Australian Financial Guarantees 2008

1. Melbourne Office:
Unit 1 / 2 - 16 Warner Street,
Oakleigh VIC 3166
Phone: 1300 736 516
Sydney Office:
38 Brisbane Street
Bondi Junction NSW 2022
Email: info@equitybonds.com.au
Phone: (02) 9369 2448
Company Profile
Fax: (02) 9369 2110
www.equitybonds.com.au

2. Company Overview Our Philosophy
Equity, meaning the state, quality, or ideal of being just,
impartial, and fair, or the residual value of a business or property
Our Mission beyond any mortgage thereon and liability therein.
To provide new and innovative Deposit Guarantee
solutions for the Australasian market place, that enable Bonds, means to mortgage or place a guaranteed bond on.
complementary finance opportunities for our introducers Hence, we guarantee ones equity to optimise cash flow
and their clients. through the use of an Equity Bond.
Prudence. Through experienced risk Assessors we have
Who are we? developed a diversified pool of valued clients that enable long
EB is an Australian owned, Surety specialist organisation term growth of our business.
formed by Bridge Lending Services P/L & Amitech P/L
(established 1998). The company was founded as Equity Ideas Promise. We will act with integrity at all times, meeting our
Pty Ltd and then later changed names to Equity Bonds Pty Ltd. client commitments by working to the highest standards.
The company was created to provide Residential, Commercial Clients will receive friendly, efficient and professional service at
& Commercial leasing surety products to the ANZ, finance every opportunity.
brokering community.
Prosperity. We will provide innovative bond facilities that assist
EB distributes exclusively to introducers through a channel our Introducers clients and ensure our company maintains its
model. Our Introducer Relationship Managers (RM’s) are sustainable and prosperous financial future.
experienced & qualified finance brokers, each with multiple
years of experience in the mortgage industry as residential
& commercial brokers. EB’s RM’s are also PS146 compliant,
Corporate Structure
each with a Financial Services Diploma. Each RM undergoes
continuous educational development to ensure our customers
are well looked after.
Whilst embracing modern technology to streamline our
processes, we place the emphasis on people. Our staff & Strategy
alliances are our most important assets - at the heart of our Insurance Limited
(OTC/BB:SGYI)
business. Their in-depth product knowledge, experience and
attitude are what make our company different.
Melbourne O ce
We have developed long term working relationships with & Sydney O ce
our clients through our insistence on maintaining the highest
standards of service.
Sales & Accounts & Introducer
All EquityBonds produced in Australian & New Zealand are
Marketing Admin Network
known as financial instruments and not financial products.
Equity Bonds acts as Guarantor for the Deposit Bonds and
has elected to securitise the Guarantee Bond Amounts under Risk & Risk &
Compliance Compliance
binding arrangements held by Strategy Insurance Limited (SIL).
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3. Credit Ratings Strategy Insurance Limited
Bond Insurance Strategy Insurance Limited is organized as a multi-line insurer
with a focus on credit and liability insurance in the fixed income
EquityBonds are proud to inform you that our Deposit Bonds and construction industries predominately in North America.
are 100% Guaranteed by Strategy Insurance Limited (SIL). In It also offers insurance related risk management solutions to
the unlikely event that EquityBonds were to cease trading, users and providers of capital.
potential valid bond claims remain payable by SIL via their
Australian solicitors. As a specialist organisation, SIL provides financial guarantees
through a wide network of agencies in more than 40 countries
(OTC/BB:SGYI) around the world.
SIL has more than US$500 million in capital and is presently
reviewing their position in the S&P Financial Enhancement
Rating, FER process. This accreditation relates specifically to
Surety insurers. Strategy International Insurance Group Inc, the
ultimate parent company of SIL, has more than US$600 Million
in assets. (OTC/BB:SGYI)
See the SIL Company Profile (2005) for further info on SIL’s
products, management and financial position. See the
Strategy International Insurance Group, Inc.
