AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 5, 2003
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
(ACN 100 346 898)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS GOVERNING INSTRUMENTS)
------------------
LEVEL 28
367 COLLINS STREET
MELBOURNE VIC, 3000
AUSTRALIA
TELEPHONE: 613-9612-1111
(ADDRESS, INCLUDING ZIP CODE/POST CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------
AGENT FOR SERVICE
ROBIN LAPETERS
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:
VERNON SPENCER DIANE CITRON, ESQ.
DIRECTOR MAYER, BROWN, ROWE & MAW
INTERSTAR SECURITIES (AUSTRALIA) PTY LIMITED 1675 BROADWAY
LEVEL 28, 367 COLLINS STREET NEW YORK, NEW YORK 10019
MELBOURNE, VICTORIA 3000, AUSTRALIA
PAUL WEIFFENBACH
ORRICK, HERRINGTON & SUTCLIFFE
4 BROADGATE
LONDON EC2M 2DA
UNITED KINGDOM
-----------------------
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 AGGREGATE FEE
PRICE OFFERING PRICE*
PER UNIT
- ------------------------------------------------------------------------------------------------------------------------
Class A2 Mortgage Backed Floating Rate Notes.... $1,000,000 100% $1,000,000 $80.90
- ------------------------------------------------------------------------------------------------------------------------
Class B1 Mortgage Backed Floating Rate Notes..... $1,000,000 100% $1,000,000 $80.90
- ------------------------------------------------------------------------------------------------------------------------
Total Mortgage Backed Floating Rate Notes......... $2,000,000 -- $2,000,000 $161.80
========================================================================================================================
* Estimated for the purpose of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any State where the offer is not permitted.
SUBJECT TO COMPLETION DATED , 2003
INTERSTAR MILLENNIUM SERIES 2003-5G TRUST
US$[_____________] CLASS A2 MORTGAGE BACKED FLOATING RATE
NOTES
US$[_____________] CLASS B1 MORTGAGE BACKED FLOATING RATE
NOTES
[INTERSTAR LOGO]
INTERSTAR SECURITISATION MANAGEMENT PTY LIMITED
(ABN 56 100 346 898)
TRUST MANAGER
PERPETUAL TRUSTEES VICTORIA LIMITED
(ABN 47 004 027 258)
ISSUER TRUSTEE
The Class A2 notes and the Class B1 notes, collectively the US$ notes, will
be collateralized by a pool of housing loans secured by properties located in
Australia. The Interstar Millennium Series 2003-5G 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 2003-5G 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 [ ].
INITIAL UNDERWRITING
PRINCIPAL INITIAL PRICE TO DISCOUNTS AND PROCEEDS TO
BALANCE INTEREST RATE PUBLIC COMMISSIONS* ISSUER TRUSTEE*
------- ------------- ------ -------------- ---------------
Class A2 notes US$___________ LIBOR+___% US$_________ or ____% US$_________ or ____% US$_________ or ____%
Class B1 notes US$___________ LIBOR+___% US$_________ or ____% US$_________ or ____% US$_________ or ____%
An application will be made to have the US$ notes listed on the Australian
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 [_______] , 2003.
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 A2 NOTES AND THE CLASS B1 NOTES
BARCLAYS CAPITAL JPMORGAN
[_________]
The date of this prospectus is [________], 2003
- --------------------------------------------------------------------------------
* The underwriting discounts and commissions will be paid separately by
Interstar Securities (Australia) Pty Limited and not from the proceeds to
the issuer trustee.
TABLE OF CONTENTS
PAGE
----
DISCLAIMERS WITH RESPECT TO SALES TO NON-U.S.
INVESTORS...........................................................vii
AUSTRALIAN DISCLAIMERS.........................................................x
SUMMARY .......................................................................1
Parties to the Transaction............................................1
Structural Diagram....................................................3
Summary Of The Notes..................................................4
Structural Overview...................................................5
Credit Enhancements...................................................5
Liquidity Enhancement.................................................6
Redraws ..............................................................7
Hedging Arrangements..................................................7
Optional Redemption...................................................8
Prefunding............................................................8
The Housing Loan Pool.................................................9
Selected Housing Loan Pool Data as of Close
of Business on [______] , 2003......................................9
Withholding Tax......................................................10
U.S. Tax Status......................................................10
Australian Tax Status................................................10
Legal Investment.....................................................10
ERISA Considerations.................................................10
Book-Entry Registration..............................................10
Collections..........................................................11
Interest on the Notes................................................11
Principal On The Notes...............................................12
Allocation Of Cash Flows.............................................12
DISTRIBUTION OF INCOME ON EACH PAYMENT DATE...................................13
DISTRIBUTION OF MORTGAGE PRINCIPAL REPAYMENTS, LIQUID AUTHORIZED
INVESTMENTS AND RECOVERY AMOUNTS ON EACH PAYMENT DATE................15
RISK FACTORS..................................................................16
CAPITALIZED TERMS.............................................................30
U.S. DOLLAR PRESENTATION......................................................30
THE ISSUER TRUSTEE, THE TRUST MANAGER AND THE
SERVICER.............................................................31
The Issuer Trustee...................................................31
Directors............................................................31
The Trust Manager....................................................31
The Servicer.........................................................32
The Seller...........................................................34
The Backup Servicers.................................................35
-i-
TABLE OF CONTENTS
(continued)
PAGE
----
DESCRIPTION OF THE TRUST......................................................36
Interstar Millennium Trusts Securitization Program...................36
Interstar Millennium Series 2003-5G Trust............................36
DESCRIPTION OF THE ASSETS OF THE TRUST........................................37
Assets Of The Trust..................................................37
The Housing Loans....................................................37
Acquisition of Housing Loans after the Closing Date..................38
Transfer and Assignment of the Housing Loans.........................38
Representations, Warranties and Eligibility Criteria.................39
Breach of Representations and Warranties.............................43
Other Features of the Housing Loans..................................43
Details of the Housing Loan Pool.....................................44
HOUSING LOAN INFORMATION......................................................45
ANALYSIS OF THE HOUSING LOAN POOL.............................................45
HOUSING LOANS BY OCCUPANCY....................................................45
HOUSING LOANS BY LVR (LOAN-TO-VALUE RATIO)....................................46
HOUSING LOANS BY PRODUCT TYPES................................................46
HOUSING LOANS BY GEOGRAPHICAL DISTRIBUTION....................................47
HOUSING LOANS BY LOAN SIZE....................................................47
HOUSING LOANS BY POSTCODE CONCENTRATION-- TOP 10 BY LOAN AMOUNT..............48
HOUSING LOANS BY LOAN SEASONING...............................................48
HOUSING LOANS BY MATURITY.....................................................48
HOUSING LOANS BY MORTGAGE INSURER.............................................49
HOUSING LOANS BY MORTGAGE INSURER AND LVR PMI MORTGAGE INSURANCE..............49
MORTGAGE LOANS BY MORTGAGE INSURER AND LVR PMI INDEMNITY......................50
MORTGAGE LOANS BY MORTGAGE INSURER AND LVR GE CAPITAL MORTGAGE INSURANCE......50
HOUSING LOANS BY CURRENT COUPON RATES.........................................51
HOUSING LOANS BY MONTHS REMAINING TO MATURITY.................................51
-ii-
TABLE OF CONTENTS
(continued)
PAGE
----
HOUSING LOANS BY INTEREST ONLY PERIOD REMAINING...............................52
HOUSING LOANS BY LOAN TYPE....................................................52
INTERSTAR RESIDENTIAL LOAN PROGRAM............................................53
Origination Process..................................................53
Approval and Underwriting Process....................................53
General Features Of The Housing Loans................................56
Special Features of the Housing Loans................................57
THE MORTGAGE INSURANCE POLICIES...............................................58
General .............................................................58
Certain Provisions of Mortgage Insurance Policies....................59
Description of the Mortgage Insurers.................................61
THE TITLE INSURANCE POLICIES..................................................63
Cover................................................................63
Period of Cover......................................................63
Refusal or Reduction in Claim........................................64
Exclusions...........................................................64
Description of Title Insurer.........................................65
DESCRIPTION OF THE US$ NOTES..................................................65
General .............................................................65
Form of the US$ Notes................................................65
Distributions on the Notes...........................................69
Key Dates and Periods................................................70
Example Calendar.....................................................71
Calculation of Income................................................71
Income ..............................................................71
Application of Mortgage Principal Repayments and Liquid Authorized
Investments to Available Income.............................72
Distribution of Available Income.....................................72
Additional Income Payments...........................................74
Interest on the Notes................................................75
Mortgage Principal Repayments........................................76
Principal Distributions..............................................77
Charge-Offs..........................................................79
Payments Into US$ Account............................................80
Payments Out of US$ Account..........................................80
Notices .............................................................80
Fixed-Floating Rate Swaps............................................80
The Currency Swaps...................................................82
Redemption of the Notes for Taxation or Other Reasons................88
Redemption of the Notes upon an Event of Default.....................89
Optional Redemption of the Notes.....................................89
Final Maturity Date..................................................90
-iii-
TABLE OF CONTENTS
(continued)
PAGE
----
Final Redemption of the Notes........................................91
Termination of the Trust.............................................91
Prescription.........................................................92
Reports to Noteholders...............................................92
Voting and Consent of Noteholders....................................93
DESCRIPTION OF THE TRANSACTION DOCUMENTS......................................95
Trust Accounts.......................................................95
Modifications........................................................95
The Issuer Trustee...................................................96
The Trust Manager....................................................99
The Note Trustee....................................................101
Note Trustee's Annual Report........................................102
List of Noteholders.................................................102
Reports ............................................................102
The Security Trust Deed.............................................102
The Check Account and Direct Paperless Entry Facilities Agreement...110
The Investment Management Agreement.................................111
The Backup Servicer Agreements......................................115
THE SERVICER.................................................................117
Servicing of Housing Loans..........................................117
Collection and Enforcement Procedures...............................117
Collection and Foreclosure Process..................................118
Servicer Delinquency Experience.....................................119
PREPAYMENT AND YIELD CONSIDERATIONS..........................................120
General ............................................................120
Prepayments.........................................................120
Weighted Average Lives..............................................121
USE OF PROCEEDS..............................................................126
LEGAL ASPECTS OF THE HOUSING LOANS...........................................126
General ............................................................126
Nature of Housing Loans as Security.................................126
Strata Title........................................................127
Urban Leasehold.....................................................127
Taking Security Over Land...........................................128
Enforcement of Registered Mortgages.................................128
Penalties and Prohibited Fees.......................................129
Bankruptcy..........................................................129
Environmental.......................................................130
Insolvency Considerations...........................................131
Tax Treatment of Interest on Australian Housing Loans...............131
Consumer Credit Legislation.........................................131
UNITED STATES FEDERAL INCOME TAX MATTERS.....................................133
Overview ...........................................................133
-iv-
TABLE OF CONTENTS
(continued)
PAGE
----
Interest Income on the US$ Notes....................................134
Sale of Notes.......................................................134
Market Discount.....................................................135
Premium ............................................................136
Backup Withholding..................................................136
AUSTRALIAN TAX MATTERS.......................................................137
Payments of Principal, Premiums and Interest........................137
Taxation of Financial Arrangements..................................138
Note Transfers......................................................138
Profit on Sale by Non-Resident Noteholders..........................139
Goods and Services Tax..............................................139
Fixed-Floating Rate Swaps and GST...................................140
Currency Swaps and GST..............................................141
Debt and Equity.....................................................141
Other Taxes.........................................................142
Taxation of the Trust...............................................142
Tax Reform Proposals................................................142
ENFORCEMENT OF FOREIGN JUDGMENTS IN AUSTRALIA................................144
EXCHANGE CONTROLS AND LIMITATIONS............................................145
Anti-terrorism Restrictions.........................................145
Prohibited Transactions.............................................145
Transactions which may be approved by the
Reserve Bank of Australia..................................145
ERISA CONSIDERATIONS.........................................................145
LEGAL INVESTMENT CONSIDERATIONS..............................................147
AVAILABLE INFORMATION........................................................147
RATINGS OF THE NOTES.........................................................147
PLAN OF DISTRIBUTION.........................................................148
Underwriting........................................................148
Offering Restrictions...............................................149
GENERAL INFORMATION..........................................................152
Listing ...........................................................152
Authorization.......................................................152
Litigation..........................................................152
Euroclear and Clearstream, Luxembourg...............................152
ANNOUNCEMENT.................................................................152
LEGAL MATTERS................................................................152
-v-
TABLE OF CONTENTS
(continued)
PAGE
----
GLOSSARY ....................................................................154
-vi-
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 2003-5G 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".
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 Securities (Australia) Pty Limited, as servicer, The Bank of New York,
New York branch, as note trustee, principal paying agent, calculation agent and
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 or
PMI Indemnity Limited as mortgage insurers accept any responsibility for any
information contained in this prospectus and none of them has separately
verified the information contained in this prospectus or makes any
representation, warranty or undertaking, express or implied, as to the accuracy
or completeness of any information contained in this prospectus or any other
information supplied in connection with the US$ notes.
Perpetual Trustees Victoria Limited, in its personal capacity and as issuer
trustee, Interstar Securitisation Management Pty Limited, as trust manager,
Interstar Securities (Australia) Pty Limited as servicer, Perpetual Trustee
Company Limited, as security trustee, The Bank of New York, New York branch, 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 or PMI Indemnity Limited as mortgage
insurers and the underwriters do not recommend that any person should purchase
any of the US$ notes and do
vii
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.
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.
THIS DOCUMENT MAY NOT BE COMMUNICATED IN THE UNITED KINGDOM OTHER THAN
TO PERSONS AUTHORIZED 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
viii
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.
ix
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, New York branch, 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 nor
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 Securities
(Australia) Pty Limited, as a seller and as servicer, Perpetual Trustee
Company Limited, as security trustee, The Bank of New York, New York
branch, 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.
x
[This page intentionally left blank.]
xi
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 2003-5G
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 28, 367 Collins Street,
Melbourne, Victoria, 3000, telephone
(613) 9612-1111
NOTE TRUSTEE........................... The Bank of New York
SECURITY TRUSTEE....................... Perpetual Trustee Company Limited (ABN
42 000 001 007)
SERVICER............................... Interstar Securities (Australia) Pty
Limited (ABN 72 087 271 109)
PRIMARY BACKUP SERVICER................ [Zurich Capital Markets Asia Limited
(ABN 99 095 545 887)]
SECONDARY BACKUP SERVICER.............. KPMG Corporate Finance (Aust) Pty
Limited (ABN 43 007 363 215)
SELLER................................. Interstar Securities (Australia) Pty
Limited
PRINCIPAL PAYING AGENT................. The Bank of New York, New York branch
CALCULATION AGENT...................... The Bank of New York, New York branch
NOTE REGISTRAR......................... The Bank of New York, New York branch
RESIDUAL INCOME BENEFICIARY............ Interstar Securities (Australia) Pty
Limited
JOINT-LEAD MANAGERS.................... Barclays Capital Inc. and J.P. Morgan
Securities Inc.
