<PAGE>
As filed with the Securities and Exchange Commission on 28 December, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
Securitisation Advisory Services Pty. Limited
(ACN 064 133 946)
(Exact name of registrant as specified in its governing instruments)
--------------
Level 8
48 Martin Place
Sydney, 2000
Australia
Telephone:
(Address, including zip code/post code, and telephone number, including area
code, of registrant's principal executive offices)
--------------
agent for service
Ian Phillips
Executive Vice President and
General Manager Americas
Commonwealth Bank of Australia
599 Lexington Avenue
New York, NY 10022
(Name, address, including zip code and telephone number, including area code,
of agent for service)
--------------
With a copy to:
Dominic Bruzze Diane Citron, Esq.
Securitisation Advisory Services Mayer, Brown & Platt
Pty. Limited 1675 Broadway
Level 8, 48 Martin Place New York, New York 10019
Sydney 2000, Australia
--------------
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
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<TABLE>
<CAPTION>
Proposed Proposed
Title of Each Class of Maximum Maximum Amount of
Securities to Be Amount to be Offering Price Aggregate Registration
Registered Registered Per Unit Offering Price* Fee
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<S> <C> <C> <C> <C>
Class A-1 Mortgage
Backed Floating
Rate Notes............ $1,000,000 100% $1,000,000 $264.00
</TABLE>
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* 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.
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<PAGE>
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Name and Caption in Form
S-11 Caption in Prospectus
------------------------ ---------------------
<C> <S> <C>
1. Forepart of Registration Front Cover of Registration Statement; Outside
Statement and Outside Front Cover Page of Prospectus
Front Cover Page of
Prospectus
2. Inside Front and Outside
Back Cover Pages of Inside Front Cover Page of Prospectus; Outside
Prospectus Back Cover Page of Prospectus
3. Summary Information, Summary; Risk Factors
Risk Factors and Ratio
of Earnings to Fixed
Charges
Determination of
4. Offering Price *
5. Dilution *
6. Selling Security Holders *
7. Plan of Distribution Method of Distribution
8. Use of Proceeds Use of Proceeds
9. Selected Financial Data *
10. Management's Discussion
and Analysis of
Financial Condition and Description of the Trust; Description of the Assets
Results of Operations of the Trust
11. General Information as The Issuer Trustee, Commonwealth Bank and the
to Registrant Manager
Policy with respect to
12. Certain Activities Description of the Notes
Investment Policies of
13. Registrant Description of the Transaction Documents
14. Description of Real The Assets of the Trust; Commonwealth Bank
Estate Residential Loan Program
15. Operating Data *
16. Tax Treatment of
Registrant and Its United States Federal Income Tax Matters,
Security Holders Australian Tax Matters
17. Market Price of and
Dividends on the
Registrant's Common
Equity and Related
Stockholder Matters *
Description of
18. Registrant's Securities Description of the Class A-1 Notes
19. Legal Proceedings *
20. Security Ownership of
Certain Beneficial The Issuer Trustee, Commonwealth Bank
Owners and Management and the Manager
Directors and Executive
21. Officers *
22. Executive Compensation *
Certain Relationships
23. and Related Transactions *
24. Selection, Management Description of the Class A-1 Notes; Description
and Custody of of the Transaction Documents; Commonwealth
Registrant's Investments Bank Residential Loan Program
25. Policies with Respect to
Certain Transactions Description of the Class A-1 Notes
26. Limitations of Liability Description of the Transaction Documents
Financial Statements and
27. Information *
Interests of Named
28. Experts and Counsel *
29. Disclosure of Commission
Position on
Indemnification for
Securities Act
Liabilities Part II of Registration Statement
30. Quantitative and
Qualitative Disclosures
about Market Risk *
</TABLE>
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* Not Applicable
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to completion, dated [ ], 2000
PRELIMINARY PROSPECTUS
US$[ ] Class A-1 Mortgage Backed Floating Rate Notes
Series 2000-1G Medallion Trust
[LOGO]
Securitisation Advisory Services Pty Limited (ACN 064 133 946)
Manager
Commonwealth Bank of Australia (ACN 123 123 124)
Seller and Servicer
Perpetual Trustee Company Limited (ACN 000 001 007)
in its capacity as trustee of the Series 2000-1G Medallion Trust
Issuer Trustee
-----------
The Class A-1 notes will be collateralized by a pool of housing loans
secured by properties located in Australia. The Series 2000-1G Medallion Trust
will be governed by the laws of New South Wales, Australia.
The Class A-1 notes are not deposits and neither the notes nor the
underlying housing loans are insured or guaranteed by any governmental agency
or instrumentality. The Class A-1 notes represent obligations of the issuer
trustee in its capacity as trustee of the Series 2000-1G Medallion Trust only
and do not represent obligations of or interests in, and are not guaranteed by,
Securitisation Advisory Services Pty Limited, Commonwealth Bank of Australia,
Perpetual Trustee Company Limited or the underwriters.
An application has been made to the London Stock Exchange Limited to admit
the Class A-1 notes to the Official List.
Investing in the Class A-1 notes involves risks. See "Risk Factors" on page
[ ].
<TABLE>
<CAPTION>
Proceeds
Initial Underwriting to
Principal Initial Price to Discounts and Issuer
Balance Interest Rate Public Commissions Trustee
--------- ------------- --------- ------------- --------
<S> <C> <C> <C> <C> <C>
Class A-1 Notes....... $ LIBOR + [ ]% 100.0000% [ ]% [ ]%
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these Class A-1 notes or determined
if this prospectus is accurate or complete. Any representation to the contrary
is a criminal offense.
The date of this prospectus is [ ], 2000
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Disclaimers with Respect to Sales to Non-U.S. Investors.................... 4
Australian Disclaimers..................................................... 6
Summary.................................................................... 8
Structural Diagram........................................................ 10
Structural Overview....................................................... 12
Credit Enhancements....................................................... 12
Liquidity Enhancement..................................................... 14
Redraws and Further Advances.............................................. 14
Hedging Arrangements...................................................... 14
Optional Redemption....................................................... 15
The Housing Loan Pool..................................................... 16
Withholding Tax........................................................... 17
U.S. Tax Status........................................................... 17
Legal Investment.......................................................... 17
ERISA Considerations...................................................... 18
Book-Entry Registration................................................... 18
Collections............................................................... 18
Interest on the Notes and Redraw Bonds.................................... 19
Principal on the Notes and Redraw Bonds................................... 19
Allocation of Cash Flows.................................................. 19
Determination of Available Income Amount on a Distribution Date........... 20
Distribution of Available Income Amount on a Distribution Date............ 21
Determination of Available Principal Amount on a Distribution Date........ 22
Distribution of Available Principal Amount on a Distribution Date......... 23
Risk Factors............................................................... 24
Capitalized Terms.......................................................... 34
U.S. Dollar Presentation................................................... 34
The Issuer Trustee, Commonwealth Bank and the Manager...................... 34
The Issuer Trustee........................................................ 34
Commonwealth Bank......................................................... 35
The Manager............................................................... 35
Description of the Trust................................................... 35
Commonwealth Bank Securitisation Trust Programme.......................... 35
Series 2000-1G Medallion Trust............................................ 36
Other Trusts.............................................................. 36
Description of the Assets of the Trust..................................... 37
Assets of the Trust....................................................... 37
The Housing Loans......................................................... 37
Transfer and Assignment of the Housing Loans.............................. 38
</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Representations, Warranties and Eligibility Criteria...................... 39
Breach of Representations and Warranties.................................. 41
Substitution of Housing Loan Securities................................... 41
Other Features of the Housing Loans....................................... 41
Details of the Housing Loan Pool.......................................... 42
Housing Loan Information.................................................. 43
Commonwealth Bank Residential Loan Program................................. 50
Origination Process....................................................... 50
Approval and Underwriting Process......................................... 50
Commonwealth Bank's Product Types......................................... 52
Special Features of the Housing Loans..................................... 53
Additional Features....................................................... 55
The Mortgage Insurance Policies............................................ 55
General................................................................... 55
The High LTV Mortgage Insurance Policies.................................. 55
The Master Mortgage Insurance Policy...................................... 59
Description of the Mortgage Insurers...................................... 62
Description of the Class A-1 Notes......................................... 63
General................................................................... 63
Form of the Class A-1 Notes............................................... 63
Distributions on the Notes................................................ 68
Key Dates and Periods..................................................... 68
Calculation of Available Income Amount.................................... 69
Liquidity Facility Advance................................................ 70
Distribution of the Available Income Amount............................... 71
Interest on the Notes..................................................... 72
Determination of the Available Principal Amount........................... 73
Distribution of the Available Principal Amount............................ 74
Allocation of Principal to Class A Notes and Class B Notes................ 75
Redraws and Further Advances.............................................. 76
Principal Charge-offs..................................................... 77
The Interest Rate Swaps................................................... 79
The Currency Swap......................................................... 82
Partial Redemption of the Class A-1 Notes on Distribution Dates........... 87
Withholding or Tax Deductions............................................. 87
Redemption of the Notes for Taxation or Other Reasons..................... 87
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Redemption of the Notes upon an Event of Default.......................... 88
Optional Redemption of the Notes.......................................... 89
Final Maturity Date....................................................... 89
Redemption upon Final Payment............................................. 89
No Payments of Principal in Excess of Stated Amount....................... 89
Termination of the Trust................................................... 90
Prescription.............................................................. 91
Directions by Class A-1 Noteholders....................................... 91
Amendments to Class A-1 Notes and Class A-1 Note Trust Deed............... 91
Reports to Noteholders.................................................... 93
Description of the Transaction Documents................................... 94
Collections Account and Authorized Short-Term Investments................. 94
Modifications of the Master Trust Deed and Series Supplement.............. 95
The Issuer Trustee........................................................ 96
The Manager............................................................... 100
Limits on Rights of Noteholders and Redraw Bondholders.................... 102
The Class A-1 Note Trustee................................................ 103
The Security Trust Deed................................................... 105
The Liquidity Facility.................................................... 114
The Standby Redraw Facility............................................... 116
Servicing of the Housing Loans............................................ 118
Seller Deposit............................................................ 123
Custody of the Housing Loan Documents..................................... 123
Clean-Up and Extinguishment............................................... 125
The Servicer............................................................... 125
Servicing of Housing Loans................................................ 125
Collection and Enforcement Procedures..................................... 126
Collection and Enforcement Process........................................ 127
Servicer Delinquency Experience........................................... 128
Prepayment and Yield Considerations........................................ 131
General................................................................... 131
Prepayments............................................................... 131
Weighted Average Lives.................................................... 132
Use of Proceeds............................................................ 136
Legal Aspects of the Housing Loans......................................... 136
General................................................................... 136
Nature of Housing Loans as Security....................................... 136
Enforcement of Registered Mortgages....................................... 139
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Penalties and Prohibited Fees............................................. 140
Bankruptcy and Insolvency................................................. 140
Environmental............................................................. 141
Insolvency Considerations................................................. 141
Tax Treatment of Interest on Australian Housing Loans..................... 142
Consumer Credit Code...................................................... 142
United States Federal Income Tax Matters................................... 143
General................................................................... 144
Sale of Notes............................................................. 144
Market Discount........................................................... 144
Premium................................................................... 146
Backup Withholding........................................................ 146
Australian Tax Matters..................................................... 146
Payments of Principal, Premiums and Interest.............................. 147
Profit on Sale............................................................ 148
Goods and Services Tax.................................................... 148
Other Taxes............................................................... 150
Enforcement of Foreign Judgments in Australia.............................. 151
Exchange Controls and Limitations.......................................... 152
ERISA Considerations....................................................... 152
Legal Investment Considerations............................................ 153
Available Information...................................................... 154
Ratings of the Notes....................................................... 154
Plan of Distribution....................................................... 154
Underwriting.............................................................. 154
Offering Restrictions..................................................... 156
Listing and General Information............................................ 157
Listing................................................................... 157
Authorization............................................................. 157
Litigation................................................................ 158
Euroclear and Cedelbank................................................... 158
Transaction Documents Available for Inspection............................ 158
Consents to Opinions...................................................... 159
Announcement............................................................... 159
Legal Matters.............................................................. 160
Glossary................................................................... 161
APPENDIX I
Terms and Conditions of the Class A-1 Notes................................ I-1
</TABLE>
3
<PAGE>
Disclaimers with Respect to Sales to Non-U.S. Investors
This section applies only to the offering of the Class A-1 notes in
countries other than the United States of America. In the section of this
prospectus entitled "Disclaimers with Respect to Sales to Non-U.S. Investors,"
references to Perpetual Trustee Company Limited are to that company in its
capacity as trustee of the Series 2000-1G Medallion Trust, and not its personal
capacity.
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 Class A-1 notes in any
country or jurisdiction. The Class A-1 notes may be offered non-publicly in
other jurisdictions. The Class A-1 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 Class A-1 notes. The distribution of
this prospectus and the offer or sale of the Class A-1 notes may be restricted
in some jurisdictions. In particular, there are restrictions on the
distribution of this prospectus and the offer and sale of the Class A-1 notes
in the United Kingdom, Australia and certain states of the United States. You
should inform yourself about and observe any of these restrictions. For a
description of further restrictions on offers and sales of the Class A-1 notes,
see "Plan of Distribution."
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 Class A-1 notes by or on
behalf of Perpetual Trustee Company 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.
For the purposes of the Financial Services Act 1986 of the United Kingdom
and the London Stock Exchange only:
. Perpetual Trustee Company Limited accepts responsibility for the
information contained in this prospectus. To the best of the
knowledge and belief of Perpetual Trustee Company Limited, which
has taken all reasonable care to ensure that such is the case, the
information contained in this prospectus is in accordance with the
facts and does not omit anything likely to affect the import of
that information.
. Commonwealth Bank of Australia accepts responsibility for the
information contained in "Summary--The Housing Loan Pool" and "--
Selected Housing Loan Pool Data," "The Issuer Trustee,
Commonwealth Bank and the Manager--Commonwealth Bank" and "--the
Manager," "Description of the Assets of the Trust--The Housing
Loans," "--Other Features of the Housing Loans," "--Details of the
Housing Loan Pool" and "--Housing Loan Information," "Commonwealth
Bank Residential Loan Program" and "The Servicer." To the best of
the knowledge and belief of Commonwealth Bank of
4
<PAGE>
Australia, which has taken all reasonable care to ensure that such
is the case, the information contained in those sections is in
accordance with the facts and does not omit anything likely to
affect the import of that information.
. Bank of New York accepts responsibility for the information
contained in "Description of the Transaction Documents--The Class A-
1 Note Trustee--Appointment of Class A-1 Note Trustee." To the best
of the knowledge and belief of Bank of New York, which has taken all
reasonable care to ensure that such is the case, the information
contained in that section is in accordance with the facts and does
not omit anything likely to affect the import of that information.
. [ ] accepts responsibility for the information contained in
"Description of the Class A-1 Notes--The Currency Swap--Currency
Swap Provider." To the best of the knowledge and belief of
[ ], which has taken all reasonable care to ensure that such
is the case, the information contained in that section is in
accordance with the facts and does not omit anything likely to
affect the import of that information.
None of Commonwealth Bank of Australia, in its individual capacity and as
seller, servicer, fixed rate swap provider, basis swap provider, liquidity
facility provider and standby redraw facility provider, Securitisation
Advisory Services Pty Limited, as manager, P.T. Limited, as security trustee,
Bank of New York, as Class A-1 note trustee, Class A-1 note registrar,
principal paying agent, agent bank and paying agent, [ ], as currency swap
provider, or the underwriters accept any responsibility for any information
contained in this prospectus and have not separately verified the information
contained in this prospectus and make no 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 Class A-1 notes except with respect to the information for
which they accept responsibility in the preceding four paragraphs.
Except as described in the preceding five paragraphs, Commonwealth Bank
of Australia, in its individual capacity and as seller, servicer, fixed rate
swap provider, basis swap provider, liquidity facility provider and standby
redraw facility provider, Perpetual Trustee Company Limited, in its personal
capacity and as trustee, Securitisation Advisory Services Pty Limited, as
manager, P.T. Limited, in its personal capacity and as security trustee, Bank
of New York, as Class A-1 note trustee, Class A-1 note registrar, principal
paying agent, agent bank and paying agent, [ ], as currency swap provider,
and the underwriters do not recommend that any person should purchase any of
the Class A-1 notes and do not accept any responsibility or make any
representation as to the tax consequences of investing in the Class A-1 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;
5
<PAGE>
. acknowledges that this prospectus and any other information
supplied in connection with the Class A-1 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 Class A-1
notes;
. should make their own independent investigation of the trust and
the Class A-1 notes; and
. should seek their own tax, accounting and legal advice as to the
consequences of investing in any of the Class A-1 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 Class A-1 notes. If such information or
representation is given or received, it must not be relied upon as having been
authorized by Perpetual Trustee Company Limited or any of 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:
. 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 the date upon which this prospectus has been most
recently amended or supplemented; or
. any other information supplied in connection with the Class A-1
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 Trustee Company Limited's liability to make payments of
interest and principal on the Class A-1 notes is limited to the assets of the
trust available to be applied towards those payments. All claims against
Perpetual Trustee Company Limited in relation to the Class A-1 notes may only
be satisfied out of the assets of the trust and are limited in recourse to the
assets of the trust.
Australian Disclaimers
. The Class A-1 notes do not represent deposits or other liabilities
of Commonwealth Bank of Australia or associates of Commonwealth
Bank of Australia.
. The holding of the Class A-1 notes is subject to investment risk,
including possible delays in repayment and loss of income and
principal invested.
. None of Commonwealth Bank of Australia, any associate of
Commonwealth Bank of Australia, Perpetual Trustee Company Limited,
P.T. Limited, The Bank of New York, as Class A-1 note trustee,
Class A-1 note registrar,
6
<PAGE>
principal paying agent, agent bank and the Bank of New York, New
York branch as paying agent, [ ], as currency swap provider,
nor any underwriter in any way stands behind the capital value or
the performance of the Class A-1 notes or the assets of the trust
except to the limited extent provided in the transaction documents
for the trust.
. None of Commonwealth Bank of Australia, in its individual capacity
and as seller, servicer, basis swap provider, fixed rate swap
provider, liquidity facility provider and standby redraw facility
provider, Perpetual Trustee Company Limited, Securitisation
Advisory Services Pty Limited, as manager, P.T. Limited, as
security trustee, The Bank of New York, as Class A-1 note trustee,
Class A-1 note registrar, principal paying agent, agent bank and
paying agent, [ ], as currency swap provider, or any of the
underwriters guarantees the payment of interest or the repayment
of principal due on the Class A-1 notes.
. None of the obligations of Perpetual Trustee Company Limited, in
its capacity as trustee of the trust, or Securitisation Advisory
Services Pty Limited, as manager, are guaranteed in any way by
Commonwealth Bank of Australia or any associate of Commonwealth
Bank of Australia or by Perpetual Trustee Company Limited or any
associate of Perpetual Trustee Company Limited.
7
<PAGE>
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
<TABLE>
<C> <S>
Trust:........................... Series 2000-1G Medallion Trust
Trustee:......................... Perpetual Trustee Company Limited (ACN 000 001
007), in its capacity as trustee of the trust
Manager:......................... Securitisation Advisory Services Pty Limited
(ACN 064 133 946), Level 8, 48 Martin Place,
Sydney,
NSW 2000
612-9378 5293
Class A-1 Note Trustee:.......... The Bank of New York, London Branch
Security Trustee:................ P.T. Limited (ACN 004 454 666)
Seller:.......................... Commonwealth Bank of Australia (ACN 123 123 124)
Servicer:........................ Commonwealth Bank of Australia
Principal Paying Agent:.......... The Bank of New York, London Branch
Paying Agent:.................... The Bank of New York, New York Branch
Agent Bank:...................... The Bank of New York, London Branch
Class A-1 Note Registrar:........ The Bank of New York, London Branch
Residual Unitholder:............. Commonwealth Bank of Australia
Underwriters:.................... [ ]
Listing Agent:................... J.P. Morgan Securities Ltd.
Liquidity Facility Provider:..... Commonwealth Bank of Australia
Standby Redraw Facility
Provider:........................ Commonwealth Bank of Australia
</TABLE>
8
<PAGE>
Mortgage Insurers:.......... [Housing Loans Insurance Corporation Pty Limited
(ACN 071 466 334), GE Capital Mortgage Insurance
Corporation (Australia) Pty Limited (ACN 081 488
440)] and the Commonwealth of Australia
Fixed Rate Swap Provider:... Commonwealth Bank of Australia
Basis Swap Provider:........ Commonwealth Bank of Australia
Currency Swap Provider:..... [ ]
Rating Agencies:............ Fitch IBCA (Australia) Pty Limited
Moody's Investors Service, Inc.
Standard & Poor's Ratings Group
9
<PAGE>
[GRAPHIC OF STRUCTURAL DIAGRAM]
10
<PAGE>
Summary of the Notes
In addition to the Class A-1 notes, the issuer trustee will also issue
Class A-2 notes and Class B notes collateralized by the same pool of housing
loans. The Class A-2 notes and the Class B notes have not been registered in
the United States and are not being offered by this prospectus. The term
"notes" will mean the Class A-1 notes, the Class A-2 notes and the Class B
notes when used in this prospectus. The term "Class A notes" will mean the
Class A-1 notes and the Class A-2 notes when used in this prospectus. The
issuer trustee may in certain circumstances also issue redraw bonds
collateralized by the same pool of housing loans. The redraw bonds will not be
registered in the United States and are not being offered by this prospectus.
<TABLE>
<CAPTION>
Class A-1 Class A-2 Class B
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<S> <C> <C> <C>
Initial
Principal
Balance........ US$[ ] A$[ ] A$[ ]
- -----------------------------------------------------------------------------------------------------------------
% of Total...... [ ]% [ ]% [ ]%
- -----------------------------------------------------------------------------------------------------------------
Anticipated
Ratings:
Fitch IBCA
(Australia) Pty
Limited........ AAA AAA AAA
Moody's
Investors
Service Inc. .. Aaa Aaa not rated
Standard &
Poor's Ratings
Group.......... AAA AAA AAA
- -----------------------------------------------------------------------------------------------------------------
Interest Rate up
to but
excluding the three-month Australian
distribution three-month Australian Bank Bill Rate plus a
date in [ ]... three-month LIBOR + [ ]% Bank Bill Rate plus [ ]% margin
- -----------------------------------------------------------------------------------------------------------------
Interest Rate
after and
including the three-month Australian
distribution three-month Australian Bank Bill Rate plus a
date in [ ]... three-month LIBOR + [ ]% Bank Bill Rate plus [ ]% margin
- -----------------------------------------------------------------------------------------------------------------
Interest Accrual
Method......... actual/360 actual/365
- -----------------------------------------------------------------------------------------------------------------
Distribution 12th day or, if the 12th day is not a Business Day, then the next Business Day, of each
Dates.......... of [ July, October, January and April] beginning in [ ], 2000.
- -----------------------------------------------------------------------------------------------------------------
Final Scheduled
Distribution The distribution date falling The distribution date falling The distribution date falling
Date*.......... in [ ] in [ ] in [ ]
- -----------------------------------------------------------------------------------------------------------------
Clearance/Settlement.. DTC/Euroclear/Cedelbank Offered in Australia to residents of Australia only
- -----------------------------------------------------------------------------------------------------------------
Cut-Off Date.... Close of business, [ ]
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Closing Date.... On or about [ ]
- -----------------------------------------------------------------------------------------------------------------
Final Maturity
Date........... The distribution date falling in July, 2031
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
* Assuming that there are not prepayments on the housing loans, that the
issuer trustee is not directed to exercise its right of optional redemption
of the notes and the other modeling assumptions contained in "Prepayment and
Yield Considerations" occur.
11
<PAGE>
Structural Overview
Commonwealth Bank established the Medallion Programme pursuant to a
master trust deed dated 8 October 1997 between Securitisation Advisory Services
Pty. Limited as manager and Perpetual Trustee Company Limited as issuer
trustee. The master trust deed provides the general terms and structure for
securitization under the program. A series supplement between the issuer
trustee, the manager and Commonwealth Bank, as seller and servicer, sets out
the specific details of the Series 2000-1G Medallion Trust and the Class A-1
notes, which may vary from the terms set forth in the master trust deed. Each
securitization under the program is a separate transaction with a separate
trust. The assets of the Series 2000-1G Medallion 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 the Series 2000-1G Medallion Trust.
See "Description of the Trust."
The Series 2000-1G Medallion Trust involves the securitization of housing
loans originated by Commonwealth Bank and secured by mortgages on residential
property located in Australia. Commonwealth Bank will equitably assign the
housing loans to the trust, which will in turn issue the floating rate Class A-
1 notes, along with the Class A-2 notes and Class-B notes, to fund the
acquisition of the housing loans.
The issuer trustee will grant a floating charge over all of the assets of
the trust under the security trust deed in favor of P.T. Limited, as security
trustee, to secure the trust's payment obligations to the noteholders and its
other creditors. The floating charge is a first ranking charge over the assets
of the trust subject only to a prior interest in favor of the issuer trustee to
secure payment of certain expenses of the trust. A floating charge is a
security interest on a class of assets, but does not attach to specific assets
unless or until it crystalizes, which means it becomes a fixed charge. The
charge will crystalize if an event of default occurs under the security trust
deed (but in some cases will crystalize only over the assets affected by the
event of default). While the charge is a floating charge, the issuer trustee
may deal with the assets of the trust in accordance with the transaction
documents and, if it acts contrary to its duties, may be able to deal with the
assets of the trust in such a way as to prejudice the security trustee's
interest in the assets in breach of the transaction documents. [Once the
floating charge crystalizes, 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.] [Subject to discussions with S&P] For a description
of floating charges and crystallization see "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 Class A-1 notes will be
supported by the following forms of credit enhancement:
12
<PAGE>
Subordination and Allocation of Losses
The Class B notes will always be subordinated to the Class A-1 and A-2
notes in their right to receive interest payments. Prior to the occurrence of
an event of default and enforcement of the charge under the security trust
deed, the Class B notes will be subordinated to the Class A-1 and A-2 notes in
their right to receive principal payments only in the circumstances and to the
extent described in "Description of the Class A-1 Notes--Allocation of
Principal to Class A Notes and Class B Notes." Following the occurrence of an
event of default and enforcement of the charge under the security trust deed,
the Class B notes will be fully subordinated to the Class A-1 and A-2 notes in
their right to receive principal payments.
The Class B notes will bear all losses on the housing loans before the
Class A-1 and A-2 notes. Any losses allocated to the Class A notes will be
allocated rateably between the Class A-1 and A-2 notes as described in
"Description of the Class A-1 Notes--Principal Charge-Offs." The support
provided by the Class B notes is intended to enhance the likelihood that the
Class A-1 and A-2 notes will receive expected quarterly payments of interest
and principal. The following chart describes the initial support provided by
the Class B notes:
<TABLE>
<CAPTION>
Initial
Credit Support
Classes Support Percentage
- ------- ------- ----------
<S> <C> <C>
A-1 and A-2.................................................. B [ ]%
</TABLE>
The initial support percentage in the preceding table is the initial
balance of the Class B notes, as a percentage of the aggregate invested amount
of the securities to be issued on the closing date.
In certain circumstances, the issuer trustee may issue redraw bonds as
described in [ ]. If issued, redraw bonds will, prior to the occurrence of an
event of default and enforcement of the charge under the security trust deed,
rank equally with the Class A-1 and A-2 notes in their right to receive
interest payments and will rank in priority to the Class A-1 and A-2 notes in
their right to receive principal payments. Any losses allocated to the Class A
notes and redraw bonds will be allocated rateably between the Class A-1 and A-2
notes and the redraw bonds. Following the occurrence of an event of default and
enforcement of the charge under the security trust deed, redraw bonds will rank
equally with the Class A-1 and A-2 notes in their right to receive both
interest and principal payments.
Mortgage Insurance Policies
Mortgage insurance policies issued by or transferred to Housing Loans
Insurance Corporation Pty Limited[, GE Capital Mortgage Insurance Corporation
(Australia) Pty Limited] and the Commonwealth of Australia will provide full
coverage for all principal due on each of the housing loans which had a loan to
value ratio greater than 80% at the time of origination.
A master mortgage insurance policy issued by Housing Loans Insurance
Corporation Pty Limited will provide full coverage for all principal due on
each of the housing loans which had a loan to value ratio of less than 80% at
the time of origination.
Seller Deposit
If Commonwealth Bank is assigned a short-term deposit credit rating by
Moody's of less than P1 or is assigned a
13
<PAGE>
long term deposit credit rating by Standard & Poor's or Fitch IBCA of less than
BBB, or in each case, a lesser rating as agreed between the manager, the issuer
trustee and the relevant rating agency, it must deposit an amount in the
collections account on account of set-off risk determined with reference to,
and which may be less than, the balances of certain deposit accounts held by
borrowers with Commonwealth Bank. The amount of the seller deposit may be reset
on each determination date and adjusted on the following distribution date and
will be reduced to zero if the seller regains the required credit ratings. The
issuer trustee may use the seller deposit to meet liabilities of the seller in
relation to amounts set-off against the amount due on a housing loan which have
not been met within 20 business days of notice from the issuer trustee or the
manager.
As an alternative to making the seller deposit, Commonwealth Bank may
implement other arrangements agreed with the rating agencies so that credit
ratings of the notes by those rating agencies will not be adversely affected.
Excess Interest Collections
Any interest collections on the housing loans remaining after payments of
interest on the notes and the redraw bonds and the trust's expenses will be
available to cover any losses on the housing loans that are not covered by the
mortgage insurance policies.
Liquidity Enhancement
To cover possible liquidity shortfalls in the payments of interest on the
notes and redraw bonds, the issuer trustee will, in certain circumstances, be
able to borrow funds under a liquidity facility to be provided by Commonwealth
Bank.
Redraws and Further Advances
Under the terms of each variable rate housing loan, a borrower may,
subject to certain conditions, redraw previously prepaid principal. A borrower
may redraw an amount equal to the difference between the scheduled principal
balance, being its principal balance if no amount had been prepaid, of his or
her loan and the current principal balance of the loan. Commonwealth Bank may
also agree to make further advances to a borrower in excess of the scheduled
principal balance of his or her loan. Commonwealth Bank will be reimbursed for
any redraws, and for any further advances which exceed the scheduled principal
balance of a housing loan by no more than one scheduled monthly instalment on
the housing loan, that it advances to borrowers from principal collections on
the housing loans. Thus, the trust will have less funds available to pay
principal to the notes on the next distribution date, but will have a
corresponding greater amount of assets with which to make future payments. See
"Commonwealth Bank Residential Loan Program," "Description of The Class A-1
Notes--Redraws and Further Advances" and "Description of the Transaction
Documents--The Standby Redraw Facility."
Hedging Arrangements
To hedge its interest rate and currency exposures, the issuer trustee
will enter into the following hedge arrangements:
. a basis swap to hedge the basis risk between the interest rate on the
housing loans which accrue interest at a discretionary variable rate of
interest and the floating rate obligations of the trust, including the
issuer trustee's
14
<PAGE>
payment obligations under the currency swap;
. a fixed rate swap to hedge the basis risk between the interest rate on the
housing loans which accrue interest at a fixed rate of interest and the
floating rate obligations of the trust, including the issuer trustee's
payment obligations under the currency swap; and
. a currency swap to hedge the currency risk and the basis risk between the
collections on the housing loans and the amounts received by the issuer
trustee under the basis swap and the fixed rate swap, which are denominated
in Australian dollars and, in the case of the basis swap and fixed rate
swap, calculated by reference to the Australian bank bill rate, and the
obligation of the trust to pay interest and principal on the Class A-1
notes, which are denominated in U.S. dollars and, in the case of interest,
calculated by reference to LIBOR.
Optional Redemption
The issuer trustee will, if the manager directs it to do so, redeem all
of the notes and redraw bonds on the earlier of the distribution date falling
in [ ] or the date when the current total outstanding principal balance of the
housing loans is less than 10% of the total outstanding principal balance of
the housing loans on [ ]. If the issuer trustee redeems the Class A-1 notes,
the Class A-1 noteholders will receive a payment equal to the outstanding
principal balance of the Class A-1 notes plus accrued interest on the
outstanding principal balance of the Class A-1 notes, unless Class A
noteholders and redraw bondholders owning 75% of the aggregate outstanding
principal balance of the Class A notes and redraw bonds consent to receiving
the outstanding principal balance of the Class A notes and redraw bonds, as
reduced by losses allocated against the Class A notes and redraw bonds, plus
accrued interest on the outstanding principal balance of the Class A notes and
redraw bonds.
15
<PAGE>
The Housing Loan Pool
The housing loan pool will consist of fixed rate and variable rate
residential housing loans secured by mortgages on owner occupied and non-owner
occupied one-to-four family residential properties. The housing loans will have
original terms to stated maturity of no more than 30 years. Commonwealth Bank
expects the pool of housing loans to have characteristics similar to the
following:
Selected Housing Loan Pool Data as of the
Close of Business on [ ], 2000
<TABLE>
<S> <C>
Number of Housing Loans.....................................................
Housing Loan Pool Size...................................................... A$
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.........................................
</TABLE>
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 at the cut-off date may not reflect the 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. This addition or removal of housing loans
may result in changes in the housing loan pool characteristics shown in the
preceding table and could affect the weighted average lives and yields of the
notes. The seller will not add or remove 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 this prospectus,
unless a revised prospectus is delivered to prospective investors.
The seller has selected the housing loans from its pool of eligible loans
based on its selection criteria.
16
<PAGE>
Withholding Tax
Payments of principal and interest on the Class A-1 notes will be reduced
by any applicable withholding taxes. The issuer trustee is not obligated to pay
any additional amounts to the Class A-1 noteholders to cover any withholding
taxes. Under present law, the Class A-1 notes will not be subject to Australian
withholding tax if they are issued in accordance with certain prescribed
conditions and they are not held by associates of the issuer trustee or
Commonwealth Bank. The issuer trustee will seek to issue the Class A-1 notes in
a manner which will satisfy the conditions for an exemption from Australian
withholding tax. One of these conditions is that the issuer trustee must not
know or have reasonable grounds to suspect that a Class A-1 note, or an
interest in a Class A-1 note, was being, or would later be, acquired directly
or indirectly by associates of the issuer trustee or Commonwealth Bank.
Accordingly, persons who are associates of the issuer trustee or the
Commonwealth Bank, for the purposes of the Australian Income Tax Assessment Act
1936, should not acquire Class A-1 notes. See "Australian Tax Matters."
If, by virtue of a change in law:
. the issuer trustee will be required to withhold or deduct amounts
from payment of principal or interest to any class of noteholders or
redraw bondholders due to taxes, duties, assessments or governmental
charges; or
. if the issuer trustee ceases to receive the total amount of interest
payable by borrowers on the housing loans due to taxes, duties,
assessments or other governmental charges,
the manager may direct the issuer trustee to redeem all of the notes and redraw
bonds. If the issuer trustee redeems the Class A-1 notes, the Class A-1
noteholders will receive a payment equal to the outstanding principal balance
of the Class A-1 notes plus accrued interest on the outstanding principal
balance of the Class A-1 notes, unless Class A noteholders and redraw
bondholders owning 75% of the aggregate outstanding principal balance of the
Class A notes and redraw bonds consent to receiving the outstanding principal
balance of the Class A notes and redraw bonds, as reduced by losses allocated
against the Class A notes and redraw bonds, plus accrued interest on the
outstanding principal balance of the Class A notes and redraw bonds. However,
if the withholding or deduction relates only to the Class A-1 notes, Class A-1
noteholders owning 75% of the aggregate outstanding principal balance of the
Class A-1 notes may direct the issuer trustee not to redeem the notes and
redraw bonds. See "Description of the Class A-1 Notes--Redemption of the Notes
for Taxation or Other Reasons."
U.S. Tax Status
In the opinion of Mayer, Brown & Platt, special tax counsel for the
manager, the Class A-1 notes will be characterized as debt for U.S. federal
income tax purposes. Each Class A-1 noteholder, by acceptance of a Class A-1
note, agrees to treat the notes as indebtedness. See "United States Federal
Income Tax Matters."
Legal Investment
The Class A-1 notes will not constitute "mortgage-related securities" for
the purposes of the Secondary Mortgage Market Enhancement Act of 1984. No
17
<PAGE>
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 your own legal
advisors concerning the status of the Class A-1 notes as legal investments for
you. See "Legal Investment Considerations."
ERISA Considerations
In general, the Class A-1 notes will be eligible for purchase by
retirement plans subject to the Employee Retirement Income Security Act.
Investors should consult their counsel with respect to the consequences under
the Employee Retirement Income Security Act and the Internal Revenue Code of
the plan's acquisition and ownership of the certificates.
Book-Entry Registration
The Class A-1 notes will be initially issued in book-entry form only.
Persons acquiring beneficial ownership of interests in the Class A-1 notes will
hold their interests through the Depository Trust Company in the United States
or Cedelbank or Euroclear outside of the United States. Transfers within the
Depository Trust Company, Cedelbank or Euroclear will be in accordance with the
usual rules and operating procedures of the relevant system. Crossmarket
transfers between persons holding directly or indirectly through the Depository
Trust Company, on the one hand, and persons holding directly or indirectly
through Cedelbank or Euroclear, on the other hand, will take place in the
Depository Trust Company through the relevant depositories of Cedelbank or
Euroclear.
Collections
The issuer trustee will receive for each collection period amounts, which
are known as collections, which include:
. payments of interest, principal, fees and other amounts under the
housing loans;
. proceeds from the enforcement of the housing loans and mortgages and
other securities relating to those housing loans;
. amounts received under mortgage insurance policies;
. amounts received from the seller or servicer for breaches of
representations or undertakings; and
. interest on amounts in the collections account, other than certain
excluded amounts, and income received on authorized short-term
investments of the trust.
Collections will be allocated between income and principal. Collections
attributable to interest, plus some other amounts, are known as the available
income amount. The collections attributable to principal, plus some other
amounts, are known as the available principal amount.
The available income amount is used to pay fees, expenses and interest on
the notes and redraw bonds. The available principal amount is used to pay,
among other things, principal on the notes and redraw bonds. If there is an
excess of available income amount after payment of fees, expenses and interest
on the notes and redraw bonds, the excess income will be used to reimburse any
principal charge-offs on the notes, the redraw bonds and the standby redraw
facility. Any remaining excess will be distributed to the residual unitholder.
18
<PAGE>
Interest on the Notes and Redraw Bonds
Interest on the notes and redraw bonds is payable quarterly in arrears on
each distribution date. The amount available to pay interest on the notes and
redraw bonds will be paid rateably between: the currency swap provider which in
turn will pay interest on the Class A-1 notes; the Class A-2 notes; and the
redraw bonds. Interest will be paid on the Class B notes only after the
payments of interest on the Class A-1 and Class A-2 notes and the redraw bonds
are made. Interest on each class of notes and the redraw bonds is calculated
for each accrual period as follows:
. at the note's or redraw bond's interest rate;
. on the outstanding principal balance of that note or redraw bond at
the beginning of that accrual period; and
. on the basis of the actual number of days in that accrual period and
a year of 360 days for the Class A-1 notes or a year of 365 days for
the Class A-2 notes, the Class B notes and the redraw bonds.