following supporting docs available online at www.sygi.com;
1. Strategy Insurance Comfort Letter.
2. Strategy $518 Million in new capital
(Press release June 2006) &
3. Strategy $100 Million in new capital
(Press release January 2006)
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4. EQUITYBONDS are proud to be a liated with Austcorps development of VISION in Brisbane
Our Customers Customer Testimonials
Since the launch of the EquityBonds Brand in 2005, AustCorp Group Limited - 20th June 2007
EquityBonds has accredited more than 250 introducer groups
around Australia New Zealand. Our customers vary according Dear Rick,
to the type of EquityBond that is required to compliment core
business. For example, a mortgage broker is likely to sell short I would like to acknowledge the professional and prompt
to medium term residential bonds, where a property agent or service we receive in the dealings we have had with Equity
developer might sell long term residential bonds “off the plan”. Bonds in the past 12 months. Austcorp’s Vision project is the
We have specialist commercial brokers and developers who tallest and most iconic tower in Brisbane and we are excited
use our commercial bonds and specialist leasing agents that that the project is now under construction, and your company
choose our Lease bonds as an alternative to traditional bank has been an important part of assisting us to obtain the pre
guarantees. Other customers include; Mortgage Managers, sales necessary to proceed. As I have previously indicated, I
Aggregators, Accountants & Solicitors. also look forward to accepting Equity Bonds in our other major
Queensland Projects, including the SW1, located in Southbank,
Here is a list of some of our traditional customers; and our other extremely successful project, Coomera Waters
(Click on them to view their website) master planned community located on the Gold Coast.
1. FKP Property Group As a national property developer, we are proud of the quality
2. Austcorp (See also www.visionbrisbane.com.au) of our diverse land projects, commercial, and residential
3. Colliers International projects and look forward to growing our business together in
4. CB Richard Ellis the future.
5. Coldwell Banker
6. National Australia Bank Kind Regards,
7. Ashe Morgan Winthrop
8. Balmain Commercial/Guarantee John Hughes
9. WHK Group Limited State Manager, Qld, NT, Sales and Marketing
10. Australand Austcorp Group Limited
11. Seville Hotels & Resorts
12. Ark Property Group
13. Propex Sydney Wide Home Loans - 4th Sep 2006
14. AAA Commercial Mortgages
15. PBS Property Group I can’t believe how easy it has been to arrange deposit bonds
16. Audit Services with Equity Bonds. Justin has been so helpful and made the
17. DIB Finance process very smooth for my clients. To find a company who
18. Savills wants to help and make the process simple has been a great
19. Remax find. I will be using you again and recommending to others.
20. Viva Properties
21. Commercial Brokers Australia Regards,
22. Connective OSN Lyn Janke
23. City Pacific Finance
22. Queensland Financial Services Sydney Wide Home Loans
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5. Products & Services EquityBond Claim Process - Overview
EB currently has three deposit guarantee products for From time to time unforeseen and sometimes unavoidable
the Australian & New Zealand market place; Residential & situations arise where a bond may be required to be redeemed.
Commercial Guarantee EquityBonds and a Commercial Lease The procedure for bond claimants is as simple as a phone call to
Guarantee EquityBond. Over the next 12 months EquityBonds Equity Bonds. Claimants need only quote the bond Guarantee
expects to introduce some more guarantee type products to Number for Equity Bonds to establish a valid claim. All valid
the ANZ market place. claims will be paid within 14 business days. The payment of
claims may be effected earlier. The 14 day period is to allow
for the instance where, Equity Bonds is required to have funds
Residential & Commercial Equity Bonds telegraphically transferred from Strategy Insurance if the bond
This is not insurance, but rather a form of financial instrument or claim exceeds the funds held in trust locally.
guarantee which can represent your deposit until settlement,
when buying a residential property. Equity Bond Advantages
When purchasing a property, it is common practice to lodge Cash Flow
a cash deposit of up to 10% of the purchase price with the When financing a deposit, Equity Bonds greatly improves cash
vendor’s solicitor as security. For a small fee, an EquityBonds flow, especially when compared with expensive alternatives
Residential Deposit Bond can be used in lieu of the cash deposit such as credit cards, lines of credit, personal loans or bank
and guarantees the Vendor that you will pay your deposit on guarantees.
the day of settlement.
Convenience
The Deposit Guarantee Bond can be used for all or part An EquityBond removes the need to borrow against an existing
of the deposit required up to a maximum of 10% of the property equity or to go through the laborious process of
purchase price. organising a bank guarantee. With an Equity Bond, you will
have more working capital.
Residential Equity Bonds are offered for terms of 3 months
to 5 years. Commercial Assessment Criteria
Equity Bonds uses commercially experienced assessors, who
Commercial Equity Bonds are offered for terms of 3 months to understand client‘s business and financial needs. The assessors
2 years (Longer terms are available on application). are able to identify strong customers, where others are not and
hence, qualify for greater deposits.