UNDERWRITERS........................... Barclays Capital Inc., J.P. Morgan
Securities Inc. and [____________]
1
MORTGAGE INSURERS...................... PMI Indemnity Limited (ABN 49 000 781
171), PMI Mortgage Insurance Ltd (ABN
70 000 511 071) and GE Capital
Mortgage Insurance Corporation
(Australia) Pty Ltd (ABN 52 081 488
440)
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 and S&P
2
STRUCTURAL DIAGRAM
BORROWERS
SELLER
Interstar Securities (Australia) Pty A$ Housing
Limited Loan Payments SECURITY TRUSTEE
Perpetual Trustee
Company Limited
COLLECTIONS BANK
National Australia First ranking floating charge
Bank Limited over the assets of the trust
MORTGAGE INSURERS
PMI Indemnity Limited
TRUST MANAGER Equitable PMI Mortgage Insurance Ltd
Interstar Securitisation assignment of GE Capital Mortgage Insurance
Management Pty Limited housing loans Corporation (Australia) Pty Ltd
PRIMARY
BACKUP
SERVICER ISSUER TRUSTEE Payments from Mortgage
Zurich Capital Perpetual Trustees Insurance Policies
Markets Australia SERVICER Victoria Limited
Limited Interstar TITLE INSURER
Securities Interstar Millenium First American Title
(Australia) Pty Series 2003-5G Trust Insurance Company
Limited of Australia Pty Limited
SECONDARY
BACKUP Payments from
SERVICER Payments on the the Title
KPMG Corporate US$ notes Insurance Policy
Finance (Aust)
Pty Limited RESIDUAL
BENEFICIARY
CURRENCY SWAP PROVIDER Interstar Securities
Barclays Bank PLC (Australia) Pty Limited
Payments on the Class A3
notes and the Class B2
FIXED-FLOATING notes
RATE SWAP PROVIDER
National Australia PRINCIPAL PAYING AGENT
Bank Limited The Bank of New York CLASS A3 NOTEHOLDERS
CLASS B2 NOTEHOLDERS
CLEARING SYSTEMS
The Depository Trust Company
Euroclear/ US$ NOTES
Clearstream, Luxembourg
NOTE TRUSTEE
US$ NOTE OWNERS The Bank of New York,
New York branch
3
SUMMARY OF THE NOTES
The issuer trustee will also issue Class B2 notes and may issue Class
A1 notes collateralized by the same pool of housing loans as the US$ notes. The
Class A1 notes, if and when issued, and the Class B2 notes have not been and
will not be registered under the Securities Act of 1933 and are not being
offered by this prospectus. When used in this prospectus the term "US$ notes"
will mean the Class A2 notes and the Class B1 notes and the term "US$
noteholders" when used in this prospectus will mean the holders of any Class A2
notes and/or Class B1 notes. The term "Class A notes" when used in this
prospectus will mean the Class A1 notes and the Class A2 notes and the term
"Class B notes" when used in this prospectus will mean the Class B1 notes and
the Class B2 notes. The term "notes" when used in this prospectus will mean the
Class A notes and the Class B notes.
- -----------------------------------------------------------------------------------------------------------------
CLASS A2 CLASS B1 CLASS B2
- -----------------------------------------------------------------------------------------------------------------
Aggregate Initial US$ [ * ] US$ [ * ]
Principal Amount:
- -----------------------------------------------------------------------------------------------------------------
% of Total: [ * ]% [ * ]% [ * ]%
- -----------------------------------------------------------------------------------------------------------------
Anticipated Ratings:
Moody's Aaa [Not rated] [Not rated]
S&P AAA AA- AA-
- -----------------------------------------------------------------------------------------------------------------
Interest rate from three-month LIBOR + [ * ]% three-month LIBOR + [ * ]% three-month Australian Bank
the closing date up Bill Rate + [ * ]%
to but excluding the
step-up margin date
- -----------------------------------------------------------------------------------------------------------------
Interest rate from three-month LIBOR + [ * ]% three-month LIBOR + [ * ]% three-month Australian Bank
and including the Bill Rate + [ * ]%
step-up margin date
- -----------------------------------------------------------------------------------------------------------------
Minimum Denominations: US$100,000 and minimum US$100,000 and minimum A$10,000 (with initial
increments of US$1,000 increments of US$1,000 in minimum subscription of
in excess excess A$500,000)
- -----------------------------------------------------------------------------------------------------------------
Interest Accrual actual/360 actual/360 actual/365
Method:
- -----------------------------------------------------------------------------------------------------------------
Payment Dates: The 27th day or, if the The 27th day or, if the 27th The 27th day or, if the 27th
27th day is not a day is not a business day, day is not a business day,
business day, then the then the next business day then the next business day of
next business day of of each [January, April, each [January, April, July
each [January, April, July and October]. The and October]. The first
July and October]. The first payment date will be payment date will be in
first payment date will in [January 2004]. [January 2004].
be in [January 2004].
- -----------------------------------------------------------------------------------------------------------------
Clearance/Settlement: DTC/Euroclear/Clearstream, DTC/Euroclear/Clearstream, Offered in Australia only
Luxembourgh Luxembourgh
- -----------------------------------------------------------------------------------------------------------------
Initial Cut-Off Date: Close of business [ * ] 2003
- -----------------------------------------------------------------------------------------------------------------
Pricing Date: On or about [ * ] 2003
- -----------------------------------------------------------------------------------------------------------------
Closing Date: [ * ] 2003
- -----------------------------------------------------------------------------------------------------------------
Step-Up Margin Date: The payment date falling in [ * ]
- -----------------------------------------------------------------------------------------------------------------
Final Maturity Date: The payment date falling in [ * ]
- -----------------------------------------------------------------------------------------------------------------
Pre-Funding Period: For the period from the closing date to, but excluding the first payment date, the issuer
trustee may acquire additional housing loans by applying the money on deposit in the
prefunding account.
- -----------------------------------------------------------------------------------------------------------------
4
STRUCTURAL OVERVIEW
The Interstar Millennium Trusts securitisation program was established
pursuant to a master trust deed dated December 2, 1999 among Perpetual Trustees
Victoria Limited and Interstar Securities (Australia) Pty Limited. The master
trust deed provides the general terms and structure for securitisations under
the program. A series notice among the issuer trustee, Interstar Securities
(Australia) Pty Limited, as seller and servicer, Interstar Securitisation
Management Pty Limited, as trust manager, The Bank of New York, New York branch,
as note trustee and Perpetual Trustee Company Limited, as security trustee, will
set out the specific details of the Interstar Millennium Series 2003-5G Trust
and the notes, which may vary from the terms set forth in the master trust deed.
Each securitisation under the program is a separate transaction with a separate
trust. The assets of the Interstar Millennium Series 2003-5G 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 2003-5G Trust.
See "Description of the Trust".
The Interstar Millennium Series 2003-5G Trust involves the securitisation
of housing loans originated by Interstar Securities (Australia) Pty Limited in
the name of Perpetual Trustees Victoria Limited, as trustee of a number of
warehouse trusts, and secured by mortgages over residential property located in
Australia. Interstar Securities (Australia) 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 AND ALLOCATION OF LOSSES
The Class B notes will be subordinated to the Class A2 notes in their right
to receive interest payments. If the threshold requirements are satisfied,
principal payments will be allocated rateably between the Class A2 notes and the
Class B notes based on their principal balances. However, if the threshold
requirements are not satisfied, the Class B notes will be
5
subordinated in their right to receive principal payments. In all cases the
Class B1 notes and the Class B2 notes will rank equally in their right to
receive principal payments. No Class A2 notes will be issued unless all of the
Class B notes are issued.
The credit support provided by the Class B notes is intended to enhance the
likelihood that the Class A2 notes will receive expected quarterly payments of
interest and principal. The following chart describes the initial credit support
provided by the Class B notes:
INITIAL
CREDIT SUPPORT
CLASS SUPPORT PERCENTAGE
----- ------- ----------
A2 Class B notes [__]%
The initial support percentage in the preceding table is the initial
balance of the Class B notes, in the case of the Class B1 notes the Australian
dollar equivalent, as a percentage of the Australian dollar equivalent of the
principal balance of all of the notes on the closing date.
In certain circumstances, the issuer trustee may issue Class A1 notes. See
"--Redraws" and "Interstar Residential Loan Program -- Special Features of the
Housing Loans -- Redraws".
If issued, Class A1 notes will rank equally with the Class A2 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 in priority to the Class A2 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 Class A1 notes will rank equally with
the Class A2 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 Class A notes. See "Description of the Notes --
Charge Offs".
MORTGAGE INSURANCE POLICIES
Mortgage insurance policies issued by, or transferred to, PMI Indemnity
Limited, GE Capital Mortgage Insurance Corporation (Australia) Pty Ltd and PMI
Mortgage Insurance 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 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
6
payments on the notes and to pay senior expenses of the trust if there are not
enough interest collections from the housing loans available to make those
payments. In addition, principal collections on the housing loans will be made
available to make interest payments on the notes and to pay senior expenses of
the trust if there are not enough interest collections from the housing loans
and liquid authorized investments to make those payments. Any liquid authorized
investments and principal collections 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.
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 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 Class A1 notes. The trust manager must not give this direction
unless it has received written confirmation from each rating agency that the
issue of the Class A1 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. On the closing date, none of the housing loans will
be fixed rate loans and no fixed-floating rate swaps will be entered
into by the issuer trustee. If, in the future, any fixed-rate housing
loans are 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 two US$ currency swaps, one in respect of the Class A2 notes
7
and one in respect of the Class B1 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 A2 notes
and the Class B1 notes, which are each 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 A2 notes and the Class B1 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 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 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$[__________] or 25% of the Australian dollar equivalent of the initial
outstanding principal amount of the US$ notes as of the closing date. See
"Description of the Assets of the Trust -- Acquisition of Housing Loans after
the Closing Date".
8
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 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
[______] , 2003
Housing Loan Pool Size............................................... A$
Total Number of Housing Loans........................................
Average Housing Loan Balance......................................... A$
Maximum Housing Loan Balance......................................... A$
Minimum Housing Loan Balance......................................... A$
Total Valuation of the Properties.................................... A$
Maximum Remaining Term to Maturity in months.........................
Weighted Average Remaining Term to Maturity in months................
Weighted Average Seasoning in months.................................
Weighted Average Original Loan-to-Value Ratio........................ %
Weighted Average Current Loan-to-Value Ratio......................... %
Maximum Current Loan-to-Value Ratio.................................. %
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.
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 sellers 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.
9
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 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
In general, the US$ notes will be eligible for purchase by 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. Crossmarket transfers between persons holding directly or
10
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 Class A notes before any allocation is made to pay
interest on the Class B notes. Amounts available to make interest payments on
the Class A notes will be allocated rateably between the Class A1 notes and the
Class A2 notes based on the amount of Australian dollar interest owed or related
swap amounts. Amounts available to make interest payments on the Class B notes
will be allocated rateably between the Class B1 notes and the Class B2 notes
based on the amount of Australian dollar interest owed or related swap amounts.
Interest on each class of notes is calculated for each interest period at the
note's interest rate:
11
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 Class A1 notes
and the Class B2 notes.
PRINCIPAL ON THE NOTES
Principal on the notes will be payable on each payment date. Principal will
be paid first on the Class A1 notes, if any have been issued, until the Class A1
notes have been redeemed in full. If the threshold requirements have been met,
principal payments will then be allocated pro rata among the Class A2 notes and
the Class B notes based on their principal balances or the Australian dollar
equivalent of their principal balances. If the threshold requirements have not
been met, principal payments will then be paid first on the Class A2 notes until
such time as all the Class A2 notes have been redeemed in full and second pro
rata among the Class B notes based on their principal balances or the Australian
dollar equivalent of 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 Class A1 notes and the Class A2 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.
The charts on the next two pages summarize the flow of payments.
12
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 fee
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 a fixed floating rate swap
o any interest for the interest period ending on that payment date to the Class
A1 noteholders
o (1) the Class A2 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 A2 notes or
(2) if the Class A2 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 A2 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 A2 notes
on that payment date
o to the currency swap provider any break costs payable under the Class A2
currency swap other than in respect of the termination of the Class A2
currency swap where the currency swap provider is the defaulting party
- --------------------------------------------------------------------------------
|
|
- --------------------------------------------------------------------------------
Pay pro rata and according to the amount of interest payable to each class:
o (1) the Class B1 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 payments of interest on the Class B1 notes
or (2) if the Class B1 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 B1 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 B1
notes on that payment date
o any interest for the interest period ending on that payment date, including
any past due interest, to the Class B2 noteholders
o to the currency swap provider any break costs payable under the Class B1
currency swap, other than in respect of the termination of the Class B1
currency swap where the currency swap provider is the defaulting party
- --------------------------------------------------------------------------------
|
|
13
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
- --------------------------------------------------------------------------------
14
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 mortgage principal repayments and liquid
authorized investments 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 Class A1 notes
- --------------------------------------------------------------------------------
|
|
- --------------------------------------------------------------------------------
If the Threshold Requirements are satisfied, pro rata:
o Pay to (1) prior to the termination of the Class A2 currency swap, the
currency swap provider the Class A2 A$ Equivalent of the Principal Amount of
the Class A2 notes and the reciprocal payment to the currency swap provider
is thereafter to be applied to repaying principal on the Class A2 notes on
that payment date or (2) if the Class A2 currency swap has been terminated,
the note trustee for conversion into U.S. dollars at the spot exchange rate
to be applied in repaying principal on the Class A2 notes on that payment
date
o Pay to Class A3 noteholders in payment of the Principal Amount of the Class
A3 notes
o Pay to (1) prior to the termination of the Class B1 currency swap, the
currency swap provider the Class B1 A$ Equivalent of the Principal Amount of
the Class B1 notes and the reciprocal payment to the currency swap provider
is thereafter to be applied to repaying principal on the Class B1 notes on
that payment date or (2) if the Class B1 currency swap has been terminated,
the note trustee for conversion into U.S. dollars at the spot exchange rate
to be applied in repaying principal on the Class B1 notes on that payment
date
o Pay to Class B2 noteholders in payment of the Principal Amount of the Class
B2 notes
If the Threshold Requirements are not satisfied, in the following order of
priority:
o first, pro rata:
o Pay to (1) prior to the termination of the Class A2 currency swap, the
currency swap provider the Class A2 A$ Equivalent of the Principal Amount
of the Class A2 notes and the reciprocal payment by the currency swap
provider is thereafter to be applied to repaying principal on the Class A2
notes on that payment date or (2) if the Class A2 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 A2 notes on
that payment date, in each case until such time as all Class A2 notes have
been redeemed in full
o Pay to Class A3 noteholders in payment of the Principal Amount of the
Class A3 notes until such time as all Class A3 notes have been redeemed in
full
o second, pro rata:
o Pay to (1) prior to the termination of the Class B1 currency swap, the
currency swap provider the Class B1 A$ Equivalent of the Principal Amount
of the Class B1 notes and reciprocal payment to the currency swap provider
is thereafter to be applied to repaying principal on the Class B1 notes or
(2) if the Class B1 currency swap has been terminated, the note trustee
for conversion into U.S. dollars at the exchange rate to be applied in
repaying principal on the Class B1 notes on that payment date, in each
case until such time as all Class B1 notes have been redeemed in full
o Pay to Class B2 noteholders in payment of the Principal Amount of the
Class B2 notes until such time as all Class B2 notes have been redeemed in
full
- --------------------------------------------------------------------------------
|
|
- --------------------------------------------------------------------------------
Payment as a distribution to the holder of the residual capital unit as to A$10,
and the remaining balance pro rata to each holder of a residual income unit
- -------------------------------------------------------------------------------
15
RISK FACTORS
The US$ 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 FROM
THE ASSETS OF THE TRUST o The notes are debt obligations of
the 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 ACTUAL
RATE AND TIMING OF PAYMENTS ON THE
HOUSING LOANS o The rate of principal and interest
payments on pools of housing loans
varies 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.