Principal on the Notes and Redraw Bonds
Principal on the notes and redraw bonds will be payable on each
distribution date. The amount available to be paid in respect of principal on
the notes and redraw bonds will be paid first to redraw bondholders with
priority given to redraw bonds with earlier issue dates until the outstanding
principal balance of the redraw bonds, as reduced by losses allocated against
the redraw bonds, is reduced to zero. After payments in respect of the redraw
bonds, the available principal up to a specified maximum amount will be paid
rateably to the currency swap provider, which in turn will pay principal on the
Class A-1 notes and to the Class A-2 noteholders in respect of principal on the
Class A-2 notes until the outstanding principal balance of the Class A-1 notes
and Class A-2 notes respectively, as reduced by losses allocated against the
Class A-1 and A-2 notes, is reduced to zero. The specified maximum amount will
vary in accordance with the stepdown conditions, with the result that, in some
circumstances, and to a limited extent, the Class B notes will receive
principal rateably with the Class A notes. The balance of the available
principal will be paid to Class B noteholders in respect of principal on the
Class B notes until the outstanding principal balance of the Class B notes, as
reduced by losses allocated against the Class B notes, is reduced to zero. On
each distribution date, the outstanding principal balance of each note and
redraw bond will be reduced by the amount of the principal payment made on that
date on that note or redraw bond. The outstanding principal balance of each
note and redraw bond will also be reduced by the amount of principal losses on
the housing loans allocated to that note or redraw bond. If the security trust
deed is enforced after an event of default, the proceeds from the enforcement
will be distributed rateably among all of the Class A notes and redraw bonds
and prior to any distributions to the Class B notes.
Allocation of Cash Flows
On each distribution date, the issuer trustee will pay interest and repay
principal to each noteholder and redraw bondholder to the extent of the
available income amount and available principal amount on that distribution
date available to be applied for these purposes. The charts on the next two
pages summarize the flow of payments.
19
<PAGE>
Determination of Available Income Amount on
a Distribution Date
Finance Charge Collections
Amounts received by the issuer trustee during the preceding
collection period under the housing loans in respect of
interest, fees and certain other charges.
+
Mortgage Insurance Interest Proceeds
Amounts received pursuant to a mortgage insurance policy
which the manager determines should be accounted for on the
preceding determination date in respect of a finance charge
loss.
+
Other Income
Certain other amounts received by the issuer trustee during
the preceding collection period and certain other receipts in
the nature of income (as determined by the manager) received
by the preceding determination date.
+
Liquidity Facility Advance
Any advance to be made under the liquidity facility on the
distribution date.
+
Other Amounts under Support Facilities
Other amounts received from a Support Facility provider which
the manager determines should be included in the available
income amount.
=
Available Income Amount
20
<PAGE>
Distribution of Available Income Amount on
a Distribution Date
On the first distribution date, pay the Accrued Interest
Adjustment to Commonwealth Bank.
(down arrow)
Pay or make provision for taxes of the trust, if any.
(down arrow)
Pay to the issuer trustee its quarterly fee.
(down arrow)
Pay to the security trustee its [quarterly] fee (if any).
(down arrow)
Pay to the manager its quarterly fee.
(down arrow)
Pay to the servicer its quarterly fee.
(down arrow)
Pay to the liquidity facility provider the quarterly
commitment fee in relation to the liquidity facility.
(down arrow)
Pay rateably to the Support Facility providers amounts due
under Support Facilities except those described above or
below. These may include interest due on the liquidity
facility and payments due under the basis swap and fixed rate
swap.
(down arrow)
Pay or make provision for all expenses of the trust except
those described above or below.
(down arrow)
Pay to the standby redraw facility provider the quarterly
commitment fee in relation to the standby redraw facility.
(down arrow)
Repay to the liquidity facility provider outstanding advances
under the liquidity facility made on prior distribution
dates.
(down arrow)
Pay rateably to:
. the currency swap provider payment under the currency swap
relating to interest due on the Class A-1 notes;
. the Class A-2 noteholders interest due on the Class A-2
notes;
. the standby redraw facility provider interest due on the
standby redraw facility; and
. the redraw bondholders interest due on the redraw bonds.
(down arrow)
Pay to Class B noteholders interest due on the Class B notes.
(down arrow)
Allocate the amount of any unreimbursed principal charge-offs
to the Available Principal Amount for distribution.
(down arrow)
Distribute any remaining amounts to the residual unitholder.
21
<PAGE>
Determination of Available Principal Amount on
a Distribution Date
Principal Collections
Amounts received by the issuer trustee during the preceding
collection period under the housing loans in respect of
principal other than as described below.
+
Mortgage Insurance Principal Proceeds
Amounts received pursuant to a mortgage insurance policy
which the manager determines should be accounted for on the
preceding determination date in respect of a principal loss.
+
Other Principal Amount
Prepayments of principal on the housing loans, amounts
rounded down from the preceding distribution date, certain
other amounts received by the issuer trustee during the
preceding collection period, certain other receipts in the
nature of principal, as determined by the manager, received
by the preceding determination date and, for the first
distribution date, the amount, if any, by which the proceeds
of issue of the notes exceeds the consideration for the
housing loans acquired by the trust.
+
Principal Charge-off Reimbursement
The amount allocated from the Available Income Amount on that
distribution date towards unreimbursed principal charge-offs.
+
Redraw Bond Amount
The proceeds of issue of any redraw bonds during the period
ending on and including the preceding determination date and
commencing on but excluding the determination date before
that.
+
Standby Redraw Facility Advance
Any advance to be made under the standby redraw facility on
the distribution date.
=
Available Principal Amount
22
<PAGE>
Distribution of Available Principal Amount on
a Distribution Date
Redraws and Further Advances
Repay to the seller any redraws and further advances under
the housing loans, other than further advances which cause
the related housing loan to be removed from the trust, made
by the seller during or prior to the preceding collection
period.
(down arrow)
Standby Redraw Facility Principal
Repay to the standby redraw facility provider the principal
outstanding under the standby redraw facility as reduced by
principal charge-offs or increased by reimbursement of
principal charge-offs.
(down arrow)
Redraw Bonds
Repay to the redraw bondholders the Stated Amount of the
redraw bonds.
(down arrow)
Class A Noteholders
Pay an amount equal to or greater than the Class A notes
proportional share of the remaining Available Principal
Amount on that distribution date rateably to:
. the currency swap provider in relation to a repayment to
the Class A-1 noteholders of the Stated Amount of the
Class A-1 notes; and
. the Class A-2 noteholders as a repayment of the Stated
Amount of the Class A-2 notes.
(down arrow)
Class B Noteholders
Repay to the Class B noteholders the Stated Amount of the
Class B notes.
(down arrow)
Residual Unitholder
Distribute any remaining amounts to the residual unitholder.
23
<PAGE>
Risk Factors
The Class A-1 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 the Class A-1 notes.
<TABLE>
<C> <S>
The Class A-1 notes will be paid . The Class A-1 notes are debt
only from the assets of the trust obligations of the issuer trustee only
in its capacity as trustee of the
trust. The Class A-1 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 Class A-1 notes. The issuer
trustee's other assets will only be
available to make payments on the
Class A-1 notes if the issuer trustee
is negligent, commits fraud or in some
circumstances where the issuer trustee
fails to comply with or breaches an
obligation imposed upon it under the
documents. Therefore, if the assets of
the trust are insufficient to pay the
interest and principal on your Class
A-1 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.
You face an additional possibility . Although Commonwealth Bank could have
of loss because the issuer trustee legally assigned the title to the
does not hold legal title to the housing loans to the issuer trustee,
housing loans initially it will assign only
equitable title to the housing loans
to the issuer trustee. The borrowers
will not be notified of the equitable
assignment. The housing loans will be
legally assigned to the issuer trustee
only upon the occurrence of a
perfection of title event, as
described in "Description of the
Assets of the Trust--Transfer and
Assignment of the Housing Loans."
Because the issuer trustee does not
hold legal title to the housing loans,
you will be subject to the following
risks, which may lead to a failure to
receive collections on the housing
loans, delays in receiving the
collections or losses to you:
. The issuer trustee's interest in a
housing loan and its related
securities may be impaired by the
creation or existence of an equal or
higher ranking security interest over
the related
</TABLE>
24
<PAGE>
<TABLE>
<C> <S>
housing loan or its related securities
created after the creation of the
issuer trustee's equitable interest
but prior to it acquiring a legal
interest in the housing loans.
. Until a borrower has notice of the
assignment, that borrower is not bound
to make payments under its housing
loan to anyone other than the seller.
Until a borrower receives notice of
the assignment, any payments the
borrower makes under his or her
housing loan to the seller will
validly discharge the borrower's
obligations under the borrower's
housing loan even if the issuer
trustee does not receive the payments
from the seller. Therefore, if the
seller does not deliver collections to
the issuer trustee, for whatever
reason, neither the issuer trustee nor
you will have any recourse against the
related borrowers for such
collections.
. The issuer trustee may not be able to
initiate any legal proceedings against
a borrower to enforce a housing loan
without the involvement of the seller.
A borrower's ability to offset may . It is likely that in the event of the
affect the return on your Class A-1 insolvency of Commonwealth Bank,
notes borrowers may be able to offset their
deposits with Commonwealth Bank
against their liability under their
housing loans. If this occurred, the
assets of the trust might be
insufficient to pay you principal and
interest in full.
The seller and servicer may . Before the seller or the servicer
commingle collections on the housing remits collections to the collections
loans with their assets account, the collections may be
commingled with the assets of the
seller or servicer. If the seller or
the servicer becomes insolvent, the
issuer trustee may only be able to
claim those collections as an
unsecured creditor of the insolvent
company. This could lead to a failure
to receive the collections on the
housing loans, delays in receiving the
collections, or losses to you.
There is no way to predict the . The rate of principal and interest
actual rate and timing of payments payments on pools of housing loans
on the housing loans varies among pools, and is influenced
by a variety of economic,
</TABLE>
25
<PAGE>
<TABLE>
<C> <S>
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 Europe, and thus
will have different rates and timing
of payments from housing loans in the
United States and Europe. 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 and
the ability to redraw principal on the
housing loans will affect the rate and
timing of payments of principal and
interest on your Class A-1 notes.
Unexpected prepayment rates could have
the following negative effects:
. If you bought your Class A-1 notes for
more than their face amount, the yield
on your Class A-1 notes will drop if
principal payments occur at a faster
rate than you expect.
. If you bought your Class A-1 notes for
less than their face amount, the yield
on your Class A-1 notes will drop if
principal payments occur at a slower
rate than you expect.
Losses and delinquent payments on . If borrowers fail to make payments of
the housing loans may affect the interest and principal under the
return on your Class A-1 notes housing loans when due and the credit
enhancement described in this
prospectus is not enough to protect
your Class
A-1 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 Class A-1 notes. Consequently,
the yield on your Class A-1 notes
could be lower than you expect and you
could suffer losses.
Enforcement of the housing loans may . Substantial delays could be
cause delays in payment and losses 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 a mortgage insurance
policy.
</TABLE>
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<TABLE>
<C> <S>
. If the proceeds of the sale of a
mortgaged property, net of
preservation and liquidation 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.
Principal on the redraw bonds will . If redraw bonds are issued they will
be paid before principal on your rank ahead of your Class A-1 notes
Class A-1 notes with respect to payment of principal
prior to enforcement of the charge
under the security trust deed, and you
may not receive full repayment of
principal on your Class A-1 notes.
The Class B notes provide only . The amount of credit enhancement
limited protection against losses provided through the subordination of
the Class B notes to the Class A notes
is limited and could be depleted prior
to the payment in full of the Class A
notes. If the principal amount of the
Class B notes is reduced to zero, you
may suffer losses on your Class A-1
notes.
The mortgage insurance policies may . The mortgage insurance policies are
not be available to cover losses on subject to some exclusions from
the housing loans coverage and rights of refusal or
reduction of claims which are
described in "The Mortgage Insurance
Policies." Therefore, a borrower's
payments that are expected to be
covered by the mortgage insurance
policies may not be covered because of
these exclusions, refusals or
reductions and the issuer trustee may
not have enough money to make full
payments of principal and interest on
your Class A-1 notes.
You may not be able to resell your . The underwriters are not required to
Class A-1 notes assist you in reselling your Class A-1
notes. A secondary market for your
Class A-1 notes may not develop. If a
secondary market does develop, it
might not continue or might not be
sufficiently liquid to allow you to
resell any of your Class A-1 notes
readily or at the price you desire.
The market value of your Class A-1
notes is likely to fluctuate, which
could result in significant losses to
you.
</TABLE>
27
<PAGE>
<TABLE>
<C> <S>
The termination of any of the swaps . The issuer trustee will exchange the
may subject you to losses from interest payments from the fixed rate
interest rate or currency housing loans for variable rate
fluctuations payments based upon the three-month
Australian bank bill rate. If the
fixed rate swap is terminated or the
fixed rate swap provider fails to
perform its obligations, you will be
exposed to the risk that the floating
rate of interest payable on the Class
A-1 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.
. The issuer trustee will exchange the
interest payments from the variable
rate housing loans for variable rate
payments based upon the three-month
Australian bank bill rate. If the
basis swap is terminated, the manager
will direct the servicer to set the
interest rate on the variable rate
housing loans at a rate high enough
to cover the payments owed by the
trust. If the rates on the variable
rate housing loans are set above the
market interest rate for similar
variable rate housing loans, the
affected borrowers will have an
incentive to refinance their loans
with another institution, which may
lead to higher rates of principal
prepayment than you initially
expected, which will affect the yield
on your Class A-1 notes.
. The issuer trustee will receive
payments from the borrowers and the
fixed rate and basis swap providers
on the housing loans in Australian
dollars calculated, in the case of
the swap providers, by reference to
the Australian bank bill rate, and
make payments to you in U.S. dollars
calculated, in the case of interest,
by reference to LIBOR. Under the
currency swap, the currency swap
provider will exchange Australian
dollar obligations for U.S. dollars,
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 obligation or if the
currency swap is terminated, the
issuer trustee might have to exchange
its Australian dollars for U.S.
dollars and its Australian bank bill
rate
</TABLE>
28
<PAGE>
<TABLE>
<C> <S>
obligations for LIBOR obligations at a
rate that does not provide sufficient
U.S. dollars to make payments to you
in full.
Prepayments during a collection . If a prepayment is received on a
period may result in you not housing loan during a collection
receiving your full interest period, interest on the housing loan
payments will cease to accrue on that portion
of the housing loan that has been
prepaid, starting on the date of
prepayment. The amount prepaid will be
invested in investments, or will be
the subject of interest payable by the
servicer, 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
distribution date.
Payment holidays may result in you . If a borrower prepays principal on his
not receiving your full interest or her housing loan, the borrower is
payments not required to make any payments,
including interest payments, until the
outstanding principal balance of the
housing loan plus unpaid interest
equals the scheduled principal
balance. If a significant number of
borrowers take advantage of this
feature at the same time and the
liquidity facility does not provide
enough funds to cover the interest
payments on the housing loans that are
not received, the issuer trustee may
not have sufficient funds to pay you
the full amount of interest on the
Class A-1 notes on the next
distribution date.
The proceeds from the enforcement of . If the security trustee enforces the
the security trust deed may be security interest on the assets of the
insufficient to pay amounts due to trust after an event of default under
you 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
Class A-1 notes and the other secured
obligations that rank ahead of or
equally with the Class A-1 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
Class A-1 note trustee, the principal
paying agent and any receiver, to the
extent they are owed any fees, the
</TABLE>
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<PAGE>
<TABLE>
<C> <S>
liquidity facility provider to the
extent of any outstanding cash advance
deposit and the seller to the extent
of any unpaid accrued interest
adjustment will generally be entitled
to receive the proceeds of any sale of
the assets of the trust 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 manager directs the issuer . If the manager directs the issuer
trustee to redeem the Class A-1 trustee to redeem the Class A-1 notes
notes early, you could suffer early as described in "Description of
losses and the yield on your the Class A-1 Notes--Optional
Class A-1 notes could be lower Redemption of the Notes" and principal
than expected charge-offs have occurred, Class A
noteholders and redraw bondholders
owning at least 75% of the aggregate
outstanding amount of the Class A
notes and redraw bonds may consent to
receiving an amount equal to the
outstanding principal amount of the
Class A notes, less unreimbursed
principal charge-offs, plus accrued
interest. As a result, you may not
fully recover your investment. In
addition, the early retirement of your
Class A-1 notes will shorten their
average lives and potentially lower
the yield on your Class A-1 notes.
Termination payments relating to . If the issuer trustee is required to
the currency swap and the fixed make a termination payment to the
rate swap may reduce payments to currency swap provider or the fixed
you rate swap provider upon the
termination of the currency swap or
the fixed rate swap, respectively, the
issuer trustee will make the
termination payment from the assets of
the trust and, prior to enforcement of
the security trust deed, in priority
to payments on the Class A-1 notes.
Thus, if the issuer trustee makes a
termination payment, there may not be
sufficient funds remaining to pay
interest on your Class A-1 notes on
the next distribution date, and the
principal on your Class A-1 notes may
not be repaid in full.
The imposition of a withholding . If a withholding tax is imposed on
tax will reduce payments to you payments of interest on your Class A-1
and may lead to an early notes, you will not be entitled to
redemption of the Class A-1 notes receive grossed-up amounts to
compensate for such withholding tax.
Thus, you will receive less interest
than is scheduled to be paid on your
Class A-1 notes.
</TABLE>
30
<PAGE>
<TABLE>
<C> <S>
. If the option to redeem the Class A-1
notes affected by a withholding tax is
exercised and principal charge-offs
have occurred, Class A noteholders and
redraw bondholders owning at least 75%
of the aggregate outstanding amount of
the Class A notes and redraw bonds may
consent to receiving an amount equal
to the outstanding principal amount of
the Class A notes, less unreimbursed
principal charge-offs, plus accrued
interest. As a result, you may not
fully recover your investment. In
addition, the early retirement of your
Class A-1 notes will shorten their
average lives and potentially lower
the yield on your Class A-1 notes.
Commonwealth Bank's ability to set . The interest rates on the variable
the interest rate on variable rate rate housing loans are not tied to an
housing loans may lead to increased objective interest rate index, but are
delinquencies or prepayments set at the sole discretion of
Commonwealth Bank. If Commonwealth
Bank increases the interest rates on
the variable rate housing loans,
borrowers may be unable to make their
required payments under the housing
loans, and accordingly, may become
delinquent or may default on their
payments. In addition, if the interest
rates are raised above market interest
rates, borrowers may refinance their
loans with another lender to obtain a
lower interest rate.
This could cause higher rates of
principal prepayment than you expected
and affect the yield on your Class A-1
notes.
The features of the housing loans . The features of the housing loans,
may change, which could affect the including their interest rates, may be
timing and amount of payments to you changed by Commonwealth Bank, either
on its own initiative or at a
borrower's request. Some of these
changes may include the addition of
newly developed features which are not
described in this prospectus. As a
result of these changes and borrower's
payments of principal, the
concentration of housing loans with
specific characteristics is likely to
change over time, which may affect the
timing and amount of payments you
receive.
. If Commonwealth Bank changes the
features of the housing loans or fails
to offer desirable features offered by
its competitors, borrowers
</TABLE>
31
<PAGE>
<TABLE>
<C> <S>
might elect to refinance their loan with
another lender to obtain more favorable
features. In addition, the housing loans
included in the trust are not permitted
to have some features. If a borrower
opts to add one of these features to his
or her housing loan, in effect the
housing loan will be repaid and a new
housing loan will be written which will
not form part of the assets of the
trust. The refinancing or removal of
housing loans could cause you to
experience higher rates of principal
prepayment than you expected, which
could affect the yield on your Class A-1
notes.
There are limits on the amount of . If the interest collections during a
available liquidity to ensure collection period are insufficient to
payments of interest to you cover fees, expenses and the interest
payments due on the Class A-1 notes on
the next distribution date, the issuer
trustee will request an advance under
the liquidity facility. In the event
that there is not enough money available
under the liquidity facility, you may
not receive a full payment of interest
on that distribution date, which will
reduce the yield on your Class A-1
notes.
A decline in Australian economic . The Australian economy has been
conditions may lead to losses on experiencing a prolonged period of
your Class A-1 notes 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, a fall in
property values or any combination of
these factors, delinquencies or losses
on the housing loans might increase,
which might cause losses on your Class
A-1 notes.
Consumer protection laws may . Some of the borrowers may attempt to
affect the timing or amount of make a claim to a court requesting
interest or principal payments to changes in the terms and conditions of
you their housing loans or compensation or
penalties from the seller for breaches
of any legislation relating to consumer
credit. Any changes which allow the
borrower to pay less principal or
interest under his or her housing loan
may delay or decrease the amount of
payments to you.
. In addition, if the issuer trustee
obtains legal title to the housing
loans, the issuer trustee will be
subject to the penalties and
compensation provisions of the
applicable consumer protection laws
instead of the
</TABLE>
32
<PAGE>
<TABLE>
<C> <S>
seller. To the extent that the issuer
trustee is unable to recover any such
liabilities under the consumer
protection laws from the seller, the
assets of the trust will be used to
indemnify the issuer trustee prior to
payments to you. This may delay or
decrease the amount of collections
available to make payments to you.
The concentration of housing . To the extent that the trust contains
loans in specific geographic a high concentration of housing loans
areas may increase the secured by properties located within
possibility of loss on your a single state or region within
Class A-1 notes Australia, any deterioration in the
real estate values or the economy of
any of those states or regions could
result in higher rates of
delinquencies, foreclosures and loss
than expected on the housing loans.
In addition, these states or regions
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 . You will not receive physical notes,
notes representing your Class A-1 except in limited circumstances. This
notes, which can cause delays in could:
receiving
distributions and hamper your . cause you to experience delays in
ability to pledge or resell your receiving payments on the Class A-1
Class A-1 notes notes because the principal paying
agent will be sending distributions
on the Class A-1 notes to DTC instead
of directly to you;
. limit or prevent you from using your
Class A-1 notes as collateral; and
. hinder your ability to resell the
Class A-1 notes or reduce the price
that you receive for them.
</TABLE>
33
<PAGE>
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 163.
U.S. Dollar Presentation
In this prospectus, references to "U.S. 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$1.00, the noon buying rate in New York City for cable transfers
in Australian dollars as certified for customs purposes by the Federal Reserve
Bank of New York on [ ], 2000. 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.
The Issuer Trustee, Commonwealth Bank and the Manager
The Issuer Trustee
The issuer trustee was incorporated on September 28, 1886 as Perpetual
Trustee Company (Limited) under the Companies Statute of New South Wales as a
public company. The name of the issuer trustee was changed to Perpetual Trustee
Company Limited on December 14, 1971 and the issuer trustee now operates as a
limited liability public company under the Corporations Law of Australia. The
registered office of the issuer trustee is at Level 7, 39 Hunter Street,
Sydney.
The issuer trustee has 4,000,000 ordinary shares issued with a paid
amount of A$1.00 per share. The shares are held by Perpetual Trustees Australia
Limited. The issuer trustee has not agreed to issue any additional shares. As a
result of changes to the Australian Corporations Law, the issuer trustee no
longer has authorised share capital.
The principal activities of the issuer trustee are the provision of
trustee and other commercial services. The issuer trustee is an authorised
trustee corporation, and holds a securities dealers licence, under the
Corporations Law. The issuer trustee and its related companies provide a range
of services including custodial and administrative arrangements to the funds
management, superannuation, property, infrastructure and capital markets. The
issuer trustee and its related companies are leading trustee companies in
Australia with in excess of A$[80 billion] under administration.
The directors of the issuer trustee are as follows:
<TABLE>
<CAPTION>
Business Principal
Name Address Activities
--------------------------------------------- ----------------- ----------
<S> <C> <C>
Michael Stefanovski.......................... 39 Hunter Street, Director
Sydney NSW 2000
Wayne Wilson................................. 39 Hunter Street, Director
Sydney NSW 2000
Phillip Vernon............................... 39 Hunter Street, Director
Sydney NSW 2000
</TABLE>
34
<PAGE>
Commonwealth Bank
The Commonwealth Bank of Australia was established in 1911 by an Act of
Australia's Commonwealth Parliament as a government owned enterprise to conduct
commercial and savings banking business. For a period it also operated as
Australia's central bank until this function was transferred to the Reserve
Bank of Australia in 1959. The process of privatization of the Commonwealth
Bank was commenced by Australia's Commonwealth Government in 1990 and was
completed in July 1996. The Commonwealth Bank is now a public company listed on
the Australian Stock Exchange Limited. Its registered office is at Level 1, 48
Martin Place Sydney New South Wales, Australia.
Commonwealth Bank is one of the four major trading banks in Australia and
provides a wide range of banking, financial and related services to over 7.7
million customers with a branch network of approximately 1,400 locations
throughout Australia and internationally.
As at June 30, 1999 Commonwealth Bank and its subsidiaries, on a
consolidated basis, had total assets of A$138.1 billion, deposits of A$93.4
billion and total regulatory capital of A$9.8 billion. Operating profit after
tax, abnormals and outside equity interests for the twelve months to June 30,
1999 was A$1.42 billion.
Commonwealth Bank currently files periodic reports with the Securities
and Exchange Commission pursuant to the Exchange Act. For additional financial
and other information with respect to Commonwealth Bank, please refer to the
most recent Form 20-F filed with the Commission.
The Australian banking activities of Commonwealth Bank come under the
regulatory supervision of the Australian Prudential Regulation Authority. For a
further description of the business operations of Commonwealth Bank, see "The
Servicer."
The Manager
The manager, Securitisation Advisory Services Pty. Limited, is a wholly
owned subsidiary of Commonwealth Bank. Its principal business activity is the
management of securitization trusts established under Commonwealth Bank's
Medallion Programme and the management of other securitization programs
established by Commonwealth Bank or its customers. The manager's registered
office is Level 8, 48 Martin Place Sydney New South Wales, Australia.
Description of the Trust
Commonwealth Bank Securitisation Trust Programme
Commonwealth Bank established its Medallion Trust Programme pursuant to a
master trust deed for the purpose of enabling Perpetual Trustee Company
Limited, as trustee of each trust established pursuant to the Medallion Trust
Programme, to invest in pools of assets originated or purchased from time to
time by Commonwealth Bank. The master trust deed provides for the creation of
an unlimited number of trusts. The master trust deed
35
<PAGE>
establishes the general framework under which trusts may be established from
time to time. The Series 2000-1G Medallion Trust is established by the master
trust deed and the series supplement. Series 2000-1G Medallion Trust is
separate and distinct from any other trust established under the master trust
deed. The assets of the Series 2000-1G Medallion 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 Series 2000-1G Medallion Trust.
Series 2000-1G Medallion Trust
The detailed terms of the trust are set out in the master trust deed and
the series supplement.
The series supplement, which supplements the general framework under the
master trust deed with respect to the trust, does the following:
. specifies the details of the notes, other than for the Class A-1
Notes which are contained in the Class A-1 note trust deed and the
Class A-1 note terms and conditions annexed to the Class A-1 notes;
. establishes the cash flow allocation;
. sets out the mechanism for the acquisition from Commonwealth Bank of
the pool of housing loans and contains various representations and
warranties by Commonwealth Bank in relation to the housing loans;
. contains Commonwealth Bank's appointment as initial servicer of the
housing loans and the various powers, discretions, rights,
obligations and protections of Commonwealth Bank in this role;
. specifies a number of ancillary matters associated with the operation
of the trust and the housing pool such as the arrangements regarding
the operation of the collections account, the custody of the title
documents in relation to the housing loans, the fees payable to the
issuer trustee, the manager and the servicer, the perfection of the
issuer trustee's title to the housing loans, the termination of the
trust and the limitation on the issuer trustee's liability; and
. 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.
Other Trusts
In addition to the Series 2000-1G Medallion Trust, two other trusts are
established in relation to the issue of the Class A-1 notes as follows:
. Class A-1 Trust. The Class A-1 note trustee acts as trustee of the
Class A-1 trust under the Class A-1 note trust deed for the benefit
of Class A-1 noteholders. Under the terms of the Class A-1 note trust
deed the Class A-1 note trustee is able to enforce obligations of the
issuer trustee for the benefit of Class A-1 noteholders and will vote
on behalf of Class A-1 noteholders, based on their directions, at
meetings held under the terms of the master trust deed or the
security trust deed, including upon an event of default and
enforcement under the security trust deed.
36
<PAGE>
. Security Trust. The security trustee acts as trustee of the security
trust for the benefit of noteholders, redraw bondholders and all
other Secured Creditors under the terms of the security trust deed.
The security trustee holds the charge over the assets of the trust
granted by the issuer trustee under the security trust deed for the
benefit of the Secured Creditors. If an event of default occurs under
the security trust deed and the charge is enforced, the security
trustee, or a receiver appointed by it, will be responsible for
realizing the assets of the trust and the security trustee will be
responsible for distributing the proceeds of realisation to Secured
Creditors in the order prescribed under the security trust deed.
Description of the Assets of the Trust
Assets of the Trust
The assets of the trust will include the following:
. the pool of housing loans, including all:
. principal payments paid or payable on the housing loans at any
time from and after the cut-off date; and
. interest payments paid or payable on the housing loans before or
after the cut-off date (other than the Accrued Interest Adjustment
which is to be paid on the first distribution date to Commonwealth
Bank as seller of the housing loans);
. rights under the mortgage insurance policies issued by or transferred
to Housing Loans Insurance Corporation Pty Limited [GE Capital
Mortgage Insurance (Australia) Pty Limited] and the Commonwealth of
Australia and the individual property insurance policies covering the
mortgaged properties relating to the housing loans;
. rights under the mortgages in relation to the housing loans;
. rights under collateral securities securing the housing loans;
. amounts on deposit in the accounts established in connection with the
creation of the trust and the issuance of the notes, including the
collections account, and any instruments in which these amounts are
invested; and
. the issuer trustee's rights under the transaction documents.
The Housing Loans
The housing loans are secured by registered first ranking mortgages on
properties located in Australia. The housing loans are from Commonwealth Bank's
general residential mortgage product pool and have been originated by
Commonwealth Bank in the ordinary course of its business. Each housing loan
will be one of the types of products described in "Commonwealth Bank
Residential Loan Program--Commonwealth Bank's Product Types." Each housing loan
may have some or all of the features described in the "Commonwealth Bank
Residential Loan Program--Special Features of the Housing Loans." The housing
37
<PAGE>
loans are either fixed rate or variable rate loans. The mortgaged properties
consist of one-to-four family owner-occupied properties and one-to-four family
non-owner occupied properties, but do not include mobile homes which are not
permanently affixed to the ground, commercial properties or unimproved land.
Transfer and Assignment of the Housing Loans
On the closing date, the housing loans purchased by the trust will be
specified in a sale notice from Commonwealth Bank, in its capacity as seller of
the housing loans, to the issuer trustee.
The seller will equitably assign the housing loans, the mortgages and any
collateral securities from time to time appearing in its records as securing
those housing loans, the mortgage insurance policies and its interest in any
insurance policies on the mortgaged properties relating to those housing loans
to the issuer trustee pursuant to the sale notice. After this assignment, the
issuer trustee will be entitled to receive collections on the housing loans.
If the issuer trustee is actually aware of the occurrence of a Perfection
of Title Event which is subsisting then, unless each rating agency confirms
that a failure to perfect the issuer trustee's title to the housing loans will
not result in a reduction, qualification or withdrawal of the credit ratings
assigned by them to the notes and redraw bonds, the issuer trustee must declare
that a Perfection of Title Event has occurred and the issuer trustee and the
manager must as soon as practicable take steps to perfect the issuer trustee's
legal title to the housing loans. These steps will include the lodgment of
transfers of the mortgages securing the housing loans with the appropriate land
titles office in each Australian State and Territory. The issuer trustee will
hold at the closing date irrevocable powers of attorney from the seller to
enable it to execute such mortgage transfers.
Each housing loan sold to the issuer trustee is secured by an "all
moneys" mortgage, which may also secure other financial indebtedness . The
seller will also sell these other loans to the issuer trustee which will hold
these by way of a separate trust for Commonwealth Bank established under the
series supplement and known as the CBA Series 2000-1 Trust or the CBA trust.
The other loans are not assets of the Series 2000-1G Medallion Trust. The
issuer trustee will hold the proceeds of enforcement of the related mortgage,
to the extent they exceed the amount required to repay the housing loan, as
trustee for the CBA trust, in relation to that other loan. The mortgage will
secure the housing loan equitably assigned to the trust in priority to that
other loan.
Because the seller's standard security documentation usually secures all
moneys owing by the provider of the security to the seller, it is possible that
a security held by the seller in relation to other facilities provided by it
could also secure a housing loan, even though in the seller's records the
particular security was not taken for this purpose. The seller will only assign
to the issuer trustee in its capacity as trustee of the trust those securities
that appear in its records as intended to secure the housing loans. Other
securities which by their terms technically secure a housing loan but which
were not taken for that purpose, will not be assigned for the benefit of the
noteholders or redraw bondholders.
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<PAGE>
Representations, Warranties and Eligibility Criteria
The seller will make various representations and warranties to the issuer
trustee as of the cut-off date with respect to each housing loan being
equitably assigned by it to the issuer trustee, including that:
. at the time the seller entered into the related mortgage, the
mortgage complied in all material respects with applicable laws;
. the seller entered into the housing loan in good faith;
. at the time the seller entered into the housing loan, the housing
loan was originated in the ordinary course of the seller's business
and since then the seller has dealt with the housing loan in
accordance with its servicing procedures and servicing standards;
. at the time the seller entered into the housing loan, all necessary
steps were taken to ensure that the related mortgage complied with
the legal requirements applicable at that time to ensure that the
mortgage was a first ranking mortgage, subject to any statutory
charges, any prior charges of a body corporate, service company or
equivalent, whether registered or not, and any other prior security
interests which do not prevent the mortgage from being considered to
be a first ranking mortgage in accordance with the servicing
standards, secured over land, subject to stamping and registration in
due course;
. where there is a second or other mortgage in respect of the land the
subject of the related mortgage and the seller is not the mortgagee
of that second or other mortgage, the seller has ensured whether by a
priority agreement or otherwise, that the mortgage ranks ahead in
priority to the second or other mortgage on enforcement for at least
the principal amount plus accrued but unpaid interest of the housing
loan and such other amount determined in accordance with the
servicing standards;
. at the time the housing loan was approved, the seller had received no
notice of the insolvency or bankruptcy of the relevant borrower or
any guarantors or security providers or any notice that any such
person did not have the legal capacity to enter into the relevant
mortgage;
. the seller is the sole legal and beneficial owner of the housing loan
and the related securities assigned to the issuer trustee as trustee
of the trust and, to its knowledge, subject to the above paragraph in
relation to second mortgages in respect of which the seller is not
the mortgagee, no prior ranking security interest exists in relation
to its right, title and interest in the housing loan and related
securities;
. each of the relevant mortgage documents, other than any property
insurance policies, which is required to be stamped with stamp duty
has been duly stamped;
. other than in respect of priorities granted by statute, the seller
has not received notice from any person that it claims to have a
security interest ranking in priority to or equal with the security
interest held by the seller and constituted by the relevant mortgage;
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<PAGE>
. each housing loan which had a loan-to-value ratio of greater than 80%
at the time of origination is insured under a mortgage insurance
policy obtained upon origination;
. except in relation to fixed rate housing loans or those which can be
converted to a fixed rate and applicable laws, binding codes and
competent authorities binding on the seller or as may be otherwise
provided in the corresponding mortgage documents, there is no
limitation affecting, or consent required from a borrower to effect,
a change in the interest rate under the housing loan; and
. as of the cut-off date the housing loan satisfies the following
eligibility criteria:
. it is from the seller's general housing loan product pool;
. it is secured by a mortgage over land which has erected on or
within it a residential dwelling or unit and the terms of that
mortgage require that dwelling or unit to be insured under a
general home owner's insurance policy;
. it has a loan-to-value ratio based on the outstanding balance of
the housing loan and the most recent valuation of the mortgaged
property at the commencement of business on the cut-off date less
than or equal to 95%;
. the amount outstanding, assuming all due payments have been made
by the borrower, will not exceed A$750,000;
. the borrower is required to repay that loan within 30 years of the
cut-off date;
. no payment from the borrower is in arrears for more than 30
consecutive days;
. the housing loan is not of a type with only interest payable
during the term and with "bullet" repayment of all principal at
the end of its term;
. it is or has been fully drawn;
. it was originated on or after 1 November, 1996;
. the borrower under the housing loan is not an employee of the
seller who is paying a concessional rate of interest under the
housing loan as a result of that employment;
. it is advanced and repayable in Australian dollars.
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 of the issuer trustee involved
in the day to day administration of the trust has actual notice to the
contrary.
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<PAGE>
Breach of Representations and Warranties
If Commonwealth Bank, the manager or the issuer trustee becomes actually
aware that a representation or warranty from Commonwealth Bank relating to any
housing loan or mortgage was incorrect when given, it must notify the others
within 5 Business Days, and provide to them sufficient details to identify the
housing loan and the reasons for believing the representation or warranty is
incorrect. None of Commonwealth Bank, the manager or the issuer trustee is
under any ongoing obligation to determine whether any representation or
warranty is incorrect when given.
If any representation or warranty is incorrect when given and notice of
this is given not later than 5 Business Days prior to 120 days after the
closing date, and the seller does not remedy the breach to the satisfaction of
the issuer trustee within 5 Business Days of the notice being given, the
housing loan and its related securities will no longer form part of the assets
of the trust and the issuer trustee will hold them for the CBA trust. The
issuer trustee will, however, retain all collections received in connection
with that housing loan from the cut-off date to the date of delivery of the
notice. Commonwealth Bank as seller must pay to the issuer trustee the
principal amount of, and interest accrued but unpaid under the housing loan as
at the date of delivery of the relevant notice within 2 Business Days of that
housing loan ceasing to form part of the trust.
During the 120 days after the closing date, the issuer trustee's sole
remedy for any of the representations or warranties being incorrect is the
right to the above payment from Commonwealth Bank and Commonwealth Bank has no
other liability for any loss or damage caused to the issuer trustee, any
noteholder or any other person, for any of the representations or warranties
being incorrect.
If the breach of a representation or warranty in relation to a housing
loan is discovered after the last day for giving notices in the period 120 days
after the closing date, Commonwealth Bank must pay damages to the issuer
trustee which will be limited to principal amount outstanding and any accrued
but unpaid interest and any outstanding fees in respect of the housing loans.
The amount of the damages must be agreed between the issuer trustee and the
seller or, failing this, be determined by the seller's external auditors.