Commercial Lease Equity Bonds
Guarantors
A lease bond is a contract between three parties: (1) landlord,
(2) tenant, and (3) surety underwriter. The lease bond may be Equity Bonds accepts guarantors to assist with qualifying when
held by the landlord in lieu of a cash security deposit, letter of a client’s asset base is below the required amount.
credit, or a personal or corporate guarantee. It serves as security
for the tenant’s full and complete performance of the financial Self Certification
terms of its commercial lease. When electing to self certify income, bonds can be approved
without the need for financials, at no additional cost.
Commercial Lease Equity Bonds are offered for terms of
1 to 5 years. (Longer terms are available on application).
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6. No need for Finance Approval Working capital solutions
Equity Bonds approvals are not restricted when a client’s When a cash deposit has already been used to secure a leased
finance has not yet been approved. property, why not consult your landlord and exchange it with a
Commercial Lease Equity Bond. This gives your clients access to
Cost Effective more working capital and more opportunities for investment.
The efficient and innovative patented structure of Equity Bonds
allows them to be very competitively priced. Full Online Services
Accredited Introducers are granted access to the members
24 Hour Turnaround
section of the Equity Bonds website for all application forms,
Equity Bonds perform bond application assessments calculators, policies and procedures. Introducers will have all
within 24hrs. the necessary tools to enable them to do business efficiently
and effectively.
Higher Bond Amounts
We approve bond amounts up to 25% of the customer’s Introducer Branding Available
acceptable asset base. This compares to our competitors For large Introducers, Co-branding is available including
standard, typically 15% – 20%. documentation and provision for client services.
Longer terms
Turn Around and Communication
We specialise in long-term, Residential and Commercial Bonds:
Terms: 3 months – 5 years. We understand how important it is for clients to be kept
informed. A dedicated point of contact at Equity Bonds will
Tailored Solutions provide you with timely assessment notifications and continued
reliable servicing. Application assessment and turnaround is
We can tailor bond amounts above $1.0 million AUD (on
typically completed within a 24 hour period of receiving your
application).
client’s application and supporting documents.
Put & Call Options
Equity Bonds allow Put & Call Options for maximum
effectiveness of geared investment strategies.
A Unique Solution For Introducers
“Equity Bonds provides Introducers with the necessary tools
to qualify customers quickly and easily. Equity Bonds has very
competitive pricing and remuneration options are available.
Quick and easy process
Equity Bonds applications are easy to read and understand,
while supporting documentation is kept to a minimum.
Application forms are easily accessible via the website. The
bonds are issued from our Sydney and Melbourne offices.
Equity Bonds are produced locally and can be mailed overnight,
to anywhere in Australia and New Zealand.
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7. Commercial Lease What are the main benefits to Landlords?
For landlords, the primary benefit of a lease bond is that the
Equity Bond FAQ’s credit of the surety underwriter, rather than the credit of the
tenant, secures the tenant’s financial performance of the lease.
How does a tenant get a Commercial Lease This gives much more security.
Equity Bond? Since the lease bonds cost much less to establish and maintain
The tenant applies for a bond using the standard application than cash security deposits, tenants are much more likely and
forms, including supporting documentation. Equity Bonds able to agree to substantial guarantees. This gives landlords
reviews the tenant’s general business history, financial much better protection.
statements, capitalization, and in some cases, business plan.
Based upon this review, we issue a lease bond in exchange for Proceeds of lease bonds are not currently subject to the
the payment of a specified fee. jurisdiction of bankruptcy courts.
The landlord holds the lease bond, in the same way as the Finally, because lease bonds tend to be much less expensive
landlord would hold a letter of credit. for tenants compared to the cost of posting and maintaining a
letter of credit or cash security deposit, landlords have a much
What happens if the tenant breaches the better opportunity to lease space to these tenants.
lease agreement?
How do I get started?
If the tenant fails to uphold the terms and conditions of their
lease, the landlord may submit a claim against the bond, which The ease of obtaining a Commercial Lease Equity Bond is
is paid by the surety underwriter much like a draw made by the one of its main attractions. Applications can be downloaded
landlord would be paid by a bank under a letter of credit. completed and faxed to either of the Melbourne or Sydney
offices. Bonds will normally be issued within 24 hours.