16
Unexpected prepayment rates could
have the following negative
effects:
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
ON THE HOUSING LOANS MAY AFFECT
THE RETURN ON YOUR NOTES o If borrowers fail to make payments
of interest and principal under the
housing loans when due and the
credit enhancements 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 LOANS
MAY CAUSE DELAYS IN PAYMENT AND
LOSSES o Substantial delays could be
encountered in connection with the
liquidation of a 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
17
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.
CERTAIN PROVISIONS OF THE MORTGAGE
INSURANCE POLICIES MAY AFFECT
THE RETURN ON YOUR NOTES o The liability of a mortgage insurer
is governed by the terms of the
relevant mortgage insurance policy,
which contains 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 TITLE INSURANCE POLICIES MAY
AFFECT THE RETURN ON YOUR NOTES o The liability of the title insurer
is governed by the terms of the
title insurance policy, which
contains certain 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 B NOTES PROVIDES ONLY LIMITED
PROTECTION AGAINST LOSSES ON
THE CLASS A NOTES o The amount of credit enhancement
provided through the subordination
of the Class B notes to the Class
A2 notes is limited and could be
depleted prior to the payment in
full of the Class A2 notes. If
principal losses incurred by the
trust exceed the principal amount
of the Class B notes, you may
suffer losses on your notes.
YOU MAY NOT BE ABLE TO RESELL
YOUR NOTES o The underwriters are not required
to 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
18
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
SWAPS MAY SUBJECT YOU TO
LOSSES FROM INTEREST RATE OR
CURRENCY FLUCTUATIONS o The issuer trustee will exchange
the interest payments from any
fixed rate housing loans for
variable rate payments based upon
the three-month Australian bank
bill rate. If a fixed-floating rate
swap is terminated or the
fixed-floating rate swap provider
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
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 both the Class A2
currency swap and the Class B1
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 if either the Class
A2 currency swap or the Class B1
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 does not
provide sufficient U.S. dollars to
make payments to you in full.
PREPAYMENTS DURING A
COLLECTION PERIOD MAY RESULT
IN YOU NOT RECEIVING YOUR FULL
INTEREST PAYMENTS o If a prepayment is received on a
housing loan during a collection
period, interest on the housing
loan will cease to accrue on that
portion of the
19
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 you the
full amount of interest due to you
on the next payment date.
THE PROCEEDS FROM THE ENFORCEMENT
OF THE SECURITY TRUST DEED MAY BE
INSUFFICIENT TO PAY AMOUNTS
DUE TO YOU o If the security trustee enforces
the security interest over the
assets of the trust after an event
of default under the 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.
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 THE ISSUER
TRUSTEE TO REDEEM THE NOTES EARLY,
THE YIELD ON YOUR NOTES MAY BE
LOWER THAN EXPECTED o If the trust manager directs the
issuer trustee to redeem the notes
early as described in "Description
of the Notes -- Optional Redemption
of the Notes", the 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 WITHHOLDING TAX
WILL REDUCE PAYMENTS TO YOU AND
MAY LEAD TO AN EARLY REDEMPTION
OF THE NOTES o If a withholding tax is imposed on
payments by the issuer trustee or
any paying agent of interest on
your notes, you will not be
entitled to receive grossed-up
amounts to compensate for such
withholding tax. Thus, you will
receive less interest than is
scheduled to be paid on your notes.
20
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 LOANS
MAY CHANGE, WHICH COULD
AFFECT THE TIMING AND AMOUNT
OF PAYMENTS TO YOU o The features of the housing loans,
including their interest rates, may
be changed by the servicer, either
on its own initiative or at a
borrowers' 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
borrowers' 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.
THERE ARE LIMITS ON THE AMOUNT OF
AVAILABLE LIQUIDITY TO ENSURE
PAYMENTS OF INTEREST TO YOU o If the interest collections during
a collection period and liquid
authorized investments are
insufficient to cover 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.
21
THE USE OF LIQUID AUTHORIZED
INVESTMENTS OR PRINCIPAL COLLECTIONS
TO COVER LIQUIDITY SHORTFALLS MAY
LEAD TO PRINCIPAL LOSSES o If liquid authorized investments or
principal collections are drawn
upon to cover shortfalls in
interest, and there is insufficient
excess income in succeeding
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 ECONOMIC
CONDITIONS MAY LEAD TO LOSSES
ON YOUR NOTES o The Australian economy has been
experiencing a prolonged period of
expansion with relatively low and
stable interest rates and steadily
increasing property values. 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 AFFECT
THE TIMING OR AMOUNT OF INTEREST
OR PRINCIPAL PAYMENTS TO YOU o Some of the housing loans are
regulated by the Consumer Credit
Legislation. Under that
legislation, a borrower may have a
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 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
22
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 LOANS
IN SPECIFIC GEOGRAPHIC AREAS MAY
INCREASE THE POSSIBILITY OF LOSS
ON YOUR NOTES o The trust contains a high
concentration of housing loans
secured by properties located
within New South Wales and
Victoria. Any deterioration in the
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.
YOU WILL NOT RECEIVE PHYSICAL NOTES
REPRESENTING YOUR NOTES, WHICH CAN
CAUSE DELAYS IN RECEIVING DISTRIBUTIONS
AND HAMPER YOUR ABILITY TO PLEDGE
OR RESELL YOUR NOTES o Your ownership of the notes will be
registered electronically through
DTC, Euroclear and/or Clearstream,
Luxembourg. The lack of physical
certificates could:
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;
23
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 ISSUER
TRUSTEE AND THE SERVICER ARE AUSTRALIAN
ENTITIES, THERE REMAINS UNCERTAINTY
AS TO THE ENFORCEABILITY OF JUDGMENTS
OBTAINED BY US$ NOTEHOLDERS IN
U.S. COURT BY AUSTRALIAN COURTS o Each of Interstar Securitisation
Management Pty Perpetual Trustees
Victoria Limited and Interstar
Securities (Australia) Pty Limited
is an Australian company and has
agreed to submit to the
jurisdiction of the New York State
and United States federal courts
for purposes of any suit, action or
proceeding arising 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 CLASS A1 NOTES
MAY AFFECT THE TIMING AND
AMOUNT OF PAYMENTS MADE ON
THE CLASS A2 AND CLASS B1 NOTES o The issuer trustee may issue Class
A1 notes to fund redraws of
previously prepaid principal under
the housing loans if principal
collections on the housing loans
are not sufficient. See "Interstar
Residential Loan Program -- Special
Features of the Housing Loans --
Redraws". The Class A1 notes will
be senior to the Class A2 notes and
the Class B1 notes with respect to
payments of principal and rank
equally with the Class A2 notes
with respect to payments of
interest before the enforcement of
the charge pursuant to the security
24
trust deed and rank equally with
the Class A2 notes in all respects
thereafter. 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 the Class A2 notes or
Class B1 notes is greater if any
Class A1 notes are outstanding at
that time.
THE CLASS B1 NOTES ARE
SUBORDINATED TO THE CLASS A NOTES
AND THEREFORE CLASS B1 NOTEHOLDERS
MAY NOT BE PAID ALL PRINCIPAL
AND INTEREST ON THE
CLASS B1 NOTES o Prior to the enforcement of the
charge under the security trust
deed, the Class B1 notes will, in
some circumstances, be subordinated
to the Class A2 notes in their
right to receive principal payments
and will be subordinated to 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 B1 notes will be
fully subordinated to the Class A
notes in their right to receive
principal and interest payments.
Accordingly, Class B1 noteholders
may not be paid principal and
interest in full in respect of the
Class B1 notes. Therefore you may
not receive your entire investment
or the yield you expected to
receive.
PREPAYMENTS COULD RESULT FROM
PREFUNDING o If there is any principal amount
remaining 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 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 TO
MANAGE THE INTEREST RATE EXPOSURE
MAY AFFECT THE RATE OF PREPAYMENTS
AND THE YIELD ON YOUR INVESTMENT o The servicer is obligated under the
transaction documents to set the
interest rates on the housing loans
at a rate to ensure that at all
times the issuer trustee has
sufficient cash available to pay
all interest payable on the notes
and otherwise comply
25
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 TO
THE CURRENCY SWAPS OR A
FIXED-FLOATING RATE SWAP ARE
SUBJECT TO CREDIT RISKS o Upon termination of a swap, a
termination payment will be due
either from the issuer trustee to
the swap provider or vice versa. 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
PAYMENT TO THE CURRENCY SWAP
PROVIDER MAY REDUCE PAYMENTS
ON YOUR US$ NOTES o If the Class A2 currency swap or
the Class B1 currency swap
terminates before its scheduled
termination date, a termination
payment by either the issuer
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
A2 currency swap or the Class B1
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 currency swap will have a
lower priority than payments of
interest on the notes. If the Class
A2 currency swap or the Class B1
currency swap terminates early
under any other circumstances, any
payment due by the issuer trustee
under the Class A2 currency swap
will have an equal priority with
interest payments on the Class A
notes and any payment due by the
issuer trustee under the
26
Class B1 currency swap will have an
equal priority with interest
payments on the Class B notes.
THIS PROSPECTUS PROVIDES
INFORMATION REGARDING ONLY A
PORTION OF THE HOUSING LOAN POOL,
AND ADDITIONAL HOUSING LOANS ADDED
TO THE HOUSING LOAN POOL COULD
HAVE DIFFERENT CHARACTERISTICS o This prospectus describes only the
characteristics of the housing loan
pool as of [_______], 2003. While
they must satisfy the criteria
specified in this prospectus, the
housing loans acquired on the
closing date, and any additional
housing loans 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 NOT
INSURE THEIR PAYMENT AND WITHDRAWAL
OF ANY RATINGS MAY AFFECT THE VALUE
OF THE US$ NOTES o It is a condition to the issuance
of the Class A2 notes that they be
rated Aaa by Moody's and AAA by S&P
and that the Class B1 notes be
rated at least 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
27
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 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 with
respect to the Class A notes.
FAILURE OF THE SERVICER TO PERFORM
ITS OBLIGATIONS MAY AFFECT THE
TIMING OF PAYMENTS
ON YOUR NOTES o The servicer under the investment
management agreement has been
appointed as initial servicer of
the housing loans. Following a
servicer event of default under the
investment management agreement,
the issuer trustee must immediately
terminate the investment management
agreement. Under the primary backup
servicer agreement, if Interstar
Securities (Australia) Pty Limited
is removed as servicer the issuer
trustee must offer to appoint
[Zurich Capital Markets Asia
Limited] as servicer. If [Zurich
Capital Markets Asia Limited] does
not accept that appointment, under
the secondary backup servicer
agreement 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.
CERTAIN HOUSING LOANS MAY NOT HAVE
THE CHARACTERISTICS AS SET OUT IN
THE REPRESENTATIONS AND WARRANTIES
MADE BY THE SERVICER o The servicer will make certain
representations and warranties to
the issuer trustee, to each
noteholder and to the security
trustee in relation to the 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.
28
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 BE
AVAILABLE TO COVER ANY LOSSES
SUFFERED BY YOU FOR ANY
MISLEADING STATEMENT OR
OMISSION OF A MATERIAL MATTER
IN THIS PROSPECTUS o The trust manager, not the issuer
trustee, takes responsibility for
this prospectus. As a result, in
the event that a person suffers
loss due to any information
contained in this prospectus that
is inaccurate or misleading, or
omitting a material matter or
thing, that person will not have
recourse to the assets of the
trust.
YOU MAY EXPERIENCE LOSSES ON
YOUR NOTES DUE TO REDUCED
VERIFICATION REQUIREMENTS FOR
LOW DOC LOANS o The verification requirements for
Latinum Low Doc Loans and Retro Low
Doc Loans, both known as the Low
Doc Loans, are less exhaustive than
the verification requirements for
housing loans originated through
Interstar Securities (Australia)
Pty Limited's standard approval and
underwriting process. With respect
to housing loans originated under
Interstar Securities (Australia)
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 Latinum Low Doc 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 a
Retro Low Doc Loan. The reduced
verification procedure for a Low
Doc 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
Doc 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.
29
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 [_______], 2003. 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.
30
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,
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 and holds a securities dealers
license under the Corporations Act 2001 of Australia.
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 7, 9 Castlereagh Street Director
Sydney, NSW, Australia
Michael Stefanovski............................... Level 7, 9 Castlereagh Street Director
Sydney, NSW, Australia
Gai McGrath....................................... Level 7, 9 Castlereagh Street Director
Sydney, NSW, Australia
Rohan Mead........................................ Level 7, 9 Castlereagh 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 28, 367 Collins Street,
Melbourne, Australia and the telephone and facsimile numbers for its registered
office are (613) 9612 1111 and (613) 9621 2368 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 Arcturus Management Pty
Limited
31
(ABN 41 054 485 415), which is ultimately beneficially owned and controlled by
Vernon Spencer, an Australian individual, and his immediate family.
DIRECTORS
The directors of Interstar Securitisation Management Pty Limited are Vernon
Spencer and Sam Kyriacou. Please refer to their descriptions below.
