limited by the Corporations Act 2001.
ITEM 36. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
1.1 Form of Underwriting Agreement.*
3.1 Constitution.*
4.1 Master Trust Deed.*
4.2 Form of the Series Notice.*
4.3 Form of the Security Trust Deed.*
4.4 Form of the Note Trust Deed.*
4.5 Form of the Agency Agreement.*
5.1 Opinion of Mayer, Brown, Rowe & Maw LLP as to legality of the Notes.*
8.1 Opinion of Mayer, Brown, Rowe & Maw LLP as to certain tax matters
(included in Exhibit 5.1 hereof).*
8.2 Opinion of KPMG as to certain tax matters.*
10.1 The Investment Management Agreement.*
10.2 Form of the Fixed-Floating Rate Swap.*
10.3 Form of the Currency Swap.*
10.4 Backup Servicer Agreement.*
23.1 Consent of Mayer, Brown, Rowe & Maw LLP (included in Exhibit 5.1
hereof).*
23.2 Consent of KPMG (included in Exhibit 8.2 hereof).*
24.1 Power of Attorney (included on signature pages).
25.1 Statement of Eligibility of Note Trustee.*
99.1 Opinion of Allens Arthur Robinson as to Enforceability of U.S.
Judgments under Australian Law.*
* To be filed by amendment.
II-4
ITEM 37. UNDERTAKINGS.
The undersigned registrant hereby undertakes that for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as of the time it was
declared effective.
For the purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-11 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Melbourne, Australia, on the 6th day of April, 2005.
Interstar Securitisation
Management Pty Limited
By: /s/ Sam Kyriacou
---------------------------------------
Name: Sam Kyriacou
Title: Director and Executive Officer
II-6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Diane Citron, Kimberly Diamond, Hana
Nitkin and David Hakim, or any of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and his or her name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons acting in the capacities and
on the dates indicated.
SIGNATURE TITLE DATE
/s/ Sam Kyriacou Director April 6, 2005
- -------------------
Sam Kyriacou
/s/ Sam Kyriacou Principal Executive Officer April 6, 2005
- -------------------
Sam Kyriacou
/s/ Andrew Twyford Director April 6, 2005
- -------------------
Andrew Twyford
/s/ Andrew Twyford Principal Financial Officer April 6, 2005
- -------------------
Andrew Twyford
/s/ Andrew Twyford Principal Accounting Officer April 6, 2005
- -------------------
Andrew Twyford
/s/ Brian Benari Director April 6, 2005
- -------------------
Brian Benari
/s/ Andrew Hall Director April 6, 2005
- -------------------
Andrew Hall
II-7
SIGNATURE OF AGENT FOR SERVICE OF PROCESS
Pursuant to the requirements of Section 6(a) of the Securities Act of 1933,
the undersigned hereby certifies that it is the agent for service of process in
the United States of the Registrant with respect to this Registration Statement
and signs this Registration Statement solely in such capacity and for the
limited purpose of said Section 6(a).
/s/ Linda Smith
-----------------------
Name: Linda Smith
Address: CT Corporation
111 8th Avenue
New York, NY 10011
Telephone: (212) 590-9100
Commonwealth Bank of Australia
II-8
EXHIBITS INDEX
EXHIBIT SEQUENTIAL PAGE
NO. DESCRIPTION OF EXHIBIT NUMBER
--- ---------------------- ------
1.1 Form of Underwriting Agreement.*
3.1 Constitution.*
4.1 Master Trust Deed.*
4.2 Form of the Series Notice.*
4.3 Form of the Security Trust Deed.*
4.4 Form of the Note Trust Deed.*
4.5 Form of the Agency Agreement.*
5.1 Opinion of Mayer, Brown, Rowe & Maw LLP as to legality of the Notes.*
8.1 Opinion of Mayer, Brown, Rowe & Maw LLP as to certain tax matters
(included in Exhibit 5.1 hereof).*
8.2 Opinion of KPMG as to certain tax matters.*
10.1 The Investment Management Agreement.*
10.2 Form of the Fixed-Floating Rate Swap.*
10.3 Form of the Currency Swap.*
10.4 Backup Servicer Agreement.*
23.1 Consent of Mayer, Brown, Rowe & Maw LLP (included in Exhibit 5.1 hereof).*
23.2 Consent of KPMG (included in Exhibit 8.2 hereof).*
24.1 Power of Attorney (included on signature pages).
25.1 Statement of Eligibility of Note Trustee.*
99.1 Opinion of Allens Arthur Robinson as to Enforceability of U.S. Judgments
under Australian Law.*
*To be filed by amendment.
II-9