Substitution of Housing Loan Securities
Under the series supplement, the servicer is empowered in relation to
each housing loan to, amongst other things, substitute any corresponding
mortgage, or collateral security appearing in the seller's records as intending
to secure the housing loan, as long as this is done in accordance with the
relevant mortgage insurance policy and the servicing guidelines.
Other Features of the Housing Loans
The housing loans have the following features.
. Interest is calculated daily and charged in arrears.
. Payments can be on a monthly, bi-weekly or weekly basis. Payments are
made by borrowers using a number of different methods, including cash
payments at branches, checks and in most cases automatic transfer.
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<PAGE>
. They are governed by the laws of one of the following Australian
States or Territories:
. New South Wales;
. Victoria;
. Western Australia;
. Queensland;
. South Australia;
. Northern Territory;
. Tasmania; or
. the Australian Capital Territory.
Details of the Housing Loan Pool
The information in the following tables sets forth in tabular format
various details relating to the housing loans proposed to be sold to the trust
on the closing date. The information is provided as of the close of business on
[ ], 2000. 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 add additional eligible housing loans or
remove housing loans. The seller may do this if, for example, the loans
originally selected are repaid early.
The seller will not add or remove 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 this prospectus,
unless a revised prospectus is delivered to prospective investors.
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<PAGE>
Housing Loan Information
Seasoning Analysis
<TABLE>
<CAPTION>
Total Total Average
Security Loan Loan
No. of Valuations Balance Balance
Seasoning Accounts (A$) (A$) (A$)
- ------------------------------------------ -------- ---------- -------- --------
<S> <C> <C> <C> <C>
1997 Q1...................................
1997 Q2...................................
1997 Q3...................................
1998 Q1...................................
1998 Q2...................................
1998 Q3...................................
1998 Q4...................................
1999 Q1...................................
1999 Q2...................................
1999 Q3...................................
-------- -------- -------- --------
Total.....................................
======== ======== ======== ========
</TABLE>
43
<PAGE>
Pool Profile by Geographic Distribution(1)
<TABLE>
<CAPTION>
Total Total
Security Loan
No. of Valuations Balance Average
Region Accounts (A$) (A$) Loan Balance (A$)
- --------------------------------- -------- ---------- ------- -----------------
<S> <C> <C> <C> <C>
Australian Capital Territory
Metro............................
New South Wales..................
Metro............................
Other............................
----- ------ ------- ------
Total............................
===== ====== ======= ======
Queensland
Metro............................
Non Metro--Gold Coast............
Non Metro--Sunshine..............
Non Metro--Other.................
----- ------ ------- ------
Total ...........................
===== ====== ======= ======
Victoria
Metro............................
Other............................
----- ------ ------- ------
Total ...........................
===== ====== ======= ======
Western Australia
Metro............................
Other............................
----- ------ ------- ------
Total............................
===== ====== ======= ======
South Australia
Metro............................
Other............................
----- ------ ------- ------
Total............................
===== ====== ======= ======
Northern Territory
Metro............................
Other............................
----- ------ ------- ------
Total............................
===== ====== ======= ======
Tasmania
Metro............................
Other............................
----- ------ ------- ------
Total............................
===== ====== ======= ======
</TABLE>
- --------
(1) Geographic distributions are split by State or Territory and by
metropolitan (metro) or country (other). Metro areas comprise the city and
surrounding suburbs of the capital city of each State or Territory and
Other comprise all other areas.
44
<PAGE>
Pool Profile by Balance Outstanding
<TABLE>
<CAPTION>
Current Loan Balance No. of Total Security Total Loan Average
($A) Accounts Valuations (A$) Balance (A$) Loan Balance (A$)
- -------------------- -------- --------------- ------------ -----------------
<S> <C> <C> <C> <C>
greater than 40,000 to less than or equal to 50,000
greater than 50,000 to less than or equal to 100,000
greater than 100,000 to less than or equal to 150,000
greater than 150,000 to less than or equal to 200,000
greater than 200,000 to less than or equal to 250,000
greater than 250,000 to less than or equal to 300,000
greater than 300,000 to less than or equal to 350,000
greater than 350,000 to less than or equal to 400,000
greater than 400,000 to less than or equal to 450,000
greater than 450,000 to less than or equal to 500,000
greater than 500,000 to less than or equal to 550,000
greater than 550,000 to less than or equal to 600,000
greater than 600,000 to less than or equal to 650,000
greater than 650,000 to less than or equal to 700,000
greater than 700,000 to less than or equal to 750,000
greater than 750,000
----- ----- ----- -----
Total ..................
===== ===== ===== =====
</TABLE>
45
<PAGE>
Pool Profile by Loan to Value Ratio (LTV)
<TABLE>
<CAPTION>
Total Total
Security Loan
No. of Valuations Balance Average
Current LTV (%) Accounts (A$) (A$) Loan Balance (A$)
---------------------------------------------- -------- ---------- ------- -----------------
<S> <C> <C> <C> <C>
0 less than 10.................................
greater than 10 to less than or equal to 15....
greater than 15 to less than or equal to 20....
greater than 20 to less than or equal to 25....
greater than 25 to less than or equal to 30....
greater than 35 to less than or equal to 40....
greater than 40 to less than or equal to 45....
greater than 45 to less than or equal to 50....
greater than 50 to less than or equal to 55....
greater than 55 to less than or equal to 60....
greater than 60 to less than or equal to 65....
greater than 65 to less than or equal to 70....
greater than 70 to less than or equal to 75....
greater than 75 to less than or equal to 80....
greater than 80 to less than or equal to 85....
greater than 85 to less than or equal to 90....
greater than 90 to less than or equal to 95....
OVER 95........................................
------ ------ ------ ------
Total..........................................
====== ====== ====== ======
</TABLE>
46
<PAGE>
Pool Profile by Year of Maturity
<TABLE>
<CAPTION>
No. of Total Security Total Loan Average
Maturity Year Accounts Valuations (A$) Balance (A$) Loan Balance (A$)
------------- -------- --------------- ------------ -----------------
<S> <C> <C> <C> <C>
<2003...................
2004....................
2005....................
2006....................
2007....................
2008....................
2009....................
2010....................
2011....................
2012....................
2013....................
2014....................
2015....................
2016....................
2017....................
2018....................
2019....................
2020....................
2021....................
2022....................
2023....................
2024....................
2025....................
2026....................
2027....................
2028....................
----- ----- ----- -----
Total ..................
===== ===== ===== =====
</TABLE>
47
<PAGE>
Pool Profile by Property Ownership Type
<TABLE>
<CAPTION>
Total Total
Security Loan
No. of Valuations Balance Average
Type of Loan Accounts (A$) (A$) Loan Balance (A$)
- ------------ -------- ---------- ------- -----------------
<S> <C> <C> <C> <C>
Owner-occupied....................
Non-owner-occupied................
----- ----- ----- -----
Total ............................
===== ===== ===== =====
</TABLE>
Pool Profile by Amortization
<TABLE>
<CAPTION>
No. of Total Security Total Loan Average
Interest Only Period Accounts Valuations (A$) Balance (A$) Loan Balance (A$)
- -------------------- -------- --------------- ------------ -----------------
<S> <C> <C> <C> <C>
Principal and Interest..
Less than 3 yrs.........
=3 Less than 5 yrs......
=5 yrs..................
----- ----- ----- -----
Total ..................
===== ===== ===== =====
</TABLE>
48
<PAGE>
Pool Profile by Product
<TABLE>
<CAPTION>
No. of Total Security Total Loan Average
Loan Type Accounts Valuations (A$) Balance (A$) Loan Balance (A$)
- --------- -------- --------------- ------------ -----------------
<S> <C> <C> <C> <C>
Complete Home Loan
Variable rate...........
1 yr Guaranteed Rate....
1 yr fixed..............
2 yr fixed..............
3 yr fixed..............
4 yr fixed..............
5 yr fixed..............
---- ---- ---- ----
Sub-total...............
Econimiser Home Loan
Total ..................
==== ==== ==== ====
Distribution by Current
Interest Rates
<CAPTION>
No. of Total Security Total Loan Average
Current Rate (%) Accounts Valuations (A$) Balance (A$) Loan Balance (A$)
- ---------------- -------- --------------- ------------ -----------------
<S> <C> <C> <C> <C>
less than 5.00................................
greater than 5.00 less than or equal to 5.50..
greater than 5.50 less than or equal to 6.00..
greater than 6.00 less than or equal to 6.50..
greater than 6.50 less than or equal to 7.00..
greater than 7.00 less than or equal to 7.50..
greater than 7.50 less than or equal to 8.00..
---- ---- ---- ----
Total ........................................
==== ==== ==== ====
</TABLE>
49
<PAGE>
Commonwealth Bank Residential Loan Program
Origination Process
The housing loans to be assigned to the trust comprise a portfolio of
variable and fixed rate loans which were originated by Commonwealth Bank
through loan applications from new and existing customers. Housing loan
applications are sourced from Commonwealth Bank's branch network, its mobile
sales force, its telephone sales operation and through the internet from
Commonwealth Bank's website at "www.commbank.com.au."
Approval and Underwriting Process
When a housing loan application is received it is processed in accordance
with Commonwealth Bank's approval policies. These policies are monitored and
are subject to continuous review by Commonwealth Bank. Commonwealth Bank, like
other 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. In
limited situations discounted interest rates are provided to retain existing
borrowers or to attract certain high income individuals. All borrowers must
satisfy Commonwealth Bank's approval criteria described in this section.
The approval process includes verifying the borrower's application
details, assessing their ability to repay the housing loan and determining the
valuation of the mortgaged property.
Verification of application details
The verification process involves borrowers providing proof of identity,
evidence of income and evidence of a savings pattern. For an employed
applicant, it includes confirming employment and income levels by way of recent
payslips or tax assessments. For a self-employed or business applicant it
includes checking annual accounts and tax assessments. Statements or records of
savings are reviewed to identify any recent additional borrowings or gifts.
Where applicants are refinancing debts from another financial institution, a
check of the last six months' statements of the existing loan is made to
determine the regularity of debt payments. The credit history of any existing
borrowings from Commonwealth Bank is also checked.
Assessing ability to repay
Based upon the application, once verified, an assessment is made of the
applicant's ability to repay the housing loan. This is primarily based on the
applicant's debt servicing to income commitment ratio along with any risk
factors identified in verifying the applicant's income, savings or credit
history. The credit decision is made using one the following processes.
. Credit scorecard. A credit scorecard system automatically and
consistently applies Commonwealth Bank's credit assessment rules
without relying on the credit experience of the inputting officer.
The credit scorecard returns a decision to approve, reject or refer
an application. An application is referred by the system
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<PAGE>
if certain risk factors, such as loan size or a high commitment
level, are present which require the application to be assessed by an
experienced loan officer. The credit score determined by this system
is based on historical performance data of Commonwealth Bank's
housing loan portfolio.
. Credit approval authorities. Housing loan applications which are not
credit scored and those which are referred by the credit scorecard
are assessed by a loan officer. Each loan officer is allocated a
credit approval authority based on their level of experience and
past performance. Loans which have certain risk characteristics,
such as loan size or a high commitment level, are assessed by more
experienced loan officers. Commonwealth Bank monitors the quality of
lending decisions and conducts regular audits of approvals.
Borrowers in respect of housing loans may be natural persons, corporations or
trusts. Housing loans to corporations and trusts may be secured, if deemed
necessary, by guarantees from directors. Guarantees may also be obtained in
other circumstances.
Valuation of mortgaged property
For applications which successfully pass the credit decision process,
the maximum allowable loan-to-value ratio, being the ratio of the housing loan
amount to the value of the mortgaged property, is calculated and an offer for
finance is made conditional upon a satisfactory valuation of the mortgaged
property and any other outstanding conditions being satisfied. The amount of
the housing loan that will be approved for a successful applicant is based on
an assessment of the applicant's ability to service the proposed housing loan
and the loan-to-value ratio. For the purposes of calculating the loan-to-value
ratio, the value of a mortgaged property in relation to housing loans to be
assigned to the trust has been determined at origination by one of the
following methods.
. Valuation by valuer. Valuations by qualified professional valuers
are carried out when there is some attribute of the housing loan or
its mortgaged property which, in accordance with the Commonwealth
Bank's policies, requires a professional valuer to undertake the
assessment. These attributes include:
. mortgaged properties with a value in excess of A$1 million;
. properties in areas which are subject to landslip, subsidence or
flooding;
. housing loans which are refinancing loans from another financial
institution; and
. housing loans where mortgage insurance is required upon
origination, unless otherwise approved by the mortgage insurer.
. Valuation on contract price or rates notice. If not valued by a
valuer and for housing loan amounts of less than or equal to
A$200,000 or, for mortgaged properties in the Sydney, Melbourne or
Brisbane metropolitan areas, A$300,000, the value of the mortgaged
property is based on the purchase price under a contract for the
purchase by the borrower of the mortgaged property or on the
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<PAGE>
value specified in a local government rates notice (that is,
generally, the unimproved value of the land assessed by a government
valuer) for the mortgaged property.
. Valuation by bank officer. In all other cases, the value of the
mortgaged property is assessed by an officer of the Commonwealth
Bank who visits the mortgaged property and compares it with recent
sales of similar properties in the same area.
The maximum loan-to-value ratio that is permitted for any loan is
determined according to Commonwealth Bank's credit policy and is dependent on
the size of the proposed loan, the nature and location of the proposed
mortgaged property and other relevant factors. Where more than one mortgaged
property is offered as security for a housing loan, the sum of the valuations
for each mortgaged property is assessed against the housing loan amount sought.
Once Commonwealth Bank's formal loan offer has been accepted by the
applicant, one of Commonwealth Bank's five loan processing centres prepares the
loan security documentation and dispatches it to the borrower for execution.
After execution, the documentation, together with signed acknowledgment that
all non-documentary conditions of approval have been met, is returned by the
business unit to the loan processing centre authorizing settlement and funding
of the housing loan to proceed. In certain circumstances, settlement and
funding are completed at the business unit level.
One of the conditions of settlement is that the borrower establish and
maintain full replacement general home owner's insurance on the mortgaged
property. Some of the housing loans have home owner's insurance provided by
Commonwealth Insurance Limited, a subsidiary of Commonwealth Bank. However,
there is no ongoing monitoring of the level of home owner's insurance
maintained by borrowers.
Commonwealth Bank's Product Types
Complete Home Loan
This type of loan is Commonwealth Bank's traditional standard mortgage
product which consists of standard variable rate and fixed rate options. The
standard variable rate set under the Complete Home Loan product is not linked
to any other variable rates in the market. However, it may fluctuate with
market conditions. Borrowers may switch to a fixed interest rate at any time
upon payment of a switching fee as described below in "Switching Interest
Rates." Some of the housing loans will be subject to fixed rates for differing
periods.
In addition, some Complete Home Loans have an interest rate which is
discounted by a fixed percentage to the standard variable rate or fixed rate.
These discounts are offered to members of certain professional groups and to
other high income individuals.
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<PAGE>
Economiser Home Loan
This type of loan has a variable interest rate which is not linked to the
standard variable rate for the Complete Home Loan and which may fluctuate
independently of this and other standard variable rates in the market. The
Economiser Home Loan was introduced by Commonwealth Bank to allow borrowers who
did not require a full range of product features to reduce their interest rate.
The interest rate for the Economiser Home Loan historically has been less than
that for the Complete Home Loan. Of the features described below, at present
only those headed "Redraw and Further Advances," "Payment Holiday" and "Early
Repayment" are available for Economiser Home Loans. To take advantage of other
features borrowers with Economiser Home Loans must, with the agreement of
Commonwealth Bank and upon payment of a fee, switch their housing loan to the
Complete Home Loan product. However, these or other features may in the future
be offered to borrowers with Economiser Home Loans.
Special Features of the Housing Loans
Each housing loan may have some or all of the features described in this
section. In addition, during the term of any housing loan, Commonwealth Bank
may agree to change any of the terms of that housing loan from time to time at
the request of the borrower.
Switching Interest Rates
Borrowers may elect for a fixed rate, as determined by Commonwealth Bank,
to apply to their housing loan for a period of up to 10 years. These housing
loans convert to the standard variable interest rate at the end of the agreed
fixed rate period unless the borrower elects to fix the interest rate for a
further period.
Any variable rate converting to a fixed rate product will automatically
be matched by an increase in the fixed rate swap to hedge the fixed rate
exposure.
Substitution of Security
A borrower may apply to the servicer to achieve the following:
. substitute a different mortgaged property in place of the existing
mortgaged property securing a housing loan; or
. release a mortgaged property from a mortgage.
If the servicer's credit criteria are satisfied and another property is
substituted for the existing security for the housing loan, the mortgage which
secures the existing housing loan may be discharged without the borrower being
required to repay the housing loan. The servicer must obtain the consent of any
relevant mortgage insurer to the substitution of security or a release of a
mortgage where this is required by the terms of a mortgage insurance policy.
Redraws and Further Advances
Each of the variable rate housing loans allows the borrower to redraw
principal repayments made in excess of scheduled principal repayments during
the period in which the
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<PAGE>
relevant housing loan is charged a variable rate of interest. Redraws must be
for at least A$2,000 per transaction. Borrowers may request a redraw at any
time subject to meeting certain credit criteria at that time. The borrower may
be required to pay a fee to Commonwealth Bank in connection with a redraw.
Currently, Commonwealth Bank does not permit redraws on fixed rate housing
loans. A redraw will not result in the related housing loan being removed from
the trust.
In addition, Commonwealth Bank may agree to make a further advance to a
borrower under the terms of a housing loan. Where a further advance does not
result in the previous scheduled principal balance of the housing loan being
exceeded by more than one scheduled monthly instalment, the further advance
will not result in the housing loan being removed from the trust. Where a
further advance does result in the previous scheduled principal balance of the
housing loan being exceeded by more than one scheduled monthly instalment,
Commonwealth Bank must pay to the trust the principal balance of the housing
loan and accrued and unpaid interest and fees on the housing loan. If this
occurs the housing loan will be treated as being repaid and will cease to be an
asset of the trust.
A further advance to a borrower may also be made under the terms of
another loan or as a new loan. These loans may share the same security as a
housing loan assigned to the trust but will be subordinated upon the
enforcement of that security to the housing loan.
Payment Holiday
A borrower is allowed a payment holiday where the borrower has prepaid
principal, creating a difference between the outstanding principal balance of
the loan and the scheduled amortized principal balance of the housing loan. The
borrower is not required to make any payments, including payments of interest,
until the outstanding principal balance of the housing loan plus unpaid
interest equals the scheduled amortized principal balance. The failure by the
borrower to make payments during a payment holiday will not cause the related
housing loan to be considered delinquent.
Early Repayment
A borrower will not incur break fees if an early repayment or partial
prepayment of principal occurs under a variable rate housing loan contract.
A borrower may incur break fees or receive break benefits if an early
repayment or partial prepayment of principal occurs on a fixed rate housing
loan. However, [many] fixed rate loans allow for early repayment by the
borrower of up to A$5,000 in any 12 month period without any break fees being
applicable. Break benefits will be paid to the borrower.
Combination or "Split" Housing Loans
A borrower may elect to split a housing loan into separate funding
portions which may, among other things, be subject to different types of
interest rates. Each part of the housing loan is effectively a separate loan
contract, even though all the separate loans are secured by the same mortgage.
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<PAGE>
Interest Offset
Commonwealth Bank offers borrowers an interest offset product known as a
mortgage interest saver account under which the interest accrued on the
borrower's deposit account is offset against interest on the borrower's housing
loan. Commonwealth Bank does not actually pay interest to the borrower on the
loan offset account, but reduces the amount of interest which is payable by the
borrower under its housing loan. The borrower continues to make its scheduled
mortgage payment with the result that the portion allocated to principal is
increased by the amount of interest offset. Commonwealth Bank will pay to the
trust the aggregate of all interest amounts offset. These amounts will
constitute Finance Charge Collections for the relevant period. The mortgage
interest saver account must be in the same name as the housing loan.
If, following a Perfection of Title Event, the trust obtains legal title
to a housing loan, Commonwealth Bank will no longer be able to offer an
interest offset arrangement for that housing loan.
Interest Only Periods
A borrower may also request to make payments of interest only on his or
her housing loan for a period of up to 5 years. If Commonwealth Bank agrees to
such a request it does so conditional upon higher principal repayments applying
upon expiry of the interest only period so that the housing loan is repaid
within its original term.
Additional Features
Commonwealth Bank may from time to time offer additional features in
relation to a housing loan which are not described in the preceding section or
may cease to offer features that have been previously offered and may add,
remove or vary any fees or other conditions applicable to such features.
The Mortgage Insurance Policies
General
The mortgage insurance policies consist of:
. high LTV mortgage insurance policies in relation to individual
housing loans which had a loan-to-value ratio of greater than 80% at
the time that they were originated; and
. a master mortgage insurance policy to provide mortgage insurance in
relation to the balance of the housing loans.
The High LTV Mortgage Insurance Policies
High LTV mortgage insurance policies entered into before December 12,
1997 represent liabilities of the Commonwealth of Australia and are presently
managed on behalf of the Commonwealth of Australia by Housing Loans Insurance
Corporation Pty Ltd. High LTV mortgage insurance policies entered into on or
after December 12, 1997 represent liabilities of Housing Loans Insurance
Corporation Pty Ltd only. References in this section to
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<PAGE>
the mortgage insurer in relation to the high LTV mortgage insurance policies
entered into before December 12, 1997 are to Housing Loans Insurance
Corporation Pty Ltd acting on behalf of the Commonwealth of Australia.
The high LTV mortgage insurance policies insure the issuer trustee
against losses in respect of housing loans which had a loan-to-value ratio of
greater than 80% at the time of origination. They were required to be taken out
at the commencement of the housing loan and will be equitably assigned by the
seller to the issuer trustee on the closing date. Each borrower paid a single
upfront premium for their respective high LTV mortgage insurance policy and no
further premium is payable by the seller or the issuer trustee.
Period of Cover
The issuer trustee has the benefit of the high LTV mortgage insurance
policies from the closing date until the policy is canceled by the mortgage
insurer. An individual high LTV mortgage insurance policy may be canceled by
the mortgage insurer in the following circumstances:
. the issuer trustee, without the approval of the mortgage insurer:
. approves any transfer or assignment of the mortgaged property
without a full discharge of the corresponding mortgage and all
moneys secured by that mortgage; or
. takes possession of the mortgaged property, sells it, takes
foreclosure action or appoints any receiver or manager over it;
. where the insured is not a lender approved by the mortgage
insurer, if at any time there is not a servicer approved by the
mortgage insurer; or
. where the mortgage is not a first mortgage, if the issuer trustee
refuses or fails to take action required by the mortgage insurer
to oppose any application by a prior mortgagee for foreclosure
against the mortgagor and the issuer trustee.
Cover for Losses
Under each high LTV mortgage insurance policy, the mortgage insurer
insures the issuer trustee against loss if a default occurs in relation to the
insured housing loan and if one of the events entitling a claim to be made
occurs.
No claim can be made for a loss unless:
. the issuer trustee has sold the mortgaged property;
. the issuer trustee has become the absolute owner of the mortgaged
property by foreclosure;
. the relevant mortgagor has sold the mortgaged property with the
express consent of the issuer trustee given with the prior written
approval of the mortgage insurer;
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. the mortgaged property has been compulsorily acquired or sold by any
government, semi-governmental or local government authority for
public purposes;
. where the mortgage is not a first mortgage, a prior mortgagee has
sold or become absolute owner of the mortgaged property by
foreclosure; or
. the mortgage insurer has agreed to pay a claim.
The loss in respect of a housing loan insured under a high LTV mortgage
insurance policy is calculated by:
. adding together:
. the outstanding principal of the housing loan, after taking into
account all amounts received by the issuer trustee as compensation
for the compulsory acquisition of the mortgaged property or any
rents, profits or proceeds from the mortgaged property and all
amounts received by the issuer trustee under any insurance policy
in relation to loss arising from destruction of or damage to the
mortgaged property and not applied in restoration or repair at the
earliest of:
. the date of completion of the sale or compulsory acquisition
of the mortgaged property;
. the date upon which the issuer trustee became the absolute
owner of the mortgaged property by foreclosure;
. the date upon which a claim is paid by the mortgage insurer;
and
. where the relevant mortgage is not a first mortgage and where
a prior mortgagee has sold the mortgaged property or has taken
foreclosure action, the date on which the issuer trustee
receives from the prior mortgagee so much of the proceeds of
that sale as are payable to the issuer trustee, or where no
part of these proceeds is so payable, the date on which the
issuer trustee becomes aware of completion of the sale or that
the prior mortgagee has become the absolute owner of the
mortgaged property;
. interest paid in respect of the housing loan up to and including
the earliest of the dates referred to in the previous 4 bullet
points at the non-default rate specified in the housing loan;
. amounts recoverable by the issuer trustee under the terms of the
mortgage in respect of:
. amounts properly paid or incurred by the issuer trustee in
respect of the mortgaged property for premiums on general
insurance policies, levies and other charges payable to a body
corporate under the Australian strata title system, rates,
taxes and other statutory charges up to a limit in respect of
land tax as specified by the mortgage insurer;
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. reasonable and necessary legal and other fees and
disbursements paid or incurred by the issuer trustee in
enforcing or protecting its rights under the mortgage;
. amounts not exceeding A$1,000 paid or incurred by the issuer
trustee for repair, maintenance and protection of the
mortgaged property or such greater amounts incurred with the
prior approval of the mortgage insurer; and
. costs related to the sale of the mortgaged property by the
issuer trustee;
. to the extent not otherwise included above, and the mortgage
insurer determines that they should be included, unpaid fines,
penalties, additional interest and other similar amounts which are
properly incurred by the issuer trustee under the mortgage or in
respect of the housing loan; and
. subtracting from the above the aggregate of:
. all amounts received by the issuer trustee under any related
collateral security;
. where the issuer trustee has sold the mortgaged property, the sale
price less any amount required to discharge any prior mortgage;
. where the issuer trustee or a prior mortgagee has taken
foreclosure action, the value of the issuer trustee's interest in
the mortgaged property as agreed between the mortgage insurer and
the issuer trustee; and
. any amount by which a claim may be reduced.
Reduction of Claims
There are a number of restrictions imposed on the insured under each
mortgage insurance policy which may entitle the mortgage insurer to refuse or
reduce the amount of a claim with respect to a housing loan, including:
. the failure of the servicer to be approved by the mortgage insurer;
. the failure of the housing loan contract to require that the related
mortgaged property be insured under a general insurance policy;
. the existence of an encumbrance or other interest which affects or
has priority over the related mortgage;
. the housing loan or related mortgage being materially altered or
modified without the mortgage insurer's consent; and
. the occurrence of other circumstances reducing the insured's rights
under any insured housing loan or related mortgage.
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The Master Mortgage Insurance Policy
Cover
The master mortgage insurance policy is provided by [Housing Loans
Insurance Corporation Pty Ltd]. The master mortgage insurance policy insures
the issuer trustee against losses in respect of housing loans which had a loan-
to-value ratio of less than or equal to 80% at the time of origination. The
seller will prior to the closing date pay a single upfront premium for the
master mortgage insurance policy. No further premium is payable by the seller
or the issuer trustee.
Period of Cover
The issuer trustee has the benefit of the master mortgage insurance
policy in respect of each housing loan insured under it from the closing date
until the earliest of:
. the date the housing loan or the mortgage securing the housing loan
is assigned, transferred or mortgaged to another party without the
mortgage insurer's consent;
. the date the housing loan is repaid in full;
. the date the housing loan ceases to be secured by the relevant
mortgage other than where the mortgage is discharged by the operation
of a compulsory acquisition or sale by a government for public
purpose;
. the date the master mortgage insurance policy is canceled in respect
of the housing loan in accordance with the terms of the master
mortgage insurance policy; and
. the maturity date set out in the certificate of insurance issued by
the mortgage insurer in relation to the housing loan or as extended
with the consent of the mortgage insurer or as varied by a court
under the Australian Consumer Credit Code.
Cover for Losses
If a loss date occurs in respect of a housing loan insured under the
master mortgage insurance policy, the mortgage insurer will pay to the issuer
trustee the loss in respect of a housing loan.
A loss date means:
. if a default occurs under the insured loan and the mortgaged property
is sold pursuant to enforcement proceedings, the date on which the
sale is completed;
. if a default occurs under the insured loan and the issuer trustee or
a prior approved mortgagee becomes the absolute owner by foreclosure
of the mortgaged property, the date on which this occurs;
. if a default occurs under the insured loan and the mortgagor sells
the mortgaged property with the prior approval of the issuer trustee
and the mortgage insurer, the date on which the sale occurs;
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. if the mortgaged property is compulsorily acquired or sold by a
government for public purposes and there is a default under the
housing loan, or, where the mortgage has been discharged by the
operation of the compulsory acquisition or sale and there is a
failure in repayment of the housing loan which would have been a
default but for the occurrence of that event, the later of the date
of the completion of the acquisition or sale or 28 days after the
date of the default; or
. where the mortgage insurer has agreed to pay a claim under the master
mortgage insurance policy, the date specified in that agreement.
A "default" in respect of an insured housing loan means any event which
triggers the issuer trustee's power of sale in relation to the mortgaged
property.
The loss payable by the mortgage insurer to the issuer trustee in
respect of an insured loan is the amount outstanding, less the deductions
referred to below, in relation to the housing loan, in each case calculated as
at the loss date.
The amount outstanding under a housing loan is the aggregate of the
following:
. the principal amount outstanding together with any interest, fees or
charges outstanding as at the loss date;
. fees and charges paid or incurred by the issuer trustee; and
. other amounts, including fines or penalties, approved by the mortgage
insurer, which the issuer trustee is entitled to recover under the
housing loan or a related guarantee.
The mortgage insurer may make the following deductions:
. where the mortgaged property is sold, the sale price or where the
mortgaged property is compulsorily acquired, the amount of
compensation, less, in either case, any amount required to discharge
any approved prior mortgage;
. where foreclosure action occurs, the value of the issuer trustee's
interest in the mortgaged property, including the interest of any
unapproved prior mortgagee;
. any amount received by the issuer trustee under any collateral
security;
. any amounts paid to the issuer trustee by way of rents, profits or
proceeds in relation to the mortgaged property or under any insurance
policy not applied in restoration or repair;
. any interest that exceeds interest at the non-default interest rate
payable in relation to the housing loan;
. any fees or charges other than:
. premiums for general insurance policies, levies and other charges
payable to a body corporate under the Australian strata titles
system, rates, taxes and other statutory charges;
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. reasonable and necessary legal and other fees and disbursements of
enforcing or protecting the issuer trustee's rights under the
housing loan, up to a maximum of A$2,000, unless otherwise
approved in writing by the mortgage insurer;
. repair, maintenance and protection of the mortgaged property, up
to a maximum amount of A$1,000, unless otherwise approved in
writing by the mortgage insurer; and
. reasonable costs of the sale of the mortgaged property up to a
maximum amount of A$1,000 plus selling agent's commission, unless
otherwise approved in writing by the mortgage insurer, in
addition, if any fees and charges exceed those recoverable under
the Australian Consumer Credit Code less any amount that must be
accounted for to the borrower or the relevant mortgagor they will
be excluded;
. losses arising out of damage to the mortgaged property other than:
. fair wear and tear; or
. losses recovered and applied in the restoration or repair of the
mortgaged property or losses recovered under a general insurance
policy and applied to reduce the amount outstanding under the
housing loan; and
. any amounts by which a claim may be reduced under the master mortgage
insurance policy.
Refusal or Reduction in Claim
The mortgage insurer may refuse or reduce the amount of a claim with
respect to a housing loan in certain circumstances, including:
. the mortgaged property is not insured under a general home owner's
insurance policy;
. there is not a servicer approved by the mortgage insurer;
. the housing loan has not been duly registered with the Land Titles
Office in the relevant Australian jurisdiction;
. the issuer trustee does not comply with the obligation to seek the
mortgage insurer's consent under certain circumstances;
. the issuer trustee does not comply with certain reporting
obligations; or
[. any item used or relied upon by the issuer trustee is not year 2000
ready as specified in the master mortgage insurance policy.]
The mortgage insurer may also reduce its liability or cancel the master
mortgage insurance policy, in relation to a particular housing loan if the
issuer trustee has failed to comply with its reporting obligations.
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Exclusions
The master mortgage insurance policy does not cover any loss arising
from:
. any war or warlike activities;
. the use, existence or escape of nuclear weapons or nuclear
contamination;
. the existence or escape of any pollution or environmentally hazardous
material;
. the fact that the housing loan or any collateral security is void or
unenforceable;
. any failure of the housing loan or collateral security to comply with
the requirements of the Australian Consumer Credit Code; or
[. the failure of the issuer trustee's computer systems to be year 2000
ready as specified in the master mortgage insurance policy.]
Description of the Mortgage Insurers
Housing Loans Insurance Corporation was an Australian Commonwealth
Government statutory authority established under the Housing Loans Insurance
Act, 1965 of Australia and was, prior to its abolition, Australia's leading
lenders' mortgage insurer with approximately 50% of the Australian lenders'
mortgage insurance market.
In December 1997, the Commonwealth Government:
. transferred the liabilities of the Corporation in relation to
contracts of insurance entered into by the Corporation before 12
December 1997 to the Commonwealth Government;
. appointed a new corporation, Housing Loans Insurance Corporation
Limited, ACN 071 466 334, which has since changed its name to Housing
Loans Insurance Corporation Pty Ltd, to manage these contracts of
insurance on behalf of the Commonwealth of Australia; and
. sold Housing Loans Insurance Corporation Pty Ltd to GE Capital
Australia Limited, ACN 008 562 534, which is a wholly owned
subsidiary of GE Capital Services, Inc.
Housing Loans Insurance Corporation Pty Ltd currently has a claims paying
ability rating of AAA by Standard & Poor's and Fitch IBCA and Aa1 by Moody's.
Housing Loans Insurance Corporation Pty Ltd's parent, GE Capital Services,
Inc., is a diversified industrial and financial services company with
operations in over 100 countries. It is rated AAA by Standard & Poor's and
Fitch IBCA and Aaa by Moody's. It has a significant lenders' mortgage insurance
business around the world, operating in the United States, United Kingdom,
Canada and now Australia.
The Commonwealth of Australia has a local currency rating of AAA by
Standard & Poor's and Fitch IBCA and Aaa by Moody's.
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Description of the Class A-1 Notes
General
The issuer trustee will issue the Class A-1 notes on the closing date
pursuant to a direction from the manager to the issuer trustee to issue the
Class A-1 notes and the terms of the master trust deed, the series supplement,
the Class A-1 note trust deed and the underwriting agreement. The Class A-1
notes will be governed by the laws of New South Wales. The following summary
describes the material terms of the Class A-1 notes. The summary does not
purport to be complete and is subject to the terms and conditions of the Class
A-1 notes, which are attached as an appendix to this prospectus, and to the
terms and conditions of the Class A-1 note trust deed and the other transaction
documents. The Class A-1 noteholders are bound by, and deemed to have notice
of, all the provisions of the transaction documents.
Form of the Class A-1 Notes
Book-Entry Registration
The Class A-1 notes will be issued only in permanent book-entry format in
minimum denominations of US$100,000. While the notes are in book-entry format,
all references to actions by the Class A-1 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 Class A-1 noteholders will
refer to distributions, notices, reports and statements to DTC or its nominee,
as the registered noteholder, for distribution to owners of the Class A-1 notes
in accordance with DTC's procedures.
Class A-1 noteholders may hold their interests in the Class A-1 notes
through DTC, in the United States, or Cedelbank or the Euroclear System, 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 hold the Class A-1 notes. Cedelbank and Euroclear will hold
omnibus positions on behalf of their respective participants, through
customers' securities accounts in Cedel'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 manager and the underwriters that it is:
. a limited-purpose trust company organized under the New York Banking
Law;
. a "banking organization" within the meaning of the New York Banking
Law;
. a member of the Federal Reserve System;
. a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
. a "clearing agency" registered under the provisions of Section 17A of
the Exchange Act.
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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 SEC.
Transfers between participants on the DTC system will occur in accordance
with DTC rules. Transfers between participants on the Cedelbank 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 Cedelbank
participants or Euroclear participants, on the other, will be effected by DTC
in accordance with DTC 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. Cedelbank participants and Euroclear participants may not deliver
instructions directly to their system's depositary.
Because of time-zone differences, credits of securities in Cedelbank 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
Cedelbank participant or Euroclear participant on that business day. Cash
received in Cedelbank or Euroclear as a result of sales of securities by or
through a Cedelbank 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 Cedelbank or Euroclear
cash account until the business day following settlement in DTC.
Purchases of Class A-1 notes held through the DTC system must be made by
or through DTC participants, which will receive a credit for the Class A-1
notes on DTC's records. The ownership interest of each actual Class A-1
noteholder is in turn to be recorded on the DTC participants' and indirect
participants' records. Class A-1 noteholders will not receive written
confirmation from DTC of their purchase. However, Class A-1 noteholders are
expected to receive written confirmations providing details of the transaction,
as well as
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periodic statements of their holdings, from the DTC participant or indirect
participant through which the Class A-1 noteholder entered into the
transaction. Transfers of ownership interests in the Class A-1 notes are to be
accomplished by entries made on the books of DTC participants acting on behalf
of the Class A-1 noteholders. Class A-1 noteholders will not receive notes
representing their ownership interest in offered Class A-1 notes unless use of
the book-entry system for the Class A-1 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 Class A-1 noteholders of the Class A-1 notes; DTC's records reflect only
the identity of the DTC participants to whose accounts the Class A-1 notes are
credited, which may or may not be the actual beneficial owners of the Class A-1
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 Class A-1 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 or
the security 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 Class A-1 notes are credited on the record date, identified in a
listing attached to the proxy.
Principal and interest payments on the Class A-1 notes will be made to
DTC. DTC's practice is to credit its participants' accounts on the applicable
distribution 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 distribution 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 Class A-1 noteholders. These payments
will be the responsibility of the DTC participant and not of DTC, the issuer
trustee, the Class A-1 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 Class A-1 noteholders is the responsibility
of DTC participants and indirect participants.
DTC may discontinue providing its services as securities depository for
the Class A-1 notes at any time by giving reasonable notice to the principal
paying agent. Under these circumstances, if a successor securities depository
is not obtained, definitive notes are required to be printed and delivered.
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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.
Cedelbank is incorporated under the laws of Luxembourg as a professional
depository. Cedelbank holds securities for its participating organizations and
facilitates the clearance and settlement of securities transactions between
Cedelbank participants through electronic book-entry changes in accounts of
Cedelbank participants, thereby eliminating the need for physical movement of
notes. Transactions may be settled in Cedelbank in any of 32 currencies,
including U.S. dollars.
Cedelbank participants are financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust companies,
and clearing corporations. Indirect access to Cedelbank is also available to
others, including banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Cedelbank participant,
either directly or indirectly.
The Euroclear System 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.