THE SERVICER
[Interstar Securities (Australia) 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
Securities (Australia) Pty Limited is Level 28, 367 Collins Street, Melbourne,
Australia and the telephone and facsimile numbers for its registered office are
(613) 9612 1111 and (613) 9621 2368 respectively.
Interstar Securities (Australia) Pty Limited has 1 share on issue with a
paid amount of A$1.00. The share is ultimately held by Arcturus Management Pty
Limited (ABN 41 054 485 415), which currently is ultimately beneficially owned
and controlled by Vernon Spencer, an Australian individual, and his immediate
family.
Interstar Securities (Australia) 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
(CAN 004 851 110), incorporated in 1970, which took place during 1999. All of
these entities are ultimately owned and controlled by Vernon Spencer, an
Australian individual, and his immediate family.
Interstar Securities (Australia) Pty Limited is a wholly Australian owned,
privately held investment management firm which specializes in the structuring
and ongoing management of residential mortgage loan portfolios and
mortgage-backed securities. The Stargate Corporation group has been actively
involved in the mortgage loan origination and management business for the past
27 years.
The operations of Interstar Securities (Australia) 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 150 administrative, marketing, and technical staff.
Since December 1989 and prior to this issue, Interstar Securities Pty
Limited and Interstar Securities (Australia) Pty Limited have issued
approximately A$11.5 billion of rated mortgage-backed securities.
As at [March 31, 2003] Interstar Securities (Australia) Pty Limited managed
a housing loan portfolio of approximately A$[9.0] 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 owned by
Arcturus Management Pty Limited as trustee of the Arcturus Trust (in that
capacity AMPL).
32
[AMPL entered into a call option arrangement with ZCM Australia Asset
Holdings (Bermuda) Limited (ZCMAH). Under the call option, ZCMAH (or any other
person to whom ZCMAH directs AMPL to transfer the shares) has the option to
acquire all of the shares in Interstar Holdings on not less than 35 business
days notice at any time up to and including June 30, 2005. The exercise price
for the call option will be determined by reference to the value of the assets
of any funding enterprises (including companies and trusts) which hold financial
assets and which entity or assets are owned, controlled, serviced or managed by
the Interstar Holdings group. In addition to the exercise price, certain
incentive payments may be payable by ZCM to AMPL, provided that the value of the
assets of the relevant funding enterprises reaches certain agreed targets.
On September 1, 2003, ZCM announced that it has entered into a sale and
purchase agreement with CPH Management Ltd. to acquire the assets of ZCM's
principal Australian financial operations. In connection with the sale of its
principal Australian financial operations, ZCM will exercise its option to
acquire all of the shares of Interstar Holdings under the call option
arrangement and will sell all of its interest in Interstar Holdings to CPH
Management Ltd. As a result, Interstar Securitisation Management Pty Limited and
Interstar Securities (Australia) Pty Limited will be wholly-owned subsidiaries
of CPH Management Ltd.]
[Insert information about CPH Management Ltd. and Challenger Financial
Services Group]
DIRECTORS
The directors of Interstar Securities (Australia) Pty Limited are as
follows:
o VERNON SPENCER has been Executive Chairman and Managing Director of
Interstar Securities Pty Limited and Interstar Securities (Australia)
Pty Limited since their inception, and retired from the latter role on
July 1, 1999. He is a Fellow of The Institute of Chartered Accountants
in Australia, a member of The Securities Institute of Australia, a
Fellow of the Mortgage Industry Association of Australia, and a former
Member of The Stock Exchange of Melbourne Limited. He is also Immediate
Past Chairman of the Board of Directors of SOCIETAS-- The International
Institute for Real Estate Finance, headquartered in Washington, D.C.,
USA, and has served on the International Committee of the Mortgage
Bankers Association of America. He was a co-founder of the Mortgage
Industry Association of Australia, its National President from 1986
until 1988, and its Victorian State President from 1984 until 1998. He
was awarded Life Membership of the Association in 1998. He has been
actively involved with all aspects of the mortgage industry for the
past 30 years, and is presently responsible for the strategic direction
of the Interstar Securities Group.
o SAM KYRIACOU has been a Director and the Chief Financial Officer of
Interstar Securities (Australia) 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
33
operations of Interstar Securities (Australia) Pty Limited, including
wholesale mortgage loan origination, loan product development and
wholesale funding programs.
o BASIL CARIDAKIS has been a Director of Interstar Securities (Australia)
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 25 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 Securities (Australia)
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 25 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 Securities (Australia) 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 21 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 Securities (Australia) Pty Limited since its
inception.
Interstar Securities (Australia) 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 SECURITIES (AUSTRALIA) PTY LIMITED
Interstar Securities (Australia) Pty Limited is the residual income
unitholder of the Interstar Millennium Warehouse B Trust, the Interstar
Millennium Warehouse N Trust and the Interstar Millennium Warehouse R Trust,
each of which is a trust within the Interstar Millennium Trusts securitization
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 Macquarie Bank Limited, National Australia Bank Limited or Barclays
Bank PLC, as the case may be, to enable it to fund the acquisition of housing
loans.
THE BACKUP SERVICERS
[ZURICH CAPITAL MARKETS ASIA LIMITED
Zurich Capital Markets Asia Limited (ZCMAL) is a limited liability company
incorporated in Australia with its principal place of business at Level 47, 2
Park Street, Sydney NSW 2000. It
34
is a wholly owned indirect subsidiary of ZFS. ZCMAL manages operations
throughout the Asian region to develop capital markets and banking
operations for Zurich Capital Markets, a subsidiary of ZFS.]
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 Securities (Australia) Pty Limited.
35
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
2003-5G Trust is a separate and distinct trust from any other trust established
under the master trust deed. The assets of the Interstar Millennium Series
2003-5G 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 2003-5G Trust.
INTERSTAR MILLENNIUM SERIES 2003-5G TRUST
The detailed terms of the Interstar Millennium Series 2003-5G Trust will be
as set out in the master trust deed and the series notice. To establish the
trust, Interstar Securities (Australia) Pty Limited, the trust manager and the
issuer trustee will execute a notice of creation of trust.
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.
36
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 and PMI Mortgage Insurance Ltd;
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 Securities
(Australia) Pty Limited through an Australia-wide network of mortgage brokers,
accounting firms, legal firms, financial and investment advisors and other
sources referred to Interstar Securities (Australia) Pty Limited in the ordinary
course of its business under the Interstar Millennium Trusts securitization
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, but do not include mobile homes
which are not permanently affixed to the ground, commercial properties or
unimproved land.
37
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 designated as the PREFUNDING
ACCOUNT. 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 A2 A$ Equivalent
of US$[__________]and the Class B1 A$ Equivalent of US$[__________], or 25% of
the sum of the Class A2 A$ Equivalent of the initial outstanding Principal
Amount of the Class A2 notes and the Class B1 A$ Equivalent of the initial
outstanding Principal Amount of the Class B1 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 sellers; or
o originate additional housing loans in the ordinary course of Interstar
Securities (Australia) 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 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 2003-5G Trust.
38
REPRESENTATIONS, WARRANTIES AND ELIGIBILITY CRITERIA
Interstar Securities (Australia) 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 or PMI Mortgage
Insurance Ltd 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:
39
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; 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;
o all applicable stamp duties have been paid on the mortgage securing the
housing loan;
40
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, 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
September 2033;
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;
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:
41
o in the case of a housing loan other than a Low Doc Loan, the amount
secured or to be secured by the mortgage does not exceed A$1,500,000;
o in the case of a Latinum Low Doc Loan, the amount secured or to be
secured by the mortgage does not exceed A$600,000;
o in the case of a Retro Low Doc 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 or the Northern Territory
-- A$500,000; or
o where the mortgaged property is property within the metropolitan
areas of Tasmania or the Northern Territory or within the
regional centers of Australia -- A$300,000;
o in respect of a mortgage:
o to secure a housing loan, other than a Low Doc Loan, for a
principal amount:
o not exceeding A$300,000-- the loan-to-value ratio in respect
of that housing loan does not exceed 95%; and
o exceeding A$300,000 but not exceeding A$500,000 -- the
loan-to-value ratio in respect of that housing loan does not
exceed 90%; and
o exceeding A$500,000 but not exceeding A$1,000,000 -- the
mortgaged property must constitute a single 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 a single 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 a single 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 Latinum Low Doc Loan for a principal amount of:
o not exceeding A$500,000 -- the mortgaged property must
constitute a single property within the metropolitan areas
or regional centers of Australia and the loan-to-value ratio
in respect of that housing loan does not exceed 80%;
o exceeding A$500,000 but not exceeding A$600,000 -- the
mortgaged property must constitute more than one property,
each being within the
42
metropolitan areas or regional centers of Australia and the
loan-to-value ratio in respect of that housing loan does not
exceed 80%;
o to secure a Retro Low Doc 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 by an insurer approved by the trust manager; and
o the mortgaged property is valued by a valuer approved by the servicer
unless:
o the loan-to-value ratio does not exceed 80%;
o the amount outstanding under the housing loan does not exceed:
o A$250,000 when secured over a single property within the
metropolitan area of Sydney;
o A$200,000 when secured over a single property within any
other city and metropolitan areas of Australia; or
o A$150,000 when secured over a single property within any
other areas of Australia.
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 Doc
Loans, Latinum Low Doc Loans and Retro Low Doc 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:
43
o interest is calculated daily and charged monthly in arrears;
o payments can be on a monthly, bi-weekly or weekly basis. 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
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 various details relating to
the housing loans to be sold to the trust on the closing date. The information
is provided as of the close of business on [_______], 2003. 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 38, unless a revised prospectus is delivered to prospective investors.
44
HOUSING LOAN INFORMATION
ANALYSIS OF THE HOUSING LOAN POOL
Total pool size...........................................................$
Total number of loans.....................................................
Average loan size.........................................................$
Maximum loan size.........................................................$
Total property value (current)............................................$
Weighted Average current LVR..............................................%
% of pool with loans > 80% LVR............................................%
Weighted Average Term to Maturity (months)................................
Weighted Average Seasoning (months).......................................
Maximum Remaining Term to Maturity (months)...............................
% of pool with loans > $300,000 (by number)...............................%
% of pool with loans > $300,000 (by loan amount)..........................%
% of pool in arrears (by loan amount):
1-30 days.................................................................%
31-60 days................................................................%
61+ days..................................................................%
Total..................................................................%
HOUSING LOANS BY OCCUPANCY
NUMBER % OF DOLLAR % OF AVERAGE WGT AGT
OF TOTAL NO. AMOUNT TOTAL A$ BALANCE CURRENT
LOANS OF LOANS A$ AMOUNT A$ LVR %
--------- --------- --------- --------- --------- ---------
Owner Occupied - House........ % % %
Owner Occupied - Unit......... % % %
Investment - House............ % % %
Investment - Unit............. % % %
--------- --------- --------- --------- --------- ---------
Total....................... % % %
========= ========= ========= ========= ========= =========
45
HOUSING LOANS BY LVR (LOAN-TO-VALUE RATIO)
NUMBER % OF DOLLAR % OF AVERAGE WGT AGT
OF TOTAL NO. AMOUNT TOTAL A$ BALANCE CURRENT
LOANS OF LOANS A$ AMOUNT A$ LVR %
--------- --------- --------- --------- --------- ---------
<=20%......................... % % %
>20% and =<25%................ % % %
>25% and =<30%................ % % %
>30% and =<35%................ % % %
>35% and =<40%................ % % %
>40% and =<45%................ % % %
>45% and =<50%................ % % %
>50% and =<55%................ % % %
>55% and =<60%................ % % %
>60% and =<65%................ % % %
>65% and =<70%................ % % %
>70% and =<75%................ % % %
>75% and =<80%................ % % %
>80% and =<85%................ % % %
>85% and =<90%................ % % %
--------- --------- --------- --------- --------- ---------
Total....................... % % %
========= ========= ========= ========= ========= =========
HOUSING LOANS BY PRODUCT TYPES
NUMBER % OF DOLLAR % OF AVERAGE WGT AGT
OF TOTAL NO. AMOUNT TOTAL A$ BALANCE CURRENT
LOANS OF LOANS A$ AMOUNT A$ LVR %
--------- --------- --------- --------- --------- ---------
Variable - Principal & Interest % % %
Variable - Interest Only...... % % %
Variable - Line of Credit..... % % %
Fixed......................... % % %
--------- --------- --------- --------- --------- ---------
Total....................... % % %
========= ========= ========= ========= ========= =========
46
HOUSING LOANS BY GEOGRAPHICAL DISTRIBUTION
NUMBER % OF DOLLAR % OF AVERAGE WGT AGT
OF TOTAL NO. AMOUNT TOTAL A$ BALANCE CURRENT
LOANS OF LOANS A$ AMOUNT A$ LVR %
--------- --------- --------- --------- --------- ---------
NSW (Metro)................... % % %
NSW (Regional)................ % % %
NSW (Country)................. % % %
ACT (Metro)................... % % %
ACT (Regional)................ % % %
ACT (Country)................. % % %
VIC (Metro)................... % % %
VIC (Regional)................ % % %
VIC (Country)................. % % %
QLD (Metro)................... % % %
QLD (Regional)................ % % %
QLD (Country)................. % % %
SA (Metro).................... % % %
SA (Regional)................. % % %
SA (Country).................. % % %
WA (Metro).................... % % %
WA (Regional)................. % % %
WA (Country).................. % % %
TAS (Metro)................... % % %
TAS (Regional)................ % % %
TAS (Country)................. % % %
NT (Metro).................... % % %
NT (Regional)................. % % %
NT (Country).................. % % %
--------- --------- --------- --------- --------- ---------
Total....................... % % %
========= ========= ========= ========= ========= =========
HOUSING LOANS BY LOAN SIZE
NUMBER % OF DOLLAR % OF AVERAGE WGT AGT
OF TOTAL NO. AMOUNT TOTAL A$ BALANCE CURRENT
LOANS OF LOANS A$ AMOUNT A$ LVR %
--------- --------- --------- --------- --------- ---------
