Schedule 1: Use of Proceeds / Securitization Transaction
Version 1 - Released and Dated 14th November 2022
SCHEDULE 1 – USE OF PROCEEDS / SECURITISATION TRANSACTION
Subject to the Securitisation Law, the Issuer acting through a distinctive Compartment will apply the net proceeds of an issue of Notes of any given Series to purchase or otherwise acquire the assets specified in the Final Terms of such Series (and to pay for or enter into any ancillary transaction in connection with the issue of such Notes or acquisition of such assets) as well as towards paying general expenses in connection with the administration of the Issuer, the issue of the Notes or acquisition of the Underlying Assets as described in the relevant Final Terms as described in the relevant Final Terms.
The expenses of the Issuer, including all fees payable to the Paying Agent, the Security Trustee and other parties, will in principle be met on a Series-by-Series basis.
The Issuer may enter into “true sale” securitisation(s) and “synthetic” securitization(s) as specified in the Final Terms by which the Issuer will acquire or assume, directly or through another undertaking, risks relating to claims, other assets, or obligations assumed by third parties or inherent to all or part of the activities of third parties and issue Notes, whose value or yield depends on such risks.
The Issuer may at any time hedge or cover the risks linked with the Underlying Assets by using derivative products.
The Issuer may also choose to replicate an Index or an investment strategy developed, created or managed by a third-party Index Provider.
As described in the relevant Final Terms, the Issuer may not have recourse to loan, borrowing nor use any leverage to enhance the performance of a Compartment and it may borrow to create necessary liquidity or due to unexpected reasons in order to achieve a Securitisation Transaction’s objective.
Depending on which type of allocation of each Series of Notes, the Issuer will end the securitisation transaction following one of these rules:
if the Issuer has invested into one or several specific Non-Fungible Assets as specified in the Final Terms: In such a case the Issuer will keep such Non-Fungible Asset(s) for the whole duration of the Series of Notes until the Maturity Date or the Redemption Date and the Issuer will use the proceeds of the disposal of such asset(s) to redeem the Series of Notes, or
if the Issuer has invested into a specific asset class/allocation of which the assets are fungible: If some Underlying Assets reach maturity before the Maturity Date of the Series of Notes, the Issuer will keep a constant exposure to this specific asset class/allocation for the whole duration of the securitization transaction by replenishing the Compartment with the same fungible Underlying Assets. The Issuer will dispose of the Underlying Assets to create liquidity to redeem the Series of Notes near their Maturity Date, or
if the Issuer will be required to invest in a portfolio of specific assets or track or replicate a specific Index as specified in the Final Terms: it will keep them till maturity, modify, rebalance or substitute the exposure to this portfolio of assets as indicated by the Index Provider and dispose of them near the Maturity Date of the Series of Notes. The Issuer will then use the proceeds of the sales of these assets to reimburse the Noteholders.
Should the Issuer be forced to create liquidity to allow an early redemption of a whole or part of a Series of Notes, the Issuer may decide to charge an anti-dilution levy if the disposal of the Underlying Assets has caused a loss for the remaining Noteholders of the same Compartment. The type of Underlying Assets in which the Issuer will invest the net proceeds of a specific Series of Notes will be described in the relevant Final Terms.