The Euroclear System is operated by Morgan Guaranty Trust Company of New
York, Brussels, Belgium office, the Euroclear operator, under contract with
Euroclear Clearance System, Societe Cooperative, a Belgium cooperative
corporation, the Euroclear cooperative. All operations are conducted by the
Euroclear operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear operator, not the
Euroclear cooperative. The board of the Euroclear cooperative establishes
policy for the Euroclear System.
Euroclear participants include banks, including central banks, securities
brokers and dealers and other professional financial intermediaries. Indirect
access to the Euroclear System 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 the Euroclear System,
withdrawal of securities and cash from the Euroclear System, and receipts of
payments for securities in the Euroclear System. All securities in the
Euroclear System 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.
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Distributions on the Class A-1 notes held through Cedelbank or Euroclear
will be credited to the cash accounts of Cedelbank participants or Euroclear
participants in accordance with the relevant system's rules and procedures, to
the extent received by its depositary. These distributions must be reported for
tax purposes in accordance with United States tax laws and regulations.
Cedelbank or the Euroclear operator, as the case may be, will take any other
action permitted to be taken by a Class A-1 noteholder on behalf of a Cedelbank
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, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of interests in Class A-1 notes
among participants of DTC, Cedelbank 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 Notes
Class A-1 notes issued in definitive form are referred to in this
prospectus as "definitive notes." Class A-1 notes will be issued as definitive
notes, rather than in book entry form to DTC or its nominee, only if one of the
following events occurs:
. the issuer trustee, at the direction of the manager, advises the
Class A-1 note trustee in writing that DTC or any replacement
clearing agency is no longer willing or able to discharge properly
its responsibilities as depository for the Class A-1 notes, and the
manager is not able to locate a qualified successor;
. the issuer trustee, at the direction of the manager, at the manager's
option, advises the Class A-1 note trustee in writing that it elects
to terminate the book-entry system through DTC or any replacement
clearing agency; or
. after the commencement of enforcement of the charge under the
security trust deed, the beneficial owners of Class A-1 notes with a
Stated Amount of greater than 50% of the aggregate Stated Amount of
all the Class A-1 notes, advise the issuer trustee, through DTC or
any replacement clearing agency, that the continuation of a book-
entry system is no longer in the best interests of the beneficial
owners of the Class A-1 notes.
If any of these events occurs, the issuer trustee, at the direction of
the manager, must instruct DTC (or its replacement) to notify all of the
beneficial owners of the Class A-1 notes of the availability of definitive
notes. Class A-1 notes will be serially numbered if issued in definitive form.
Definitive notes will be transferable and exchangeable at the specified
offices of the Class A-1 note registrar. The Bank of New York, London Branch is
the initial Class A-1 note registrar and its initial specified offices are
located at [ ]. The Class A-1 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
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governmental charge. The Class A-1 note registrar will not be required to
register the transfer or exchange of definitive notes within the thirty days
preceding a distribution date.
Distributions on the Notes
Collections in respect of interest and principal will be received during
each quarterly collection period. Collections include the following:
. interest and principal receipts from the housing loans;
. proceeds from enforcement of the housing loans;
. proceeds from claims under the mortgage insurance policies; and
. payments by the seller or the servicer relating to breaches of their
representations or undertakings.
The issuer trustee will make its payments on a quarterly basis on each
distribution date, including payments to noteholders and redraw bondholders,
from collections received during the preceding collection period and from
amounts received under Support Facilities on or prior to the distribution date.
Certain amounts received by the issuer trustee are not distributed on a
distribution date. These amounts include cash collateral lodged with the issuer
trustee by a Support Facility provider or the seller and interest on that cash
collateral.
Key Dates and Periods
The following are the relevant dates and periods for the allocation of
cashflows and their payments.
Collection Period................ means, with respect to each determination
date, the period commencing on and
including the previous determination date
and ending on but excluding that
determination date. However, the first
collection period means the period from
and including the cut-off date to but
excluding the first determination date.
Accrual Period................... means each period commencing on and
including a distribution date and ending
on but excluding the next distribution
date. However, the first and last accrual
periods are as follows:
. first: the period from and including
the closing date to but excluding the
first distribution date;
. last: the period from and including
the distribution date immediately
preceding the date upon which the
Class A-1 notes are redeemed to but
excluding the date upon which the
Class A-1 notes are redeemed.
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Determination Date............... The first day of each July, October,
January and April. The first
determination date is [ ].
Distribution Date................ The 12th day of each of July, October,
January and April, or, if the 12th day is
not a Business Day, then the next
Business Day. The first distribution date
is [ ].
Example Calendar
The following example calendar for a quarter assumes that all relevant
days are Business Days:
Collection Period............. July 1st to September 30th
Determination Date............ October 1st
Distribution Date............. October 12th
Accrual Period................ July 12th to October 11th
Calculation of Available Income Amount
Payments of interest, fees and amounts otherwise of an income nature,
including payments of interest on the notes and redraw bonds, are made from the
available income amount.
The Available Income Amount for a determination date and the following
distribution date means the aggregate of:
. the Finance Charge Collections for the preceding collection period
which are the following amounts received by or on behalf of the
issuer trustee during that collection period:
. all amounts received in respect of interest, fees, government
charges and other amounts due under the housing loans but not
including principal and any insurance premiums or related charges
payable to the seller;
. all amounts of interest in respect of the housing loans to the
extent that the obligation to pay is discharged by a right of set-
off or right to combine accounts; and
. break costs but only to the extent that these are not paid to the
fixed rate swap provider under the fixed rate swap;
. the Mortgage Insurance Interest Proceeds for that determination date
which are amounts received by the issuer trustee under a mortgage
insurance policy which the manager determines should be accounted for
on that determination date in respect of a loss of interest, fees,
charges and certain property protection and enforcement expenses on a
housing loan;
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. Other Income for that collection period which means:
. certain damages or equivalent, including amounts paid by the
seller in respect of breaches of representations or warranties in
relation to the housing loans, in respect of interest or fees on
the housing loans received from the servicer or seller during the
collection period;
. other damages received by the issuer trustee during the collection
period from the servicer, the seller or any other person and
allocated by the manager as other income;
. amounts received upon a sale of the housing loans in respect of
interest or fees if the trust terminates as described under
"Termination of the Trust";
. interest, if any, on the collections account other than interest
in respect of cash collateral lodged by a Support Facility
provider or the seller in the collections account;
. income earned on Authorized Short-Term Investments received during
the collection period;
. certain tax credits; and
. other receipts in the nature of income, as determined by the
manager, received by the determination date;
. any advance under the liquidity facility due to be made on the
distribution date in order to meet an income shortfall; and
. any other amounts received from a Support Facility provider on or
prior to the distribution date which the manager determines should be
included in the Available Income Amount.
Based upon the margins payable by Commonwealth Bank on the basis swap and
the fixed rate swap, and assuming that payments are made when due under the
housing loans, it is expected that there will be sufficient Available Income
Amount to cover all the known obligations of the trust on each distribution
date, including interest on the notes, plus a buffer.
Liquidity Facility Advance
If the manager determines on any determination date that there is an
income shortfall, the manager must direct the issuer trustee to make a drawing
under the liquidity facility in an amount equal to the lesser of the amount of
the income shortfall and the unutilized portion of the liquidity limit, if any.
An income shortfall is the amount by which the payments to be made from
the Available Income Amount, other than reimbursement of principal charge-offs
or payment to the residual unitholder, exceed the aggregate of the Finance
Charge Collections, the Mortgage Insurance Interest Proceeds and Other Income
in relation to that distribution date.
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Distribution of the Available Income Amount
On each distribution date, the Available Income Amount for that
distribution date is allocated in the following order of priority:
. first, to payment of any taxes of the trust including government
charges paid by the servicer for the issuer trustee;
. second, payment of the issuer trustee's fee;
. third, payment of the security trustee's fee;
. fourth, payment of the manager's fee;
. fifth, payment of the servicer's fee;
. sixth, payment of the commitment fee payable under the liquidity
facility;
. seventh, rateably towards payment of any amounts due to a support
facility provider under a Support Facility, including interest due on
advances outstanding under the liquidity facility and payments under
the fixed rate swap and the basis swap, but not including any
payments under support facilities detailed above or below or which
are properly payable from the Principal Amount;
. eighth, payment of all costs, charges and expenses incurred by the
issuer trustee in administering the trust, other than as detailed
above or below or which are payable from the Principal Amount;
. ninth, payment of the commitment fee payable under the standby redraw
facility;
. tenth, repayment of any liquidity facility advance made on or prior
to the previous distribution date and then outstanding;
. eleventh, rateably between themselves:
. payment to the currency swap provider of the A$ Class A-1 Interest
Amount in relation to that distribution date and any unpaid A$
Class A-1 Interest Amounts from prior distribution dates and
interest on those unpaid amounts, in return for which the currency
swap provider will pay the principal paying agent for distribution
to the Class A-1 noteholders as described in "The Currency Swap--
Interest Payments" below;
. payment of interest in relation to the Class A-2 notes for the
accrual period ending on that distribution date and any unpaid
interest in relation to the Class A-2 notes from prior
distribution dates and interest on that unpaid interest;
. payment of interest in relation to the redraw bonds for the
accrual period ending on that distribution date and any unpaid
interest in relation to the redraw bonds from prior distribution
dates and interest on that unpaid interest; and
. payment of the interest due on that distribution date under the
standby redraw facility and any interest remaining unpaid from
prior distribution dates and interest on that unpaid interest;
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. twelfth, payment of interest in relation to the Class B notes for the
accrual period ending on that distribution date and any unpaid
interest in relation to the Class B notes from prior distribution
dates and interest on that unpaid interest;
. thirteenth, to reimburse any principal charge-offs as an allocation
to the Principal Amount on that distribution date; and
. fourteenth, to the residual unitholder.
The issuer trustee shall only make a payment under the bullet points
above to the extent that any Available Income Amount remains from which to make
the payment after amounts with priority to that payment have been distributed.
On the first distribution date, prior to any allocation or payment
described above, the issuer trustee will first apply the Available Income
Amount to pay to the seller the Accrued Interest Adjustment.
Interest on the Notes
Calculation of interest payable on the notes
The period that any notes or redraw bonds accrue interest is divided into
accrual periods. The first accrual period commences on and includes the closing
date and ends on but excludes the first distribution date. Each subsequent
accrual period commences on and includes a distribution date and ends on but
excludes the following distribution date. The final accrual period for the
Class A-1 notes will end on but exclude the date that the Class A-1 notes are
redeemed.
Up to, but excluding, the distribution date falling in [ ], the
interest rate for the Class A-1 notes for the related accrual period will be
equal to LIBOR for that accrual period plus [ ]%. If the issuer trustee has
not redeemed all of the Class A-1 notes by the distribution date falling in
[ ], then the interest rate for each accrual period commencing on or after
that date will be equal to LIBOR for that accrual period plus [ ]%.
The interest rates for the Class A-2 notes and the Class B notes for an
accrual period will be equal to the Bank Bill Rate for that accrual period plus
the relevant margin applicable to those notes. The margin applicable to the
Class A-2 notes will increase from the accrual period commencing on the
distribution date in [ ] if the Class A-2 notes have not been redeemed by that
date. If redraw bonds are issued the interest rate applicable to them will be
equal to the Bank Bill Rate plus a margin determined at the time of their
issue. The interest rates for the Class A-2 notes, the Class B notes and the
redraw bonds, if any, for each accrual period are calculated by the manager.
With respect to any distribution date, interest on a note or any redraw
bond will be calculated as the product of:
. the Invested Amount of that note or redraw bond as of the first day
of that accrual period, after giving effect to any payments of
principal made with respect to such note or redraw bond on such day;
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. the interest rate for such note or redraw bond for that accrual
period; and
. a fraction, the numerator of which is the actual number of days in
that accrual period and the denominator of which is 360 days for the
Class A-1 notes, or 365 days for the Class A-2 notes, the Class B
notes and any redraw bonds.
The Class A-1 notes accrue interest from and including the closing date
to but excluding the earlier of the date on which the Stated Amount of the
Class A-1 notes is reduced to zero and the date upon which the Class A-1 notes
are redeemed.
Interest will accrue on any unpaid interest in relation to a note or
redraw bond at the interest rate that applies from time to time to that note or
redraw bond until that unpaid interest is paid.
Calculation of LIBOR
On the second business day in London and New York before the beginning of
each accrual period, the agent bank will determine LIBOR for the next accrual
period.
Determination of the Available Principal Amount
Payments of principal, including repayment of principal on the notes and
redraw bonds, are made from the Available Principal Amount. The Available
Principal Amount for a determination date and the following distribution date
means the aggregate of:
. the Principal Collections for the preceding collection period which
are all amounts received during the collection period in respect of
principal on the housing loans, other than principal prepayments, and
includes principal to the extent that an obligation to pay principal
on a housing loan is discharged by a right of set-off or right to
combine accounts;
. the Mortgage Insurance Principal Proceeds for the determination date
which are all amounts received by the issuer trustee under a mortgage
insurance policy which the manager determines should be accounted for
on the determination date in respect of a loss of principal and
certain property restoration expenses on a housing loan;
. Other Principal Amounts which are all other amounts in respect of
principal on the housing loans including:
. proceeds of the liquidation of a housing loan following
enforcement, other than amounts included in Finance Charge
Collections, received during the collection period;
. principal prepayments under the housing loans received during the
collection period;
. certain damages or equivalent, including amounts paid by the
seller in respect of breaches of representations or warranties in
relation to the housing loans, in respect of principal received
from the servicer or the seller during the collection period;
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. other damages received by the issuer trustee during the collection
period from the servicer, the seller or any other person and
allocated by the manager as Other Principal Amounts;
. amounts received upon a sale of the housing loans in respect of
principal if the trust terminates as described under "Termination
of the Trust";
. in relation to the first determination date, the amount, if any,
by which subscription proceeds of the notes exceed the aggregate
of the principal outstanding on the housing loans as at the cut-
off date;
. any amount rounded down on payments of principal on the previous
distribution date; and
. any other receipts in the nature of principal as determined by the
manager which have been received by the determination date;
. Principal Charge-Off Reimbursement which is the excess of the
Available Income Amount for the determination date available to be
applied towards unreimbursed principal charge-offs;
. Standby Redraw Facility Advance which is any advance to be made under
the standby redraw facility on that distribution date; and
. Redraw Bond Amount which is the total subscription proceeds of redraw
bonds issued on the determination date or during the collection
period, but after the immediately preceding determination date.
Distribution of the Available Principal Amount
On each distribution date, the Available Principal Amount for that
distribution date is allocated in the following order of priority:
. first, repayment to the seller of any redraws and further advances
under the housing loans, other than further advances which cause the
related housing loan to be removed from the trust, made during or
prior to the collection period then ended and which are then
outstanding;
. second, repayment to the standby redraw facility provider of the
principal outstanding under the standby redraw facility as reduced by
any principal charge-offs or increased by any reimbursement of
principal charge-offs on or prior to that distribution date;
. third, equally amongst the redraw bonds in order of their issue until
their Stated Amounts are reduced to zero on the basis that a redraw
bond receives no principal repayment until the Stated Amount of all
earlier issued redraw bonds has been reduced to zero;
. fourth, to the currency swap provider in respect of principal
payments on the Class A-1 notes and amongst the Class A-2 notes and
the Class B notes in the manner described below under the heading
"Allocation of Principal to Class A Notes and Class B Notes";
. fifth, to the residual unitholder.
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The issuer trustee shall only make a payment under the bullet points
above to the extent that any Available Principal Amount remains from which to
make the payment after amounts with priority to that payment have been
distributed.
Allocation of Principal to Class A Notes and Class B Notes
That part of the Available Principal Amount which is available on a
distribution date for repayment of the Stated Amount of the Class A and Class B
notes is applied as follows.
The amount available for repayment of the Stated Amount of the notes,
under the fourth bullet point above, is divided between Net Principal
Collections and Net Unscheduled Principal. The Net Principal Collections are
the remaining Principal Collections available after prior applications in the
preceding three bullet points and the Net Unscheduled Principal is the
remaining Mortgage Insurance Principal Proceeds, Other Principal Amounts,
Principal Charge-off Reimbursement, Standby Redraw Facility Advance and Redraw
Bond Amount after prior applications in the preceding three bullet points. This
is determined on the basis that in applying the Available Principal Amount the
issuer trustee first applies the Mortgage Insurance Principal Proceeds, the
Other Principal Amounts, the Principal Charge-off Reimbursement, the Standby
Redraw Facility Advance and the Redraw Bond Amount and then, only after these
have been applied in full, applies the Principal Collections.
The amount to be applied towards repayment of the Stated Amount of the
Class A notes on a distribution date is determined as follows:
The amount to be applied to repayment is:
where:
<TABLE>
<S> <C> <C> <C> <C> <C>
(NPC+NUP)X SACAN) + (NUPX SACBN XSP)
( SAN ) ( SAN )
</TABLE>
. NPC is the Net Principal Collections;
. NUP is the Net Unscheduled Principal;
. SACAN is the aggregate Stated Amount of the Class A notes on the
preceding determination date, converted, in the case of the Class A-1
notes, to Australian dollars at the A$ Exchange Rate;
. SACBN is the aggregate Stated Amount of the Class B Notes on the
preceding determination date;
. SAN is the aggregate Stated Amount of all notes on the preceding
determination date, converted, in the case of the Class A-1 notes, to
Australian dollars at the A$ Exchange Rate; and
. SP is the Stepdown Percentage.
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The effect of the above calculation is that Class A noteholders receive
their proportional share of the Net Principal Collections and the Net
Unscheduled Principal (based upon the Stated Amounts of the notes) and also
receive the Stepdown Percentage (which may vary between 0% and 100%) of the
Class B noteholders' proportional share of the Net Unscheduled Principal. The
remaining part of the Available Principal Amount is applied towards repayment
of the Stated Amount of the Class B notes.
The amount to be applied towards repayment of the Stated Amount of the
Class A notes on the distribution date is applied rateably based upon the
aggregate Stated Amounts of the Class A-1 and A-2 notes converted, in the case
of the Class A-1 notes, to Australian dollars at the A$ Exchange Rate, towards:
. payment to the currency swap provider in respect of repayment of the
Stated Amount of the Class A-1 notes;
. payment equally amongst the Class A-2 notes in reduction of the
Stated Amount of the Class A-2 notes,
until the Stated Amount of the Class A notes is reduced to zero.
The balance of the Net Principal Collections and the Net Unscheduled
Principal is applied on that distribution date equally amongst the Class B
notes in reduction of the Stated Amount of the Class B notes until the Stated
Amount of the Class B notes is reduced to zero.
Redraws and Further Advances
The seller may make redraws and further advances to borrowers under the
housing loans. The seller is entitled to be reimbursed by the issuer trustee
for redraws and further advances other than further advances which cause the
related housing loan to be removed from the trust. The seller will be
reimbursed from the Available Principal Amount including proceeds of advances
under the standby redraw facility and proceeds from the issue of redraw bonds.
Standby Redraw Facility
If the manager determines that there is a redraw shortfall on a
determination date, the manager may direct the issuer trustee in writing to
make a drawing under the standby redraw facility on a distribution date equal
to the lesser of the redraw shortfall and the unutilized portion of the redraw
limit, if any.
A redraw shortfall is the amount by which the redraws and further
advances to be repaid to the seller on that distribution date exceed the
aggregate of the Principal Collections, the Mortgage Insurance Principal
Proceeds, the Other Principal Amounts and the Principal Charge-off
Reimbursement in relation to that distribution date.
Issue of Redraw Bonds
If prior to a determination date the manager considers that the aggregate
of the Principal Collections, the Mortgage Insurance Principal Proceeds, the
Other Principal
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Amounts, the Principal Charge-off Reimbursement in relation to the
determination date and the Standby Redraw Facility Advance that will be
available to be made with respect to the following distribution date are likely
to be insufficient to pay in full the manager's estimate of:
. the redraws and further advances to be repaid to the seller on that
distribution date; and
. the outstanding principal under the standby redraw facility as
reduced by any principal charge-offs or increased by any
reimbursement of principal charge-offs [on or prior to that
distribution date],
the manager may direct the issuer trustee to issue redraw bonds. The manager
must not direct the issuer trustee to issue redraw bonds unless it considers
that on the following distribution date, taking into account that issue of
redraw bonds and any repayments of principal and principal charge-offs or
reimbursement of principal charge-offs on the redraw bonds expected on that
distribution date, the aggregate Stated Amount of all redraw bonds will not
exceed on that distribution date A$[50,000,000] or such other amount agreed
between the manager and the rating agencies and notified to the issuer trustee.
Before issuing any redraw bonds, the issuer trustee must receive written
confirmation from each rating agency that the proposed issue of redraw bonds
will not result in a reduction, qualification or withdrawal of any credit
rating assigned by that rating agency to a note or redraw bond. The redraw
bonds will be denominated in Australian dollars and issued only in Australia.
Principal Charge-offs
In certain circumstances, amounts which are unrecoverable under a housing
loan will be absorbed by reducing the Stated Amount of a note or redraw bond or
by reducing the principal outstanding in respect of the standby redraw
facility. That reduction of the Stated Amount of a note or redraw bond or the
principal outstanding of the standby redraw facility is referred to as a
principal charge-off.
Application of Principal Charge-Offs
If the manager determines on a determination date that a principal loss
should be accounted for in respect of a housing loan, after taking into account
proceeds of enforcement of that housing loan and its securities, any relevant
payments under a mortgage insurance policy or damages from the servicer or the
seller, that principal loss will be allocated in the following order:
. first, equally amongst the Class B notes until the Stated Amount of
the Class B notes is reduced to zero; and
. secondly, rateably amongst the following based, in the case of the
notes or redraw bonds, on their Stated Amount converted, in the case
of the Class A-1 notes, to Australian dollars at the A$ Exchange
Rate:
. the Class A-1 notes;
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. the Class A-2 notes;
. the redraw bonds; and
. the principal outstanding of the standby redraw facility,
until the Stated Amount of the Class A-1 and A-2 notes, the redraw
bonds and the principal outstanding of the standby redraw facility is
reduced to zero.
To the extent allocated, the principal loss will reduce the Stated Amount
of the notes and redraw bonds and will reduce the principal outstanding of the
standby redraw facility as from the following distribution date. The principal
loss allocated is an Australian dollar amount. Where this is allocated to a
Class A-1 note, the Stated Amount of the Class A-1 note is reduced by an
equivalent US dollar amount converted at the US$ Exchange Rate.
Reimbursements of Principal Charge-Offs
Principal charge-offs may be reimbursed on a subsequent distribution date
where there is excess income available after payment of all fees, expenses and
interest on that distribution date. Reimbursement of principal charge-offs will
only occur to the extent that there are unreimbursed principal charge-offs and
will be allocated in the following order:
. first rateably amongst the following based on their unreimbursed
principal charge-offs converted, in the case of the Class A-1 notes,
to Australian dollars at the A$ Exchange Rate:
. the Class A-1 notes;
. the Class A-2 notes;
. the redraw bonds; and
. the principal outstanding of the standby redraw facility,
in reduction of their unreimbursed charge-offs until these are
reduced to zero; and
. second, equally amongst the Class B notes until the unreimbursed
charge-offs of the Class B notes are reduced to zero.
A reimbursement of a principal charge-off on a note or redraw bond will
increase the Stated Amount of that note or redraw bond and a reimbursement of a
principal charge-off on the standby redraw facility will increase the principal
outstanding of the standby redraw facility but the actual funds allocated in
respect of the reimbursement will be distributed as described in "Distribution
of the Available Principal Amount" above.
The amounts allocated for reimbursement of principal charge-offs are
Australian dollar amounts. Where such an amount is allocated to a Class A-1
note, the Stated Amount of the Class A-1 note is increased by an equivalent
U.S. dollar amount converted at the US$ Exchange Rate.
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The Interest Rate Swaps
Purpose of the Interest Rate Swaps
Collections in respect of interest on the variable rate housing loans
will be calculated based on the servicer's administered variable rates.
Collections in respect of interest on the fixed rate housing loans will be
calculated based on the relevant fixed rates. However, the payment obligations
of the issuer trustee on the Class A-2 notes and the Class B notes and under
the currency swap are calculated by reference to the Bank Bill Rate. To hedge
these interest rate exposures, the issuer trustee will enter into the basis
swap with the basis swap provider and the fixed rate swap with the fixed rate
swap provider . The basis swap and the fixed rate swap will be governed by a
standard form ISDA Master Agreement, as amended by a supplementary schedule and
confirmed by written confirmations in relation to each swap.
Basis Swap
On each distribution date the issuer trustee will pay to the basis swap
provider an amount calculated by reference to the aggregate principal amount
outstanding of the variable rate housing loans as at the previous distribution
date and the weighted average of the interest rates charged on the variable
rate housing loans.
In return the basis swap provider will pay to the issuer trustee on each
distribution date an amount calculated by reference to the aggregate principal
amount outstanding of the variable rate housing loans as at the previous
distribution date and the Bank Bill Rate plus a margin.
The basis swap will terminate on the distribution date in [ ]. See
"Description of the Transaction Documents--Servicing of the Housing Loans--
Administer Interest Rates" in relation to the servicer's obligations with
respect to interest rates on the variable rate housing loans if the basis swap
is terminated.
Fixed Rate Swap
On each distribution date the issuer trustee will pay to the fixed rate
swap provider an amount calculated by reference to the aggregate principal
amount outstanding of the fixed rate housing loans as at the previous
distribution date and the weighted average of the interest rates charged on the
fixed rate housing loans.
In return the fixed rate swap provider will pay to the issuer trustee on
each distribution date an amount calculated by reference to the aggregate
principal amount outstanding of the fixed rate housing loans as at the previous
distribution date and the Bank Bill Rate plus a margin.
In addition, if a borrower prepays a loan subject to a fixed rate of
interest, or otherwise terminates a fixed rate period under a housing loan, the
issuer trustee will normally be entitled to receive from the borrower a break
cost or the issuer trustee will be required to pay to the borrower a break
benefit.
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A break cost is currently payable by the borrower to the issuer trustee
where the terminated fixed rate under the housing loan is greater than the
current equivalent fixed rate product offered by the seller for the remaining
term of the housing loan. Under the seller's current policies and procedures,
prepayments of up to $5,000 in any 12 month period may be made by a borrower
without incurring break costs, see "Commonwealth Bank Residential Loan
Program--Special Features of the Housing Loans--Early Repayment." A break
benefit is payable by the issuer trustee to the borrower where the terminated
fixed rate under the housing loan is less than the equivalent fixed rate
product offered by the seller for the remaining term of the housing loan. If
the break period is not a whole year an interpolated rate is used.
While the fixed rate swap is operating the net difference between break
costs and break benefits for all housing loans for a collection period is
either paid by the fixed rate swap provider, where the difference is a negative
number, or paid to the fixed rate swap provider, where the difference is a
positive number, on each distribution date. While the fixed rate swap is
operating, break costs are not included within the Available Income Amount and
break benefits are not considered to be expenses of the trust.
The method for calculation of break costs and break benefits may change
from time to time according to the business judgment of the servicer.
Termination by the Basis Swap and Fixed Rate Swap Provider
The basis swap and fixed rate swap provider will each have the right to
terminate the basis swap and the fixed rate swap, respectively, in the
following circumstances:
. if the issuer trustee fails to make a payment under either swap
within 10 days after notice of failure is given to the issuer
trustee;
. if due to a change in law it becomes illegal for either party to
make or receive payments, perform its obligations under any credit
support document or comply with any other material provision of the
basis swap or the fixed rate swap. However, only a swap affected by
the illegality may be terminated and if the basis swap and fixed
rate swap provider is the party affected by the illegality it must
make efforts to transfer its rights and obligations to avoid this
illegality; or
. in the case of the basis swap only, if the basis swap provider
ceases to have short term credit ratings of P-1 from Moody's, A-1+
from Standard & Poor's and F1+ from Fitch IBCA as described under
"Basis Swap Provider Downgrade" below.
Termination by the Issuer Trustee
The issuer trustee will have the right to terminate the basis swap or the
fixed rate swap in the following circumstances:
. if the swap provider fails to make a payment within 10 days after
notice of failure is given to the swap provider; or
. if due to a change in law it becomes illegal for either party to
make or receive payments, perform its obligations under any credit
support document or comply
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with any other material provision of the basis swap or the fixed rate
swap. However, only a swap affected by the illegality may be
terminated and if the basis swap and fixed rate swap provider is the
party affected by the illegality it must make certain efforts to
transfer its rights and obligations to avoid this illegality.
Fixed Rate Swap Provider Downgrade
If, as a result of the withdrawal or downgrade of its credit rating by
any rating agency, on any determination date the fixed rate swap provider does
not have:
. [either a long term credit rating of at least AA- by Standard &
Poor's or] a short term credit rating of at least A-1+ by Standard &
Poor's;
. a long term credit rating of at least A2 by Moody's; and
. a short term rating of at least F1+ by Fitch,
the fixed rate swap provider must:
. obtain a counterparty acceptable to the manager, the issuer trustee,
and the rating agencies to enter into a swap with the issuer trustee
on substantially the same terms as the fixed rate swap;
. prepay its obligations under the fixed rate swap by depositing an
amount into the [collections account] which the relevant rating
agencies confirm will not result in a reduction, qualification or
withdrawal of any credit rating assigned by them to the notes or
redraw bonds (which amount will be adjusted on each following
determination date based on the requirements of the rating
agencies); or
. enter into other arrangements satisfactory to the issuer trustee and
the manager which each rating agency confirms will not result in a
reduction, qualification or withdrawal of any credit rating assigned
by it to the notes or redraw bonds.
Basis Swap Provider Downgrade
If, as a result of the withdrawal or downgrade of its credit rating by
any rating agency, on any determination date the basis swap provider does not
have:
. a short term credit rating of at least A-1+ by Standard & Poor's;
. a long term credit rating of at least A2 by Moody's; and
. a short term rating of at least F1+ by Fitch,
the basis swap provider must:
. terminate the basis swap;
. on each of the following distribution dates prepay the amount that
would otherwise be due from the basis swap provider to the issuer
trustee on the next distribution date; or
. enter into other arrangements satisfactory to the issuer trustee and
the manager which each rating agency confirms will not result in a
reduction, qualification or withdrawal of any credit rating assigned
by it to the notes or redraw bonds.
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Termination Payments
Upon termination of the fixed rate swap, a termination payment will be
due from the issuer trustee to the fixed rate swap provider or from the fixed
rate swap provider to the issuer trustee.
The termination payment in respect of fixed rate swap will be determined,
if possible, on the basis of quotations from leading dealers in the relevant
market 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 fixed rate swap.
No termination payment will be payable in respect of the termination of
the basis swap.
If the basis swap terminates then, unless and until the issuer trustee
has entered into a replacement basis swap or other arrangements which the
rating agencies have confirmed will not result in a reduction, qualification or
withdrawal of the credit ratings assigned to the notes or redraw bonds, the
servicer must, subject to applicable laws including the Consumer Credit Code,
adjust the interest rates charged on the variable rate housing loans. The
interest rates must be adjusted to a level which will be sufficient, assuming
that all the parties to the transaction documents and the housing loans comply
with their obligations under the transaction documents and the housing loans,
when aggregated with the income produced by the rate of interest on all the
other housing loans and the income from Authorized Short-Term Investments, to
ensure the issuer trustee will have sufficient collections to enable it to
comply with its obligations under the transaction documents as they fall due.
The Currency Swap
Purpose of the Currency Swap
Collections on the housing loans and receipts under the basis swap and
the fixed rate swap will be denominated in Australian dollars. However, the
payment obligations of the issuer trustee on the Class A-1 notes are
denominated in United States dollars. In addition, receipts by the issuer
trustee under the basis swap and the fixed rate swap are calculated by
reference to the Bank Bill Rate but the interest obligations of the issuer
trustee with respect to the Class A-1 notes are calculated by reference to
LIBOR. To hedge this currency and interest rate exposure, the issuer trustee
will enter into a currency swap agreement with the currency swap provider. The
currency swap will be governed by a standard form ISDA Master Agreement, as
amended by a supplementary schedule and confirmed by a written confirmation.
Principal Payments
On the closing date, the issuer trustee will pay the currency swap
provider the U.S. dollar proceeds of issue of the Class A-1 notes. In return,
the currency swap provider will pay to the issuer trustee the Australian dollar
equivalent of the proceeds of issue of the Class A-1 notes converted at the US$
Exchange Rate.
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On each distribution date, the issuer trustee will pay to the currency
swap provider the Australian dollar amount available to be applied towards
repayment of the Stated Amount of the Class A-1 notes. In return, the currency
swap provider will pay to the principal paying agent on behalf of the issuer
trustee the U.S. dollar equivalent of that amount converted at the A$ Exchange
Rate for distribution to the Class A-1 noteholders in accordance with the
agency agreement in reduction of the Stated Amount of the Class A-1 notes.
Interest Payments
On each distribution date, the issuer trustee will pay to the currency
swap provider an amount, the A$ Class A-1 Interest Amount, calculated by
reference to the Australian dollar equivalent of the aggregate Invested Amount
of the Class A-1 notes as at the preceding distribution date converted at the
US$ Exchange Rate and the Bank Bill Rate plus a margin.
In return, the currency swap provider will pay to the principal paying
agent on behalf of the issuer trustee the interest due in respect of the Class
A-1 notes on that distribution date for distribution to Class A-1 noteholders
in accordance with the agency agreement.
If the issuer trustee does not have sufficient funds under the series
supplement to pay the full amount owing to the currency swap provider in
respect of the above payment the currency swap provider is not required to make
the corresponding payment to the principal paying agent and, after the
applicable grace period, the currency swap provider may terminate the currency
swap. The manner of determining whether the issuer trustee will have sufficient
funds to pay the currency swap provider that amount on a distribution date is
described in "Distribution of the Available Income Amount" above. A failure of
the issuer trustee to pay an amount owing under the currency swap, if not
remedied within the applicable grace period, will be an event of default under
the security trust deed.
Termination by the Currency Swap Provider
The currency swap provider will have the right to terminate the currency
swap in the following circumstances:
. if the issuer trustee fails to make a payment under the currency
swap within 10 days after notice of failure is given to the issuer
trustee;
. if due to a change in or a change in interpretation of law it
becomes illegal other than as a result of the introduction of
certain exchange controls by an Australian governmental body for
either party to make or receive payments, perform its obligations
under any credit support document or comply with any other material
provision of the currency swap. However, if the currency swap
provider is the party affected by the illegality, it must make
efforts to transfer its rights and obligations to avoid this
illegality; and
. if due to any action taken by a taxation authority or a change in
tax law the currency swap provider is required to gross-up payments
on account of a non-resident withholding tax liability or receive
payments from which amounts have been withheld or deducted on
account of tax. However, the currency swap
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provider will only have the right to terminate the currency swap if
the Class A-1 note trustee is satisfied that all amounts owing to
Class A-1 noteholders will be paid in full on the date on which the
Class A-1 notes are to be redeemed.
Termination by the Issuer Trustee
The issuer trustee will have the right to terminate the currency swap in
the following circumstances:
. if the currency swap provider fails to make a payment under the
currency swap within 10 days after notice of failure is given to the
currency swap provider;
. if certain bankruptcy related events occur in relation to the
currency swap provider;
. if the currency swap provider merges with, or otherwise transfers
all or substantially all of its assets to, another entity and the
new entity does not assume all of the obligations of the currency
swap provider under the currency swap;
. if due to a change in or a change in interpretation of law it
becomes illegal other than as a result of the introduction of
certain exchange controls by an Australian governmental body for
either party to make or receive payments, perform its obligations
under any credit support document or comply with any other material
provision of the currency swap. However, if the currency swap
provider is the party affected by the illegality, it must make
efforts to transfer its rights and obligations to avoid this
illegality;
. if due to any action taken by a taxation authority or a change in
tax law the issuer trustee is required to receive payments from
which amounts have been withheld or deducted on account of tax and
no entitlement to a corresponding gross-up arises other than as a
result of its failure to perform certain tax covenants or, in
certain circumstances, a breach of its tax representations;
. if as a result of the currency swap provider merging with, or
otherwise transferring all or substantially all its assets to
another entity, the issuer trustee is required to receive payments
from which a deduction or withholding has been made on account of a
non-resident withholding tax liability and no entitlement to a
corresponding gross-up arises other than as a result of its failure
to perform certain tax covenants, or, in certain circumstances, a
breach of its tax representations; and
. if the currency swap provider fails to comply with its obligations
described in "Currency Swap Provider Downgrade" below following a
downgrade of its credit ratings, and that failure is not remedied
within 10 Business Days of notice of the failure being given to the
currency swap provider or such other period as the issuer trustee
and the manager agree and the rating agencies confirm will not
result in a reduction, qualification or withdrawal of the credit
ratings assigned by them to the Class A-1 notes.
The issuer trustee may only terminate the currency swap with the prior written
consent of the Class A-1 note trustee.
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Termination by the Class A-1 Note Trustee
If following an event that allows the issuer trustee or the currency swap
provider to terminate the currency swap the relevant party does not terminate
the currency swap, the Class A-1 note trustee may terminate the currency swap.
Currency Swap Provider 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:
. either a long term credit rating of at least AA- by Standard &
Poor's or a short term credit rating of at least A-1+ by Standard &
Poor's;
. a long term credit rating of at least A2 by Moody's; and
. a long term rating of at least AA- by Fitch,
the currency swap provider must within:
. 30 days, if the currency swap provider still has either a long term
credit rating of at least A- by Standard & Poor's or a short term
credit rating of at least A-1 by Standard & Poor's, and a long term
credit rating of at least A2 by Moody's and a long term rating of at
least A- by Fitch; or
. 5 days, in any other case,
or, in either case, such greater period as is agreed to in writing by the
relevant rating agency, at its cost and at its election:
. lodge cash collateral in US$, in an amount determined by the
relevant rating agencies or, in certain circumstances, determined
under the currency swap, in an account held by the issuer trustee
with a financial institution outside Australia which has the highest
short-term credit rating from each rating agency;
. enter into an agreement novating the currency swap to a replacement
counterparty proposed by the currency swap provider or the manager
and, if proposed by the currency swap provider, acceptable to the
manager and which each rating agency has confirmed will not result
in there being a reduction, qualification or withdrawal of any
credit rating assigned by it to the Class A-1 notes; or
. enter into other arrangements which each rating agency has confirmed
will not result in there being a reduction, qualification or
withdrawal of any credit rating assigned by it to the Class A-1
notes.
If the currency swap provider lodges cash collateral with the issuer
trustee, any interest on that cash collateral will be paid to the currency swap
provider.
Termination Payments
Upon termination of the 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.
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The termination payment in respect of the currency swap will be
determined, if possible, on the basis of quotations from leading dealers in the
relevant market 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 currency swap.
Replacement of the Currency Swap
If the currency swap is terminated prior to its scheduled termination
date, the issuer trustee may, at the direction of the manager, enter into one
or more replacement currency swaps on terms and with a counterparty which the
rating agencies confirm will not result in a reduction, qualification or
withdrawal of the credit ratings assigned by them to the Class A-1 notes. A
termination payment received by the issuer trustee upon termination of the
currency swap may be applied towards a premium payable to enter into a
replacement currency swap and a premium received by the issuer trustee upon
entering into a new currency swap may be applied towards a termination payment
in respect of the terminated currency swap.