<=100%........................ % % %
> 100,000 and <= 150,000...... % % %
> 150,000 and <= 200,000...... % % %
> 200,000 and <= 250,000...... % % %
> 250,000 and <= 300,000...... % % %
> 300,000 and <= 350,000...... % % %
> 350,000 and <= 400,000...... % % %
> 400,000 and <= 500,000...... % % %
> 500,000 and <= 750,000...... % % %
> 750,000 and <= 950,000...... % % %
> 950,000..................... % % %
--------- --------- --------- --------- --------- ---------
Total....................... % % %
========= ========= ========= ========= ========= =========
47
HOUSING LOANS BY POSTCODE CONCENTRATION --
TOP 10 BY LOAN AMOUNT
NUMBER % OF DOLLAR % OF AVERAGE WGT AGT
POST- OF TOTAL NO. AMOUNT TOTAL A$ BALANCE CURRENT
CODE LOANS OF LOANS A$ AMOUNT A$ LVR %
--------- --------- --------- --------- --------- --------- ---------
Liverpool South............... % % %
St Johns Park................. % % %
Strathfield................... % % %
Broadbeach.................... % % %
Arndell Park.................. % % %
Greystanes.................... % % %
Kerrydale..................... % % %
Cabramatta.................... % % %
Guildford West................ % % %
Chirn Park.................... % % %
Total....................... % % %
HOUSING LOANS BY LOAN SEASONING
NUMBER % OF DOLLAR % OF AVERAGE WGT AGT
OF TOTAL NO. AMOUNT TOTAL A$ BALANCE CURRENT
LOANS OF LOANS A$ AMOUNT A$ LVR %
--------- --------- --------- --------- --------- ---------
<= 3 months................... % % %
> 3 and <= 6 months......... % % %
> 6 and <= 12 months......... % % %
> 12 and <= 18 months......... % % %
> 18 and <= 24 months......... % % %
> 24 and <= 36 months......... % % %
> 36 and <= 48 months......... % % %
> 48 and <= 60 months......... % % %
> 60.......................... % % %
Total....................... % % %
HOUSING LOANS BY MATURITY
NUMBER % OF DOLLAR % OF AVERAGE WGT AGT
OF TOTAL NO. AMOUNT TOTAL A$ BALANCE CURRENT
LOANS OF LOANS A$ AMOUNT A$ LVR %
--------- --------- --------- --------- --------- ---------
October 15, 2020.............. % % %
October 15, 2022.............. % % %
October 15, 2023.............. % % %
October 15, 2028.............. % % %
October 15, 2030.............. % % %
October 15, 2031.............. % % %
October 15, 2032.............. % % %
Total....................... % % %
48
HOUSING LOANS BY MORTGAGE INSURER
NUMBER % OF DOLLAR % OF AVERAGE WGT AGT
OF TOTAL NO. AMOUNT TOTAL A$ BALANCE CURRENT
LOANS OF LOANS A$ AMOUNT A$ LVR %
--------- --------- --------- --------- --------- ---------
PMI Mortgage Insurance........ % % %
GE Capital Mortgage Insurance. % % %
PMI Indemnity................. % % %
Total....................... % % %
HOUSING LOANS BY MORTGAGE INSURER AND LVR
PMI MORTGAGE INSURANCE
NUMBER % OF DOLLAR % OF AVERAGE WGT AGT
OF TOTAL NO. AMOUNT TOTAL A$ BALANCE CURRENT
LOANS OF LOANS A$ AMOUNT A$ LVR %
--------- --------- --------- --------- --------- ---------
<=20%......................... % % %
>20% and =<25%................ % % %
>25% and =<30%................ % % %
>30% and =<35%................ % % %
>35% and =<40%................ % % %
>40% and =<45%................ % % %
>45% and =<50%................ % % %
>50% and =<55%................ % % %
>55% and =<60%................ % % %
>60% and =<65%................ % % %
>65% and =<70%................ % % %
>70% and =<75%................ % % %
>75% and =<80%................ % % %
>80% and =<85%................ % % %
>85% and =<90%................ % % %
Total....................... % % %
49
MORTGAGE LOANS BY MORTGAGE INSURER AND LVR
PMI INDEMNITY
NUMBER % OF DOLLAR % OF AVERAGE WGT AGT
OF TOTAL NO. AMOUNT TOTAL A$ BALANCE CURRENT
LOANS OF LOANS A$ AMOUNT A$ LVR %
--------- --------- --------- --------- --------- ---------
<=20%......................... % % %
>20% and =<25%................ % % %
>25% and =<30%................ % % %
>30% and =<35%................ % % %
>35% and =<40%................ % % %
>40% and =<45%................ % % %
>45% and =<50%................ % % %
>50% and =<55%................ % % %
>55% and =<60%................ % % %
>60% and =<65%................ % % %
>65% and =<70%................ % % %
>70% and =<75%................ % % %
>75% and =<80%................ % % %
>80% and =<85%................ % % %
>85% and =<90%................ % % %
Total....................... % % %
MORTGAGE LOANS BY MORTGAGE INSURER AND LVR
GE CAPITAL MORTGAGE INSURANCE
NUMBER % OF DOLLAR % OF AVERAGE WGT AGT
OF TOTAL NO. AMOUNT TOTAL A$ BALANCE CURRENT
LOANS OF LOANS A$ AMOUNT A$ LVR %
--------- --------- --------- --------- --------- ---------
<=20%......................... % % %
>20% and =<25%................ % % %
>25% and =<30%................ % % %
>30% and =<35%................ % % %
>35% and =<40%................ % % %
>40% and =<45%................ % % %
>45% and =<50%................ % % %
>50% and =<55%................ % % %
>55% and =<60%................ % % %
>60% and =<65%................ % % %
>65% and =<70%................ % % %
>70% and =<75%................ % % %
>75% and =<80%................ % % %
>80% and =<85%................ % % %
>85% and =<90%................ % % %
Total....................... % % %
50
HOUSING LOANS BY CURRENT COUPON RATES
NUMBER % OF % OF WGT AGT
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE CURRENT
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
--------- --------- --------- --------- --------- ---------
<= 5.00....................... % % %
> 5.01 and <= 5.50............ % % %
> 5.51 and <= 6.00............ % % %
> 6.01 and <= 6.50............ % % %
> 6.51 and <= 7.00............ % % %
> 7.01 and <= 7.50............ % % %
> 7.51 and <= 8.00............ % % %
> 8.00........................ % % %
Total....................... % % %
HOUSING LOANS BY MONTHS REMAINING TO MATURITY
NUMBER % OF AVERAGE WGT AGT
OF TOTAL NO. DOLLAR % OF BALANCE CURRENT
LOANS OF LOANS AMOUNT TOTAL AMOUNT A$ LVR %
--------- --------- --------- --------- --------- ---------
216-228 Months................ % % %
228-240 Months................ % % %
240-252 Months................ % % %
252-264 Months................ % % %
264-276 Months................ % % %
276-288 Months................ % % %
288-300 Months................ % % %
300-312 Months................ % % %
312-324 Months................ % % %
324-336 Months................ % % %
336-348 Months................ % % %
348-360 Months................ % % %
Total....................... % % %
51
HOUSING LOANS BY INTEREST ONLY PERIOD REMAINING
NUMBER % OF DOLLAR % OF AVERAGE WGT AGT
OF TOTAL NO. AMOUNT TOTAL A$ BALANCE CURRENT
LOANS OF LOANS A$ AMOUNT A$ LVR %
--------- --------- --------- --------- --------- ---------
0-1 Years..................... % % %
1-2 Years..................... % % %
2-3 Years..................... % % %
3-4 Years..................... % % %
4-5 Years..................... % % %
5-6 Years..................... % % %
6-7 Years..................... % % %
7-8 Years..................... % % %
8-9 Years..................... % % %
9-10 Years.................... % % %
Total....................... % % %
HOUSING LOANS BY LOAN TYPE
NUMBER % OF % OF WGT AGT
OF TOTAL NO. DOLLAR TOTAL $ AVERAGE CURRENT
LOANS OF LOANS AMOUNT AMOUNT BALANCE LVR %
--------- --------- --------- --------- --------- ---------
Standard...................... % % %
Latinum Low Doc............... % % %
Retro Low Doc................. % % %
Total....................... % % %
52
INTERSTAR RESIDENTIAL LOAN PROGRAM
ORIGINATION PROCESS
The housing loans included in the assets of the trust were originated by
Interstar Securities (Australia) Pty Limited from loan applications received
through its national network of independent accredited mortgage brokers and
funded by the seller as described above. The mortgage brokers will receive an
originator's fee for approved loans, which will equal a portion of the interest
payments on the housing loans, throughout the term of such approved housing
loan. Interstar Securities (Australia) 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 service officer must attend ongoing in-house training courses
conducted by Interstar Securities (Australia) Pty Limited. This program covers
the duties, requirements and office procedures expected of each lending service
officer with particular emphasis on regulatory matters such as the Consumer
Credit Legislation and the Privacy Act. The lending service 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 service 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 service officer and
where an application is outside the current authority of the lending service
officer or the file has been declined it is referred to the lending service
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
Securities (Australia) Pty Limited's credit policy and procedures described in
this section. Interstar Securities (Australia) 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
Securities (Australia) 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 and credit history details
and ensuring these details satisfy Interstar Securities (Australia) Pty
Limited's underwriting criteria. However, the level of verification will be less
for Low Doc Loans, as described below. The initial assessment of the applicant
is conducted by the mortgage broker on behalf of Interstar Securities
(Australia) Pty Limited, with the application then being submitted for approval,
to Interstar Securities (Australia) Pty Limited based upon it meeting
satisfactory credit standards. Approval of the loan application is at the total
discretion of Interstar Securities (Australia) Pty Limited.
All proposed security properties are required to be valued, subject to a
number of exceptions, by a valuer approved by Interstar Securities (Australia)
Pty Ltd. 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, have at least 5 years experience in the
53
geographical area in which the proposed security property is situated and have
the necessary professional indemnity insurance policy in force.
The valuation report must include the following details:
o the age, condition and size of the security property;
o comparable sale prices to other properties;
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 that would have an adverse effect on the value
of the security property.
Where a valuation is not required, a copy of the stamped executed contract
of sale confirming actual purchase price of the property must be provided prior
to settlement.
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 Securities (Australia) 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 broker obtains such information as:
o in the case of all housing loans apart from Low Doc Loans, tax returns
and an employer confirmation letter;
o in the case of all housing loans, credit checks; and
o in the case of all housing loans other than Retro Low Doc Loans, a full
and detailed current assets and liabilities statement.
This information is then submitted to Interstar Securities (Australia) Pty
Limited for assessment within its current lending criteria.
The Latinum Low Doc Loan and Retro Low Doc Loan products, the LOW DOC
LOANS, are made available by Interstar Securities (Australia) 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 Latinum Low Doc Loan, an applicant must have been self-employed
or a full-time investor for at least 2 years and must have net assets,
post-
54
settlement of the housing loan, of not less than A$50,000. There are no such
minimum requirements in relation to a Retro Low Doc Loan. The income
verification requirements for a Low Doc Loan are less exhaustive than the
verification requirements for housing loans originated through Interstar
Securities (Australia) Pty Limited's standard approval and underwriting process.
In a Latinum Low Doc 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 Securities (Australia) 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 Latinum Low
Doc 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 Retro Low Doc Loan.
The lending criteria for Low Doc Loans are the same as the lending criteria
for other housing loans originated through Interstar Securities (Australia) 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 Securities (Australia)
Pty Limited, mortgage insurance coverage must be obtained by the borrower. All
loans through Interstar Securities (Australia) 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 Securities
(Australia) 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 loan agreement
document together with a general terms and conditions booklet. 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.
Interstar Securities (Australia) 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.
55
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"
Access Account 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"
Access Account 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"
Access Account 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"
Access Account 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"
Access Account Amortizing line of credit "P&I" loans 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
amortizing 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.
Interstar "Split"
Access Account A combined facility which:
56
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 then 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 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 checking 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 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. All mortgage loan
payments deducted from a
57
borrower's checking 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:
o repays 50% or more of the principal balance of the housing loan in the
first year of its term; or
o discharges the housing loan within the first 5 years of its term.
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" Access Account, 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.
THE MORTGAGE INSURANCE POLICIES
GENERAL
Each housing loan acquired by the trust will be insured by one of PMI
Indemnity Limited -- formerly CGU Lenders Mortgage Insurance Limited -- GE
Capital Mortgage Insurance Corporation (Australia) Pty Ltd or PMI Mortgage
Insurance 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
58
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;
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.
59
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.
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.
60
DESCRIPTION OF THE MORTGAGE INSURERS
PMI MORTGAGE INSURANCE LTD AND PMI INDEMNITY LIMITED (FORMERLY CGU LENDERS
MORTGAGE INSURANCE 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. It is currently Australia's second largest lenders' mortgage insurer
with a market share of approximately 33 percent.
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 S&P and Fitch Ratings and [Aa2] by
Moody's.
As of [December 31, 2002], PMI Mortgage Insurance Ltd insures approximately
482,417 mortgage loans in excess of A$[57.9] billion and had total assets of
A$[535] million, shareholders' equity of A$[287] million. PMI Mortgage Insurance
Ltd currently has a financial strength rating of [AA] by S&P and Fitch Ratings
and [Aa3] by Moody's.
PMI Indemnity Limited, previously named CGU Lenders Mortgage Insurance
Limited, was formed in 1971 as a monoline insurer to provide mortgage lenders
with protection against loss arising from borrower default on residential
mortgages. On September 14, 2001, PMI Indemnity Limited was acquired by PMI
Mortgage Insurance Australia (Holdings) Pty Ltd.
As of [December 31, 2002], PMI Indemnity Limited insures approximately
232,965 mortgage loans in excess of A$[27.0] billion and had total assets of
$[196] million and shareholders' equity of A$[106] million. PMI Indemnity
Limited currently has an insurer financial strength rating of [Aa3] by Moody's,
[AA] by Fitch Ratings and [AA-] by S&P.
PMI Indemnity Limited's ability to meet claims under its mortgage insurance
policies is, in addition to its capital and reserves, supported by reinsurance
contracts with international reinsurance companies. These contracts are reviewed
annually and the level of cover provided complies with the Australian Prudential
Regulation Authority's conditions of authorization. Since September 14, 2001,
PMI Indemnity Limited's obligations to its policy holders has been managed by
PMI Mortgage Insurance Ltd. PMI Indemnity Limited ceased (except for increased
advances on current insurance in force) writing new business from July 1, 2002.
Insurance in force as at July 1, 2002 will be maintained.
[The PMI Group Inc. currently has an A+ counterparty credit rating from
S&P. As of May 1, 2003, 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 "stable" to "negative". If S&P lowers its credit rating on PMI
Indemnity Limited or PMI Mortgage Insurance Ltd below AA-, then S&P could lower
its rating on the Class B1 notes. 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.]
The business address of each of PMI Mortgage Insurance Ltd and PMI
Indemnity Limited is Level 23, 50 Bridge Street, Sydney, New South Wales.
