Balmain Eagle Series

The Balmain Eagle Series is a series of discreet, separate units of BOT that are specifically exposed to a single investment. That investment might be a loan to a corporate borrower or equity in a joint venture project. Each discreet unit class is called a Balmain Eagle Series Trust (BEST) and they are numbered sequentially. Each BEST is a stand alone investment. Any defaults or losses in an individual BEST will not affect investors investments in other BEST's or their investment in BOT units. All BESTs are governed by an Information Memorandum (IM), and each individual BEST is further described in a Supplementary Information Memorandum (SuppIM).

Only existing BOT Investors, with a BOT Account Number, may invest in a BEST and access the IM. If you have forgotten your BOT Account Number or would like to subscribe to BOT, please contact the Balmain Investments Team.

INFORMATION MEMORANDUMCONTACT INVESTMENT TEAM

The Trustee is of the opinion that the reluctance of the major trading banks to lend to borrowers operating in certain industries has created an unprecedented opportunity for the Trustee to lend into this ‘void’ and enjoy outsized pricing for the respective risk.

The Trustee can specifically realise this opportunity by investing in assets that are no longer supported by the major banks nor adequately catered for by existing private lenders (the Target Assets).

The Target Assets include, by way of example:

  • loans to corporates including for example corporates that operate in the non-renewable energy sector
  • mezzanine or equity investments in the real estate debt sector
  • joint ventures and other equity investments, typically in the real estate sector

However, the Trustee also acknowledges that some BOT investors may hold similar views to the major banks and may not be willing to participate in significant investments in the Target Assets. For this reason, the Trustee has elected to limit BOT’s exposure to the Target Assets and has established the Eagle Series to take advantage of this opportunity. The Eagle Series enables investors to separately consider investments in the Target Assets and to either opt-in (by subscribing to units) or opt-out (by not subscribing) at their own discretion.

Summary

OVERVIEW OF Strategy

The Trustee is of the opinion that the reluctance of the major trading banks to lend to borrowers operating in certain industries has created an unprecedented opportunity for the Trustee to step into the ‘void’ and enjoy outsized pricing for the risk.  The Trustee intends to realise this opportunity by investing in asset classes that are no longer adequately catered for by the major banks or existing private lenders (the Target Assets).

This opportunity to invest in the Target Assets extends to several industry types including, without limitation:

  1. the resources sector with particular emphasis on non-renewable energy (coal, gas, etc.);
  2. any industry sector where the major banks believe an exposure in that sector may no longer comply with their environmental, social and governance policies;
  3. any industry sector which the major banks consider to be outside of their respective credit/ risk policies; and,
  4. acquisition of loans or portfolios of loans where either the loans or the lender are in some way strategically or financially compromised (generally referred to as non-performing loans or NPLs) and the loans are:
    • no longer capable of being funded/ held by the original lender (for any of the reasons in A, B or C above); or,
    • are displaying default characteristics such that they are no longer eligible for investment by the original lender.
  5. the real estate sector in respect of joint ventures and equity participation

Investments in the Target Assets will generally have characteristics that do not readily suit BOT’s preferred investment requirements. For example:

  • Duration: The investments may have terms that exceed BOT’s preference for shorter duration loans or may involve amortisation or other capital movements during the term of the loan;
  • Interest: The investments may not satisfy BOT’s requirement to pay monthly distributions.  Other payment scenarios may include quarterly payments, pre-payments or capitalised interest;
  • Asset Type: The investment may comprise asset types (coal, non-performing, etc.) that require significantly more intense management from the Trustee; and,
  • Management Fees: The Trustee will not be adequately compensated for the significantly higher degree of management that the Target Assets require to be properly administered.

To properly execute this strategy, the Trustee will offer existing BOT investors the opportunity to invest in the Eagle Series.  Each Eagle Series unit class, or BEST, will invest in a specific Target Asset (which may be a single loan or a group of similar loans).  Each BEST will be sequentially numbered from 001 onwards.

Each BEST will comprise a single class of Units in BOT which will be separate and discreet from other Units in the Trust.  Specifically, there will be no mingling or co-mingling of the assets in BOT and the respective BEST.

For the sake of clarity, if you invest in the first BEST, being BEST - 001:

  1. your investment will only give rise to an interest in the relevant Target Asset held by BEST - 001;
  2. the Trustee will calculate the value and entitlements of those Units, including for the purposes of determining the issue price and withdrawal price of Units and the entitlement to income and capital (including on winding up) solely with reference to the value and performance of the Target Assets held by BEST - 001, income, costs and expenses of BEST - 001 and no other BEST; and,
  3. the performance of BOT and/ or other BESTs shall have no impact on the value and entitlements of units pertaining to BEST - 001.

Each BEST will be governed by both this Information Memorandum (IM) which will provide the general governance information in respect of each BEST and a Supplementary Information Memorandum (SuppIM) which will provide the specific investment details of the BEST and the specific details of the Target Asset in which the BEST will invest.

Investment Detail

Eligibility for Investment
To invest in a BEST, the investor must be an existing eligible unitholder in BOT (the Balmain Opportunity Trust) and hold a current investor number.
Supplementary Information Memorandum (SuppIM)
Each BEST will be governed by both the IM and a SuppIM for that BEST. In the event of any ambiguity between this IM and the SuppIM, this IM will be read down and the SuppIM for the BEST will take precedence.
No Mingling
The assets and liabilities of each BEST are separate and distinct from the assets and liabilities of BOT and any other BEST.  There will be no mingling or comingling of funds, assets or liabilities.
Target BEST Size
A$20-100MM. The Trustee may accept oversubscriptions and has the discretion to close a BEST at any level of subscriptions as it may determine.
Trust Term
Each BEST will be expected to have a term of between 6-60 months.
Net Asset Income (NAI)
The total income generated by the BEST less Management Fees and Administration Costs.
Co-Investment
BOT may co-invest in a BEST or provide leverage in respect of a BEST.
Minimum Investment
The minimum subscription to a BEST is $250,000.
Trust Structure
Australian domiciled AUD unit trust.
Trustee
The initial trustee of the Trust is Australian Commercial Mortgage Corporation Pty Limited. There is no capacity for unitholders to remove the Trustee in respect of a BEST.
Liquidity
Unitholders may not withdraw their investment. Subject to liquidity, unitholders’ investments will be redeemed on the Repayment Dates.
Distribution Reinvestment
Unitholders cannot have distributions reinvested in a BEST. In the event that you require your distributions reinvested in BOT, or another Balmain product, please contact a member of the Balmain Investments Team and will be paid by method nominated for the investor's existing BOT account.