Currency Swap Provider
The currency swap provider will be [ ]. [ ] is [description of
currency swap provider]. [ ]'s principal executive offices are located at
[ ] and its telephone number is [ ]. [ ] has a long term rating of
[ ] from Fitch IBCA, [ ] from Moody's and [ ] from Standard & Poor's,
and a short term rating of [ ] from Standard & Poor's.
The following table sets forth certain unaudited selected financial data
for [ ] and its consolidated subsidiaries for the periods and as of the
dates indicated:
Unaudited Consolidated Income Statement Data (in U.S.$ millions)
<TABLE>
<CAPTION>
[Six months ended
[ ]]
------------------
[1999 1998]
-------- --------
<S> <C> <C>
Net interest revenue..............................
Total non-interest revenue........................
Net income (loss).................................
</TABLE>
Unaudited Consolidated Balance Sheet Data (in U.S. $ millions)
<TABLE>
<CAPTION>
As of
[ ]
-------
<S> <C>
Total assets....................................................
Total long-term debt and mandatorily redeemable capital
securities.....................................................
Total stockholders' equity......................................
</TABLE>
[ ] currently files periodic reports with the Securities and Exchange
Commission pursuant to the Exchange Act. The summary selected financial data
and other
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information regarding [ ] in the preceding table has been drawn from the
unaudited consolidated financial statements of [ ] at and for the three and
six month periods ended [ ] set forth on pages [ ] through [ ] of
[ ]'s Quarterly Report of Form [ 10-Q/10-K] for the quarterly period
ended[ ] as filed with the Securities and Exchange Commission. This limited
information does not provide a complete picture of the financial condition of
[ ]. For additional material financial and other information with respect to
[ ], please refer to the Form 10-Q.
Partial Redemption of the Class A-1 Notes on Distribution Dates
On each distribution date until the Stated Amount of the Class A-1 notes
is reduced to zero the issuer trustee must:
. pay to the currency swap provider, in accordance with the directions
of the manager, the Australian dollar amount allocated to repayment
on that distribution date of principal on the Class A-1 notes as
described in "Allocation of Principal to Class A Notes and Class B
Notes";
. direct the currency swap provider to pay on that distribution date
the U.S. dollar equivalent of that Australian dollar amount,
converted at the US$ Exchange Rate, to the principal paying agent;
and
. direct the principal paying agent to pay that amount received from
the currency swap provider rateably to the Class A-1 noteholders
towards repayment of the Stated Amounts of the Class A-1 notes in
accordance with the agency agreement and the terms and conditions of
the Class A-1 notes.
Withholding or Tax Deductions
All payments in respect of the Class A-1 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 Class A-1 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 Class A-1
notes with respect to that withholding or deduction. Immediately after becoming
aware that such a withholding or deduction is or will be required, the issuer
trustee will notify the Class A-1 note trustee, the paying agent and the Class
A-1 noteholders.
Redemption of the Notes for Taxation or Other Reasons
If the manager satisfies the issuer trustee and the Class A-1 note
trustee, immediately before giving the notice to the Class A-1 noteholders as
described in this section, that because of a change of law in Australia or any
other jurisdiction to which the issuer trustee becomes subject either:
. on the next distribution date the issuer trustee would be required to
deduct or withhold from any payment of principal or interest in
respect of any class of
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notes or redraw bonds 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 a
government or authority of Australia or such other jurisdiction; or
. the total amount payable in respect of interest in relation to the
housing loans for a collection period ceases to be receivable,
whether or not actually received by the issuer trustee during such
collection period by reason of any present or future taxes, duties,
assessments or governmental charges of whatever nature imposed,
levied, collected, withheld or assessed by a government or authority
of Australia or such other jurisdiction,
and in each case such obligation cannot be avoided by the issuer trustee taking
reasonable measures available to it, then the issuer trustee must, when so
directed by the manager, at the manager's option, redeem all, but not some, of
the notes and redraw bonds at their then Invested Amounts, in the case of the
Class A notes and redraw bonds, subject to the following, or at their Stated
Amounts, in the case of the Class B notes, together with accrued but unpaid
interest to but excluding the date of redemption. The issuer trustee may redeem
the Class A notes and redraw bonds at their Stated Amounts, instead of at their
Invested Amounts, together with accrued but unpaid interest to but excluding
the date of redemption, if so approved by an Extraordinary Resolution of Class
A noteholders and redraw bondholders together.
However, the issuer trustee will not redeem the notes or redraw bonds
unless it is in a position on the relevant distribution date to repay the then
Invested Amounts or Stated Amounts, as required, of the notes and the redraw
bonds together with all accrued but unpaid interest to but excluding the date
of redemption and to discharge all its liabilities in respect of amounts which
are required under the security trust deed to be paid in priority to or equally
with the notes or redraw bonds if the charge under the security trust deed were
enforced.
Class A-1 noteholders must be given notice of a redemption not more than
60 nor less than 45 days prior to the date of redemption.
If a tax, duty or other amount described above applies only to the Class
A-1 notes and the issuer trustee gives notice that it proposes to redeem the
notes and the redraw bonds, the holders of 75% of the aggregate Stated Amount
of the Class A-1 notes may elect, in accordance with the terms of the Class A-1
note trust deed, that they do not require the issuer trustee to redeem the
Class A-1 notes. Upon being notified of such an election at least 21 days
before the distribution date upon which redemption was to occur the issuer
trustee must not redeem the notes or redraw bonds.
Redemption of the Notes upon an Event of Default
If an event of default occurs under the security trust deed the security
trustee must, subject to certain conditions, in accordance with an
Extraordinary Resolution of Voting Secured Creditors and the provisions of the
security trust deed, enforce the security created
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by the security trust deed. That enforcement can include the sale of some or
all of the housing loans. Any proceeds from the enforcement of the security
will be applied in accordance with the order of priority of payments as set out
in the security trust deed.
Optional Redemption of the Notes
The issuer trustee must, when directed by the manager, at the manager's
option, redeem all of the notes and the redraw bonds at their then Invested
Amounts, in the case of the Class A notes and redraw bonds, subject to the
following, or at their Stated Amounts in the case of the Class B notes,
together with accrued but unpaid interest to, but excluding, the date of
redemption, on any distribution date falling on or after the earlier of:
. the date on which the total principal outstanding on the housing
loans is less than 10% of the total principal outstanding on the
housing loans on [ ]; and
. the distribution date falling in [ ],
The issuer trustee may redeem the Class A notes and redraw bonds at their
Stated Amounts instead of at their Invested Amounts, together with accrued but
unpaid interest to but excluding the date of redemption, if so approved by an
Extraordinary Resolution of Class A noteholders and redraw bondholders
together. However, the issuer trustee will not redeem the notes or redraw bonds
unless it is in a position on the relevant distribution date to repay the then
Invested Amounts or the Stated Amounts, as required, of the notes and the
redraw bonds together with all accrued but unpaid interest to but excluding the
date of redemption and to discharge all its liabilities in respect of amounts
which are required under the security trust deed to be paid in priority to or
equally with the notes or redraw bonds if the charge under the security trust
deed were enforced.
Class A-1 noteholders must be given notice of a redemption not more than
60 nor less than 45 days prior to the date of redemption.
Final Maturity Date
Unless previously redeemed, the issuer trustee must redeem the notes and
redraw bonds by paying the Stated Amount, together with all accrued and unpaid
interest, in relation to each note and redraw bond on or by the distribution
date falling in [ ].
Redemption upon Final Payment
Upon final distribution being made in respect of any notes or redraw
bonds following termination of the trust or enforcement of the charge under the
security trust deed, those notes or redraw bonds will be deemed to be redeemed
and discharged in full and any obligation to pay any accrued but unpaid
interest, the Stated Amount or the Invested Amount in relation to the notes or
redraw bonds will be extinguished in full.
No Payments of Principal in Excess of Stated Amount
No amount of principal will be repaid in respect of a note or redraw bond
in excess of its Stated Amount or, in the case of an optional redemption or
redemption for taxation reasons, its Invested Amount.
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Termination of the Trust
Termination of Trust
Following the issue of the notes the trust may only terminate prior to
the redemption of the notes if the issuer trustee gives notice to the manager
that as a result of the introduction, imposition or variation of any law it is
unlawful for the issuer trustee, and that it would also be unlawful for any new
issuer trustee, to carry out any of its obligations under the series
supplement.
Sale of Housing Loans Upon Termination
Upon termination of the trust, the issuer trustee in consultation with
the manager must sell and realize the assets of the trust within 180 days of
the termination date. During this period the issuer trustee is not entitled to
sell the housing loans and their related securities, mortgage insurance
policies and other rights for less than the aggregate Fair Market Value of the
housing loans. The issuer trustee is only entitled to sell the housing loans
and their related securities, mortgage insurance policies and other rights to a
person other than the seller if the seller does not exercise its right of first
refusal. The issuer trustee must not conclude a sale unless, among other
things, any housing loans and their related securities, mortgage insurance
policies and other rights are assigned in equity only, except if the issuer
trustee already has legal title, and the sale is expressly subject to the
servicer's right to be retained as servicer and subject to the rights of the
CBA trust and to the rights of the seller as beneficiary of the CBA trust in
respect of those housing loans and their related securities, mortgage insurance
policies and other rights, as described in "Description of the Assets of the
Trust--Transfer and Assignment of the Housing Loans."
If the issuer trustee is unable to sell the housing loans and their
related securities and mortgage insurance policies for Fair Market Value and on
those terms during the 180 day period, it may then sell them free of the
restrictions and may perfect its legal title if necessary to obtain Fair Market
Value for the housing loans. However upon such a sale the issuer trustee must
use reasonable endeavors to include as a condition of the sale that a purchaser
will agree to the seller taking second mortgages in order to retain second
ranking security for the other loans secured by the mortgage and to entering
into a priority agreement to give the seller second priority for its second
mortgage and to use reasonable endeavours to obtain the consent of the relevant
borrowers and security providers to the seller's second mortgage.
Seller's First Right of Refusal
On the termination date of the trust, the issuer trustee is deemed to
offer to sell the housing loans and their related securities, mortgage
insurance policies and other rights to the seller for at least the aggregate
Fair Market Value of the housing loans.
The issuer trustee must not sell the housing loans and their related
securities, mortgage insurance policies and other rights unless the seller has
failed to accept that offer within 90 days of the termination date of the trust
or has failed to pay the purchase price within 180 days of the termination date
of the trust.
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Distributions
The issuer trustee must deposit the proceeds of realization of the assets
of the trust into the collections account and, following the realization of all
the assets of the trust, must distribute them on a distribution date in
accordance with the order of priority described in "Description of the Class A-
1 Notes--Distribution of Available Income Amount" and "Description of the Class
A-1 Notes-- Distribution of Available Principal Amount." The amount distributed
will be in full and final redemption of all of the notes and redraw bonds.
Prescription
A Class A-1 note will be void in its entirety if not surrendered for
final payment within ten years of the relevant date in respect of that payment
on the Class A-1 note. The relevant date is the date on which a payment first
becomes due but, if the full amount of the money payable has not been received
by the principal paying agent or the Class A-1 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 Class A-1 note. After the date on which a Class A-1 note
becomes void in its entirety, no claim may be made in respect of it.
Directions by Class A-1 Noteholders
Under the Class A-1 note trust deed the Class A-1 note trustee may seek
directions from the Class A-1 noteholders from time to time including following
the occurrence of an event of default under the security trust deed.
The Class A-1 note trustee will not be responsible for acting in good
faith upon a direction given, or purporting to be given, by Class A-1
noteholders holding Class A-1 notes with a Stated Amount of greater than 50% of
the aggregate Stated Amount of all the Class A-1 notes.
If the Class A-1 note trustee is entitled under the master trust deed or
the security trust deed to vote at any meeting on behalf of Class A-1
noteholders the Class A-1 note trustee must vote in accordance with the
directions of the Class A-1 noteholders and otherwise in its absolute
discretion. In acting in accordance with the directions of Class A-1
noteholders the Class A-1 note trustee must exercise its votes for or against
any proposal to be put to a meeting in the same proportion as that of the
aggregate Stated Amounts of the Class A-1 notes held by Class A-1 noteholders
who have directed the Class A-1 note trustee to vote for or against that
proposal.
For the purposes of seeking any consent, direction or authorisation from
Class A-1 noteholders the Class A-1 note trustee may by notice to the Class A-1
noteholders specify a date not earlier than the date of the notice upon which
the persons who are the Class A-1 noteholders and the Stated Amount of the
Class A-1 notes held by them will be determined based upon the details recorded
in the Class A-1 note register as at 5.30pm on that date.
Amendments to Class A-1 Notes and Class A-1 Note Trust Deed
The issuer trustee, the manager and the Class A-1 note trustee, may
alter, add to or revoke any provision of the Class A-1 note trust deed or the
Class A-1 notes, subject to the
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limitations described below, if the alteration, addition or revocation is not a
Payment Modification and, in the opinion of the Class A-1 note trustee:
. is made to correct a manifest error or ambiguity or is of a formal,
technical or administrative nature only;
. is necessary or expedient to comply with the provisions of any law
or regulation or with the requirements of any statutory authority;
. is appropriate or expedient as a consequence of an alteration to any
law or regulation or altered requirements of the government of any
jurisdiction or any governmental agency including an alteration,
addition or revocation which is appropriate or expedient as a result
of an alteration to Australia's tax laws or any ruling by the
Australian Commissioner or Deputy Commissioner of Taxation or any
governmental announcement or statement which has or may have the
effect of altering the manner or basis of taxation of trusts
generally or of trusts similar to the trust or to the trust under
the Class A-1 note trust deed;
. is otherwise desirable for any reason and:
. is not in the opinion of the Class A-1 note trustee likely, upon
coming into effect, to be materially prejudicial to the interests
of the Class A-1 noteholders; or
. if it is in the opinion of the Class A-1 note trustee likely,
upon coming into effect, to be materially prejudicial to the
interests of the Class A-1 noteholders, the consent of Class A-1
noteholders owning 75% of the aggregate outstanding principal
balance of the Class A-1 notes is obtained.
Any alteration, addition or revocation must be notified to the rating
agencies 5 Business Days in advance.
The Class A-1 note trustee will be entitled to assume that any proposed
alteration, addition or revocation will not be materially prejudicial to the
interests of Class A-1 noteholders if each of the rating agencies confirms in
writing that the alteration, addition or revocation, if effected, will not lead
to a reduction, qualification or withdrawal of the rating given to the Class A-
1 notes by that rating agency.
The issuer, the manager and the Class A-1 note trustee may make any
Payment Modification to the Class A-1 note trust deed or the Class A-1 notes
only if the consent has first been obtained of each Class A-1 Noteholder to the
Payment Modification.
Payment Modification means any alteration, addition or revocation of any
provision of the Class A-1 note trust deed or the Class A-1 notes which
modifies:
. the amount, timing, currency or manner of payment of principal or
interest in respect of the Class A-1 Notes or the rights of Class A-
1 Noteholders to institute suit for enforcement of such payment;
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. the manner of determining whether Class A-1 noteholders owning 75%
of the aggregate outstanding principal balance of the Class A-1
notes have provided a consent or direction or the circumstances in
which such a consent or direction is required; or
. the requirements for altering, adding to or revoking any provision
of the Class A-1 note trust deed or the Class A-1 notes.
The issuer trustee must distribute to all Class A-1 noteholders a copy of
any amendment made as soon as reasonably practicable after the amendment has
been made.
Reports to Noteholders
On each [distribution] date, the manager will, in respect of the
collection period ending before that [distribution] date, deliver to the
principal paying agent, the note trustee and the issuer trustee, and the
principal paying agent will deliver to the Class A-1 noteholders, a quarterly
servicing report containing the following information:
. the Invested Amount and the Stated Amount of each class of notes;
. the interest payments and principal distributions on each class of
notes;
. the Available Income Amount;
. the aggregate of all redraws made during that quarterly collection
period;
. the redraw shortfall, if any;
. the income shortfall, if any;
. the liquidity facility draws, if any, for that collection period,
together with all liquidity facility draws before the start of that
collection period and not repaid;
. the Available Principal Amount;
. the Principal Collections;
. the Standby Redraw Facility Advance;
. the Redraw Bond Amount;
. the Principal Charge-Off, if any;
. the Principal Charge-Off Reimbursement, if any;
. the note factor for each class of notes, which with respect to a
class of notes, means the aggregate of the Invested Amount of the
class of notes less all principal payments on that class of notes to
be made on that distribution date, divided by the aggregate initial
Invested Amount for all of that class of notes;
. the charge-offs for each class of notes;
. if required, the threshold rate at that distribution date;
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. the interest rates on the notes for the related accrual period;
. scheduled and unscheduled payments of principal on the housing
loans;
. aggregate outstanding principal balance of the fixed rate housing
loans and the aggregate principal balance of the variable rate
housing loans; and
. delinquency and loss statistics with respect to the housing loans.
Unless and until definitive Class A-1 notes are issued, beneficial owners
of the Class A-1 notes will receive reports and other information provided for
under the transaction documents only if, when and to the extent provided by DTC
and its participating organizations or by way of information published on a
Reuters Screen or the electronic information system made available to
subscribers by Bloomberg L.P. or a similar electronic reporting service.
Unless and until definitive Class A-1 notes are issued, periodic and
annual unaudited reports containing information concerning the trust and the
Class A-1 notes will be prepared by the manager and sent to DTC. DTC and its
participants will make such reports available to holders of interests in the
Class A-1 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 Class A-1 notes are in book-entry form. Upon
the issuance of Class A-1 notes in definitive form such reports will be sent
directly to each Class A-1 noteholder. Such reports will not constitute
financial statements prepared in accordance with generally accepted accounting
principles.
The manager will file with the SEC such periodic 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 manager expects that the obligation to file such
reports will be terminated following the end of June, 2001.
Description of the Transaction Documents
The following summary describes the material terms of the transaction
documents other than the underwriting agreement and the dealer agreement and
except as already described above. The summary does not purport to be complete
and is subject to the provisions of the transaction documents. The transaction
documents are governed by the laws of New South Wales, Australia. A copy of the
master trust deed 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.
Collections Account and Authorized Short-Term Investments
The issuer trustee will establish and maintain the collections account
with an Eligible Depositary. The collections account will initially be
established with Commonwealth Bank, which has a short term rating of F1+ from
Fitch IBCA, P-1 from Moody's and A-1+ from Standard & Poor's at its office at
[ ]. The collections account shall be opened by the
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issuer trustee in its name and in its capacity as trustee of the trust. The
collections account will not be used for any purpose other than for the trust.
The account will be an interest bearing account.
If the financial institution with which the collections account is held
ceases to be an Eligible Depositary the issuer trustee must establish a new
account with an Eligible Depositary as a replacement collections account.
The manager shall have the discretion to propose to the issuer trustee,
in writing, the manner in which any moneys forming part of the trust shall be
invested in Authorized Short-Term Investments and what purchases, sales,
transfers, exchanges, realizations or other dealings with assets of the trust
shall be effected and when and how they should be effected. Provided that they
meet certain requirements, the issuer trustee must give effect to the manager's
proposals. Each investment of moneys required for the payment of liabilities of
the trust shall be in Authorized Short-Term Investments that will mature on or
before the due date for payment of those liabilities.
Modifications of the Master Trust Deed and Series Supplement
The issuer trustee and the manager, with respect to the master trust
deed, and the issuer trustee, the manager, the seller and the servicer, with
respect to the series supplement, may amend, add to or revoke any provision of
the master trust deed or the series supplement, subject to the limitations
described below, if the amendment, addition or revocation:
. in the opinion of the issuer trustee is necessary to correct a
manifest error or is of a formal, technical or administrative nature
only;
. in the opinion of the issuer trustee, or of a lawyer instructed by
the issuer trustee, is necessary or expedient to comply with the
provisions of any law or regulation or with the requirements of any
statutory authority;
. in the opinion of the issuer trustee is required by, a consequence
of, consistent with or appropriate or expedient as a consequence of
an amendment to any law or regulation or altered requirements of the
government of any jurisdiction or any governmental agency,
including, an amendment, addition or revocation which is appropriate
or expedient as a result of an amendment to Australia's tax laws or
any 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
Medallion Programme trusts;
. in the case of the master trust deed, relates only to a Medallion
Programme trust not yet constituted;
. in the opinion of the issuer trustee, will enable the provisions of
the master trust deed or the series supplement to be more
conveniently, advantageously, profitably or economically
administered; or
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. in the opinion of the issuer trustee is otherwise desirable for any
reason.
Any amendment, addition or revocation referred to in the last two of the above
paragraphs which in the opinion of the issuer trustee is likely to be
prejudicial to the interests of:
. the residual unitholder, may only be effected with the consent of
the residual unitholder;
. a class of noteholders or redraw bondholders, may only be effected
if those noteholders or redraw bondholders pass a resolution by a
majority of not less than 75% of the votes at a meeting approving
the amendment, addition or revocation or all such noteholders or
redraw bondholders sign a resolution approving the amendment,
addition or revocation, subject to the following paragraph; or
. all noteholders and redraw bondholders, may only be effected if the
noteholders and redraw bondholders pass a resolution by a majority
of not less than 75% of the votes at a meeting approving the
amendment, addition or revocation or all noteholders and redraw
bondholders sign a resolution approving the amendment, addition or
revocation. A separate resolution will not be required in relation
to any class of noteholders or redraw bondholders.
The manager must advise the rating agencies no less than 10 Sydney business
days prior to any amendment, addition or revocation of the master trust deed or
the series supplement and must certify to the issuer trustee that no rating
agency has advised that the amendment, addition or revocation will cause a
withdrawal, downgrading or qualification of the credit ratings assigned to the
notes or redraw bonds before the amendment, addition, or revocation is
effected. The issuer trustee may not amend, add to or revoke any provision of
the master trust deed or the series supplement if the consent of a party is
required under a transaction document unless that consent has been obtained.
The Issuer Trustee
General Duties of 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 supplement.
Subject to the provisions of the master trust deed, the issuer trustee
has all the powers in respect of the assets of the trust which it could
exercise if it were the absolute and beneficial owner of the assets. The issuer
trustee agrees to act in the interests of the residual unitholder, the
noteholders and the redraw bondholders. If there is a conflict between the
interests of the residual unitholder on the one hand and the noteholders and
redraw bondholders on the other hand, the issuer trustee must act in the
interests of the noteholders and the redraw bondholders.
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 and the series
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supplement in a proper and efficient manner and 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, having regard to the interests of noteholders, redraw bondholders and the
residual unitholder.
The terms of the master trust deed and series supplement provide, amongst
other things, that:
. the obligations of the issuer trustee to the noteholders expressed
in the master trust deed or the series supplement are contractual
obligations only and do not create any relationship of trustee or
fiduciary between the issuer trustee and the noteholders;
. the issuer trustee has no duty, and is under no obligation, to
investigate whether a Manager Default, a Servicer Default or a
Perfection of Title Event has occurred in relation to the trust
other than where it has actual notice;
. unless actually aware to the contrary, the issuer trustee is
entitled to rely conclusively on, and is not required to investigate
the accuracy of any calculation by the seller, the servicer or the
manager under the series supplement, the amount or allocation of
collections or the contents of any certificate provided to the
issuer trustee by the servicer or manager under the series
supplement;
. the issuer trustee may obtain and act on the advice of experts,
whether instructed by the issuer trustee or the manager, which are
necessary, usual or desirable for the purpose of enabling the issuer
trustee to be fully and properly advised and informed and will not
be liable for acting in good faith on such advice; and
. the issuer trustee will only be considered to have knowledge or
awareness of, or notice of, a thing or grounds to believe anything
by virtue of the officers of the issuer trustee who have day-to-day
responsibility for the administration or management of the issuer
trustee's obligations in relation to the trust, having actual
knowledge, actual awareness or actual notice of that thing, or
grounds to believe that thing.
Annual Compliance Statement
The issuer trustee will deliver to the Class A-1 note trustee annually a
written statement as to the fulfilment of the issuer trustee's obligations
under the Class A-1 note trust deed including compliance with its material
obligations under the transaction documents.
Delegation
In exercising its powers and performing its obligations and duties under
the master trust deed, the issuer trustee may delegate any or all of the
powers, discretions and authorities of the issuer trustee under the master
trust deed or otherwise in relation to the trust, to a related company of the
issuer trustee or otherwise in accordance with the master trust deed or series
supplement, including, in respect of its payment obligations in respect of
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the Class A-1 notes, to the paying agents under the agency agreement. The
issuer trustee at all times remains liable for the acts or omissions of such
related company when acting as delegate.
Issuer Trustee Fees and Expenses
The issuer trustee is entitled to a quarterly fee based on [the aggregate
outstanding principal balance of the housing loans on the first day of each
collection period], payable in arrears on the following distribution date. The
issuer trustee's fee is calculated to cover the fees payable to the Class A-1
note trustee and the agents which are paid by the issuer trustee from its own
personal funds.
The fee payable to the issuer trustee may be varied as agreed between the
issuer trustee and the manager provided that each rating agency must be given 3
Business Day's prior notice of any variation and the fee must not be varied if
this would result in a reduction, qualification or withdrawal of the credit
rating of any note or redraw bond.
The issuer trustee will be indemnified and is entitled to be reimbursed
out of the assets of the trust for costs, charges and expenses which it may
incur in respect of and can attribute to the trust including, amongst other
costs, disbursements in connection with the assets of the trust, the auditing
of the trust, taxes payable in respect of the trust, legal costs and amounts in
connection with the exercise of any power or discretion or the performance of
any obligation in relation to the trust approved by the manager which approval
is not to be unreasonably withheld.
Removal of the Issuer Trustee
The issuer trustee is required to retire as issuer trustee following an
Issuer Trustee Default. If the issuer trustee refuses to retire following an
Issuer Trustee Default the manager may remove the issuer trustee immediately,
or, if the Issuer Trustee Default relates only to a change in ownership or
merger without assumption of the issuer trustee, upon 30 days notice in
writing.
The manager must use reasonable endeavors to appoint a qualified
substitute issuer trustee who is approved by the ratings agencies within 30
days of the retirement or removal of the issuer trustee. Until a substitute
issuer trustee is appointed, the manager must act as issuer trustee and will be
entitled to receive the issuer trustee's fee.
If after 30 days the manager is unable to appoint a qualified substitute
issuer trustee who is approved by the ratings agencies, it must convene a
meeting of all debt security holders, including the noteholders and redraw
bondholders, and all beneficiaries, including the residual unitholder, of all
the Medallion Programme trusts under the master trust deed at which a
substitute issuer trustee may be appointed by resolution of not less than 75%
of the votes at that meeting or by a resolution in writing signed by all debt
security holders and beneficiaries.
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Voluntary Retirement of the Issuer Trustee
The issuer trustee may resign on giving to the manager not less than 3
months' notice in writing, or such lesser period as the manager and the issuer
trustee may agree, of its intention to do so.
Upon retirement, the issuer trustee must appoint a qualified substitute
issuer trustee who is approved by the ratings agencies and the manager. If the
issuer trustee does not propose a substitute issuer trustee at least one month
prior to its proposed retirement, the manager may appoint a qualified
substitute issuer trustee who is approved by the ratings agencies.
If a substitute issuer trustee has not been appointed upon the expiry of
the 3 month notice period, the manager will act as issuer trustee. If the
manager is unable to appoint a qualified substitute issuer trustee within a
further 30 days, it must convene a meeting of all debt security holders,
including the noteholders and redraw bondholders, and all beneficiaries,
including the residual unitholder, of all the Medallion Programme trusts under
the master trust deed at which a substitute issuer trustee may be appointed by
resolution of not less than 75% of the votes at that meeting or by a resolution
in writing signed by all debt security holders and beneficiaries.
The retiring issuer trustee must indemnify the manager and the substitute
issuer trustee in respect of all costs incurred as a result of its removal or
retirement.
Limitation of the Issuer Trustee's Liability
The issuer trustee acts as trustee 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 as trustee of the trust under or in connection
with the transaction documents, except with respect to the following paragraph,
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. Except in the
circumstances described in the following paragraph, this limitation of the
issuer trustee's liability applies despite any other provisions of the
transaction documents 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 notes, the redraw bonds, the
master trust deed the series supplement or any other transaction document.
Noteholders, redraw bondholders and the parties to the transaction documents
may not sue the issuer trustee in respect of liabilities incurred by it acting
as trustee of the trust in any capacity other than as trustee of the trust and
may not seek to appoint a liquidator or administrator to the issuer trustee or
to appoint a receiver to the issuer trustee, except in relation to the assets
of the trust and may not prove in any liquidation, administration or
arrangements of or affecting the issuer trustee, except in relation to the
assets of the trust.
The limitation in the previous paragraph will not apply to any obligation
or liability of the issuer trustee to the extent that it is not satisfied
because under a transaction document or by operation of law there is a
reduction in the extent of the issuer trustee's
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indemnification out of the assets of the trust as a result of the issuer
trustee's fraud, negligence or wilful default or the fraud, negligence or
wilful default of its officers, employees or agents or any person for whom the
issuer trustee is liable under the terms of the transaction documents. For
these purposes a wilful default does not include a default which arises as a
result of a breach of a transaction document by any other person, other than
any person for whom the issuer trustee is liable under the terms of the
transaction documents, or which is required by law or a proper instruction or
direction of a meeting of Secured Creditors of the trust or noteholders,
bondholders or other debt security holders or beneficiaries of a Medallion
Program trust.
In addition, the manager, the servicer, the agents, the Class A-1 note
trustee and other persons are responsible for performing a variety of
obligations in relation to the trust. An act or omission of the issuer trustee
will not be considered to be fraudulent, negligent or a wilful default to the
extent to which it was caused or contributed to by any failure by any such
person to fulfil its obligations relating to the trust or by any other act or
omission of such a person.
Rights of Indemnity of Issuer Trustee
The issuer trustee is indemnified out of the assets of the trust for any
liability properly incurred by the issuer trustee in performing or exercising
any of its powers or duties. This indemnity is in addition to any indemnity
allowed to the issuer trustee by law, but does not extend to any liabilities
arising from a breach of trust by the issuer trustee or from 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 the Consumer Credit Code. The
servicer also indemnifies the issuer trustee in relation to such payments in
certain circumstances and the issuer trustee is required to first call on the
indemnity from the servicer before calling on the indemnity from the assets of
the trust. See "Legal Aspects of the Housing Loans--Consumer Credit Code."
The Manager
Powers
The manager's general duty is to manage the assets of the trust which are
not serviced by the servicer. In addition, the manager has a number of specific
responsibilities including making all necessary determinations to enable the
issuer trustee to make the payments and allocations required on each
distribution date in accordance with the series supplement, directing the
issuer trustee to make those payments and allocations, keeping books of account
and preparing the tax returns of the trust and monitoring support facilities.
The manager 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 and the other transaction documents in a proper and
efficient manner and exercise such prudence as a prudent person
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of business would exercise in performing its express functions and in
exercising its discretions under the master trust deed and the other
transaction documents having regard to the interests of noteholders, redraw
bondholders and the residual unitholder.
Delegation
The manager may, in carrying out and performing its duties and
obligations in relation to the trust, appoint any person as attorney or agent
of the manager with such powers as the manager thinks fit including the power
to sub-delegate provided that the manager may not delegate a material part of
its duties and obligations in relation to the trust. The manager remains liable
for the acts or omissions of such attorneys or agents to the extent that the
manager would itself be liable.
Manager's Fees, Expenses and Indemnification
The manager is entitled to a quarterly fee based on [the aggregate
outstanding principal balance of the housing loans on the first day of each
collection period], payable in arrears on the following distribution date.
The fee payable to the manager may be varied as agreed between the issuer
trustee and the manager provided that each rating agency must be given 3
Business Day's prior notice of any variation and the fee must not be varied if
this would result in a reduction, qualification or withdrawal of the credit
rating of any note or redraw bond.
The 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 manager
of the trust.
Removal or Retirement of the Manager
If the issuer trustee becomes aware that a Manager Default has occurred
and is subsisting the issuer trustee must immediately terminate the appointment
of the manager and must appoint a substitute manager in its place. The manager
indemnifies the issuer trustee in respect of all costs incurred as a result of
its replacement by the issuer trustee.
The manager may retire on giving to the issuer trustee 3 months, or such
lesser period as the manager and the issuer trustee may agree, notice in
writing of its intention to do so. Upon its retirement, the manager may appoint
another corporation approved by the issuer trustee as manager in its place. If
the manager does not propose a replacement by the date one month prior to the
date of its retirement the issuer trustee may appoint a replacement manager as
from the date of the manager's retirement.
Until a substitute manager is appointed, the issuer trustee must act as
manager and will be entitled to receive the manager's fee.
Limitation of Manager's Liability
The manager is not personally liable to indemnify the issuer trustee or
to make any payments to any other person in relation to the trust except where
arising from any fraud, negligence, wilful default or breach of duty by it in
its capacity as manager of the trust. A
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number of limitations on the manager's liability are set out in full in the
master trust deed and the other transaction documents. These include the
limitation that the manager will not be liable for any loss, costs, liabilities
or expenses:
. arising out of the exercise or non-exercise of its discretions under
any transaction document or otherwise in relation to the trust;
. arising out of the exercise or non-exercise of a discretion on the
part of the issuer trustee, the seller or the servicer or any act or
omission of the issuer trustee, the seller or the servicer; or
. caused by its failure to check any calculation, information,
document, form or list supplied or purported to be supplied to it by
the issuer trustee, the seller, the servicer or any other person,
except to the extent that they are caused by the manager's own fraud,
negligence or wilful default.
Limits on Rights of Noteholders and Redraw Bondholders
Apart from the security interest arising under the security trust deed,
the noteholders and redraw bondholders do not own and have no interest in the
trust or any of its assets. In particular, no noteholder or redraw bondholder
is entitled to:
. an interest in any particular part of the trust or any asset of the
trust;
. require the transfer to it of any asset of the trust;
. interfere with or question the exercise or non-exercise of the rights
or powers of the seller, the servicer, the manager or the issuer
trustee in their dealings with the trust or any assets of the trust;
. attend meetings or take part in or consent to any action concerning
any property or corporation in which the issuer trustee has an
interest;
. exercise any rights, powers or privileges in respect of any asset of
the trust;
. lodge a caveat or other notice forbidding the registration of any
person as transferee or proprietor of or any instrument affecting any
asset of the trust or claiming any estate or interest in any asset of
the trust;
. negotiate or communicate in any way with any borrower or security
provider under any housing loan assigned to the issuer trustee or
with any person providing a support facility to the issuer trustee;
. seek to wind up or terminate the trust;
. seek to remove the servicer, manager or issuer trustee;
. interfere in any way with the trust;
. take proceedings against the issuer trustee, the manager, the seller
or the servicer or in respect of the trust or the assets of the
trust. This will not limit the right of noteholders and redraw
bondholders to compel the issuer trustee, the manager
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and the security trustee to comply with their respective obligations
under the master trust deed, the series supplement, the Class A-1
note trust deed and the security trust deed, in the case of the
issuer trustee and the manager, and the security trust deed, in the
case of the security trustee;
. have any recourse to the issuer trustee or the manager in their
personal capacity, except to the extent of fraud, negligence or
wilful default on the part of the issuer trustee or the manager
respectively; or
. have any recourse whatsoever to the seller or to the servicer in
respect of a breach by the seller or the servicer of their respective
obligations and duties under the series supplement.
The Class A-1 Note Trustee
Appointment of Class A-1 Note Trustee
The Bank of New York, London Branch will serve as the Class A-1 note
trustee. The Bank of New York [Insert description of BNY].The corporate trust
office of the Class A-1 note trustee responsible for the administration of the
Class A-1 note trustee's obligations in relation to the trust is located at
[ ].
Delegation by Class A-1 Note Trustee
The Class A-1 note trustee will be entitled to delegate its duties,
powers, authorities, trusts and discretions under the Class A-1 note trust deed
to any related company of the Class A-1 note trustee or to any other person in
accordance with the Class A-1 note trust deed or as agreed by the manager.
Indemnity of Class A-1 Note Trustee
The Class A-1 note trustee will be entitled to be indemnified from the
assets of the trust against all liability, expense, costs, charges, taxes and
stamp duties other than general overhead costs and expenses properly incurred
by the Class A-1 note trustee, or its properly appointed agents or delegates,
in the performance of its obligations under the Class A-1 note trust deed or
any other transaction document.
However, the Class A-1 note trustee will not be entitled to be
indemnified against any liability for breach of trust or any liability which by
virtue of any rule of law would otherwise attach to it in respect of fraud or
wilful default of which it may be guilty in relation to its duties under the
Class A-1 note trust deed.
Qualifications of Class A-1 Note Trustee
The Class A-1 note trustee is, and 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 of
U.S.$50,000,000, as set forth in its most recent published annual report of
condition, and subject to supervision or examination by federal or state
authority. The Class A-1 note trustee may also, if permitted by the Securities
and
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Exchange Commission, 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.
Removal of Class A-1 Note Trustee
The Class A-1 note trustee will retire as note trustee if:
. an Insolvency Event occurs in relation to the note trustee;
. it ceases to carry on business;
. it ceases to be an Eligible Trust Corporation;
. it is so directed by the Class A-1 noteholders holding no less than
75% of the aggregate Stated Amount of the Class A-1 notes;
. when required to do so by the manager or the issuer trustee by notice
in writing, it fails or neglects within 20 Business Days after
receipt of such notice to carry out or satisfy any material duty
imposed on it by the note trust deed or any transaction document; or
. there is a change in ownership of 50% or more of the issued equity
share capital of the Class A-1 note trustee from the position as at
the date of the Class A-1 note trust deed or effective control of the
Class A-1 note trustee alters from the position as at the date of the
Class A-1 note trust deed unless in either case approved by the
manager.
If any of these events occurs and the Class A-1 note trustee refuses to
retire, the manager may remove the Class A-1 note trustee from office
immediately by notice in writing. On the retirement or removal of the Class A-1
note trustee:
. the manager must promptly notify the rating agencies; and
. subject to any approval required by law, the manager must use
reasonable endeavors to appoint in writing some other Eligible Trust
Corporation approved by the rating agencies to be the substitute
Class A-1 note trustee.
Class A-1 Note Trustee May Retire
The Class A-1 note trustee may retire on 3 months, or such lesser period
as the manager, the issuer trustee and the Class A-1 note trustee agree, notice
in writing to the issuer trustee, the manager and the rating agencies provided
that the period of notice may not expire within 30 days before a distribution
date. Upon retirement the Class A-1 note trustee, subject to any approval
required by law, may appoint in writing any other Eligible Trust Corporation
approved by the rating agencies and the manager as Class A-1 note trustee. If
the Class A-1 note trustee does not propose a replacement at least one month
prior to its proposed retirement, the manager may appoint a substitute Class A-
1 note trustee, which must be an Eligible Trust Corporation approved by the
rating agencies.