61
GE CAPITAL MORTGAGE INSURANCE CORPORATION (AUSTRALIA) PTY LTD
GE Capital Mortgage Insurance Corporation (Australia) Pty Ltd, commenced
operations in March 1998. It is a wholly-owned subsidiary of GE Capital
Australia Limited, whose ultimate parent is General Electric Company. General
Electric Company is a diversified industrial and financial services company with
operations in over 100 countries. General Electric Company is currently rated
[AAA] by S&P and [Aaa] by Moody's. General Electric Company is the indirect
owner of lenders' mortgage insurance businesses in the United States, United
Kingdom, Canada and Australia which collectively insured over US$[165] billion
of loans worldwide.
As of [December 31, 2002], GE Capital Mortgage Insurance Corporation
(Australia) Pty Ltd had total assets of A$[604.8] million, shareholders' equity
of A$[206.1] million and statutory reserves -- claims equalization reserve -- of
A$[21.7] million. GE Capital Mortgage Insurance Corporation (Australia) Pty Ltd
currently has a claims paying ability rating of [AA] by S&P and Fitch and [Aa2]
by Moody's.
The business address of GE Capital Mortgage Insurance Corporation
(Australia) Pty Ltd is Level 23, 259 George Street, Sydney, New South Wales.
62
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:
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
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:
63
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;
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;
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.
64
DESCRIPTION OF TITLE INSURER
First American Title Insurance Company of Australia Pty Limited 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 was founded over 113 years ago with
revenues of [US$4.7 billion] and approximately [24,886] employees worldwide in
2002. First American Title Insurance Company is publicly traded on the New York
Stock Exchange through its holding company, the First American Financial
Corporation.
A.M. Best Company, an insurance company ratings and information agency,
affirmed in 2002 the current rating for First American Title Insurance Company
of Australia Pty Limited of [A+ (Superior)]. A.M. Best Company evaluates title
insurers from both an insurance and general industry perspective.
First American Title Insurance Company and First American Financial
Corporation have a rating of ["A-"] from S&P. First American Financial
Corporation's senior debt is rated "stable" by S&P.
DESCRIPTION OF THE US$ 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
65
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 (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, 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
66
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 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
67
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 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.
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 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
68
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
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 21W New York, NY 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 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;
69
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 pm Melbourne time on the
date that is four business days before the payment date or transferred to a US$
account maintained by the US$ noteholder with a bank in New York City.
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 6 business days before the
payment date preceding that payment
date to, but excluding, the date which
is 6 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 [January 15, 2004]
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.
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
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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 27th day or, if the 27th day is not
a business day, then the next business
day of each [January, April, July and
October] 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 [_______] 2003.
EXAMPLE CALENDAR
The following example calendar for a quarter assumes that all relevant
days are business days.
COLLECTION PERIOD..................... [_______] to [_______]
INTEREST PERIOD....................... [_______] to [_______]
DETERMINATION DATE.................... [_______]
PAYMENT DATE.......................... [_______]
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
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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 Class A1 notes, the Class A2 A$ Equivalent of the outstanding Principal
Amount of the Class A2 notes, the Class B1 A$ Equivalent of the outstanding
Principal Amount of the Class B1 notes and the outstanding Principal Amount of
the Class B2 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 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;
and
o pro rata:
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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
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 Class A1 notes for the Interest Period ending
on that payment date to the Class A1 noteholders;
o (1) the Class A2 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 A2 notes or (2) if the Class A2 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 A2 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 A2 notes on that payment date;
o to the currency swap provider any break costs payable to the
currency swap provider under the Class A2 currency swap other
than in respect of the termination of the Class A2 currency swap
where the currency swap provider is the defaulting party, as such
term is defined in the Class A2 currency swap; and
o sixth, pro rata and according to the amount of interest payable to each
class:
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o (1) the Class B1 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 B1 notes or (2) if the Class B1 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 B1 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 B1 notes on that payment date;
o any interest on the Class B2 notes for the Interest Period ending on
that payment date, including any past due interest, to the Class B2
noteholders; and
o to the currency swap provider any break costs payable to the currency
swap provider under the Class B1 currency swap other than in respect of
the termination of Class B1 currency swap where the currency swap
provider is the defaulting party, as such term is defined in the Class
B1 currency swap.
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.
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, pro rata any fees payable to the seller; and
o sixth, the balance, if any, pro rata to each holder of a residual
income unit.
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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 for each
class of US$ notes for any Interest Period will be equal to LIBOR on the related
rate reset date plus a margin of [___]% in respect of the Class A2 notes and a
margin of [___] in respect of the Class B1 notes. If the issuer trustee has not
redeemed all of either class 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 class of US$ note will be equal to LIBOR on the related rate reset date
plus a margin of [___]% in respect of the Class A2 notes and a margin of [___]%
in respect of the Class B1 notes.
Up to, and including, the Step-Up Margin Date, the interest rate for the
Class B2 notes for any Interest Period will be equal to the Bank Bill Rate on
the first day of that Interest Period plus a margin of [___]%. If the issuer
trustee has not redeemed all of the Class B2 notes by the Step-Up Margin Date
then the interest rate for any Interest Period commencing on or after that date
will be equal to the Bank Bill Rate on the first day of that Interest Period
plus a margin of [___]%.
The STEP-UP MARGIN DATE means the payment date falling in [_______].
The interest rate for the Class A1 notes will be as specified on the date
the Class A1 notes are issued. No Class A1 notes may be issued unless the rating
agencies have confirmed that the issue of the Class A1 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 A2 A$ Interest Amount, the
Class B1 A$ Interest Amount the Class A1 notes and the Class B2 notes.
A note will bear interest until the date that note is finally redeemed. See
"-- Final Redemption of the Notes" below.
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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;
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 Amounts 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;
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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 Class A1 noteholders in payment of the Principal Amount of
the Class A1 notes until such time as the Class A1 notes have been
redeemed in full;
o fourth:
o if the Threshold Requirements have been met on the payment date,
pro rata:
o to pay to (1) prior to the termination of the Class A2 currency
swap, the currency swap provider the Class A2 A$ Equivalent of
the Principal Amount of the Class A2 notes and the reciprocal
payment by the currency swap provider is thereafter to be applied
towards payment of the Principal Amount of the Class A2 notes on
that payment date or (2) if the Class A2 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 A2 notes on that payment date, in each case until such time
as all of the Class A2 notes have been redeemed in full;
o to pay to (1) prior to the termination of the Class B1 currency
swap, the currency swap provider the Class B1 A$ Equivalent of
the Principal Amount of the Class B1 notes and the reciprocal
payment by the currency swap provider is thereafter to be applied
towards payment of the Principal Amount of the Class B1 notes on
that payment date or (2) if the Class B1 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 B1 notes on that payment date, in each case until such time
as all of the Class B1 notes have been redeemed in full; and
o to pay to the Class B2 noteholders in payment of the Principal
Amount of the Class B2 notes until such time as all of the Class
B2 notes have been redeemed in full,
provided that, each such amount in the preceding five bullet points 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 to pay to (1) prior to the termination of the Class A2
currency swap, the currency swap provider the Class A2 A$
Equivalent of the Principal Amount of the Class A2 notes and the
reciprocal payment by the currency swap provider is thereafter to
be applied towards payment of the Principal Amount of the Class
A2 notes on that payment date or (2) if the Class A2 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 A2 notes on that payment date, in each
case until such time as all Class A2 notes have been redeemed in
full; and
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o second, pro rata:
o to pay to (1) prior to the termination of the Class B1
currency swap, the currency swap provider the Class B1 A$
Equivalent of the Principal Amount of the Class B1 notes and
the reciprocal payment by the currency swap provider is
thereafter to be applied towards payment of the Principal
Amount of the Class B1 notes or (2) if the Class B1 currency
swap has been terminated, the note trustee for purchase of
U.S. dollars at the exchange rate to be applied in repaying
principal on the Class B1 notes on that payment date, in
each case until such time as all Class B1 notes have been
redeemed in full; and
o to pay to the Class B2 noteholders in payment of the
Principal Amount of the Class B2 notes until such time as
all Class B2 notes have been redeemed in full; and
o fifth, the balance as a distribution to the holder of the residual
capital unit as to A$10, and the remaining balance pro rata to each
holder of a residual income unit.
The issuer trustee, pursuant to the directions provided by the trust
manager, will only make a payment described in any of the preceding bullet
points above in this section to the extent that any Mortgage Principal
Repayments and Recovery Amounts remain from which to make the payment after
amounts with priority to that payment have been fully paid. The issuer trustee
will only use Liquid Authorized Investments in the third, fourth and fifth
bullet points above to the extent that the application of Liquid Authorized
Investments will not reduce the value of Liquid Authorized Investments to less
than the Prescribed Minimum Level.
The THRESHOLD REQUIREMENTS will be met if each of the following conditions
are satisfied:
o there are no Carryover Charge-Offs;
o no more than 5% of the housing loans (by unpaid principal balance) are
in arrears by an amount equal to two or more monthly payments at the
time;
o an amount equal to the aggregate of:
1. the Class B1 A$ Equivalent of the Principal Amount of all Class
B1 notes outstanding at the time; plus
2. the Principal Amount of all Class B2 notes outstanding at the
time;
is not less than 0.25% of the amount equal to the aggregate of:
1. the Class A2 A$ Equivalent of the Initial Principal Amount of all
Class A2 notes; plus
2. the Class B1 A$ Equivalent of the Initial Principal Amount of all
Class B1 notes; plus
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3. the Initial Principal Amount of all Class B2 notes; and
o an amount equal to the aggregate of:
1. the Class B1 A$ Equivalent of the Principal Amount of all Class
B1 notes outstanding at the time; plus
2. the Principal Amount of all Class B2 notes outstanding at the
time;
is not less than 9.8% of the amount equal to the aggregate of:
1. the Class A2 A$ Equivalent of the Principal Amount of all Class
A2 notes at the time; plus
2. the Class B1 A$ Equivalent of the Principal Amount of all Class
B1 notes at the time; plus
3. the Principal Amount of all Class B2 notes at the 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.
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$
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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 A2 notes and the Class B1 notes; and
o principal on the Class A2 notes and the Class B1 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 Australian 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 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.
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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 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; or
o if the fixed-floating rate swaps are not novated within 30 days of the
downgrade, cash collateralize its obligations.
Where the fixed-floating rate swap provider must comply with the second
bullet point above, 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;
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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.
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 A2 currency swap to hedge its interest rate
and currency exposure in relation to the Class A2 notes and the Class B1
currency swap to hedge its interest rate and currency exposure in relation to
the Class B1 notes. These currency swaps are called the US$ CURRENCY SWAPS and
will be governed by the laws of England and Wales.
The US$ currency swaps 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 A2 notes and the Class
B1 notes, respectively.
Under the Class A2 currency swap and the Class B1 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 Class A1 notes, if any -- see "--Principal Distributions"
above -- and (2) (a) the Class A2 A$ Equivalent of the Principal Amount of the
Class A2 notes, or (b) the Class B1 A$ Equivalent of the Principal Amount of the
Class B1 notes, as the case may be. 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 A2 currency swap, the equivalent
United States dollar payment will be calculated using an exchange rate of
US$[_______] = A$1.00. Under the Class B1 currency swap, the equivalent United
States
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dollar payment will be calculated using an exchange rate of US$[_______] =
A$1.00. Both exchange rates will be fixed for the term of the US$ currency
swaps.
In addition, under the Class A2 currency swap and the Class B1 currency
swap on each payment date the issuer trustee will pay to the currency swap
provider the Class A2 A$ Interest Amount and the Class B1 A$ Interest Amount,
respectively, 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 a 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 A2 A$ Equivalent
and the Class B1 A$ Equivalent, as applicable, of that U.S. dollar amount.
TERMINATION BY THE CURRENCY SWAP PROVIDER
With respect to each of the Class A2 currency swap and the Class B1
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;
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
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deduction in 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 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 A2 currency swap or the Class B1 currency swap. In
each of these cases and with respect to each of the currency swaps 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
relevant 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
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 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 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
relevant 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
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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 business 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
long term credit rating by Moody's to not lower than A3; or
o 30 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 in the situation described in the first bullet point above only, (A)
deposit and maintain in the relevant swap collateral account, which
will be a US$ account with an Approved Bank in the name of the issuer
trustee, sufficient funds to ensure that the amount on deposit in such
account is not less than the full amount owed by the currency swap
provider as set forth in the relevant currency swap, or (B) acquire in
the name of or transfer to the issuer trustee eligible investments
which will mature on or prior to the next payment date with an
aggregate face amount equal to the full amount owed by the currency
swap provider as set forth in the relevant currency swap; or
o in the situation described in the second bullet point above:
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 with respect to the Class A2 currency swap and
or a credit rating not less than A-1+ (short-term) from S&P with
respect to the Class B1 currency swap; 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,
and until such time as replacement currency swaps or alternative
arrangements have been entered into in accordance with the immediately
preceding 2 bullet points above, the currency swap provider shall deposit
such amounts in the relevant swap collateral accounts or acquire in the
name of or transfer to the issuer trustee eligible investments as set forth
in clauses (A) and (B) of the fourth preceding bullet point within 5
business days.
If, at any time, the currency swap provider's obligations under the Class
A2 currency swap or the Class B1 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 which it has deposited in the
applicable swap collateral account pursuant to such currency swap.
The issuer trustee, at the direction of the trust manager, may only invest
amounts on deposit in a swap collateral account in eligible investments that
will mature on or before the next payment date. All accrued interest or any
other income derived from the acquisition or transfer
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of any eligible investments or any amounts on deposit in a swap collateral
account will be payable quarterly to the party providing such eligible
investments or who has deposited such amount in the applicable swap collateral
account. Such amounts will only be payable to such party to the extent that the
payment will not reduce the balance of the swap collateral account to an amount
less than the required amount set forth in the relevant currency swap.
TERMINATION PAYMENTS
On the date of termination of the Class A2 currency swap or the Class B1
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 A2 currency swap or the Class B1 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 [ * ].
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The short-term unsecured debt obligations of [ * ] are rated [A-1+ by S&P
and P-1 by Moody's] and the long-term unsecured debt obligations of [ * ] are
rated [AA by S&P and Aa1 by Moody's].
SWAP COLLATERAL ACCOUNT
If a swap provider provides cash collateral to the issuer trustee:
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.
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:
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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
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
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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".
OPTIONAL REDEMPTION OF THE NOTES
ON STEP-UP MARGIN DATE
At the trust manager's direction, to be given not later than 4 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 [_______] 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; and
o in no circumstance may the trust manager give such a direction in
relation to Class B noteholders unless:
o there are at that time no Class A notes outstanding; or
o the trust manager at the same time gives or has given a direction
to redeem the Class A notes.
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:
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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 [_______].
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;
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.
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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.
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
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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;
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.
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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 [June 2004].
