Option & Loan Facility

How it Works?

1. At the beginnning of the term, Investor posts shares as collateral and borrows at a 70%-90% Loan-to-Value ratio (LVR) of the shares' value in AUD (or preffered currency).

2. Depending on market performance and personal preference, investors at maturity:

• Choose to sell the shares or keep them.
• Settle any obligations arising from the collar strategy, and pay back the loan or roll into a new facility. Scenarios explained below.

Example of a $1,000,000 AUD Equity Release: Sonic Healthcare Ltd with a 80/111% Collar Strategy

Assumptions:

• Investor has at least $1M exposure to Sonic Healthcare: An upfront commitment of $1m in shares results in a $800k loan facility, at an interest rate of 5.20% p.a.

• Cash Release: After the prepaid interest of -$41.6k is deducted, investor receives $758.4k in cash to deploy as they see fit.

• Secured by a protective collar strategy over the shares:
  • An 80% put strike protects the equity collateral from downside (-20% Protection Level).
  • A 111% call strike caps your upside return. (+11% Cap Level)

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Scenarios at Maturity: Keeping or selling shares at expiry

A) Keeping Shares at Expiry

1. Bullish Market: Share price above the call strike. (116% of intial price):

• Settle the Call Option: Investors pay the difference between the Final share price (at 1 year) and the Call strike. Amount Payable = ((116% - 111%) x $1M)) = $50K
• Pay back the loan or roll into a new facility.

2. Neutral Market: Share price is between 80% and 111% of initial price.

Options at maturity:

• Investors can roll into a new facility.
• Or exit the facility and receive back shares: You will be required to pay back the loan.

3. Bearish Market: Share price below the put strike. (70% of inital price)

• Settle the Put Option: Investor gets compensated for the difference between the final share price after 1 year and the put strike. Amount Received = $100K (calculated as (80% - 70%) x $1M).
• Pay back the loan or roll into a new facility. Only $700K of the $800K loan is repaid after offsetting the received amount.

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B) Selling Shares at Expiry:

Investor have the option to liquidate shares at expiry. This amount can then be used to settle the loan obligation. Payout table illlustrated below.

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1. Subject to the credit risk of the issuer.

2. Wholesale investors only. All figures are illustrative. Review the issuer’s docs and seek tax/financial advice.

3. Product terms and pricing are indicative only and subject to change.

4. Product terms and pricing are indicative only and subject to change.

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