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Appointment by Class A-1 Noteholders
No retirement or removal of the Class A-1 note trustee will be effective
until a substitute Class A-1 note trustee has been appointed.
If a substitute Class A-1 note trustee has not been appointed at a time
when the position of Class A-1 note trustee would, but for the foregoing
requirement, become vacant, the issuer trustee must promptly advise the Class
A-1 noteholders. A special majority of Class A-1 noteholders, being Class A-1
noteholders who hold not less than 75% of the aggregate Stated Amount of all
Class A-1 notes, may appoint an Eligible Trust Corporation to act as Class A-1
note trustee.
The Security Trust Deed
General
P.T. Limited of Level 7, 39 Hunter Street, Sydney, Australia is the
security trustee. 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
redraw bondholders, the servicer, the Class A-1 note trustee, each paying
agent, the seller, the liquidity facility provider, the standby redraw facility
provider and each swap provider. These secured parties are collectively known
as the Secured Creditors.
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 chargee. 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 accordance with the master trust deed, the series supplement
or the security trust deed and the 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 accordance with the master trust
deed, the series supplement or the security trust deed, the person acquiring
the property will take it free of the floating charge. The floating charge
granted over the trust assets will crystalize, which means it becomes a fixed
charge, upon the occurrence of an event of default or will become fixed over
the affected assets in the case of certain events of default. [On
crystallization of the floating charge, the issuer trustee may not deal with
the assets of the trust unless permitted in accordance with the master trust
deed, the series supplement or any other transaction document.]
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The Security Trustee
The security trustee is appointed to act as trustee on behalf of the
Secured Creditors and holds the benefit of the charge over the trust assets in
trust for each Secured Creditor on the terms and conditions of the security
trust deed. If, in the security trustee's opinion, there is a conflict between
the duties owed by the security trustee to any Secured Creditor or class of
Secured Creditors and the interests of noteholders and redraw bondholders as a
whole, the security trustee must give priority to the interests of the
noteholders and redraw bondholders. In addition, the security trustee must give
priority to the interests of the Class A noteholders and redraw bondholders if,
in the security trustee's opinion, there is a conflict between the interests of
Class A noteholders and redraw bondholders and the interests of the Class B
noteholders.
Duties and Liabilities of the Security Trustee
The security trustee's liability to the Secured Creditors is limited to
the amount the security trustee is entitled to recover through its right of
indemnity from the assets held on trust by it under the security trust deed.
However, this limitation will not apply to the extent that the security trustee
limits its right of indemnity as a result of its own fraud, negligence or
wilful default.
The security trust deed contains a range of other provisions regulating
the scope of the security trustee's duties and liabilities. These include the
following:
. the security trustee is not required to monitor whether an event of
default has occurred or compliance by the issuer trustee or manager
with the transaction documents or their other activities;
. the security trustee is not required to do anything unless its
liability is limited in a manner satisfactory to it;
. the security trustee is not responsible for the adequacy or
enforceability of any transaction documents;
. except as expressly stated in the security trust deed, the security
trustee need not give to the Secured Creditors information concerning
the issuer trustee or the trust which comes into the possession of
the security trustee;
. the issuer trustee gives wide ranging indemnities to the security
trustee in relation to its role as security trustee; and
. the security trustee may rely on documents and information provided
by the issuer trustee or manager.
Events of Default
Each of the following is an event of default under the security trust
deed:
. the issuer trustee retires or is removed, or is required to retire or
be removed, as trustee of the trust and is not replaced within 30
days and the manager fails within a further 20 days to convene a
meeting of debt security holders and beneficiaries of the Medallion
Program trusts;
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. the security trustee has actual notice or is notified by the manager
or the issuer trustee that the issuer trustee is not entitled for any
reason to fully exercise its right of indemnity against the assets of
the trust to satisfy any liability to a Secured Creditor and the
circumstances are not rectified to the reasonable satisfaction of the
security trustee within 14 days of the security trustee requiring
this;
. the trust is not properly constituted or is imperfectly constituted
in a manner or to an extent that is regarded by the security trustee
acting reasonably to be materially prejudicial to the interests of
any class of Secured Creditor and is incapable of being, or is not
within 30 days, remedied;
. an Insolvency Event occurs in respect of the issuer trustee in its
capacity as trustee of the trust;
. distress or execution is levied or a judgment, order or encumbrance
is enforced, or becomes enforceable, over any of the assets of the
trust for an amount exceeding A$1,000,000, either individually or in
aggregate, or can be rendered enforceable by the giving of notice,
lapse of time or fulfilment of any condition;
. the charge under the security trust deed:
. is or becomes wholly or partly void, voidable or unenforceable; or
. loses its priority, subject only to the Prior Interest, as a first
ranking charge, other than as mandatorily preferred by law or by
an act or omission of the security trustee;
. subject only to the Prior Interest, the issuer trustee attempts to
create or allows to exist a security interest over the assets of the
trust otherwise than in accordance with the master trust deed, the
series supplement or the security trust deed;
. the Australian Commissioner of Taxation, or its delegate, determines
to issue a notice under section 74 of the Sales Tax Assessment Act
1992, section 34 of the Taxation Administration Act, 1953 or sections
260-5 to 260-20 of the Taxation Administration Act 1953 or section
218 or 255 of the Income Tax Assessment Act 1936 for any amount due
by the issuer trustee in respect of any tax under any such Act or any
fines and costs imposed on the issuer trustee or a governmental
agency takes any other steps which will result in an amount of tax or
an amount owing to a governmental agency ranking ahead of the charge
with respect to any charged property; and
. any Secured Moneys are not paid within 10 days of when due, other
than amounts due to the Class B noteholders.
The security trustee may determine that any event that would otherwise be an
event of default under the security trust deed will not be treated as an event
of default, where this will not in the opinion of the security trustee be
materially prejudicial to the interests of the Secured Creditors. However, it
must not do so in contravention of any prior directions in an Extraordinary
Resolution of Voting Secured Creditors. Unless the security trustee has made
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such an election, and providing that 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 Secured Creditors at which it shall seek at
directions from the Voting Secured Creditors by way of Extraordinary Resolution
regarding the action it should take as a result of that event of default.
Meetings of Voting Secured Creditors
The security trust deed contains provisions for convening meetings of the
Voting Secured Creditors to enable the Voting Secured Creditors 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. Meetings may also be held of a class or classes of Voting
Secured Creditors under the security trust deed.
Voting Procedures
Every question submitted to a meeting of Voting Secured Creditors 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. A representative is a person or body corporate appointed as a
proxy for a Voting Secured Creditor or a representative of a corporate Voting
Secured Creditor under the Australian Corporations Law. On a show of hands,
every person holding, or being a representative holding or representing other
persons who hold, Secured Moneys shall have one vote. If at any meeting a poll
is demanded, every person who is present shall have one vote for every A$10 of
Secured Moneys owing to it, converted, in the case of the Class A-1
noteholders, to Australian dollars at the A$ Exchange Rate if the currency swap
has not been terminated or else at the spot rate as determined by the security
trustee on the Business Day prior to the meeting, or in which he or she is a
representative.
A resolution of all the Voting Secured Creditors, 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 Secured Creditors.
Enforcement of the Charge
At a meeting of Voting Secured Creditors called following an event of
default under the security trust deed the Voting Secured Creditors must vote on
whether to direct the security trustee by Extraordinary Resolution to do any or
all of the following:
. declare all Secured Moneys immediately due and payable;
. appoint a receiver over the trust assets and determine the
remuneration to be paid to that receiver;
. sell and realize the assets of the trust; or
. take any other action which the security trustee indicates that it is
willing to take.
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Any enforcement action taken by the security trustee will only relate to
the same rights in relation to the assets of the trust as are held by the
issuer trustee. This means that even after an enforcement, the security
trustee's interest in the assets of the trust will remain subject to the rights
of the seller and the servicer arising under the master trust deed and the
series supplement.
No Secured Creditor is entitled to enforce the charge under the security
trust deed, or appoint a receiver or otherwise exercise any power conferred by
any applicable law on charges, otherwise than in accordance with the security
trust deed.
The Class A-1 Note Trustee as Voting Secured Creditor
If an event of default under the security trust deed occurs and is
continuing, the Class A-1 note trustee must deliver notice of that event to
each Class A-1 noteholder within [10] days, or sooner if required by the rules
of the London Stock Exchange or any other stock exchange on which the Class A-1
notes are listed, of becoming aware of that event provided that, except in the
case of a default in payment of interest and principal on the Class A-1 notes,
the note trustee may withhold such notice if it determines in good faith that
withholding the notice is in the interests of Class A-1 noteholders.
The rights, remedies and discretion of the Class A-1 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 Class A-1 note trustee on behalf of
the Class A noteholders except in limited circumstances as specified in the
security trust deed. The security trustee may rely on any instructions or
directions given to it by the Class A-1 note trustee as being given on behalf
of the Class A-1 noteholders without inquiry about compliance with the Class A-
1 note trust deed.
If any of the Class A-1 notes remain outstanding and are due and payable
otherwise than by reason of a default in payment of any amount due on the Class
A-1 notes, the Class A-1 note trustee must not vote under the security trust
deed to, or otherwise direct the security trustee to enforce the charge or
dispose of the assets of the trust unless:
. a sufficient amount would be realized to discharge in full all
amounts owing to the Class A-1 noteholders, and any other amounts
payable by the issuer trustee ranking in priority to or equal with
the Class A-1 notes;
. the Class A-1 note trustee is of the opinion, reached after
considering at any time and from time to time the advice of a
investment bank or other financial adviser selected by the Class A-1
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; or
. the Class A-1 note trustee is so directed by the holders of 75% of
the aggregate Stated Amount of the Class A-1 notes.
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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 an Extraordinary Resolution of the Voting Secured
Creditors in accordance with the security trust deed, unless in the opinion of
the security trustee the delay required to obtain such directions would be
prejudicial to Secured Creditors as a class. The security trustee is not
obligated to act unless it obtains an indemnity from the Voting Secured
Creditors 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 Secured
Creditors, or is required by an Extraordinary Resolution to take any action
under the security trust deed, and advises the Voting Secured Creditors that it
will not act in relation to the enforcement of the security trust deed unless
it is personally indemnified by the Voting Secured Creditors 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 Secured Creditors 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 Secured Creditors may exercise such of
those powers conferred on them by the security trust deed as they determine by
Extraordinary Resolution.
Priorities under the Security Trust Deed
The proceeds from the enforcement of the charge are to be applied in the
following order of priority, subject to any statutory or other priority which
may be given priority by law:
. first, rateably to pay amounts owing or payable under the security
trust deed to indemnify the security trustee against all loss and
liability incurred by the security trustee or any receiver in acting
under the security trust deed, except the receiver's remuneration,
and in payment of the Prior Interest;
. second, to pay rateably any fees due to the security trustee, the
Class A-1 note trustee or the principal paying agent and the
receiver's remuneration;
. third, to pay rateably other outgoings and liabilities that the
receiver, the security trustee or the Class A-1 note trustee have
incurred in acting under the security trust deed, and, in the case
of the Class A-1 note trustee, under the Class A-1 note trust deed;
. fourth, to pay any security interests over the assets of the trust
of which the security trustee is aware having priority to the charge
under the security trust deed, other than the Prior Interest, in the
order of their priority;
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. fifth, to pay the Class A-1 noteholders the proceeds, if any, of any
termination payment received from the currency swap provider toward
satisfaction of any secured moneys owing in relation to the Class A-
1 Notes;
. sixth, to pay the liquidity facility provider any unutilized cash
collateral lodged with the issuer trustee and any unpaid interest on
that cash collateral;
. seventh, to pay the seller any unpaid Accrued Interest Adjustment;
. eighth, to pay rateably:
. the Class A noteholders and redraw bondholders all Secured Moneys
owing in relation to the Class A notes and redraw bonds. For the
purposes of calculating the Class A-1 entitlement, the Secured
Moneys owing in respect of the Class A-1 notes will be converted
from US dollars to Australian dollars at the A$ exchange rate or
the spot exchange rate upon the termination of the currency swap,
as determined by the security trustee in each case, which ever
rate produces the lesser amount of Australian dollars. This will
be applied:
. first, rateably towards all unpaid interest on the Class A
notes and redraw bonds; and
. second, rateably to reduce the Stated Amount of the Class A
notes and redraw bonds;
. any other Secured Moneys owing to the liquidity facility
provider;
. any Secured Moneys owing to the standby redraw facility provider;
. rateably all Secured Moneys owing to each swap provider; and
. all unpaid redraws and further advances owing to the seller and
the seller deposit;
. ninth, if the Secured Moneys owing to the Class A-1 noteholders were
converted under the preceding paragraph from US dollars to
Australian dollars at the spot exchange rate upon the termination of
the currency swap and, as a result, fewer US$ than the US$ amount
owing to the Class A-1 noteholders were paid to the Class A-1
noteholders, equally amongst the Class A-1 notes in respect of any
remaining US$ amounts owing to the Class A-1 noteholders converted
at the spot exchange rate, as determined by the security trustee, 2
Business Days prior to the date of distribution;
. tenth, equally to the Class B noteholders;
. eleventh, to pay rateably to each Secured Creditor any monetary
liabilities owing to that Secured Creditor under any transaction
document and not satisfied under the preceding paragraphs;
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. twelfth, to pay subsequent security interests over the assets of the
trust of which the security trustee is aware, in the order of their
priority; and
. thirteenth, to pay any surplus to the issuer trustee to be
distributed in accordance with the terms of the master trust deed and
the series supplement. The surplus will not carry interest as against
the security trustee.
Payments to Class A-1 noteholders will be effected in US$, which will be
calculated by re-converting the Australian dollar amount due to Class A-1
noteholders to US$ using the spot exchange rate 2 Business Days prior to the
date of distribution.
Upon enforcement of the security created by the security trust deed, the
net proceeds may be insufficient to pay all amounts due on redemption to the
noteholders and redraw bondholders. Any claims of the noteholders and redraw
bondholders remaining after realization of the security and application of the
proceeds shall 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 incurred in performing its duties under the
security trust deed. The security trustee shall receive a fee in the amount
agreed from time to time by the issuer trustee, the security trustee and the
manager provided that the rating agencies must be given prior notice of any
variation of the fee and the fee may not be varied if this would result in a
reduction, qualification or withdrawal of the credit rating of any note or
redraw bond.
Retirement and Removal of the Security Trustee
The security trustee may retire on 3 months notice. The security trustee
must retire if:
. an Insolvency Event occurs with respect to it;
. it ceases to carry on business;
. the issuer trustee, where it is a related body corporate, retires or
is removed from office and the manager requires the security trustee
by notice in writing to retire;
. the Voting Secured Creditors require it to retire by an Extraordinary
Resolution;
. it breaches a material duty and does not remedy the breach with 20
Business Days notice from the manager or the issuer trustee; or
. there is a change in ownership or effective control of the security
trustee without the consent of the manager.
If the security trustee retires, it may appoint an authorized trustee
corporation to act in its place with the approval of the manager and the
rating agencies. If the security trustee is removed, the issuer trustee, or
failing it the manager, may appoint a replacement security trustee which is an
authorized trustee corporation under the Australian Corporations Law with the
approval of the rating agencies.
If a substitute security trustee has not been appointed at a time when
the position of security trustee becomes vacant, the manager must act as
security trustee and must promptly convene a meeting of Voting Secured
Creditors who may by Extraordinary Resolution appoint a replacement security
trustee. While the manager acts as security trustee, it is entitled to the
security trustee's fee.
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Amendment
The issuer trustee, the manager, the security trustee and the Class A-1
note trustee, may alter, add to or revoke any provision of the security trust
deed, subject to the limitations described below, if the alteration, addition
or revocation:
. in the opinion of the security trustee is made to correct a manifest
error or is of a formal, technical or administrative nature only;
. in the opinion of the security trustee, or of a lawyer instructed by
the issuer trustee, is necessary or expedient to comply with the
provisions of any law or regulation or with the requirements of any
statutory authority;
. in the opinion of the security trustee is appropriate or expedient
as a consequence of an alteration to any law or regulation or
altered requirements of the government of any jurisdiction or any
minister, department, commission, office, instrumentality, agency,
board, authority or organ of such a government or any person or
delegate deriving authority from any of them, including, without
limitation, an alteration, addition or revocation which is
appropriate or expedient as a result of an alteration to Australia's
tax laws or any ruling by the Australian Commissioner or Deputy
Commissioner of Taxation or any governmental announcement or
statement, which has or may have the effect of altering the manner
or basis of taxation of trusts generally or of trusts similar to the
trust under the security trust deed;
. in the opinion of the security trustee is otherwise desirable for
any reason.
If any alteration, addition or revocation referred to in the last bullet
point above, in the opinion of the Class A-1 note trustee, affects the Class A-
1 noteholders only or in a manner differently to Secured Creditors generally,
alters the terms of the Class A-1 notes or is materially prejudicial to the
interests of Class A-1 noteholders, the alteration, addition or revocation will
not be effective unless the consent of Class A-1 noteholders owning 75% of the
aggregate outstanding principal balance of the Class A-1 notes is obtained.
Any alteration, addition or revocation must be notified to the rating
agencies 5 Business Days in advance.
The Class A-1 note trustee will be entitled to assume that any proposed
alteration, addition or revocation will not be materially prejudicial to the
interests of the Class A-1 noteholders if each of the rating agencies confirms
in writing that if the alteration, addition or revocation is effected this will
not lead to a reduction, qualification or withdrawal of the then rating given
to the Class A-1 notes by the rating agency.
If any alteration, addition or revocation referred to above purports to
effect a Payment Modification it will not be effective as against a given Class
A-1 noteholder unless consented to by that Class A-1 noteholder.
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The Liquidity Facility
Advances and Facility Limit
Under the liquidity facility agreement, the liquidity facility provider
agrees to make advances to the issuer trustee for the purpose of meeting
shortfalls between the Finance Charge Collections, Mortgage Insurance Interest
Proceeds and Other Income on a distribution date and the payments to be made
from the Available Income Amount, other than reimbursements of principal
charge-offs or payments to the residual unitholder, on that distribution date.
The liquidity facility provider agrees to make advances to the issuer
trustee up to the liquidity limit. The liquidity limit is equal to the lesser
of:
. A$[50] million;
. the Performing Housing Loans Amount at that time; and
. the amount agreed by the liquidity facility provider, the manager
and the rating agencies.
Conditions Precedent to Drawing
The liquidity facility provider is only obliged to make an advance if:
. no event of default under the liquidity facility exists or will
result from the provision of the advance;
. the representations and warranties by the issuer trustee in any
transaction document are true and correct as of the date of the
drawdown notice and the drawdown; and
. other than statutory priorities, the liquidity facility provider has
not received notice of any security interest ranking in priority to
or equal with its security interest under the security trust deed.
Interest and fees under the Liquidity Facility
Interest accrues daily on the principal outstanding under the liquidity
facility at the Bank Bill Rate plus a margin, calculated on the number of days
elapsed and a 365 day year. Interest is payable quarterly in arrears on each
distribution date to the extent that funds are available for this purpose in
accordance with the series supplement. Unpaid interest will be capitalized and
will accrue interest from the date not paid.
A commitment fee with respect to the unutilized portion of the redraw
limit accrues daily, calculated on the number of days elapsed and a 365 day
year. The commitment fee is payable quarterly in arrears on each distribution
date to the extent that funds are available for this purpose in accordance with
the series supplement.
The interest rate and the commitment fee under the liquidity facility may
be varied by agreement between the liquidity facility provider, the issuer
trustee and the manager. However, the rating agencies must be notified of any
proposed variation and the interest rate and the commitment fee will not be
varied if this would result in the reduction, qualification or withdrawal of
any credit rating of a note or redraw bond.
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Repayment of Liquidity Advances
Advances under the liquidity facility are repayable on the following
distribution date from the funds available for this purpose in accordance with
the series supplement.
Downgrade of Liquidity Facility Provider
If the liquidity facility provider does not have short term credit
ratings of at least A-1+ by Standard & Poor's, P-1 by Moody's and F1+ by Fitch,
it must within 5 Business Days, or longer if agreed by the rating agencies,
deposit in the collections account an amount equal to the unutilized portion of
the liquidity limit. Following this, all drawings under the liquidity facility
will be made from that deposit. If the liquidity facility provider regains the
required credit ratings, the unutilized portion of that deposit will be repaid
to it.
Events of Default under the Liquidity Facility Agreement
The following are events of default under the liquidity facility:
. the issuer trustee fails to pay any amount within 10 Business Days
of its due date where funds are available for this purpose under the
series supplement;
. the issuer trustee alters the priority of payments under the
transaction documents without the consent of the liquidity facility
provider; and
. an event of default occurs under the security trust deed and any
enforcement action is taken under the security trust deed.
Consequences of an Event of Default
At any time after an event of default under the liquidity facility
agreement, the liquidity facility provider may do all or any of the following:
. declare all moneys actually or contingently owing under the
liquidity facility agreement immediately due and payable; and
. terminate the liquidity facility.
Termination
The liquidity facility will terminate upon the earlier to occur of:
. the distribution date in [ ] 2031;
. the date on which the liquidity facility provider declares the
liquidity facility terminated following an event of default under
the liquidity facility or where it becomes unlawful or impossible to
maintain or give effect to its obligations under the liquidity
facility;
. the date one month after all notes and redraw bonds are redeemed;
. the distribution date upon which the issuer trustee, as directed by
the manager, appoints a replacement liquidity facility provider,
provided that each rating agency has confirmed that this will not
result in a reduction, qualification or withdrawal of any credit
rating assigned by it to the notes or redraw bonds; and
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. the date upon which the liquidity limit is reduced to zero by
agreement between the liquidity facility provider, the manager and
the rating agencies.
The Standby Redraw Facility
Advances and Facility Limit
Under the standby redraw facility agreement, the standby redraw facility
provider agrees to make advances to the issuer trustee for the purpose of
reimbursing redraws and further advances made by the seller to the extent that
Principal Collections, Mortgage Insurance Principal Proceeds, Other Principal
Amounts and Principal Charge-off Reimbursements are insufficient to fund such
redraws and further advances on a distribution date.
The standby redraw facility provider agrees to make advances to the
issuer trustee up to the redraw limit. The redraw limit is equal to the lesser
of:
. A$[50] million; and
. the Performing Housing Loans Amount at that time,
or such greater or lesser amount agreed by the standby redraw facility
provider, the manager and the rating agencies.
Conditions Precedent to Drawing
The standby redraw facility provider is only obliged to make an advance
if:
. no event of default under the standby redraw facility exists or will
result from the provision of the advance;
. the representations and warranties by the issuer trustee in any
transaction document are true and correct as of the date of the
drawdown notice and the drawdown; and
. other than statutory priorities, the standby redraw facility
provider has not received notice of any security interest ranking in
priority to or equal with its security under the security trust
deed.
Interest and fees under the Standby Redraw Facility
Interest accrues daily on the principal outstanding under the standby
redraw facility, adjusted for principal charge-offs and principal charge-off
reimbursements as described below, at the Bank Bill Rate plus a margin,
calculated on the number of days elapsed and a 365 day year. Interest is
payable quarterly in arrears on each distribution date to the extent that funds
are available for this purpose in accordance with the series supplement. Unpaid
interest will be capitalized and will accrue interest from the date not paid.
A commitment fee with respect to the unutilized portion of the redraw
limit accrues daily, calculated on the number of days elapsed and a 365 day
year. The commitment fee is
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payable quarterly in arrears on each distribution date to the extent that funds
are available for this purpose in accordance with the series supplement.
The interest rate and the commitment fee under the standby redraw
facility may be varied by agreement between the standby redraw facility
provider, the issuer trustee and the manager. However, the rating agencies must
be notified of any proposed variation and the interest rate and the commitment
fee will not be varied if this would result in the reduction, qualification or
withdrawal of any credit rating of a note or redraw bond.
Repayment of Standby Redraw Advances
Advances under the standby redraw facility are repayable on the following
distribution date from the funds available for this purpose in accordance with
the series supplement.
However, in certain circumstances, the principal outstanding under the
standby redraw facility will be reduced by way of principal charge-off or
increased by a reimbursement of principal charges-offs, as described in
"Description of the Class A-1 Notes--Principal Charge-offs." The amount of
principal to be repaid under the standby redraw facility on a distribution date
is the outstanding principal as reduced by any principal charge-offs or
increased by any principal charge-off reimbursements.
Events of Default under the Standby Redraw Facility Agreement
The following are events of default under the standby redraw facility:
. the issuer trustee fails to pay any amount within 10 Business Days
of its due date where funds are available for this purpose under the
series supplement;
. the issuer trustee alters the priority of payments under the
transaction documents without the consent of the standby redraw
facility provider; and
. an event of default occurs under the security trust deed and any
enforcement action is taken under the security trust deed.
Consequences of an Event of Default
At any time after an event of default under the standby redraw facility
agreement, the standby redraw facility provider may do all or any of the
following:
. declare all moneys actually or contingently owing under the standby
redraw facility agreement immediately due and payable; and
. terminate the standby redraw facility.
Termination
The term of the standby redraw facility is 364 days from the date of the
standby redraw facility agreement. The term may be renewed at the option of the
standby redraw facility provider if it receives a request for an extension from
the manager 60 days prior to the scheduled termination. If the standby redraw
facility provider agrees to an extension, the term of the standby redraw
facility will be extended to the date specified by the standby redraw facility
provider, which must not be more than 364 days, subject to any further agreed
extension.
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The standby redraw facility will terminate upon the earlier to occur of
the following:
. the date on which the standby redraw facility provider declares the
standby redraw facility terminated following an event of default
under the standby redraw facility or where it becomes unlawful or
impossible to maintain or give effect to its obligations under the
standby redraw facility; and
. 364 days from the date of the standby redraw facility agreement or
any extension as set out above.
Servicing of the Housing Loans
Appointment and Obligations of Servicer
Commonwealth Bank is appointed as servicer of the housing loans on the
terms set out in the series supplement.
The servicer is required to administer the housing loans in the following
manner:
. in accordance with the series supplement;
. in accordance with the servicer's procedures manual and policies as
they apply to those housing loans which are under regular review and
may change from time to time in accordance with business judgment and
changes to legislation and guidelines established by relevant
regulatory bodies; and
. to the extent not covered by the preceding paragraphs, in accordance
with the standards and practices of a prudent lender in the business
of originating and servicing retail home loans.
The servicer's actions in servicing the housing loans are binding on the
issuer trustee, whether or not such actions are in accordance with the
servicer's obligations. The servicer is entitled to delegate its duties under
the series supplement however it must not delegate a material part of its
duties. The servicer at all times remains liable for the acts or omissions of
any delegate to the extent that those acts or omissions constitute a breach of
the servicer's obligations.
Powers
The function of servicing the housing loans is vested in the servicer and
it is entitled to service the housing loans to the exclusion of the issuer
trustee. The servicer has a number of express powers, which include the power:
. to release a borrower from any amount owing where the servicer has
written-off or determined to write-off that amount or where it is
required to do so by a court or other binding authority;
. subject to the preceding paragraph, to waive any right in respect of
the housing loans and their securities, except that the servicer may
not increase the term of a housing loan beyond 30 years from its
settlement date unless required to do so by a court or other binding
authority;
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. to release or substitute any security for a housing loan in
accordance with the relevant mortgage insurance policy;
. to consent to subsequent securities over a mortgaged property for a
housing loan, provided that the security for the housing loan
retains priority over any subsequent security for at least the
principal amount and accrued and unpaid interest on the housing loan
plus any extra amount determined in accordance with the servicer's
procedures manual and policies;
. to institute litigation to recover amounts owing under a housing
loan, but it is not required to do so if, based on advice from
internal or external legal counsel, it believes that the housing
loan is unenforceable or such proceedings would be uneconomical;
. to take other enforcement action in relation to a housing loan as it
determines should be taken; and
. to compromise, compound or settle any claim in respect of a mortgage
insurance policy or a general insurance policy in relation to a
housing loan or a mortgaged property for a housing loan.
Undertakings by the Servicer
The servicer has undertaken, among other things, the following:
. upon being directed by the issuer trustee following a Perfection of
Title Event, it will promptly take all action required or permitted
by law to assist the issuer trustee to perfect the issuer trustee's
legal title to the housing loans and related securities;
. to make reasonable efforts to collect all moneys due under the
housing loans and related securities and, to the extent consistent
with the series supplement, to follow such normal collection
procedures as it deems necessary and advisable;
. to comply with its material obligations under each mortgage
insurance policy;
. it will notify the issuer trustee if it becomes actually aware of
the occurrence of any Servicer Default or Perfection of Title Event;
. it will obtain and maintain all authorizations, filings and
registrations necessary to properly service the housing loans; and
. subject to the provisions of the Australian Privacy Act and its duty
of confidentiality to its clients, it will promptly make available
to the manager, the auditor of the trust and the issuer trustee any
books, reports or other oral or written information and supporting
evidence of which the servicer is aware that they reasonably request
with respect to the trust or the assets of the trust or with respect
to all matters in respect of the activities of the servicer to which
the series supplement relates.
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Administer Interest Rates
The servicer must set the interest rates to be charged on the variable
rate housing loans and the monthly instalment to be paid in relation to each
housing loan. Subject to the next paragraph, while Commonwealth Bank is the
servicer, it must charge the same interest rates on the variable rate housing
loans in the pool as it does for housing loans of the same product type which
have not been assigned to the issuer trustee.
If the basis swap has terminated while any notes or redraw bonds are
outstanding then, unless the issuer trustee has entered into a replacement
basis swap or other arrangements which the rating agencies have confirmed will
not result in a reduction, qualification or withdrawal of the credit ratings
assigned to the notes or redraw bonds, the servicer must ensure that the
weighted average of the variable rates charged on the housing loans is
sufficient, subject to applicable laws, including the Consumer Credit Code,
assuming that all relevant parties comply with their obligations under the
housing loans and the transaction documents, to ensure that issuer trustee has
sufficient funds to comply with its obligations under the transaction documents
as they fall due.
Collections
The servicer will receive collections on the housing loans from
borrowers. The servicer must deposit any collections into the collections
account within 5 Business Days following its receipt. However if the
collections account is permitted to be maintained with the servicer and:
. the servicer has short term credit ratings of A-1+ from Standard &
Poor's, P-1 from Moody's and F1+ from Fitch IBCA or, where the
seller is the servicer and the servicer is a bank, F1 from Fitch
IBCA it may retain collections until 10:00 am on the day which is 2
Business Days before the distribution date following the end of the
relevant collection period;
. the servicer has short term credit ratings of A-1 from Standard &
Poor's and P-1 from Moody's, it may retain collections until 10.00
am on the Business Day which is the earlier of 30 days from receipt
and 2 Business Days before the distribution date following the end
of the relevant collection period. However, while the sum of all
collections held by the servicer and the value of any Authorized
Short-Term Investments which are with, or issued by, a bank or
financial institution which has a short-term credit rating of A-1
from Standard & Poor's, exceeds 20% of the aggregate of the Stated
Amounts of the notes and redraw bonds, the servicer will only be
entitled to retain any additional collections received for 2
Business Days following receipt; and
. the servicer has no credit ratings or has short term credit ratings
of lower than A-1 from Standard & Poor's, lower than P-1 from
Moody's or lower than F1+ from Fitch IBCA or, where the seller is
the servicer and the servicer is a bank, F1 from Fitch IBCA, it may
retain collections for 2 Business Days following receipt.
After the applicable period referred to above, the servicer must deposit
the collections into the collections account.
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If collections are retained by the servicer in accordance with the first
two paragraphs above, the servicer must when depositing the collections into
the collections account also deposit interest on the collections retained equal
to the interest that would have been earned on the collections if they had been
deposited in the collections account within 5 Business Days of their receipt by
the servicer.
Servicing Compensation and Expenses
The servicer is entitled to a quarterly fee based on [the aggregate
outstanding principal balance of the housing loans on the first day of each
collection period], payable in arrears on the following distribution date.
The servicer's fee may be varied by agreement between the issuer trustee,
the manager and the servicer provided that the rating agencies are notified and
the servicer's fee is not varied if it would cause a reduction, qualification
or withdrawal in the credit rating of a note or redraw bond.
The servicer must pay from its own funds all expenses incurred in
connection with servicing the housing loans except for expenses in connection
with the enforcement of any housing loan or its related securities, the
recovery of any amounts owing under any housing loan 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, which amounts are recoverable from the assets
of the trust.
Liability of the Servicer
The servicer will not be liable for any loss incurred by any noteholder,
any redraw bondholder, any creditor of the trust or any other person except to
the extent that such loss is caused by a breach by the servicer or any delegate
of the servicer of the series supplement or any fraud, negligence or wilful
default by the servicer. In addition, the servicer will not be liable for any
loss in respect of a default in relation to a housing loan in excess of the
amount outstanding under the housing loan at the time of default less any
amounts that the issuer trustee has received or is entitled to receive under a
mortgage insurance policy in relation to that housing loan.
Removal, Resignation and Replacement of the Servicer
If the issuer trustee has determined that the performance by the servicer
of its obligations under the series supplement is no longer lawful and there is
no reasonable action that the servicer can take to remedy this, or a Servicer
Default is subsisting, the issuer trustee must by notice to the servicer
immediately terminate the rights and obligations of the servicer and appoint
another bank or appropriately qualified organization to act in its place.
A Servicer Default occurs if:
. the servicer fails to remit any collections or other amounts received
within the time periods specified in the series supplement and that
failure is not remedied within 5 Business Days, or such longer period
as the issuer trustee may agree, of notice of that failure given by
the manager or the issuer trustee;
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. the servicer fails to prepare and transmit the information required
by the manager by the date specified in the series supplement and
that failure is not remedied within 20 Business Days, or such longer
period as the issuer trustee may agree, of notice of that failure
given by the manager or the issuer trustee and has or will have an
Adverse Effect as reasonably determined by the issuer trustee;
. a representation, warranty or certification made by the servicer in
a transaction document or in any certificate delivered pursuant to a
transaction document proves incorrect when made and has or will have
an Adverse Effect as reasonably determined by the issuer trustee and
is not remedied within 60 Business Days after receipt by the
servicer of notice from the issuer trustee requiring remedy;
. an Insolvency Event occurs in relation to the servicer;
. if the servicer is the seller and is acting as custodian, it fails
to deliver all the mortgage documents to the issuer trustee
following a document transfer event in accordance with the series
supplement and does not deliver to the issuer trustee the
outstanding documents within 20 Business Days of receipt of a notice
from the issuer trustee specifying the outstanding documents;
. the servicer fails to maintain the required threshold rate on the
housing loans following termination of the basis swap and that
failure is not remedied within 20 Business Days of its occurrence;
or
. the servicer breaches its other obligations under a transaction
document and that breach has or will have an Adverse Effect as
reasonably determined by the issuer trustee and:
. the breach is not remedied within 20 Business Days after receipt
of notice from the trustee or manager requiring its remedy; and
. the servicer has not paid satisfactory compensation to the issuer
trustee.
The servicer may voluntarily retire if it gives the issuer trustee 3
months' notice in writing or such lesser period as the servicer and the issuer
trustee agree. Upon retirement the servicer may appoint in writing any other
corporation approved by the issuer trustee. If the servicer does not propose a
replacement by one month prior to its proposed retirement, the issuer trustee
may appoint a replacement.
Pending the appointment of a new servicer, the issuer trustee will act as
servicer and will be entitled to the servicer's fee.
The appointment of a substitute servicer is subject to confirmation from
the rating agencies that the appointment will not cause a reduction,
qualification or withdrawal in the credit ratings of the notes or redraw bonds.
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Seller Deposit
If the seller has a short-term deposit credit rating by Moody's of less
than P-1 or such other rating as is agreed between the issuer trustee, the
seller, the manager and Moody's or has a long term deposit credit rating
assigned by Standard & Poor's or Fitch IBCA of less than BBB or such other
rating as is agreed between the issuer trustee, the seller, the manager and
Standard & Poor's or Fitch IBCA, as the case may be, it must in respect of set-
off risk in relation to the trust:
. deposit or maintain in the collections account on each distribution
date, after giving effect to the payments to be made on that
distribution date, an amount being the higher of the amount specified
by Standard & Poor's from time to time or determined in accordance
with the series supplement or otherwise agreed by Moody's or Fitch
IBCA. This deposit may be utilized by the issuer trustee to meet any
liabilities of the seller to the issuer trustee in relation to the
exercise of set-off rights in relation to the housing loans, which
the seller has not met within 20 Business Days of notice from the
issuer trustee or the manager; or
. enter into such other arrangement from time to time agreed between
the seller and the relevant rating agency so as to ensure that rating
agency does not reduce, qualify or withdraw any credit rating
assigned by it to the notes or redraw bonds.
Custody of the Housing Loan Documents
Document Custody
The seller will retain all documents relating to the housing loans, their
securities and, where applicable, the certificates of title to property subject
to those securities, until a transfer of the housing loan documents to the
issuer trustee as described below.
The seller's duties and responsibilities as custodian include:
. holding the housing loan documents in accordance with its standard
safe keeping practices and in the same manner and to the same extent
as it holds its own documents;
. marking and segregating the security packages containing the housing
loan documents in a manner to enable easy identification by the
issuer trustee when the issuer trustee is at the premises where the
housing loan documents are located with a letter provided by the
seller explaining how those security packages are marked or
segregated;
. maintaining reports on movements of the housing loan documents;
. providing to the issuer trustee prior to the closing date and on each
distribution date computer diskettes containing certain information
in relation to the storage of the housing loan documents and the
borrower, mortgaged property and housing loan account number in
relation to each housing loan; and
. curing any deficiencies noted by the auditor in a document custody
auditor report.
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Audit
The seller will be audited by an independent auditor on an annual basis
in relation to its compliance with its obligations as custodian of the housing
loan documents and will be instructed to provide a document custody audit
report. The document custody audit report will grade the seller from "A" (good)
to "D" (adverse). If the seller receives an adverse document custody audit
report, the issuer trustee must instruct the auditor to conduct a further
document custody audit report.
Transfer of Housing Loan Documents
If:
. an adverse document custody audit report is provided by the auditor
and a further report, conducted no earlier than one month nor later
than two months after the first report, is also an adverse report;
. the issuer trustee replaces Commonwealth Bank as the servicer when
entitled to do so; or
. the long term debt rating of the seller is downgraded below BBB by
Standard & Poor's or Fitch IBCA or Baa2 by Moody's or such other
rating as is agreed between the manager, the servicer and the
relevant rating agency,
the seller, upon notice from the issuer trustee, must transfer custody of the
housing loan documents to the issuer trustee. This obligation will be satisfied
if the seller delivers the housing loan documents in relation to 90% by number
of the housing loans within 5 Business Days of that notice and the balance
within 10 Business Days of that notice.
In addition, if:
. the issuer trustee declares that a Perfection of Title Event has
occurred; or
. a Servicer Default occurs as a result of a breach of the servicer's
obligations which has or will have an Adverse Effect which is not
remedied within the required period,
the seller must, immediately following notice from the issuer trustee, transfer
custody of the mortgage documents to the issuer trustee.