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 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, the primary backup
servicer agreement and the secondary 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, the primary backup
servicer agreement and the secondary 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 primary backup
servicer agreement and the secondary backup servicer agreement are 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
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department, commission, office of any government or any corporation
owned or controlled by any government, including, without limitation,
an alteration, addition or modification which is appropriate or
expedient as a consequence of the enactment of a statute or regulation
or an amendment to any statute or regulation or ruling by the
Australian Commissioner or Deputy 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 any 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 OF 1939
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 [_______], 2003, 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:
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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
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 [_______], 2004,
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.
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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 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 willful 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 fulfil 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
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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.
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
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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 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.
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THE NOTE TRUSTEE
The Bank of New York, New York branch 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, 21W, 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 providing that
the use of such agent does not have an adverse effect on the rating of the US$
notes. 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,
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.
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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;
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 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
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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 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 Class A noteholders if, in the security
trustee's opinion, there is a conflict between the interests of the Class A
noteholders and the interests of the Class B noteholders or other Mortgagees.
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.
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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 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 Class A noteholders,
a fixed-floating rate swap or the Class A2 currency swap is terminated
and a replacement fixed-floating rate swap or Class A2 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 for so long as no Secured Monies are owed to the Class A noteholders, a
fixed-floating rate swap or the Class B1 currency swap is terminated
and a replacement fixed-floating rate swap or Class B1 currency swap,
as the case may be, on terms that will not lead to a withdrawal or
downgrade of the rating assigned to any notes, is not put in place;
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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
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 the Noteholder Mortgagees alone for as long as amounts outstanding
under the notes are 75% or more of the total Secured Monies; 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.
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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$10,000 or its equivalent,
but not part thereof, of the Secured Monies that he holds or in respect of which
he is a representative.
A resolution of all the Voting Mortgagees, including an Extraordinary
Resolution, may be passed, without any meeting or previous notice being
required, by an instrument or notes in writing which have been signed by all of
the Voting Mortgagees.
ENFORCEMENT OF THE CHARGE
At any time after an event of default occurs, a resolution passed at a duly
convened meeting by a majority consisting of not less than 75% of the votes
capable of being cast by Voting Mortgagees present in person or by proxy or a
written resolution signed by all of the Voting Mortgagees may direct the
security trustee to do any or all of the following:
o declare the charge to be enforceable;
o declare all Secured Monies immediately due and payable;
o convert the floating charge to a fixed charge over any or all of the
trust assets; or
o appoint a receiver over the trust assets or itself exercise the powers
that a receiver would otherwise have under the security trust deed.
If the Noteholder Mortgagees are the only Voting Mortgagees, they may
direct the security trustee to do any act which the security trustee is required
to do, or may only do, at the direction of an Extraordinary Resolution of Voting
Mortgagees, including enforcing the charge.
THE NOTE TRUSTEE AS VOTING MORTGAGEE
If an event of default under the security trust deed occurs and is
continuing, the issuer trustee and the trust manager will promptly notify the
note trustee of such an occurrence and the note trustee shall deliver to each
US$ 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
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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:
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
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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 willful 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 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 other than to the currency swap provider for a
liability owing under the Class B1 currency swap;
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o monetary liabilities of the issuer trustee to the Class A
noteholders; and
o monetary liabilities owing in relation to any redraws;
o seventh, to pay pro rata:
o any monetary liabilities of the issuer trustee to Class B
noteholders; and
o any monetary liabilities of the issuer trustee to the currency
swap provider under the Class B1 currency swap;
o eighth, 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 a currency swap;
o ninth, 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
o tenth, 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.
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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.
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 utilise 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
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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 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.
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
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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 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;
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
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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
0.220% 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.
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:
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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 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.
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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 AGREEMENTS
[THE PRIMARY BACKUP SERVICER AGREEMENT
The issuer trustee, the primary backup servicer and the servicer have
entered into the primary backup servicer agreement. Under the primary 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
must promptly notify the primary backup servicer of such removal or retirement
and offer the appointment as servicer of the trust to the primary backup
servicer. Within 5 days of such notice, the primary backup servicer will notify
the issuer trustee whether it will accept such appointment.
If the primary backup servicer accepts the issuer trustee's appointment as
servicer, then the primary backup servicer will act as servicer of the trust
from the date of appointment until such time as the primary backup servicer is
removed or retires in accordance with the primary backup servicer agreement. The
issuer trustee cannot appoint the primary 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 primary backup servicer has been appointed, it will be bound by
and must observe the rights, obligations 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 primary backup servicer as servicer, Interstar Securities (Australia) Pty
Limited will immediately provide to the primary 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 primary 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
primary backup servicer to fulfill its duties, obligations and discretions as
servicer. The issuer trustee may remove the primary backup servicer as servicer
after providing the primary backup servicer with written notice and in
accordance with the provisions of the investment management agreement.
Prior to its appointment as servicer, the primary backup servicer will be
entitled to receive a backup servicer standby fee from the servicer as agreed
from time to time between the servicer and the primary backup servicer and
notified to the issuer trustee. In the event that the servicer fails to pay the
primary backup servicer the backup servicer standby fee, then subject to the
primary backup servicer giving written notice to the issuer trustee, the issuer
trustee can deduct such amount from any amount payable to the servicer as a
servicer's fee. After its appointment as servicer, the primary backup servicer
will be entitled to receive the servicer's fee.
If the primary backup servicer is unable or declines the issuer trustee's
offer to be appointed as servicer, the issuer trustee will have the option to
appoint the secondary backup servicer as servicer under the secondary backup
servicer agreement.]
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The primary backup servicer agreement will be governed by the laws of the
State of Victoria.
THE SECONDARY BACKUP SERVICER AGREEMENT
The issuer trustee, the secondary backup servicer and the servicer have
entered into the secondary backup servicer agreement. The provisions of the
secondary backup servicer agreement are similar to the provisions described
above in the primary backup servicer agreement, except that the secondary backup
servicer is obliged to become servicer at the request of the issuer trustee. The
secondary backup servicer agreement will be governed by the laws of the State of
Victoria.
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THE SERVICER
SERVICING OF HOUSING LOANS
Under the investment management agreement, Interstar Securities (Australia)
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 Securities (Australia) 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; and
o claims on mortgage insurance.
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It should be noted that Interstar Securities (Australia) 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 90 days 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 Securities (Australia) 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, vacant possession may be
obtained within 45 days of issuing the letter of demand.
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 30 days 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
The table below summarizes the delinquency and foreclosure experience of
housing loans serviced by Interstar Securities (Australia) Pty Limited.
INTERSTAR MORTGAGE BACKED PROGRAM -- TOTAL PORTFOLIO HISTORICAL DELINQUENCIES
SEPTEMBER MARCH 31, SEPTEMBER MARCH 31, SEPTEMBER MARCH 31, SEPTEMBER MARCH 31, SEPTEMBER MARCH 31,
PORTFOLIO AT: 30, 1998 1999 30, 1999 2000 30, 2000 2001 30, 2001 2002 30, 2002 2003
- ------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Outstanding
Balance.......
Number of Loans
Outstanding..
Percentage of
Delinquent
Loans*.......
31 - 60 Days...
60 - 90 Days...
91 Days Plus...
Total
Delinquencies
over 30 Days.
SIX MONTH SEPTEMBER MARCH 31, SEPTEMBER MARCH 31, SEPTEMBER MARCH 31, SEPTEMBER MARCH 31, SEPTEMBER MARCH 31,
PERIOD ENDING: 30, 1998 1999 30, 1999 2000 30, 2000 2001 30, 2001 2002 30, 2002 2003
- --------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Loan Losses as a % of
Total Outstanding
Balance............
* 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.
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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.
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
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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. None of the sellers 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.
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 [_______], 2003;
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o closing date for the notes is [_______], 2003;
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 [_______] 2003,
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 twenty-seventh
day of each month, with no defaults or arrears;
o there are no redraws, principal increases, substitutions or payment
holidays with respect to the housing loans and, accordingly, no Class
A1 notes will be issued;
o housing loans bearing a variable rate of interest maintain the rate set
as at [_______], 2003;
o borrowers in relation to any interest only housing loans in the
portfolio are assumed to pay no principal for a period of five years
and will pay principal and interest thereafter;
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 B2 notes, the Class A2 A$ Equivalent of the
outstanding Principal Amount of the Class A2 notes, and the Class B1 A$
Equivalent of the outstanding Principal Amount of the Class B1 notes;
o all prepayments are received on the twenty-seventh day of each month
and include the full month's interest on the prepayment;
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
o the exchange rate is US$[_______]=A$1.0000.
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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.
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PERCENTAGE OF INITIAL PRINCIPAL AMOUNT OUTSTANDING OF THE CLASS A2
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...................
June 27, 2004..................
June 27, 2005..................
June 27, 2006..................
June 27, 2007..................
June 27, 2008..................
June 27, 2009..................
June 27, 2010..................
June 27, 2011..................
June 27, 2012..................
June 27, 2013..................
June 27, 2014..................
June 27, 2015..................
June 27, 2016..................
June 27, 2017..................
June 27, 2018..................
June 27, 2019..................
June 27, 2020..................
June 27, 2021..................
June 27, 2022..................
June 27, 2023..................
June 27, 2024..................
June 27, 2025..................
June 27, 2026..................
June 27, 2027..................
June 27, 2028..................
June 27, 2029..................
June 27, 2030..................
June 27, 2031..................
June 27, 2032..................
June 27, 2033..................
Weighted Average Life -
To earlier of Clean Up Call
and Step-Up Margin Date (Years)
To Maturity (Years)............
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PERCENTAGE OF INITIAL PRINCIPAL AMOUNT OUTSTANDING OF THE CLASS B1
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...................
June 27, 2004..................
June 27, 2005..................
June 27, 2006..................
June 27, 2007..................
June 27, 2008..................
June 27, 2009..................
June 27, 2010..................
June 27, 2011..................
June 27, 2012..................
June 27, 2013..................
June 27, 2014..................
June 27, 2015..................
June 27, 2016..................
June 27, 2017..................
June 27, 2018..................
June 27, 2019..................
June 27, 2020..................
June 27, 2021..................
June 27, 2022..................
June 27, 2023..................
June 27, 2024..................
June 27, 2025..................
June 27, 2026..................
June 27, 2027..................
June 27, 2028..................
June 27, 2029..................
June 27, 2030..................
June 27, 2031..................
June 27, 2032..................
June 27, 2033..................
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, together with the proceeds of the issue of the other notes, 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 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 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 all 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 original certificate is retained by the
registry, and in most States a duplicate certificate is issued to the owner. Any
dealing with the relevant land is carried out by pro forma instruments which
become effective on registration.
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 leases, mortgages, registered easements and
other dealings to which it is subject. The certificate is conclusive evidence,
except in limited circumstances, such as fraud, of the matters stated in it.
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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 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 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 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
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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 mortgage.
In most States and Territories of Australia, a mortgagee will retain a
duplicate certificate of title which mirrors the original certificate of title
held at the relevant land registry office. Although the certificate is not a
document of title as such, the procedure for replacement is sufficiently onerous
to act as a deterrent against most mortgagor fraud. 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, under the Land Title Act 1994, 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, 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
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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.
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 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.
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.
That is, the property of the bankrupt which is available for distribution by the
trustee in bankruptcy does not include the secured property. 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
petition for bankruptcy and that disposition gave a preference to an
existing creditor over at least one other creditor.
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.
No Australian statute expressly imposes liability on "passive" lenders or
security holders for environmental matters, and some states expressly exclude
such liability. However, 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. 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
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
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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,
132
ownership and disposition of the US$ notes, including the advisability of making
any election discussed under "-- Market Discount".
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
133
the extent of capital gains and by an individual taxpayer only to the extent of
capital gains plus US$3,000 of other United States income.
MARKET DISCOUNT
In the opinion of Mayer, Brown, Rowe & Maw LLP, you will be considered to
have acquired a US$ 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.
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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.
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
taxes 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 of 30%, in effect for payments made during the taxable year 2003,
will be reduced to 29% for payments made during the taxable years 2004 and 2005,
and 28% for payments made during the taxable years 2006 through 2010. For
payments made after 2010, the backup withholding tax 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 is a summary of the material Australian tax provisions
relevant to this transaction. We suggest that you consult your Australian tax
advisors in relation to their investment in the notes.
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%, on interest or amounts in the nature of
interest paid on the notes. A premium on redemption is currently accepted by the
Australian Taxation Office (ATO) as an amount in the nature of interest for this
purpose.
Pursuant to section 128F of the Income Tax Assessment Act 1936 of the
Commonwealth of Australia (the TAX ACT), an exemption from Australian interest
withholding tax applies provided all prescribed conditions are met.
These conditions are:
o the issuer trustee is a company that is a resident of Australia when it
issues the notes and when interest, as defined in section 128A(1AB) of
the Tax Act, is paid; and
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.
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.
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, within the
meaning of that term under "-- Offering Restrictions -- Australia", 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. However, the Australian government
enacted on April 2, 2003, Taxation Laws Amendment Act (No 1) of 2003, which
contains amendments, which are effective from August 29, 2001, to treat interest
payments to the following associates as being eligible for the exemption if the
issue of the notes otherwise satisfies the requirements of section 128F:
o an Australian resident that does not acquire the note in carrying on
business at or through a permanent establishment in a country outside
Australia;
o an Australian resident that acquires the note in carrying on business
at or through a permanent establishment in a country outside Australia
if the interest is received in the capacity of a clearing house, paying
agent, custodian, funds manager or responsible entity of a registered
scheme;
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o a non-resident that acquires the note in carrying on business at or
through a permanent establishment in Australia; and
o a non-resident that acquires the note in carrying on business outside
Australia if the interest is received in the capacity of a clearing
house, paying agent, custodian or funds manager.
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
carry 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 trustee with a tax file number or Australian
Business Number pursuant to the "Pay-As-You-Go" provisions of the tax
legislation.
TAXATION OF FINANCIAL ARRANGEMENTS
The Australian Federal Government introduced into Parliament on May 29,
2003, The New Business (Taxation of Financial Arrangements) Bill (No. 1) 2003
(the BILL). The Bill includes proposed measures in relation to the treatment of
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 new
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 Bill also contains proposed measures in relation to the removal of the
taxing point on conversion or exchange of certain traditional securities. These
proposed measures apply to traditional securities issued after May 14, 2002.
The specific taxation implications of these proposed measures will vary as
between noteholders. Broadly, the taxation consequences will depend on whether
noteholders own the notes on revenue or capital account.
The proposed measurers should not impact non-resident noteholders who do
not have a permanent establishment in Australia.
Noteholders should seek their own advice in relation to the specific
taxation consequences of these proposed measures.
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.
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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
the notes provided that:
o the notes are not held as part of a business carried on, at or through
a permanent establishment in Australia; and
o the profits do not have an Australian source.