Such Underlying Assets may be :
Receivables in which case the Issuer will grant a loan to companies in link with the investment policy (the “Investment Policy”) of the Issuer;
Mortgages on infrastructure projects in link with the Investment Policy;
Equipment loans and leases of machinery granted to companies within the framework of the Investment Policy of the Issuer;
Intellectual Property Rights: in which case the Issuer, within the framework of its Investment Policy, will purchase some intellectual property rights and will grant a third the right to use such rights over period of time;
Real Estate: in which case the Issuer will invest in the infrastructure project in link with its Investment Policy in development in the vie to resell such project to a third party or keep such project to be rented to a third party or used in another manner by such third party;
Financial instruments: which can be bonds, notes, or shares of any kind issued by a third party. It can also be shares, units or a partnership interest in an investment fund considering that that complies with the Issuer’s Investment Policy;
Derivatives Instruments: futures contracts, contracts of difference, forwards contracts, options, and warrants of any kind which are linked directly or directly with the Investment Policy;
Private Equity Investment: in which case the Issuer will co-invest into a dedicated project in link with its Investment Policy;
Commodity: in which case the Issuer will invest directly or indirectly or via derivative instruments in commodities;
Basket: in which case the Issuer will select a list of the Underlying Assets listed above;
Index: a formula or an asset allocation which comprises an exposure on one or several of the Underlying Asset listed above;
If a relationship exists that is material to the issue, between the Issuer and third parties, details of the principal terms of that relationship;
In the case of a single Underlying Asset, please specify the following elements/details: Legal and commercial name and LEI of the entity, date of incorporation, length of life, domicile and legal form, legislation under which it operates, country of incorporation, address of its registered office/principal place of business; a brief description of the entity’s principal activities (in case of an entity performing mining, extraction of hydrocarbons, quarrying or similar activities, description of the deposits, estimate of economically exploitable reserves and expected period of working, indication of the periods and main terms of concessions and the economic conditions for working them, Indication of the progress of actual working; description of the group and Issuer’s position within it; Names, business addresses and functions of the entity’s members of the administrative, management or supervisory bodies an indication of the principal activities performed by them; inclusion of the audited financial statements of the entity for the last two financial years (may not be older than 18 months) and any interim financial statements available; Names and addresses of the Issuer’s auditor(s) for the period covered by the historical financial information; Prominent disclosure of risk factors that may affect the Issuer’s ability to fulfil its obligations under the securities to investors
For each of those the relevant Final Terms of the Series of Notes will describe:
The type of Underlying Assets selected by the Issuer;
The amount of the Underlying Assets invested by the Issuer;
The legislation governing such Underlying Assets;
The terms and conditions of transfer of such Underlying Assets if any;
The expiry or maturity date of the Underlying Assets;
If such Underlying Assets are covered by one of several insurance and a short description of such insurance;
The description of the criteria for accepting additional Underlying Assets to a Compartment or replacing such assets;
In case of single Underlying Asset or of several underlying contract, the description of the counterparty;
Where a material portion of the Underlying Assets are secured on or backed by a real estate property;
A valuation report of the property setting out the valuation and the cash flow stream (together with the name of the expert);
In case of securitisation of shares or fund units, the relevant Final Terms will indicate information about past and future performance and its volatility, the name of the market where such asset is admitted to trading, the ISIN number and where more than 10% of the Underlying Assets are shares/units which are not admitted to trading;
If a relationship exists that is material to the issue, between the Issuer, guarantor and obligor, details of the principal terms of that relationship.
The purpose of the Securitisation Fund is to acquire or to assume, either directly or through the intermediary of another undertaking, the risks associated with the financial assets, equities, loans, receivables, swaps, guarantees, commitments or cash flow generated by third-party’s activities. Taking advantage of the ring-fencing principle at the Compartment level, the Management Company, Frictionless Markets Sàrl. will determine for each compartment a distinctive investment strategy that shall be reflected in the Specific Management Regulations thereof. The Management Company on behalf of the Securitisation Fund may also authorise to have recourse to techniques and technologies, including DLT technology and instruments involving transferrable securities, provided that they are conducted for the purposes of efficient cash or asset management, or that such techniques, technologies and instruments are intended to hedge currency and interest rate risk as part of the asset management, and that they are employed to hedge risks related to market fluctuations.
The Management Company may issue any type of securities at the charge of one or several compartments. This includes shares, units, bonds, notes, certificates, or any type of securities pursuant to the Securitisation Law. Securities may be issued in several categories, series, tranches or classes within one of several currencies and each securities may bear different forms of terms and conditions. The Compartments may have recourse to credit facilities to finance /acquire the Underlying Assets.
For each securities to be issued by the compartments, the Management Company will issue a Final Terms containing all the terms and conditions of the issuance of the securities.
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