The seller is not required to deliver housing loan documents that are
lodged with a governmental agency or lost but must provide a list of these to
the issuer trustee and deliver them upon receipt or take steps to replace them,
as applicable.
Reappointment of Seller as Custodian
The issuer trustee may, following a transfer of housing loan documents,
reappoint the seller as custodian of the housing loan documents provided that
the rating agencies confirm that this will not cause a reduction, qualification
or withdrawal in the credit rating of any note or redraw bond.
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Clean-Up and Extinguishment
The seller will have certain rights to extinguish the issuer trustee's
interest in the housing loans and their related securities, mortgage insurance
policies and other rights, or to otherwise regain the benefit of the housing
loans and their related securities, mortgage insurance policies and other
rights, if:
. the date on which the total principal outstanding on the housing
loans is less than 10% of the total principal outstanding on the
housing loans on [ ] has occurred or is expected to occur on or
before the next distribution date; or
. both of the following events occur:
. the next distribution date is the distribution date falling in
[ ] or the issuer trustee will be entitled to redeem the
notes and redraw bonds because of the imposition of a withholding
or other tax; and
. the seller has previously notified the manager that the Australian
Prudential Regulation Authority will permit the seller to exercise
its rights to extinguish the issuer trustee's interest in the
housing loans notwithstanding that the total principal outstanding
on the housing loans is greater than 10% of the total principal
outstanding on the housing loans on [ ].
The seller may only exercise those rights by paying to the issuer trustee on a
distribution date the amount determined by the manager to be the aggregate of
the Fair Market Value as at the last day of the immediately preceding accrual
period of the housing loans. If any notes or redraw bonds are outstanding the
seller will not be able to exercise those rights unless the amount to be paid
by the seller to the issuer trustee will be sufficient to redeem the notes and
redraw bonds in full. In addition, the seller may not exercise those rights
where the issuer trustee's right to redeem the notes and redraw bonds arises
from the imposition of a tax or duty applicable only to the Class A-1 notes and
the holders of 75% of the aggregate Stated Amount of the Class A-1 notes have
elected that they do not require the issuer trustee to redeem the Class A-1
notes.
The Servicer
Servicing of Housing Loans
Under the series supplement, Commonwealth Bank will be 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 Commonwealth Bank's loan processing
centers, presently located in Sydney, Melbourne, Brisbane, Perth and Adelaide,
and at Commonwealth Bank's retail branches and telephone banking and marketing
centers. Servicing procedures undertaken by loan processing centres include
partial loan security discharges, loan security substitutions, consents for
subsequent mortgages and arrears management. Customer enquiries are dealt with
by the retail branches and telephone banking and marketing centers. For a
further description of the duties of the servicer, see "Description of the
Transaction Documents--The Servicing of the Housing Loans."
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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. A borrower may elect to make his
or her repayments weekly or fortnightly so long as the equivalent of the
minimum monthly repayment is received on or before the monthly installment due
date. Borrowers often select repayment dates to coincide with receipt of their
salary or other income. In addition to payment to a retail branch by cash or
cheque, housing loan repayments may be made by direct debit to a nominated bank
account or direct credit from the borrower's salary by their employer. At
present over 90% of scheduled repayments on the housing loans are made by way
of direct debits to a nominated bank account.
Commonwealth Bank credits 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 housing loan account.
A housing loan is subject to action in relation to arrears of payment
whenever the monthly repayment is not paid by the monthly installment due date.
However, under the terms of the housing loans, borrowers may prepay amounts
which are additional to their required monthly repayments to build up a "credit
buffer," being the difference between the total amount paid by them and the
total of the monthly repayments required to be made by them. If a borrower
subsequently fails to make some or all of a required monthly repayment, the
servicing system will apply the amount not paid against the credit buffer until
the total amount of missed payments exceeds the credit buffer. The housing loan
will be considered to be arrears only in relation to that excess. See
"Commonwealth Bank Residential Loan Program--Payment Holidays."
Commonwealth Bank's automated collections system identifies all housing
loan accounts which are in arrears and produces lists of those housing loans.
The collection system allocates overdue loans to designated collection officers
within Commonwealth Bank who take action in relation to the arrears.
Actions taken by Commonwealth Bank in relation to delinquent accounts
will vary depending on a number of elements, including the following and, if
applicable, with the input of the mortgage insurer:
. arrears history;
. equity in the property; and
. arrangements made with the borrower to meet overdue payments.
If satisfactory arrangements cannot be made to rectify a delinquent housing
loan, legal notices are issued and recovery action is initiated by Commonwealth
Bank. This includes, if Commonwealth Bank obtains possession of the mortgaged
property, ensuring that the mortgaged property supporting the housing loan
still has adequate general home owner's insurance and that the upkeep of the
mortgaged property is maintained. Recovery action is
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arranged by experienced collections staff in conjunction with internal or
external legal advisers. A number of sources of recovery are pursued including
the following:
. voluntary sale by the mortgagor;
. guarantees;
. government assistance schemes;
. mortgagee sale; and
. claims on mortgage insurance.
It should be noted that Commonwealth Bank reports all actions that it takes on
overdue housing loans to the relevant mortgage insurer where required in
accordance with the terms of the mortgage insurance policies.
Collection and Enforcement Process
When a housing loan is more than 7 days delinquent a call to the borrower
is made to seek full and immediate clearance of all arrears. In the absence of
successful call contact arrears follow-up letters to the borrower are sent. If
the housing loans have a direct debit payment arrangement, a sweep of the
nominated account is made to rectify the arrears.
When a housing loan reaches 60 days delinquent, a default notice is sent
advising the borrower that if the matter is not rectified within a period of 30
days, Commonwealth Bank is entitled to commence enforcement proceedings without
further notice. Normally a further notice will be issued to a borrower on an
account which is 90 days delinquent advising the borrower that failure to
comply within 30 days will result in Commonwealth Bank exercising its power of
sale. At 120 days delinquent, a letter of demand and notice to vacate is issued
to the borrower, followed by a statement of claim at 150 days delinquent. Once
a statement of claim is served, Commonwealth Bank can then enter judgement in
the Supreme Court. The borrower is given up to 40 days to file a notice of
appearance and defense and, failing this, Commonwealth Bank will then have
judgment entered and will apply for a writ of possession whereby the sheriff
will set an eviction date. Appraisals and valuations are ordered and a reserve
price is set for sale by way of auction or private treaty. These time frames
assume that the borrower has either taken no action or has not honored any
commitments made in relation to the delinquency to the satisfaction of the
Commonwealth Bank and the mortgage insurer.
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 collection and enforcement procedures may change from time to time in
accordance with business judgment and changes to legislation and guidelines
established by the relevant regulatory bodies.
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Servicer Delinquency Experience
The following table summarizes the delinquency and loss experience for
each of the portfolios of securitized housing loans serviced by the servicer.
The portfolios consist of the housing loans relating to the Series 1997-1
Medallion Trust and the Series 1998-1 Medallion Trust. The table expresses the
number of delinquent loans at period end as a percentage of the total number of
loans serviced.
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Delinquencies and Losses
Series 1997-1 Medallion Trust
<TABLE>
<CAPTION>
December 31, June 30, December 31, June 30,
Portfolio At: 1997 1998 1998 1999
------------ -------- ------------ --------
<S> <C> <C> <C> <C>
Outstanding Balance (A$000's)
Number of Loans Outstanding
Percentage of Delinquent Loans:
30 to 59 days
60 to 89 days
90 to 119 days
120 days or more
---- --- ---- ---
Total Delinquencies
---- --- ---- ---
Loan losses as a % of total
outstanding balance
==== === ==== ===
</TABLE>
Delinquencies and Losses
Series 1998-1 Medallion Trust
<TABLE>
<CAPTION>
December 31, June 30,
Portfolio At: 1998 1999
------------ --------
<S> <C> <C>
Outstanding Balance (A$000's)
Number of Loans Outstanding
Percentage of Delinquent Loans:
30 to 59 days
60 to 89 days
90 to 119 days
120 days or more
---- ---
Total Delinquencies
---- ---
Loan losses as a % of total outstanding balance
==== ===
</TABLE>
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Loan losses for each period were annualized and are expressed as a
percentage of the average outstanding balance for the period.
There can be no assurance that the delinquency experience with respect to
the housing loans comprising the housing loan pool will correspond to the
delinquency experience of the servicer's securitized portfolios set forth in
the foregoing tables. The statistics shown in the preceding tables represent
the delinquency experience for the securitized portfolios for each of the years
presented, whereas the aggregate delinquency experience on the housing loans
comprising the securitized portfolios will depend on the results obtained over
the life of the securitized portfolios. 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 comprising the housing loan
pool. Moreover, if the residential real estate market should experience an
overall decline in property values such that the principal balances of the
housing loans comprising the securitized portfolios become equal to or greater
than the value of the related mortgaged properties, the actual rates of
delinquencies 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, bankruptcies and losses with respect
to the securitized portfolios. You should note that Australia experienced a
period of relatively low and stable interest rates during the period covered in
the preceding tables. If interest rates were to rise, it is likely that the
rate of delinquencies and losses would increase.
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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 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 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 the 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:
. refinancing by mortgagors with other financiers;
. receipt by the issuer trustee of enforcement proceeds due to a
mortgagor having defaulted on its housing loan;
. receipt by the issuer trustee of insurance proceeds in relation to a
claim under a mortgage insurance policy in respect of a housing loan;
. repurchase by the seller as a result of a breach by it of certain
representations, if any;
. repurchase by the seller upon a further advance being made which
exceeds the then scheduled balance of the housing loan by more than
one scheduled monthly installment;
. repurchase of the housing loans as a result of an optional
termination or a redemption for taxation or other reasons;
. receipt of proceeds of enforcement of the security trust deed prior
to the final maturity date of the notes; and
. 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
. repurchased by Commonwealth Bank under its right of first refusal;
or
. sold to a third party.
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The prepayment amounts described above are reduced by:
. principal draws; and
. repayment of redraw advances.
Since the rate of payment of principal of the housing loans cannot be
predicted and will depend on future events and a variety of factors, no
assurance can be given to you as to this rate of payment or the rate of
principal prepayments. The extent to which the yield to maturity of any note
may vary from the anticipated yield will depend upon the following factors:
. the degree to which a note is purchased at a discount or premium; and
. 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 dollar
in respect of principal repayable under the note is reduced to zero.
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 life of the notes.
The following tables are based on a constant prepayment rate model.
Constant prepayment rate represents an assumed constant rate of prepayment each
month, expressed as a per annum percentage of the principal balance of the pool
of mortgage loans for that month. Constant prepayment rate does not purport to
be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any pool of housing loans, including the
housing loans in your pool. Neither of the seller nor the 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 tables are based upon the assumptions in the following
paragraph, and not upon the actual characteristics of the housing loans. Any
discrepancies between
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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 tables. Furthermore, since
these discrepancies exist, principal payments on the notes may be made earlier
or later than the tables indicate.
For the purpose of the following tables, it is assumed that:
. the housing loan pool consists of fully-amortizing housing loans;
. the cut-off date is the close of business on [ ];
. closing date for the notes is [ ];
. payments on the notes are made on the quarterly payment date,
regardless of the day on which payment actually occurs, commencing in
[ ] 2000 and are made in accordance with the priorities
described in this prospectus;
. the housing loans' prepayment rates are equal to the respective
percentages of constant prepayment rate indicated in the tables;
. the scheduled monthly payments of principal and interest on the
housing loans will be timely delivered on the first day of each
month, [except in the month of [ ], in which case, payments are
calculated based on a rateable share of one month's collections,]
assuming a start date of the close of business [ ], 2000, with
no defaults;
. there are no redraws, substitutions or payment holidays with respect
to the housing loans;
. there are no releases from the liquidity reserve;
. all prepayments are prepayments in full received on the last day of
each month and include 30 days' interest on the prepayment;
. principal collections are distributed according to the rules of
distribution set forth in this prospectus;
. all payments under the swaps are made as scheduled;
. the 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 Call (Years)"; and
. the exchange rate is US$ [0.6377]=A$1.00
It is not likely that the housing loans will pay at any assumed constant
prepayment rate to maturity or that all housing loans will prepay at the same
rate. In addition, the diverse remaining terms to maturity of the housing loans
could produce slower or faster distributions of principal than indicated in the
tables at the assumed constant prepayment rate specified, even if the weighted
average remaining term to maturity of the housing loans is the same as the
weighted average remaining term to maturity of the assumptions described in
this section. You are urged to make your investment decisions on a basis that
includes your
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determination as to anticipated prepayment rates under a variety of the
assumptions discussed in this prospectus as well as other relevant assumptions.
In the following tables, the percentages have been rounded to the nearest
whole number and the weighted average life of a class of notes is determined by
the following three step process:
. multiplying the amount of each payment of principal thereof by the
number of years from the date of issuance to the related payment
date,
. summing the results, and
. dividing the sum by the aggregate distributions of principal referred
to in the first clause above and rounding to two decimal places.
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Percent of Initial Principal Outstanding at the Following Percentages of
Constant Prepayment Rate
<TABLE>
<CAPTION>
Class A Notes
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Use of Proceeds
The net proceeds from the sale of the Class A-1 notes, after being
exchanged pursuant to the currency swap, will amount to A$[ ] and will be used
by the issuer trustee to acquire from the seller equitable title to the housing
loans and related securities.
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. Laws may differ between 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 (except where it expressly provides otherwise), 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 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 in respect of the mortgaged property over all other mortgages
granted by the relevant borrower or guarantor and over all unsecured creditors
of the borrower or guarantor, except in respect of certain statutory rights
such as some rates and taxes, which are granted statutory priority. Each
borrower under the housing loans is prohibited under its loan documents from
creating another mortgage or other security interest over the relevant
mortgaged property without the consent of Commonwealth Bank.
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." Each housing loan in
the pool will be 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. 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
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," "stratum title" or "residential
Crown leasehold."
Strata title and Stratum title
"Strata title" and "stratum title" were developed to enable the creation
of, and dealings with, apartment units which are similar to condominiums in the
United States, and is governed by the legislation of the State or Territory in
which the property is situated. Under both strata title and stratum title, each
proprietor has title to, and may freely dispose of, their apartment unit.
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 a "body corporate" or a "service company" for the
benefit of the individual proprietors. All proprietors are members of the body
corporate or service company, which is vested with the control, management and
administration of the common property and the strata scheme generally, for the
benefit of the proprietors. In general, the body corporate or service company
will have a charge (either registered or created by statute) over the units of
its members to secure fees payable by the members. This charge will take
priority over the mortgage securing the housing loan.
Only Torrens title land can be the subject of strata or stratum 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 or
stratum proprietor.
Residential Crown 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 Crown
leasehold. Mortgaged residential property in that jurisdiction comprises a
Crown lease and developments on the land are subject to the terms of that
lease. Any such lease:
. cannot have a term exceeding 99 years, although the term can be
extended in effect under a straightforward administrative process,
whereby the existing lease is surrendered and a new lease is granted
for a term not exceeding 99 years, unless the Commonwealth or
Australian Capital Territory Government considers that the land is
required for a public purpose; and
. is subject to a nominal rent of 5 cents per annum on demand.
As with other Torrens title land, the mortgagor's leasehold interest in
the land is entered in a central register and, subject to some exceptions, the
mortgagor may deal with its residential 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
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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 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 securities over real property is made
complex by the fact that each State and Territory 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
mortgage operates as a statutory charge. The mortgagee does not obtain an
estate in the property but does have an interest in the land which is marked 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, 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 his or her debt, a discharge executed by
the mortgagee is lodged with the relevant registrar by the mortgagor or the
mortgagee and the mortgage is noted as having been released.
Commonwealth Bank as Mortgagee
Commonwealth Bank is, and until a Perfection of Title Event occurs,
intends to remain, the registered mortgagee of all the mortgages. The borrowers
will not be aware of the equitable assignment of the housing loans and
mortgages to the issuer trustee.
Prior to any Perfection of Title Event, Commonwealth Bank, as servicer,
will undertake any necessary enforcement action with respect to defaulted
housing loans and
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mortgages. Following a Perfection of Title Event, the issuer trustee is
entitled, under an irrevocable power of attorney granted to it by Commonwealth
Bank, to be registered as mortgagee of the mortgages. Until that registration
is achieved, the issuer trustee or the manager is entitled to lodge caveats on
the register publicly to notify its interest in the mortgages (and must do so
if it has not commenced to take all necessary steps to perfect its legal title
within 30 Business Days of its declaration that a Perfection of Title Event has
occurred).
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 moneys 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:
. 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.
. The mortgagee may, in limited circumstances, lease the property to
third parties.
. The mortgagee may foreclose on the property. Under foreclosure
procedures, the mortgagee extinguishes the mortgagor's title to the
property so that the mortgagee becomes the absolute owner of the
property, a remedy that is, because of procedural constraints, rarely
used. If the mortgagee forecloses on the property, it loses the right
to sue the borrower under the personal covenant to repay and can look
only to the value of the property for satisfaction of the debt.
. 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.
. 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.
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A mortgagee's ability to call in all amounts under a housing loan or
enforce a mortgage which is subject to the Consumer Credit Code 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. A default interest rate will not
be a penalty if the amount payable on default is a genuine pre-estimate of the
loss that the lender will suffer as a result of the default. The Consumer
Credit Code 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 Law, where a company is
being wound up, a loan is voidable if it is an unfair loan. A loan will only be
unfair if the interest or charges on the loan were extortionate when the loan
was made or have become extortionate because of a variation.
The Consumer Credit Code requires that certain fees or charges to be
levied by the lender must be provided for in the contract, otherwise they
cannot be levied. The regulations under the Consumer Credit Code may also from
time to time prohibit certain fees and charges. There are none currently so
prohibited. The Consumer Credit Code also requires that establishment fees,
early termination fees and prepayment fees must not be unconscionable otherwise
they may be reduced or set aside.
Bankruptcy and Insolvency
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, 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:
. the disposition was made to defraud creditors; or
. the disposition was made by an insolvent debtor within a prescribed
period and that disposition had the effect of giving a creditor a
preference, priority or advantage over other creditors.
The insolvency of a company is governed by the Corporations Law of the
relevant Australian jurisdiction. Again, secured creditors generally stand
outside the insolvency.
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However, a liquidator may avoid a housing loan or a mortgage which is voidable
under the Corporations Law because it is an uncommercial transaction, or an
unfair preference to a creditor and that transaction occurs:
. when the company is insolvent, or an act is done, or an omission is
made, to give effect to the transaction when the company is
insolvent, or the company becomes insolvent because of, or because of
matters including, the entering into of the transaction or the doing
of an act, or the making of an omission, to give effect to the
transaction; and
. within a prescribed period prior to the commencement of the winding
up of the company.
A liquidator may also avoid a housing loan if it is an unfair loan being
a loan in relation to which an extortionate interest rate or charges are
levied.
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.
Insolvency Considerations
The current transaction is intended to mitigate insolvency risk. For
example, the equitable assignment of the housing loans by Commonwealth Bank to
the issuer trustee should ensure that the housing loans are not assets
available to the liquidator or creditors of Commonwealth Bank in the event of
the insolvency of Commonwealth Bank. 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 the insolvency of the
issuer trustee.
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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 Secured Creditors. See
"Description of the Transaction Documents--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
or is a creditor of the trust with a right of subrogation to the issuer
trustee's lien over the assets of the trust. 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 Class A-1 notes in full,
some or all of the Class A-1 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 Code
Under the Consumer Credit Code, a borrower has the right to apply to a
court to do the following, among other things:
. vary the terms of a housing loan on the grounds of hardship or that
it is an unjust contract;
. reduce or cancel any interest rate payable on a housing loan if the
interest rate is changed in a way which is unconscionable;
. have certain provisions of a housing loan which are in breach of the
legislation declared unenforceable;
. obtain an order for a civil penalty against the seller, the amount of
which may be set off against any amount payable by the borrower under
the applicable housing loan; or
. obtain restitution or compensation from the seller in relation to
breaches of the Consumer Credit Code in relation to a housing loan.
The issuer trustee will become liable for compliance with the Consumer
Credit Code if it acquires legal title to the housing loans. It will take this
legal title subject to any breaches of the Consumer Credit Code by the seller.
In particular, once the issuer trustee acquires legal title it may become
liable to orders of the type referred to in the last two bullet points listed
above in relation to breaches of the Consumer Credit Code. Any order under the
Consumer Credit Code may affect the timing or amount of interest or principal
payments or repayments under the relevant housing loan, which might in turn
affect the timing or amount of interest or principal payments or repayments to
you under the Class A-1
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notes. The servicer will indemnify the issuer trustee against any liability
under the Consumer Credit Code in relation to the trust where the events giving
rise to that liability occur before a Perfection of Title Event and against any
such liability where the events giving rise to that liability occur after a
Perfection of Title Event to the extent that they arise from a Servicer Default
or a failure of the servicer to comply with its obligations under any
transaction document.
United States Federal Income Tax Matters
Overview
The following is a summary of all material United States federal income
tax consequences of the purchase, ownership and disposition of the Class A-1
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, 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 IRS. The parts of this summary which relate to matters of law
or legal conclusions represent the opinion of Mayer, Brown & Platt, special
United States federal tax counsel for the manager, and are as qualified in this
summary. We have not sought and will not seek any rulings from the IRS about
any of the United States federal income tax consequences we discuss, and we
cannot assure you that the IRS will not take contrary positions.
Mayer, Brown & Platt has prepared or reviewed the statements under the
heading "United States Federal Income Tax Matters" and is of the opinion that
these statements discuss all material United States federal income tax
consequences to investors generally of the purchase, ownership and disposition
of the Class A-1 notes. However, the following discussion does not discuss and
Mayer, Brown & Platt is unable to opine as to the unique tax consequences of
the purchase, ownership and disposition of the Class A-1 notes by investors
that are given special treatment under the United States federal income tax
laws, including:
. banks and thrifts;
. insurance companies;
. regulated investment companies;
. dealers in securities;
. 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;
. foreign investors;
. trusts and estates; and
. pass-through entities, the equity holders of which are any of the
foregoing.
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Additionally, the discussion regarding the Class A-1 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 Class A-1 notes as "capital assets" within the meaning of Section 1221
of the Code.
It is suggested that prospective investors consult their own tax advisors
about the United States federal, state, local, foreign and any other tax
consequences to them of the purchase, ownership and disposition of the Class A-
1 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 manager that the
trust does not and will not have an office in the United States, and that the
trust is not conducting, and will not conduct any activities in the United
States, other than in connection with its issuance of the Class A-1 notes, in
the opinion of Mayer, Brown & Platt, the issuer trustee will not be subject to
United States federal income tax.]
General
Mayer, Brown & Platt is of the opinion that you will be required to
report interest income on the Class A-1 notes you hold in accord with your
method of accounting.
Sale of Notes
Mayer, Brown & Platt is of the opinion that if you sell a Class A-1 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 Class A-1 note. Your
adjusted tax basis in a note will equal your cost for the Class A-1 note,
decreased by any amortized premium and any payments other than interest made on
the Class A-1 note and increased by any market discount or original issue
discount previously included in 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 Class A-1
note was held as a capital asset for more than one year. In the case of an
individual taxpayer, the maximum long-term capital gains tax rate is lower than
the maximum ordinary income tax rate. Any capital losses realized may be
deducted by a corporate taxpayer only to the extent of capital gains and by an
individual taxpayer only to the extent of capital gains plus $3,000 of other
U.S. income.
Market Discount
In the opinion of Mayer, Brown & Platt, you will be considered to have
acquired a Class A-1 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.
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In the case of a sale or other disposition of a Class A-1 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 Class A-1 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 Class A-1 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:
. 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
. 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 Class A-1 note subject to the market discount rules, and the
interest paid or accrued on this debt in any taxable year exceeds the interest
and original issue discount currently includible in income on the note,
deduction of this excess interest must be deferred to the extent of the market
discount allocable to the taxable year. The deferred portion of any interest
expense will generally be deductible when the market discount is included in
income upon the sale, repayment, or other disposition of the indebtedness.
Section 1278 of the Code allows a taxpayer to make an election to include
market discount in gross income currently. If an election is made, the
previously described rules of Sections 1276 and 1277 of the Code will not apply
to the taxpayer.
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.
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Premium
In the opinion of Mayer, Brown & Platt, you will generally be considered
to have acquired a Class A-1 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 Class A-1 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
Class A-1 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 & Platt is of the opinion that, backup withholding taxes
will be imposed on payments to you at the rate of 31% on interest paid, and
original issue discount accrued, if any, on the Class A-1 notes if, upon
issuance, you fail to supply the 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. 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 IRS by the 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 Class A-1 notes. We suggest that
you consult your tax advisors about your eligibility for, and the procedure for
obtaining, exemption from backup withholding.
Recently, the Treasury Department issued new regulations which modify the
backup withholding and information reporting rules described in this section.
The new regulations will generally be effective for payments made after
December 31, 2000, subject to transition rules. We suggest that you consult
your own tax advisors regarding these new regulations.
Australian Tax Matters
The following statements with respect to Australian taxation are the
material tax consequences to the United States Class A-1 noteholders of holding
Class A-1 notes and are based on advice received by the manager. It is
suggested that purchasers of Class A-1 notes should consult their own tax
advisers concerning the consequences, in their particular circumstances under
Australian tax laws and the laws of any other taxing jurisdiction, of the
ownership of or any dealing in the Class A-1 notes.
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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 would generally be
treated 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, an exemption from Australian interest withholding
tax applies provided all prescribed conditions are met.
These conditions are:
. 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 Income Tax Assessment Act, is paid; and
. the notes, or a global bond or note or interests in such a global
bond or note, were issued in a manner which satisfied the public
offer test as prescribed under section 128F of the Income Tax
Assessment Act.
The issuer trustee will seek to issue the Class A-1 notes and interests
in any global Class A-1 note in a way that will satisfy the public offer test
and otherwise meet the requirements of section 128F of the Income Tax
Assessment Act including by listing the Class A-1 notes.
The public offer test will not be satisfied if the issuer trustee knew or
had reasonable grounds to suspect that the Class A-1 notes were being or would
later be acquired directly or indirectly by an associate of the issuer trustee
within the meaning of that section, other than in the capacity of a dealer,
manager or underwriter in relation to the placement of a note. "Associate" for
these purposes is widely defined and means, generally speaking, in relation to
an issuer acting in the capacity of a trustee, the beneficiaries of the trust,
and any "associates" of those beneficiaries. Thus the relevant associates of
the issuer trustee in the present case will be Commonwealth Bank as the
residual unitholder of the trust and the associates of Commonwealth Bank and
the other beneficiaries of the trust, if any, from time to time.
The exemption from Australian withholding tax will also not apply to
interest paid by the issuer trustee to an associate of the issuer trustee
within the meaning of section 128F of the Income Tax Assessment Act, which, as
discussed, would be an associate of the residual unitholder, if, at the time of
the payment, the issuer trustee knows, or has reasonable grounds to suspect,
that the person is an associate.
If, for any reason, the interest paid by the issuer trustee is not exempt
from interest withholding tax, the treaty titled "Convention for the Avoidance
of Double Taxation and the
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Prevention of Fiscal Evasion with respect to Taxes on Income" between the
United States and Australia may apply. This treaty provides that interest which
has its source in Australia, and to which a United States resident, as defined
in the treaty and who is entitled to the benefit of the treaty, is beneficially
entitled, may be taxed in Australia, but that any tax charged shall not exceed
10% of the gross amount of interest. However, this provision will not apply
where the indebtedness giving rise to the interest entitlement is effectively
connected with:
. the United States resident beneficial owner's permanent
establishment, at or through which it carries on business in
Australia; or
. the United States resident beneficial owner's fixed base, situated in
Australia, from which it performs independent personal services.
Profit on Sale
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:
. the notes are not held, and the sale or disposal does not occur, as
part of a business carried on, at or through a permanent
establishment in Australia; and
. 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 would not be expected to have an
Australian source.
However, there are specific withholding tax rules that can apply to treat
a portion of the sale price of notes as interest for withholding tax purposes
and which amounts are not covered by the exemption conditions in section 128F
of the Income Tax Assessment Act. These rules can apply when:
. notes are sold for any amount in excess of their issue price prior to
maturity to a purchaser who is either a resident who does not acquire
the notes in the course of carrying on business in a country outside
Australia at or through a permanent establishment in that country or
a non-resident that acquires the notes in the course of carrying on a
business in Australia at or through a permanent establishment in
Australia; or
. notes are sold to an Australian resident in connection with a
"washing arrangement" as defined in section 128A (1AB) of the Income
Tax Assessment Act.
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Goods and Services Tax
From July 1, 2000, a goods and services tax will be payable by all
entities which make taxable supplies in Australia. If an entity, such as the
issuer trustee, makes any taxable supply on or after July 1, 2000, it will have
to pay goods and services tax equal to 1/11th of the total value of the
consideration for that supply. However, on the basis of the current goods and
services tax legislation and regulations, the issue of the Class A-1 notes and
the payment of interest or principal on the Class A-1 notes to you will not be
taxable supplies.
If the supply is
. "GST free," the issuer trustee does not pay a goods and services tax
on the supply and can obtain goods and services tax credits for goods
and services taxes paid on things acquired to make the supply; or
. "input taxed," which includes financial supplies, the issuer trustee
does not pay a goods and services tax on the supply, but is
restricted in its ability to claims to goods and services tax credits
for amounts, including goods and services tax, paid to acquire things
relating to the making of that supply.
Services provided to the issuer trustee will be a mixture of taxable and
input taxed supplies for goods and services tax purposes. If a supply is
taxable, the supplier is liable to pay goods and services tax in respect of
that supply and must rely on a contractual provision to recoup that goods and
services tax from the issuer trustee. The scope of "financial supplies," and
certain supplies that are not financial supplies, is determined by the goods
and services tax legislation and regulations, as amended from time to time.
Under the series supplement, the issuer trustee's fee will only be able to be
increased by reference to the issuer's trustee goods and services tax
liability, if any, if:
. the issuer trustee and the manager agree or, failing agreement, the
issuer trustee's goods and services tax liability is determined by an
expert; and
. the increase will not result in the reduction, qualification or
withdrawal of the credit rating of any notes or redraw bonds.
The manager and the servicer may agree to adjust the manager's fee and
the servicer's fee provided that the adjustment will not result in the
reduction, qualification or withdrawal of the credit rating of any notes or
redraw bonds.
If amounts payable by the issuer trustee are treated as the consideration
for a taxable supply under the goods and services tax legislation or are
increased by reference to the relevant supplier's goods and services tax
liability, the issuer trustee may not be entitled to an input tax credit for
that increase and the expenses of the trust will increase, resulting in a
decrease in the funds available to the trust to pay you.
The goods and services tax may increase the cost of repairing or
replacing damaged properties offered as security for housing loans. However, it
is a condition of Commonwealth Bank's loan contract and mortgage documentation
that the borrower must maintain full replacement value property insurance at
all times during the loan term.
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The goods and services tax legislation, in certain circumstances, treats
the issuer trustee as making a taxable supply if it enforces a security by
selling the mortgaged property and applying the proceeds of sale to satisfy the
housing loan. The issuer trustee will have to account for goods and services
tax out of the sale proceeds, with the result that the remaining sale proceeds
may be insufficient to cover the unpaid balance of the related loan. However,
the general position is that a sale of existing residential property is an
input taxed supply for goods and services tax purposes and so the enforced sale
of property which secures the housing loans will generally not be treated as a
taxable supply under these provisions. As an exception, the issuer trustee may
still have to account for goods and services tax out of the proceeds of sale
recovered when a housing loan is enforced where the borrower is an enterprise
which is registered for goods and services tax purposes, uses the mortgaged
property as an asset of its enterprise and any of the following are relevant:
. the property is no longer being used as a residence; or
. the property is used as commercial residential premises such as a
hostel or boarding house; or
. the borrower is the first vendor of the property--the borrower built
the property; or
. the mortgaged property has not been used predominantly as a
residence.
Because the issuer trustee is an insured party under the mortgage
insurance policies, it may have to account for goods and services tax in
respect of any claim payment received. However, under the goods and services
tax legislation, where the claim payment is made in respect of an insurance
policy on which the insured was not entitled to a goods and services tax credit
on the premium payable, the insured does not have to account for goods and
services tax in respect of the claim payment. The provisions of the goods and
services tax legislation relating to insurance are currently the subject of
review. It is not possible to predict the final form of the legislation with
any certainty.
Any reduction as a result of goods and services tax in the amount
recovered by the issuer trustee when enforcing the housing loans will decrease
the funds available to the trust to pay you to the extent not covered by the
mortgage insurance policies. The extent to which the issuer trustee is able to
recover an amount on account of the goods and services tax, if any, payable on
the proceeds of sale in the circumstances described in this section, will
depend on the terms of the related mortgage insurance policy.
Other Taxes
No stamp, issue, registration or similar taxes are payable in Australia
in connection with the issue of the Class A-1 notes. Furthermore, a transfer
of, or agreement to transfer, notes executed outside of Australia will not be
subject to Australian stamp duty.
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Enforcement of Foreign Judgments in Australia
Securitisation Advisory Services Pty Limited is an Australian proprietary
company registered with limited liability under the Corporations Law. 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 Securitisation Advisory Services 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 Securitisation Advisory Services 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:
. the proceedings in New York State or United States Federal Court, as
applicable, involved a denial of the principles of natural justice;
. the judgment is contrary to the public policy of the relevant
Australian jurisdiction;
. the judgment was obtained by fraud or duress or was based on a clear
mistake of fact;
. the judgment is a penal or revenue judgment; or
. 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. Securitisation Advisory Services 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. Securitisation Advisory
Services Pty Limited has appointed [ ], as its agent upon whom process
may be served in any such action.
All of the directors and executive officers of Securitisation Advisory
Services 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 Class A-1 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. Securitisation Advisory Services Pty
Limited has been advised by its Australian counsel Clayton Utz, 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
Under temporary Australian foreign exchange controls, which may change in
the future, payments by an Australian resident to, or on behalf of the
following payees may only be made with Reserve Bank of Australia approval:
. the Government of Iraq or its agencies or nationals;
. the authorities of the Federal Republic of Yugoslavia (Serbia and
Montenegro); or
. the Government of Libya or any public authority or controlled entity
of the Government of Libya.
ERISA Considerations
Subject to the considerations discussed in this section, the Class A-1
notes are eligible for purchase by employee benefit plans.
Section 406 of the Employee Retirement Income Security Act 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 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
Class A-1 notes might be deemed to constitute prohibited transactions under
ERISA and 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 the Code only if the Benefit Plan acquires an "equity
interest" in the trust and none of the exceptions contained in the regulation
is applicable. An equity interest is defined under the regulation as an
interest in an entity other than an instrument which is treated as indebtedness
under applicable local law and which has no substantial equity features.
Although there can be no assurances in this regard, it appears, at the time of
their initial issuance that the Class A-1 notes should be treated as debt
without substantial equity features for purposes of the regulation and that the
Class A-1 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.
However, without regard to whether the Class A-1 notes are treated as an
equity interest for these purposes, the acquisition or holding of the Class A-1
notes by or on behalf of a Benefit Plan could be considered to give rise to a
prohibited transaction if the trust, the issuer trustee, the servicer, the
manager, the Class A-1 note trustee, the seller or the security
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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:
. Prohibited Transaction Class Exemption 96-23, regarding transactions
effected by "in-house asset managers";
. Prohibited Transaction Class Exemption 90-1, regarding investments
by insurance company pooled separate accounts;
. Prohibited Transaction Class Exemption 95-60, regarding transactions
effected by "insurance company general accounts";
. Prohibited Transaction Class Exemption 91-38, regarding investments
by bank collective investment funds; and
. Prohibited Transaction Class Exemption 84-14, regarding transactions
effected by "qualified professional asset managers."
By your acquisition of a Class A-1 note, you shall be deemed to represent
and warrant that your purchase and holding of the Class A-1 note will not
result in a non-exempt prohibited transaction under ERISA or 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.
If you are a plan fiduciary considering the purchase of any of the Class
A-1 notes, you should consult your tax and legal advisors regarding whether the
assets of the Trust would be considered plan assets, the possibility of
exemptive relief from the prohibited transaction rules and other issues and
their potential consequences.
Legal Investment Considerations
The Class A-1 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 U.S. institutions with legal
authority to invest in comparably rated securities based on such housing loans
may not be legally authorized to invest in the Class A-1 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 Class A-1 notes as legal investments for
you.
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Available Information
Securitisation Advisory Services Pty Limited, as manager, has filed with
the SEC a registration statement under the Securities Act with respect to the
Class A-1 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; and at the SEC's regional offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7
World Trade Center, Suite 1300, New York, New York 10048. 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 A-1 and Class A-2 notes will be conditioned on
obtaining a rating of AAA by Standard & Poor's, Aaa by Moody's and AAA by Fitch
IBCA. The issuance of the Class B notes will be conditioned on obtaining a
rating of AAA by Standard & Poor's and AAA by Fitch IBCA. 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 Class A-1 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 Class A-1 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-1 and A-2 notes, the availability of excess interest
collections after payment of interest on the notes and the trust's expenses,
the mortgage insurance policies, the availability of the Liquidity Facility,
the creditworthiness of the swap providers and the mortgage insurer and the
foreign currency rating of Australia. The Commonwealth of Australia's current
foreign currency long term debt rating is [ ] by Standard & Poor's, [ ]
by Moody's and [ ] by Fitch IBCA. 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.
Plan of Distribution
Underwriting
Under the terms and subject to the conditions contained in the
underwriting agreement among Commonwealth Bank, the issuer trustee, the manager
and J.P. Morgan as
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the representative of the underwriters, the issuer trustee has agreed to sell
to the underwriters the following respective principal amounts of the Class A-1
notes:
<TABLE>
<CAPTION>
Principal Amount
of Class A-1
Underwriter Notes (US$)
----------- ----------------
<S> <C>
</TABLE>
The underwriting agreement provides that the underwriters are obligated,
subject to certain conditions in the underwriting agreement, to purchase all of
the Class A-1 notes if any are [not] purchased. The underwriting agreement may
be terminated if there is a default by the underwriters.
The underwriters propose to initially offer the Class A-1 notes 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
relative principal balance. 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 broker/dealers. After the initial public offering, the
public offering price and concessions and discounts to broker/dealers may be
changed by the representative of the underwriters.
<TABLE>
<CAPTION>
Selling Reallowance
Class Concessions Discount
----- ----------- -----------
<S> <C> <C>
A-1............................................... [ ]% [ ]%
</TABLE>
Commonwealth Bank estimates that the out-of-pocket expenses for this
offering will be approximately US$[ ] million.
J.P. Morgan has informed Commonwealth Bank and the manager that the
underwriters do not expect discretionary sales by them to exceed 5% of the
principal balance of the Class A-1 notes.
Commonwealth Bank and the manager have 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 representative, on behalf of the underwriters, may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Class A-1 notes. The underwriters may engage in over-allotment, stabilizing
transactions, syndicate covering transactions and penalty bids in accordance
with Regulation M under the Exchange Act.