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.
They are as follows:
o under section 128AA of the Tax Act, where a security is sold and the
transfer price exceeds the issue price, the excess is deemed to be
interest which may be subject to interest withholding tax. Under the
existing rules, it is unclear whether the profit on sale would trigger
an interest withholding tax obligation, even if the notes are issued in
accordance with section 128F. However, the Australian government
enacted on April 2, 2003 Taxation Laws Amendment Act (No. 1) 2003,
which clarifies the relationship between section 128AA and 128F to
exempt from interest withholding tax deemed interest under section
128AA where that interest would have been exempt under section 128F.
This amendment applies retrospectively from August 29, 2001; or
o notes that are sold to an Australian resident in connection with a
"washing arrangement" as defined in the Tax Act, where the issue of
notes are not covered by the exception in section 128F.
GOODS AND SERVICES TAX
The goods and services tax regime was introduced in Australia from July 1,
2000.
The GST is a transactions based tax and accordingly may impact various
transactions in which the issuer trustee is involved. Broadly, the impact of the
GST regime 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.
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Where the supply by the issuer trustee is a "GST free supply", 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 the GST
free supply.
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 charged in
respect of the supply. Payments made to noteholders would not constitute a
separate supply for GST purposes, and therefore GST will also not apply in
respect of such payments.
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 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.
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); and
o the exchange of floating interest rate obligations for fixed interest
rate obligations by the fixed-floating rate swap provider would also
constitute a financial supply.
Where the fixed-floating rate swap provider is not an Australian resident,
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.
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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
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); and
o the exchange of currency denominations by the currency swap provider
would also constitute a financial supply.
Where the currency swap provider is not an Australian resident, 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 on issue constitute
debt. 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 recipients 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 recipient.
New rules dealing with the characterisation of debt and equity for
Australian taxation purposes have been enacted and have had effect from July 1,
2001.
Broadly, the new rules have been drafted to characterise certain interests
on an economic substance basis rather than according to their legal form.
Interests will generally be regarded as equity where the rights and returns
attaching to the interests are contingent on the economic performance of the
entity, the right or the amount of the return is at the discretion of the
entity, or where the interest is convertible to equity. Interests which impose
an effective non-contingent obligation of an issuer to return to the investor an
amount at least equal to the amount invested will be characterised as debt.
The notes on issue have the following attributes:
o the notes are not convertible to equity;
o interest payable in respect of the notes is based on a specific
formula; and
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o the rights attaching to the notes and the amount of the return is not
subject to the discretion of the issuer trustee.
In light of these measures, the notes issued by the issuer trustee should
constitute debt.
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.
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.
Under the current taxation law, the net income of the trust is to 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 unitholder, where the unitholder is presently entitled to
the net income of the trust. Where the net income is paid to a unitholder, it
will be assessable to the unitholder 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
Securities (Australia) Pty Ltd who will be presently entitled to the net income
of the trust. The trust itself will not currently be liable to income tax on the
net income derived by the trust.
TAX REFORM PROPOSALS
TAXATION OF TRUSTS AS COMPANIES
Under the Review of Business Taxation recommendations it was proposed that
some trusts be taxed as if they were companies as from July 1, 2001. The
Australian federal government released draft legislation to implement these
recommendations. The draft legislation provided that non-fixed trusts would be
taxed as if they were companies. Fixed trusts, however, would not be subject to
the proposed measures and would therefore retain their current taxation
treatment and accordingly will continue to receive flow-through treatment. The
Exposure Draft Legislation was subject to an extensive consultation process. As
a result of this process, the Australian federal government resolved that the
Exposure Draft Legislation involved numerous complications, therefore it has
since been withdrawn.
The Australian federal government may issue new draft rules in relation to
the taxation of trusts in the future, however the form and proposed start date
of these measures remain uncertain.
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In any case, the measures should in no way impact the payment to
noteholders who will continue to receive their interest payments in respect of
the notes issued by the issuer trust.
TAX CONSOLIDATION
The Australian federal government has released legislation in relation to
the new Tax Consolidation regime to apply from July 1, 2002.
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 bills and
legislation provide that where, however, the head company fails to meet its
income tax liabilities, each wholly-owned group member is jointly and severally
liable to pay the consolidated group's income tax liabilities. Thus, there is
contingent risk that the members of a consolidated group may be liable to
contribute to a consolidated group's income tax liabilities.
It is not the current intention of the issuer trustee or the trust
manager that an election to consolidate be made and thus no intention that the
trust form part of a tax consolidated group.
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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.
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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
Transactions involving the Government of Iraq or its agencies, its senior
officials and their immediate families, individuals associated with the regime
of former President of Yugoslavia Slobodan Milosevic and certain ministers and
senior officials of the Government of Zimbabwe are prohibited under the Banking
(Foreign Exchange) Regulations 1959 (Cth). The Reserve Bank of Australia
publishes changes to prohibited parties and variations in the restrictions on
those parties from time to time in the Commonwealth Government Gazette.
TRANSACTIONS WHICH MAY BE APPROVED BY THE RESERVE BANK OF AUSTRALIA
Transactions over A$100,000 involving the Embassy of the Federal Republic
of Yugoslavia, the Consulate-General of the Federal Republic of Yugoslavia and
Narodna Banka Jugoslavije (including Banque Nationale de Yugoslavie) require
prior approval from the Reserve Bank of Australia.
ERISA CONSIDERATIONS
Subject to the considerations discussed in this section, the US$ notes are
eligible for purchase by employee 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. 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 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
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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 can be no assurances in this regard, it appears, at the
time of their initial issuance that the notes should be treated as debt without
substantial equity features for purposes of the regulation and that the notes do
not constitute equity interests in the trust for purposes of the regulation. The
debt characterization of the notes could change after their initial issuance if
the trust incurs losses. This risk of recharacterization is enhanced for the
Class B1 notes because they are subordinated to the Class A2 notes.
However, without regard to whether the US$ notes are treated as an equity
interest for these purposes, the acquisition or holding of the 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, a 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 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";
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 your purchase and holding of the note will not result in a
non-exempt prohibited transaction under ERISA or Section 4975 of the Code.
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 state law 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.
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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".
RATINGS OF THE NOTES
The issuance of the Class A2 notes will be conditional on obtaining a
rating of AAA by S&P and Aaa by Moody's. The issuance of the Class B1 notes and
the Class B2 notes will be conditional on obtaining a rating of AA- by S&P.
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 B notes with respect
to the Class A 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 securitization, 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.
146
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 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:
PRINCIPAL AMOUNT OF
CLASS A2 NOTES
UNDERWRITERS OF THE CLASS A2 NOTES (US$)
---------------------------------- -------------------
Barclays Capital Inc......................................................................
[J.P. Morgan Securities Inc.].............................................................
[______________]..........................................................................
Total.....................................................................................
PRINCIPAL AMOUNT OF
CLASS B1 NOTES
UNDERWRITERS OF THE CLASS B1 NOTES (US$)
---------------------------------- -------------------
Barclays Capital Inc......................................................................
[J.P. Morgan Securities 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 A2 notes and the Class B1 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 A2 notes.......................................................
Class B1 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$[__________]. The underwriting discounts and commissions will be
paid separately by Interstar Securities (Australia) Pty Limited and not from the
proceeds of the issuance of the US$ notes.
147
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.
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.
In the ordinary course of its business, the underwriters and some of their
affiliates have in the past and may in the future engage in commercial and
investment banking activities with the trust manager and its affiliates.
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
(FISMA), 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 FISMA, will only be communicated or caused to be
communicated in circumstances when Section 21 of FISMA does not apply, including
to persons authorized under FISMA or otherwise any professional with experience
on matters relating to such 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
148
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 FISMA.
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 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,
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$500,000, or its equivalent
in another currency -- disregarding amounts, if any, lent by the issuer
trustee or other person offering the notes or any associate of them --
or the offer or invitation is otherwise an offer or invitation for
which no disclosure is required to be made under Part 6D.2 of the
Corporations Act 2001 of Australia;
o the offer, invitation or distribution complies with all applicable
laws, regulations and directives in relation to the offer, invitation
or distribution and does not require any document to be lodged with the
Australian Securities and Investments Commission; and
o the US$ notes will not be acquired 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 US$ notes, or in the
capacity of a clearing house, custodian, funds manager or responsible
entity of a registered scheme.
In addition, each underwriter 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 underwriter knows, or has 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 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
149
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 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 to be an associate of any of the others; or
o by the underwriter offering those US$ notes as a result of 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
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.
150
GENERAL INFORMATION
LISTING
An application will be made to list the US$ notes on the Australian 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 [_______], 2003.
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.
EUROCLEAR AND CLEARSTREAM, LUXEMBOURG
The US$ notes have been accepted for clearance through Euroclear and
Clearstream, Luxembourg with the Common Code number [_______] and ISIN [_______]
for the Class A2 notes and Common Code number [_______] and ISIN [_______] for
the Class B1 notes.
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.
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.
151
Orrick, Herrington & Sutcliffe, London, United Kingdom will act as United States
legal counsel to the underwriters.
152
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;
153
o each proposed investment
falling within bullet
point 5 must have a
credit rating issued by
S&P of AAA and by 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
[ * ] and a three-month bill, in
each case quoted on the page
designated "BBSW" of the Reuters
Monitor System at or about 10.30
am, 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
154
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 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 A2 A $EQUIVALENT.................... means, in relation to an amount
denominated or to be denominated in
US$:
o prior to the termination of
the Class A2 currency swap,
the amount converted to and
denominated in A$ at the rate
of exchange set forth in the
Class A2 currency swap for the
exchange of United States
dollars for Australian
dollars; and
o after the termination of the
Class A2 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 A2 notes to be paid
from or by reference to such
amount.
CLASS A2 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 A2 currency
swap that will increase after
the Step-Up Margin Date;
o on the Class A2 A$ Equivalent
of the Principal Amount of the
Class A2 notes as at the first
day of the Interest Period
ending on that payment date;
and
155
o on the basis of the actual
number of days in the relevant
payment period and a year of
365 days.
CLASS B1 A $EQUIVALENT.................... means, in relation to an amount
denominated or to be denominated
in US$:
o prior to the termination of
the Class B1 currency swap,
the amount converted to and
denominated in A$ at the rate
of exchange set forth in the
Class B1 currency swap for the
exchange of United States
dollars for Australian
dollars; and
o after the termination of the
Class B1 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 $amount owing in
respect of principal or
interest, as applicable, on
the Class B1 notes to be paid
from or by reference to such
amount.
CLASS B1 A$ 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 B1 currency
swap that will increase after
the Step-Up Margin Date;
o on the Class B1 A$ Equivalent
of the Principal Amount of the
Class B1 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, and shall include
any interest due and unpaid
from a prior Payment Date.
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.
156
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 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;
157
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 six
preceding paragraphs or having
a substantially similar effect
occurs with respect to the
relevant corporation.
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;
158
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, the
Class A2 currency swap or the
Class B1 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 2 and 3 months - which
appears on the Telerate Page 3750
as of 11.00 am, 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 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 am, 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
159
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
am, 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
a bank which has a short term
rating of A-1+ from S&P and
P-1 from Moody's which is
approved by the trust manager
in writing;
o cash and/or deposits with an
Approved Bank, or the
acquisition of certificates of
deposit or any other debt
security issued by a bank
which has a short term rating
of A-1+ from S&P and P-1 from
Moody's which is approved by
the trust manager in writing;
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, including any
160
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 DOC 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,
both at the time the borrower
entered into the relevant housing
loan agreement.
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 Class A1 noteholders, the
Class B2 noteholders and the note
trustee, on behalf of the Class A2
noteholders and the Class B1
noteholders.
PAYMENT DATE.............................. see page [__].
PREFUNDING ACCOUNT........................ see page [__].
161
PRESCRIBED MINIMUM LEVEL.................. see page [__].
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
A2 currency swap or the Class B1
currency swap.
SERVICER TRANSFER EVENT................... see page [__].
STEP-UP MARGIN DATE....................... means the payment date falling in
[__________].
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
162
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 [__].
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 A2
currency swap, or the Class B1
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 A2 currency swap or the
Class B1 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 A2 currency swap or the
Class B1 currency swap, or a
document provided under or in
connection with a transaction
document, any fixed-floating
rate swap, the Class A2
currency swap or the Class B1
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
163
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 [__].
164
================================================================================
INTERSTAR MILLENNIUM SERIES 2003-5G TRUST
CLASS A2 MORTGAGE BACKED FLOATING RATE NOTES
CLASS B1 MORTGAGE BACKED FLOATING RATE NOTES
---------------------------------
PROSPECTUS
---------------------------------
UNDERWRITERS OF THE CLASS A2 NOTES AND THE CLASS B1 NOTES
BARCLAYS CAPITAL [JPMORGAN]
[______________]
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 [__________], 2003, 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.
================================================================================
165
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................................. $161.80
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.
The following information relates to securities of the registrant issued or
sold by the registrant that were not registered under the Securities Act:
The registrant was incorporated on April 26, 2002. One fully paid share of
A$1.00 was allotted to Interstar Securities (Australia) Pty Limited.
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.
II-1
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 as to legality of the Notes.*
8.1 Opinion of Mayer, Brown, Rowe & Maw 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 Primary Backup Servicer Agreement.
10.5 Secondary Backup Servicer Agreement.
23.1 Consent of Mayer, Brown, Rowe & Maw (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.
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.
II-2
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-3
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 the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Melbourne, Australia, on the 3rd day of September,
2003.
Interstar Securitization
Management Pty Limited
By: /s/ Sam Kyriacou
---------------------------------------
Name: Sam Kyriacou
Title: Director and Chief Financial Officer
II-4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Paul Jorissen and Diane Citron, 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 in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Vernon Spencer Director September 3, 2003
- ----------------------
/s/ Sam Kyriacou Director September 3, 2003
- ----------------------
/s/ Sam Kyriacou Principal Executive Officer September 3, 2003
- ----------------------
/s/ Andrew Twyford Principal Financial Officer September 3, 2003
- ----------------------
/s/ Andrew Twyford Principal Accounting Officer September 3, 2003
- ----------------------
II-5
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 the Registration Statement
and signs this Registration Statement solely in such capacity and for the
limited purpose of said Section 6(a).
/s/ Robin LaPeters
-----------------------------------------
Name: Robin LaPeters
Address: CT Corporation
111 8th Avenue
New York, NY 10011
Telephone: (212) 590-9100
II-6
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 as to legality of the Notes.*
8.1 Opinion of Mayer, Brown, Rowe & Maw 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 Primary Backup Servicer Agreement.
10.5 Secondary Backup Servicer Agreement.
23.1 Consent of Mayer, Brown, Rowe & Maw (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.