. Over-allotment involves syndicate sales in excess of the offering
size, which creates a syndicate short position;
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. Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a specified
maximum;
. Syndicate covering transactions involve purchases of the Class A-1
notes in the open market after the distribution has been completed
in order to cover syndicate short positions;
. Penalty bids permit the underwriters to reclaim a selling concession
from a syndicate member when the Class A-1 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 Class A-1 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.
Pursuant to the underwriting agreement, the manager, Commonwealth Bank
and the issuer trustee have agreed to indemnify the underwriters against
certain liabilities, including civil liabilities under the Securities Act, or
contribute to certain payments which the underwriters may be responsible for.
In the ordinary course of its business, some of the underwriters and
some of their affiliates have in the past and may in the future engage in
commercial and investment banking activities with Commonwealth Bank and its
affiliates.
Offering Restrictions
United Kingdom
Each underwriter has severally represented and agreed with the issuer
trustee that:
. it has not offered or sold and will not offer or sell any Class A-1
notes to persons in the United Kingdom prior to admission of the
Class A-1 notes to listing in accordance with Part IV of the
Financial Services Act, 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 otherwise in circumstances which have not resulted and
will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations
1995 (as amended) or the Financial Services Act;
. it has complied and will comply with all applicable provisions of
the Financial Services Act with respect to anything done by it in
relation to the Class A-1 notes in, from or otherwise involving the
United Kingdom; and
. it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with
the issue of the Class A-1 notes, other than any document which
consists of or of any part of listing particulars, supplementary
listing particulars or any other document required or permitted to
be published by listing rules under Part IV of the Financial
Services
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Act, to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1996 (as amended) or is a person to whom the document may
otherwise lawfully be issued or passed on.
Australia
The Class A-1 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 severally represented and agreed that in connection with
the initial distribution of the Class A-1 notes it:
. has not, directly or indirectly, offered for subscription or
purchase or issue invitations to subscribe for or buy nor has it
sold, the Class A-1 notes;
. will not, directly or indirectly, offer for subscription or purchase
or issued invitations to subscribe for or buy nor will it sell the
Class A-1 notes; and
. has not distributed and will not distribute any offering circular,
or any advertisement or other offering material,
in Australia, its territories or possessions or to any person who is an
associate of the issuer trustee within the meaning of that section, which
includes Commonwealth Bank and associates of Commonwealth Bank, other than in
the capacity of a dealer or underwriter in relation to a placement of the
notes, [as identified on a list provided by Commonwealth Bank.]
Listing and General Information
Listing
An application has been made to the London Stock Exchange Limited to
admit the Class A-1 notes to the Official List. This prospectus, including
Appendix I, constitutes listing particulars with regard to the issuer trustee
and the Class A-1 notes, in accordance with the listing rules made under Part
IV of the Financial Services Act. Copies of the prospectus have been delivered
to the Registrar of Companies in England and Wales for registration in
accordance with Section 149 of the Financial Services Act.
The listing of the Class A-1 notes on the London Stock Exchange will be
expressed as a percentage of their principal amount, exclusive of accrued
interest. It is expected that listing of the Class A-1 notes on the London
Stock Exchange will be granted on or about [ ], 2000, subject to the issuance
of the Class A-1 notes. The Class A-1 notes will be issued in the form of one
or more book-entry notes.
Authorization
The issuer trustee has obtained all necessary consents, approvals and
authorizations in connection with the issue and performance of the Class A-1
notes. The issue of the Class A-1 notes has been authorized by the resolutions
of the board of directors of Perpetual Trustee Company Limited passed on [
].
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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 Cedelbank
The Class A-1 notes have been accepted for clearance through Euroclear
and Cedelbank with the following CUSIP numbers and ISIN Common Codes:
<TABLE>
<CAPTION>
ISIN
CUSIP Common Code
----- -----------
<S> <C> <C>
</TABLE>
Transaction Documents Available for Inspection
You may inspect copies of the following transaction documents during
normal business hours on any weekday, excluding Saturdays, Sundays and public
holidays, at the offices of the Bank of New York, London Branch, during the
period of fourteen days from the date of this prospectus:
. the constitution of the issuer trustee;
. the master trust deed among the issuer trustee and the manager,
dated October 8, 1997 as amended by a deed dated October 17, 1997;
. the following, which, prior to the closing date, will be in draft
form:
. the series supplement among the issuer trustee, the manager, the
seller and the servicer, dated on or about [ ], 2000;
. the security trust deed among the issuer trustee, the manager,
the security trustee and the Class A-1 note trustee, dated on or
about [ ], 2000;
. the Class A-1 note trust deed among the issuer trustee, the
manager and the Class A-1 note trustee, dated on or about [
], 2000;
. the agency agreement among the issuer trustee, the manager, the
Class A-1 note trustee, the principal paying agent, the agent
bank, the Class A-1 note registrar [and the paying agent] dated
on or about [ ], 2000;
. the standby redraw facility agreement among the issuer trustee,
the manager and the standby redraw facility provider, dated on or
about [ ], 2000;
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. the basis swap and fixed rate swap among the issuer trustee, the
manager, the basis swap provider and the fixed rate swap
provider, together with the related schedule and confirmations,
dated on or about [ ], 2000;
. the currency swap between the issuer trustee, the manager and the
currency swap provider, together with the related schedule and
confirmations, dated on or about [ ], 2000;
. the mortgage insurance policy among Commonwealth Bank, the issuer
trustee and [Housing Loans Insurance Corporation Pty Limited],
dated on or about [ ], 2000;
. the powers of attorney from Commonwealth Bank, dated on or about
[ ], 2000; and
. the underwriting agreement among Commonwealth Bank, the manager,
the issuer trustee and the underwriters, dated on or about [
], 2000.
Consents to Opinions
Mayer, Brown & Platt has given and not withdrawn its written consent to
the inclusion in this prospectus of its opinion in the form and context in
which it is included on pages [O] and [O] through [O] and has authorized the
content of its opinion for the purposes of section 152(1)(e) of the Financial
Services Act.
Clayton Utz has given and not withdrawn its written consent to the
inclusion in the prospectus of its opinion in the form and context in which it
is included on pages [O] through [O] and [O] and has authorized the content of
its opinion for the purposes of section 152(1)(e) of the Financial Services
Act.
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:
. the Class A-1 notes will initially be issued in the form of book-
entry notes and will be held by Cede & Co., as nominee of DTC;
. in connection with the issue, DTC will confer rights in the Class A-
1 notes to the noteholders and will record the existence of those
rights; and
. as a result of the issue of the Class A-1 notes in this manner,
these rights will be created.
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<PAGE>
Legal Matters
Mayer, Brown & Platt, New York, New York, will pass upon some legal
matters with respect to the Class A-1 notes, including the material U.S.
federal income tax matters, for Commonwealth Bank and Securitisation Advisory
Services Pty Limited. Clayton Utz, Sydney, Australia, will pass upon some legal
matters, including the material Australian tax matters, with respect to the
Class A-1 notes for Commonwealth Bank and Securitisation Advisory Services Pty
Limited. Skadden, Arps, Slate, Meagher & Flom will pass upon some legal matters
with respect to the Class A-1 notes for the underwriters.
160
<PAGE>
Glossary
<TABLE>
<C> <S>
A$ Class A-1 Interest Amount..... see page [ ].
A$ Exchange Rate................. means a rate of A$1.00 = US$ [ ].
Accrued Interest Adjustment...... means the amount of interest accrued on the
housing loans for, and any fees in relation
to the housing loans falling due for
payment during, the period commencing on
and including the date on which interest is
debited to the relevant housing loan
accounts by the servicer for that housing
loan immediately prior to the cut-off date
and ending on but excluding the closing
date and any accrued interest and fees due
but unpaid in relation to the housing loan
prior to the date that interest is debited
to the relevant housing loan accounts.
Adverse Effect................... means any event which, determined by the
manager unless specifically provided
otherwise, materially and adversely affects
the amount or timing of any payment due to
any noteholder or redraw bondholder.
Authorized Short-Term
Investments..................... means:
. bonds, debentures, stock or treasury
bills issued by or notes or other
securities issued by the Commonwealth of
Australia or the government of any State
or Territory of the Commonwealth of
Australia;
. deposits with, or the acquisition of
certificates of deposit issued by, an
Australian bank;
. bills of exchange, which at the time of
acquisition have a maturity date of not
more than 200 days accepted, drawn on or
endorsed with recourse by an Australian
bank; or
. debentures or stock of any public
statutory body constituted under the
laws of the Commonwealth of Australia or
any State or Territory of the
Commonwealth where the repayment of the
principal secured and the interest
payable on that principal is guaranteed
by the Commonwealth or the State or
Territory, in each case denominated in
Australian dollars.
</TABLE>
161
<PAGE>
<TABLE>
<C> <S>
Available Income Amount.......... see page [ ].
Available Principal Amount....... see page [ ].
Average Delinquent Percentage....
in relation to a determination date means
the amount (expressed as a percentage)
calculated as follows:
</TABLE>
SDP
ADP = 12
<TABLE>
<C> <S>
where:
</TABLE>
<TABLE>
<C> <C> <S> <C>
ADP = the Average Delinquent Percentage; and
SDP = the sum of the Delinquent Percentages for
the 12 collection periods immediately
preceding or ending (as the case may be) on
the determination date,
</TABLE>
<TABLE>
<C> <S>
provided that if on that determination date
there has not yet been 12 collection
periods the Average Delinquent Percentage
in relation to that determination date
means the amount (expressed as a
percentage) calculated as follows:
</TABLE>
ADP = SDP
N
<TABLE>
<C> <S>
where:
</TABLE>
<TABLE>
<C> <C> <S> <C>
ADP = the Average Delinquent Percentage;
SDP = the sum of the Delinquent Percentages for
all of the collection periods preceding or
ending on the determination date; and
N = the number of collection periods preceding
the determination date.
</TABLE>
<TABLE>
<C> <S>
Bank Bill Rate................... in relation to an accrual period means the
rate appearing at approximately 10.00 am
Sydney time on the first day of that
accrual period on the Reuters Screen page
"BBSW" as being the average of the mean
buying and selling rates appearing on that
page for a bill of exchange having a tenor
of three months and rounded upwards to 4
decimal places. If:
. on the first day of an accrual period
fewer than 4 banks are quoted on the
Reuters Screen page "BBSW"; or
. for any other reason the rate for that
day cannot be determined in accordance
with the foregoing procedures,
</TABLE>
162
<PAGE>
<TABLE>
<C> <S>
then Bank Bill Rate means the rate
specified by the manager having regard to
comparable indices then available.
[However, the Bank Bill Rate for the
initial accrual period will be determined
by straight line interpolation between the
Bank Bill Rate determined as above for a
bill of exchange having a tenor of [ ]
and the Bank Bill Rate determined as above
for a bill of exchange having a tenor of
[ ].]
Business Day..................... means any day on which banks are open for
business in Sydney, New York City and
London other than a Saturday, a Sunday or a
public holiday in Sydney, New York City or
London.
Class B Available Support........ in relation to a determination date means
an amount (expressed as a percentage)
calculated as follows:
</TABLE>
<TABLE>
<S> <C> <C>
SAB
CBAS =
----------
ASA + SRFL
</TABLE>
<TABLE>
<C> <S>
where:
</TABLE>
<TABLE>
<C> <C> <S> <C>
CBAS = the Class B Available Support;
SAB = the aggregate Stated Amount for the Class
B notes on that determination date;
ASA = the aggregate of the of the Stated
Amounts of the Class A-1 notes converted
to Australian dollars at the A$ Exchange
Rate, and the Stated Amounts of all other
notes and redraw bonds on that
determination date; and
SRF = the redraw limit under the standby redraw
facility on that determination date.
</TABLE>
<TABLE>
<C> <S>
Class B Required Support......... in relation to a determination date means
the amount (expressed as a percentage)
calculated as follows:
</TABLE>
ISA
CBRS = AISA
<TABLE>
<C> <S>
where:
</TABLE>
<TABLE>
<C> <C> <S> <C>
CBRS = the Class B Required Support;
ISA = the aggregate Invested Amount of the Class
B notes upon the issue of the Class B
notes; and
</TABLE>
163
<PAGE>
<TABLE>
<C> <C> <S> <C>
AISA = the aggregate of the Invested Amounts of
the Class A-1 notes upon the issue of the
Class A-1 notes converted to Australian
dollars at the A$ Exchange Rate and the
Invested Amounts of all other notes and
redraw bonds on that determination date.
</TABLE>
<TABLE>
<C> <S>
Consumer Credit Code............. means, as applicable, the Consumer Credit
Code set out in the Appendix to the
Consumer Credit (Queensland) Act 1995 as in
force or applied as a law of any
jurisdiction in Australia, the provisions
of the Code set out in the Appendix to the
Consumer Credit (Western Australia) Act
1996 or the provisions of the Code set out
in the Appendix to the Consumer Credit
(Tasmania) Act 1996.
Delinquent Percentage............ in relation to a collection period means
the amount (expressed as a percentage)
calculated as follows:
</TABLE>
DMLP
DP = AMLP
<TABLE>
<C> <S>
where:
</TABLE>
<TABLE>
<C> <C> <S> <C>
DP = the Delinquent Percentage;
[DMLP = the aggregate, on the last day of the
collection period, of the principal
outstanding with respect to those housing
loans in relation to which a payment due
from the borrower has been in arrears (on
that day) by more than 60 days; and]
AMLP = the aggregate principal outstanding in
relation to the housing loans on the last
day of the collection period.
</TABLE>
<TABLE>
<C> <S>
Eligible Depository.............. means a financial institution which has
assigned to it short term credit ratings
equal to or higher than A-1 by Standard &
Poor's, P-1 by Moody's and F1+ by Fitch
IBCA and includes the servicer to the
extent that:
. it is rated in this manner, provided
that if the servicer is the seller and
the servicer is an authorized deposit
taking institution under the Banking
Act 1959 of Australia the rating
requirement of Fitch IBCA will be F1,
or higher; or
</TABLE>
164
<PAGE>
<TABLE>
<C> <S>
. the rating agencies confirm that the
rating of the servicer at a lower level
will not result in a reduction,
qualification or withdrawal of the
ratings given by the rating agencies to
the notes or redraw bonds.
</TABLE>
<TABLE>
<C> <S>
Eligible Trust Corporation....... means any person eligible for appointment
as trustee under an indenture to be
qualified pursuant to the Trust Indenture
Act of 1939 of the United States of America
as prescribed in section 310(a) of the
Trust Indenture Act.
Extraordinary Resolution......... means a resolution passed at a duly
convened meeting of the Voting Secured
Creditors or a class of Voting Secured
Creditors under the security trust deed by
a majority consisting of not less than 75%
of the votes of such Voting Secured
Creditors or their representatives present
and voting or, if a poll is demanded, by
Voting Secured Creditors holding or
representing between them Voting
Entitlements comprising in aggregate not
less than 75% of the aggregate number of
votes comprised in the Voting Entitlements
held or represented by all the persons
present and voting at the meeting or a
written resolution signed by all the Voting
Secured Creditors.
Fair Market Value................ in relation to a housing loan means the
fair market value for that housing loan
determined by the seller's external
auditors and which value reflects the
performing or non-performing status, as
determined by the servicer, of that housing
loan and any benefit which the intended
purchaser will have in respect of such
housing loan under any relevant Support
Facility.
Finance Charge Collections....... see page [ ].
Insolvency Event................. means, in relation to:
. the issuer trustee in its capacity as
trustee of the trust:
. an application is made and not dismissed
or stayed on appeal within 30 days or an
order is made that the issuer trustee be
wound up or dissolved;
</TABLE>
165
<PAGE>
<TABLE>
<C> <S>
. an application for an order is made and
not dismissed or stayed on appeal within
30 days appointing a liquidator, a
provisional liquidator, a receiver or a
receiver and manager in respect of the
issuer trustee or one of them is
appointed;
. except on terms approved by the security
trustee, the issuer trustee enters into,
or resolves to enter into, a scheme of
arrangement, deed of company arrangement
or composition with, or assignment for
the benefit of, all or any class of its
creditors, or it proposes a
reorganisation, moratorium or other
administration involving any of them;
</TABLE>
<TABLE>
<C> <S>
. the issuer trustee resolves to wind
itself up, or otherwise dissolve itself,
or gives notice of intention to do so,
except to reconstruct or amalgamate
while solvent on terms approved by the
security trustee or is otherwise wound
up or dissolved;
. the issuer trustee is or states that it
is unable to pay its debts when they
fall due;
. as a result of the operation of section
459F(1) of the Australian Corporations
Law, the issuer trustee is taken to have
failed to comply with a statutory
demand;
. the issuer trustee is or makes a
statement from which it may be
reasonably deduced by the security
trustee that the issuer trustee is, the
subject of an event described in section
459C(2)(b) or section 585 of the
Australian Corporations Law;
. the issuer trustee takes any step to
obtain protection or is granted
protection from its creditors, under any
applicable legislation or an
administrator is appointed to the issuer
trustee or the board of directors of the
issuer trustee propose to appoint an
administrator to the issuer trustee or
the issuer trustee becomes aware that a
person who is entitled to enforce a
charge on the whole or substantially the
whole of the issuer trustee's property
proposes to appoint an administrator to
the issuer trustee; and
</TABLE>
166
<PAGE>
<TABLE>
<C> <S>
. anything analogous or having a
substantially similar effect to any of
the events specified above happens under
the law of any applicable jurisdiction.
. any other body corporate and the issuer
trustee in its personal capacity, each
of the following events:
. an order is made that the body corporate
be wound up;
. a liquidator, provisional liquidator,
controller or administrator is appointed
in respect of the body corporate or a
substantial portion of its assets
whether or not under an order;
. except to reconstruct or amalgamate on
terms reasonably approved by the issuer
trustee (or in the case of a
reconstruction or amalgamation of the
issuer trustee, on terms reasonably
approved by the manager), the body
corporate enters into, or resolves to
enter into, a scheme of arrangement,
deed of company arrangement or
composition with, or assignment for the
benefit of, all or any class of its
creditors;
. the body corporate resolves to wind
itself up, or otherwise dissolve itself,
or gives notice of its intention to do
so, except to reconstruct or amalgamate
on terms reasonably approved by the
issuer trustee (or in the case of a
reconstruction or amalgamation of the
issuer trustee, except on terms
reasonably approved by the manager) or
is otherwise wound up or dissolved;
. the body corporate is or states that it
is insolvent;
. as a result of the operation of section
459F(1) of the Australian Corporations
Law, the body corporate is taken to have
failed to comply with a statutory
demand;
. the body corporate takes any step to
obtain protection or is granted
protection from its creditors, under any
applicable legislation;
</TABLE>
167
<PAGE>
<TABLE>
<C> <S>
. any writ of execution, attachment,
distress or similar process is made,
levied or issued against or in relation
to a substantial portion of the body
corporate's assets and is not satisfied
or withdrawn or contested in good faith
by the body corporate within 21 days; or
. anything analogous or having a
substantially similar effect to any of
the events specified above happens under
the law of any applicable jurisdiction.
Invested Amount.................. means in relation to a note or a redraw
bond, the principal amount of that note or
redraw bond upon issue less the aggregate
of all principal payments made on that note
or redraw bond.
Issuer Trustee Default........... means:
. the issuer trustee fails within 20
Sydney business days, or such longer
period as the manager may agree to,
after notice from the manager to carry
out or satisfy any material duty or
obligation imposed by the master trust
deed or any other transaction document
in respect of a Medallion Program trust;
. an Insolvency Event occurs with respect
to the issuer trustee in its personal
capacity;
. the issuer trustee ceases to carry on
business;
. the issuer trustee merges or
consolidates into another entity, unless
approved by the manager, which approval
will not be withheld if, in the
manager's reasonable opinion, the
commercial reputation and standing of
the surviving entity will not be less
than that of the issuer trustee prior to
such merger or consolidation, and unless
the surviving entity assumes the
obligations of the issuer trustee under
the transaction documents in respect of
a Medallion Program trust; or
. there is a change in the ownership of 50
per cent or more of the issued equity
share capital of the issuer trustee from
the position as at the date of the
master trust deed, or effective control
of the issuer trustee alters from the
position as at the
</TABLE>
168
<PAGE>
<TABLE>
<C> <S>
date of the master trust deed, unless in
either case approved by the manager,
which approval will not be withheld if,
in the manager's reasonable opinion, the
change in ownership or control of the
issuer trustee will not result in a
lessening of the commercial reputation
and standing of the issuer trustee.
LIBOR............................ means:
. the rate for three-month deposits in US
dollars which appears on Telerate Page
3750 as of 11.00 am, London time on the
second London and New York Business Day
before the beginning of the accrual
period;
. if that rate does not appear, the USD-
LIBOR-BBA for that accrual period will
be determined as if the issuer trustee
and the agent bank had specified "USD-
LIBOR-Reference Banks" as the applicable
Floating Rate Option under the
Definitions of the International Swaps
and Derivates Association, Inc.
The USD-LIBOR-BBA for the first accrual
period will be determined by linear
interpolation calculated with reference to
the duration of the first accrual period.
Manager Default.................. means:
. an Insolvency Event occurs in relation
to the manager;
. the manager does not instruct the issuer
trustee to pay the required amounts to
the noteholders within the time periods
specified in the series supplement and
that failure is not remedied within 10
Business Days, or such longer period as
the issuer trustee may agree, of notice
of failure being delivered to the
manager by the issuer trustee;
. the manager does not prepare and
transmit to the issuer trustee the
quarterly certificates or any other
reports required to be prepared by the
manager and such failure is not remedied
within 10 Business Days, or such longer
period as the issuer trustee may agree,
of notice being
</TABLE>
169
<PAGE>
<TABLE>
<C> <S>
delivered to the manager by the issuer
trustee. Such a failure by the manager
does not constitute a Manager Default
if it is as a result of a Servicer
Default referred to in the second
paragraph of the definition of that
term provided that, if the servicer
subsequently provides the information
to the manager, the manager prepares
and submits to the issuer trustee the
outstanding quarterly certificates or
other reports within 10 Business Days,
or such longer period as the issuer
trustee may agree to, of receipt of the
required information from the servicer;
. any representation, warranty or
certification made by the manager or in
a transaction document or any
certificate delivered by the manager
proves to be incorrect when made, in a
manner which as reasonably determined
by the issuer trustee has an Adverse
Effect and is not remedied to the
issuer trustee's reasonable
satisfaction within 60 Business Days of
notice to the manager by the issuer
trustee;
. the manager has breached its other
obligations under a transaction
document and that breach has had or, if
continued, will have an Adverse Effect
as reasonably determined by the issuer
trustee, and either;
. such breach is not remedied so that it
no longer has or will have to such an
Adverse Effect, within 20 Business Days
of notice delivered to the manager by
the issuer trustee; or
. the manager has not within 20 Business
Days of receipt of such notice paid
compensation to the issuer trustee for
its loss from such breach in an amount
satisfactory to the issuer trustee
acting reasonably.
The issuer trustee must, in such notice,
specify the reasons why it believes an
Adverse Effect has occurred, or will
occur, as the case may be.
Mortgage Insurance Interest
Proceeds........................ see page [ ].
Mortgage Insurance Principal
Proceeds........................ see page [ ].
</TABLE>
170
<PAGE>
<TABLE>
<C> <S>
Net Principal Collections........ see page [ ].
Net Unscheduled Principal........ see page [ ].
Other Income..................... see page [ ].
Other Principal Amounts.......... see page [ ].
Payment Modification............. see page [ ].
Perfection of Title Event........ means:
. the seller makes any representation or
warranty under a transaction document
that proves to be incorrect when made,
other than a representation or warranty
in respect of which damages have been
paid or for which payment is not yet
due, for breach, or breaches any
covenant or undertaking given by it in a
transaction document and that has or, if
continued will have, an Adverse Effect
and:
. that breach is not satisfactorily
remedied so that it no longer has or
will have, an Adverse Effect, within 20
Business Days of notice being delivered
to the seller by the manager or the
issuer trustee; or
. if the preceding paragraph is not
satisfied, the seller has not within 20
Business Days of such notice paid
compensation to the issuer trustee for
its loss from that breach in an amount
satisfactory to the issuer trustee
acting reasonably. Such compensation
cannot exceed the aggregate of the
principal amount outstanding in respect
of the corresponding housing loan and
any accrued or unpaid interest in
respect of the housing loan, calculated
in both cases at the time of payment of
the compensation.
The issuer trustee must, in such notice,
specify the reasons why it believes an
Adverse Effect has occurred, or will occur;
. if the seller is the servicer, a
Servicer Default occurs;
. an Insolvency Event occurs in relation
to the seller;
</TABLE>
171
<PAGE>
<TABLE>
<C> <S>
. if the seller is the basis swap provider
or the fixed rate swap provider, the
seller fails to make any payment due
under a swap and that failure:
. has or will have an Adverse Effect as
reasonably determined by the issuer
trustee; and
. is not remedied by the seller within 20
Business Days, or such longer period as
the issuer trustee agrees, of notice to
the seller by the manager or the issuer
trustee;
. a downgrading in the long term debt
rating of the seller below BBB by
Standard & Poor's, Baa2 by Moody's or
BBB by Fitch IBCA or such other rating
in respect of the seller as is agreed
between the manager, the seller and the
rating agency which had assigned the
relevant rating.
Performing Housing Loans Amount.. means the aggregate of the following:
. the amount outstanding under housing
loans under which no payment due from
the borrower has been in arrears by more
than 90 days;
. the amount outstanding under housing
loans under which a payment due from the
borrower has been in arrears by more
than 90 days and which are insured under
a mortgage insurance policy other than
the master mortgage insurance policy;
and
. the amount outstanding under housing
loans under which a payment due from the
borrower has been in arrears by more
than 90 days and which are insured under
the master mortgage insurance policy but
only to the extent that the servicer
reasonably considers that this amount is
recoverable from the relevant borrower,
Housing Loans Insurance Corporation Pty.
Ltd. or otherwise.
Principal Charge-off
Reimbursement................... see page [ ].
Principal Collections............ see page [ ].
</TABLE>
172
<PAGE>
<TABLE>
<C> <S>
Prior Interest................... means the issuer trustee's lien over, and
right of indemnification from, the assets
of the trust calculated in accordance with
the master trust deed for fees and expenses
payable to the issuer trustee other than
the Secured Moneys which are unpaid, or
paid but not reimbursed.
Redraw Bond Amount............... see page [ ].
Secured Creditor................. see page [ ].
Secured Moneys................... means the aggregate of all moneys owing to
the security trustee or to a Secured
Creditor under any of the transaction
documents whether such amounts are
liquidated or not or are contingent or
presently accrued due, and including rights
sounding in damages only, provided that the
amount owing by the issuer trustee in
relation to the principal component of a
note or redraw bond is to be calculated by
reference to the Stated Amount at that note
or redraw bond and the Secured Moneys do
not include any fees or value added tax
payable to the Class A-1 note trustee for
which the issuer trustee is personally
liable.
Servicer Default................. see page [ ].
Standby Redraw Facility Advance.. see page [ ].
Stated Amount.................... for a note or a redraw bond means:
. the principal amount of that note or
redraw bond upon issue; less
. the aggregate of principal payments
previously made on that note or redraw
bond; less
. the aggregate of all then unreimbursed
principal charge-offs on that note or
redraw bond.
Stepdown Conditions.............. are satisfied on a determination date if:
. the following applies:
. the Class B Available Support on the
determination date is equal to or
greater than two times the Class B
Required Support on the determination
date;
</TABLE>
173
<PAGE>
<TABLE>
<C> <S>
. the aggregate Stated Amount for the
Class B notes on the determination date
is equal to or greater than 0.25% of the
aggregate Invested Amount of the Class B
notes upon the issue of the Class B
notes; and
. either:
. the Average Delinquent Percentage on the
determination date does not exceed 2%
and the aggregate of all unreimbursed
principal charge-offs on the
determination date does not exceed 30%
of the aggregate of the Invested Amounts
of the Class B notes upon the issue of
the Class B notes; or
. the Average Delinquent Percentage on the
determination date does not exceed 4%
and the aggregate of all Unreimbursed
Principal Charge-offs on the
determination date not exceed 10% of the
aggregate of the Invested Amounts of the
Class B notes upon the issue of the
Class B notes; and
. the total principal outstanding on the
housing loans is not, and is not
expected to be on or prior to the next
distribution dated, less than 10% of the
total principal outstanding on the
housing loans on [ ];
. the following applies:
. the determination date falls on or after
the fifth anniversary of the closing
date;
. the Average Delinquent Percentage on the
determination date does not exceed 2%;
. the Stated Amount of the aggregate of
all outstanding notes is greater than
10% of the original issued amount;
. the aggregate Stated Amount for the
Class B notes on the determination date
is equal to or greater than 0.25% of the
aggregate Invested Amount of the Class B
notes upon the issue of the Class B
notes; and
</TABLE>
174
<PAGE>
<TABLE>
<C> <S>
. the aggregate of all Unreimbursed
Principal Charge-offs on the
determination date does not exceed, if
the determination date falls on or after
the:
. fifth but prior to the sixth anniversary
of the closing date, 30% of the
aggregate of the initial Invested
Amounts of the Class B notes;
. sixth but prior to the seventh
anniversary of the closing date, 35% of
the aggregate of the initial Invested
Amounts of the Class B notes;
. seventh but prior to the eighth
anniversary of the closing date, 40% of
the aggregate of the initial Invested
Amounts of the Class B notes;
. eighth but prior to the ninth
anniversary of the closing date, 45% of
the aggregate of the initial Invested
Amounts of the Class B notes; or
. ninth anniversary of the closing date,
50% of the aggregate of the initial
Invested Amounts of the Class B notes.
Stepdown Percentage.............. on a determination date is determined as
follows.
If the Stepdown Conditions are not
satisfied on that determination date, the
Stepdown Percentage is 100%.
If the Stepdown Conditions are satisfied on
that determination date, the Stepdown
Percentage is 100% unless the following
apply:
. if the determination date falls prior to
the third anniversary of the closing
date the Stepdown Percentage is 50%;
. if:
. the determination date falls on or after
the third anniversary of the closing
date but prior to the tenth anniversary
of the closing date; and
</TABLE>
175
<PAGE>
<TABLE>
<C> <S>
. the Class B Available Support on the
determination date is equal to or
greater than two times the Class B
Required Support on the determination
date;
the Stepdown Percentage is 0%;
. if:
. the preceding paragraph does not apply;
. the determination date falls on or after
the fifth anniversary of the closing
date but prior to the tenth anniversary
of the closing date; and
. the Class B Available Support on the
determination date is equal to or
greater than the Class B Required
Support on the determination date;
then if the determination date falls on or
after the:
. fifth but prior to the sixth anniversary
of the closing date, the Stepdown
Percentage is 70%;
. sixth but prior to the seventh
anniversary of the closing date, the
Stepdown Percentage is 60%;
. seventh but prior to the eighth
anniversary of the closing date, the
Stepdown Percentage is 40%;
. eighth but prior to the ninth
anniversary of the closing date, the
Stepdown Percentage is 20%; or
. ninth but prior to the tenth anniversary
of the closing date, the Stepdown
Percentage is 0%; or
. if the determination date falls on or
after the tenth anniversary of the
closing date, the Stepdown Percentage is
0%.
</TABLE>
176
<PAGE>
<TABLE>
<C> <S>
Support Facility................. means the currency swap, the basis swap,
the fixed rate swap, the liquidity
facility, the standby redraw facility and
the mortgage insurance policies.
US$ Exchange Rate................ means a rate of US$1.00 = A$ [ ].
Voting Secured Creditors......... means:
. for so long as the Secured Moneys of the
noteholders, converted, in the case of
the Class A-1 notes, to Australian
dollars in the manner described in the
definition of "Voting Entitlements"
below, and the redraw bondholders are
75% or more of the then total Secured
Moneys:
. if any Class A-1 note then remains
outstanding, the Class A-1 note trustee,
or, if the Class A-1 note trustee has
become bound to take steps and/or to
proceed under the Class A-1 note trust
deed and fails to do so when required by
the Class A-1 note trustee and such
failure is continuing, the Class A-1
noteholders; if any Class A-2 notes
remain outstanding, the Class A-2
noteholders; and if any redraw bonds
remain outstanding, the redraw
bondholders; or
. if none of the above securities then
remain outstanding, the Class B
noteholders; and
. otherwise:
. if any Class A-1 note remains
outstanding, the Class A-1 note trustee,
or, if the Class A-1 note trustee has
become bound to take steps and/or to
proceed under the Class A-1 note trust
deed and fails to do so when required by
the Class A-1 note trustee and such
failure is continuing, the Class A-1
noteholders; and
. each other then Secured Creditor other
than the Class A-1 note trustee and the
Class A-1 noteholders.
</TABLE>
177
<PAGE>
<TABLE>
<C> <S>
Voting Entitlements.............. on a particular date means the number of
votes which a Voting Secured Creditor would
be entitled to exercise if a meeting of
Voting Secured Creditors were held on that
date, being the number calculated by
dividing the Secured Moneys owing to that
Voting Secured Creditor by 10 and rounding
the resultant figure down to the nearest
whole number. If the Class A-1 note trustee
is a Voting Secured Creditor it will have a
Voting Entitlement equal to the aggregate
Voting Entitlement for all Class A-1
noteholders.
Secured Moneys in respect of the Class A-1
notes will be converted to Australian
dollars from US dollars at the spot
exchange rate determined by the security
trustee on the Business Day immediately
preceding the date for the calculation
provided that, if the currency swap has not
been terminated, that conversion will occur
at the A$ Exchange Rate.
</TABLE>
178
<PAGE>
APPENDIX I
Terms and Conditions of the Class A-1 Notes
[To be inserted]
I-1
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Securitisation Advisory Services Pty. Limited
US$ [ ]
Mortgage Backed
Floating Rate Notes
[LOGO]
----------------
PROSPECTUS
----------------
Underwriter
, 2000
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.
The securities are not being offered in any state where the offer is not
permitted.
The Class A-1 notes will be offered by the underwriters, subject to
prior sale, if and when they are issued to and accepted by them. The
underwriters reserve the right to reject an order in whole or in part and to
withdraw, cancel or modify the offer without notice. Delivery of the Class A-1
notes in book-entry form only will be made on or about [ ], 2000.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
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:
<TABLE>
<S> <C>
SEC Registration Fee...........................................
Printing and Engraving.........................................
Legal Fees and Expenses........................................
Trustee Fees and Expenses......................................
Rating Agency Fees.............................................
Accounting Fees & Expenses.....................................
Miscellaneous..................................................
----------
Total........................................................
==========
</TABLE>
- --------
* 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 28 April 1994. Two fully paid shares
of A$1.00 each were allotted to Commonwealth Bank of Australia on 28
April 1994.
Item 34. Indemnification of Directors and Officers.
Pursuant to Article 59 of the Articles of Association 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 Law in which relief
is granted to him by the court in respect of any negligence, default, breach of
duty or breach of trust.
Item 36. Exhibits and Financial Statement Schedules.
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.*
3.1 Memorandum of Association of Registrant*
3.2 Articles of Association of the Registrant.*
4.1 Master Trust Deed.*
4.2 Form of the Series Supplement.*
4.3 Form of the Security Trust Deed.*
4.4 Form of the Note Trust Deed.*
4.5 Form of Agency Agreement.*
5.1 Opinion of Mayer, Brown & Platt as to legality of the Notes.*
Opinion of Mayer, Brown & Platt as to certain tax matters (included in
8.1 Exhibit 5.1 hereof).*
8.2 Opinion of Clayton Utz as to certain tax matters.*
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
10.1 Form of the Standby Redraw Facility Agreement.*
10.2 Form of the Liquidity Facility Agreement.*
10.3 Form of the Interest Rate Swap *
10.4 Form of the Currency Swap.*
23.1 Consent of Mayer, Brown & Platt (included in Exhibit 5.1 hereof).*
23.2 Consent of Clayton Utz (included in Exhibit 8.2 hereof).*
24.1 Power of Attorney (included on signature pages).
25.1 Statement of Eligibility of Note Trustee.*
Opinion of Clayton Utz as to Enforceability of U.S. Judgments under
99.1 Australian Law.*
</TABLE>
- --------
* 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.
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-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-11 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sydney, Australia, on the 22 day of December, 1999.
Securitisation Advisory Services
Pty. Limited
By: /s/ Dominic Bruzze
----------------------------------
Name: Dominic Bruzze
Office: Company Secretary
II-3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Dominic Bruzze 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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Dominic Bruzze Principal Executive December 22,
___________________________________________ Officer 1999
Dominic Bruzze
/s/ Dominic Bruzze Principal Financial December 22,
___________________________________________ Officer 1999
Dominic Bruzze
/s/ Dominic Bruzze Principal Accounting December 22,
___________________________________________ 1999
Dominic Bruzze
/s/ Geoffrey Michael Steel Director December 10,
___________________________________________ 1999
Geoffrey Michael Steel
/s/ Garry Lynton Mackrell Director December 9, 1999
___________________________________________
Garry Lynton Mackrell
/s/ Craig Anthony Carland Director December 9, 1999
___________________________________________
Craig Anthony Carland
</TABLE>
II-4
<PAGE>
SIGNATURE OF AUTHORIZED REPRESENTATIVE
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/ Ian Phillips
-------------------------------------
Name: Ian Phillips
Address: Commonwealth Bank of
Australia
599 Lexington Avenue
New York, NY 10022
Telephone: 212-848-9241
II-5
<PAGE>
EXHIBITS INDEX
<TABLE>
<CAPTION>
Sequential
Exhibit Page
No. Description of Exhibit Number
------- ---------------------- ----------
<C> <S> <C>
1.1 Form of Underwriting Agreement.*
3.1 Memorandum of Association of Registrant*
3.2 Articles of Association of the Registrant.*
4.1 Master Trust Deed.*
4.2 Form of the Series Supplement.*
4.3 Form of the Security Trust Deed.*
4.4 Form of the Note Trust Deed.*
4.5 Form of Agency Agreement.*
Opinion of Mayer, Brown & Platt as to legality of the
5.1 Notes.*
8.1 Opinion of Mayer, Brown & Platt as to certain tax matters
(included in Exhibit 5.1 hereof).*
8.2 Opinion of Clayton Utz as to certain tax matters.*
10.1 Form of the Standby Redraw Facility Agreement.*
10.2 Form of the Liquidity Facility Agreement.*
10.3 Form of the Interest Rate Swap *
10.4 Form of the Currency Swap.*
Consent of Mayer, Brown & Platt (included in Exhibit 5.1
23.1 hereof).*
23.2 Consent of Clayton Utz (included in Exhibit 8.2 hereof).*
24.1 Power of Attorney (included on signature pages).
25.1 Statement of Eligibility of Note Trustee.*
Opinion of Clayton Utz as to Enforceability of U.S.
99.1 Judgments under Australian Law.*
</TABLE>
- --------
* To be filed by amendment.
II-6