With a lease bond, the surety underwriter (and not the tenant)
is liable to the landlord for the tenant’s breach of its lease. Who are EQUITYBONDS?
The surety underwriter’s liability on the lease bond is strictly EQUITYBONDS is an Australian owned brand specialising in
monetary; the surety underwriter is not required to physically Property Bonds and Financial Guarantees. EQUITYBONDS acts
perform the unfulfilled non-monetary obligations of the as Guarantor for the Commercial Lease Security Bonds. These
tenant. are securitised by A rated paper via Strategy
Insurance Limited.
What are the main benefits for tenants?
For many tenants, the amount of the premium will be Tenancy Period Extension
considerably less than the cost of posting and maintaining a Market survey results have informed us that Lessors and
letter of credit throughout the term of the lease. The premium Managing Agents of Commercial Properties require the term
will also usually be a much better financial proposition for of the Security Bond to extend past the Expiration of the Initial
tenants than sacrificing working capital in order to post a cash Lease Term.
security deposit.
Equity Bonds caters for this contingency by extending the term
The obligation secured by the lease bond is not treated as a of the Security Bond for 90 days after the Expiration date of the
contingent liability on the tenant’s financial statements; it is Lease. This was designed in favour of using a Lease / Rental
off-balance sheet. As a result, the tenant’s financial statements Guarantee in place of a bank Guarantee after the major banks
and borrowing capacity are much stronger. recently announced that all bank guarantee’s MUST have an
expiry date.
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8. Surety Bonds versus Bank Guarantees
Prequalification
Surety Bonds Bank Guarantees
A surety company assesses the purchaser/lessee’s personal A bank guarantee has no guarantee of the purchaser or
assets, income streams and or business operation, checking tenant meeting there purchase contract / lease obligation.
for adequate financial resources, necessary experience and its The banker examines the quality and liquidity of the collateral
profitability, and management skills to carry on its business. available to the bank in case there is a demand on the bank
When it issues a bond, the surety company has verified that guarantee. Generally there is no further prequalification.
the bond applicant is capable of completing the purchase or Purchasers / lessee who cannot qualify for a surety bond
maintaining the proposed lease at time of application. but can provide a bank guarantee may not possess all the
necessary capabilities to complete the purchase or maintain
the proposed lease.
Duration
Surety Bonds Bank Guarantees
Surety bonds remain in force for the duration of the contract A Bank guarantee is usually date specific, generally for one
including sunset clause periods for purchase contracts and 3 year. A Bank guarantee may contain “evergreen” clauses
months past lease periods, subject to the terms and conditions for renewal, after re-assessment of the applicant and the
of the bond. applicant may be charged renewal related fees.
Borrowing Capacity
Surety Bonds Bank Guarantees
With few exceptions, surety bonds are issued on an unsecured Specific property and or liquid assets are pledged to secure
basis. That is, they are usually provided on the individuals and a bank guarantee. Bank guarantees can diminish an existing
or company’s financial strength and experience. The issuance line of credit, and are reflected on the applicant’s financial
of bonds has no effect on the applicant’s bank line of credit statement as a contingent liability. Having assets tied up, or
and in some instances, can be viewed as a credit enhancement. an available line of credit diminished, is counter-productive to
Unused borrowing capacity can be viewed as off-balance the vendor / landlord and purchaser / lessee. Cash reserves in
sheet strength. funding initial fit outs and operating costs of leased premises
can be adversely affected when liquid assets are pledged
to a bank, or in the case of purchases the bank reduces the
purchases borrowing capacity as a result of the issuance of a
bank guarantee.
Claims
Surety Bonds Bank Guarantees
Surety Bonds are irrevocable. Most Bank Guarantees are irrevocable, which means that both
parties must agree to any changes to the Bank Guarantee.
Changes must be documented by an amendment signed by
both parties.
The Surety Company will pay on a bond upon demand of the The bank will pay on a Bank Guarantee upon demand of the
holder. The holder or beneficiary must make a demand prior to holder. The holder or beneficiary must make a demand prior
the expiration date. to the expiration date.
Note: Some material contained in this document has been sourced from publicly released information written by: Surety Information
Office, Washington, DC & the Surety & Fidelity Association of America & from the National Association of Surety Bond Producers,
Washington, DC. In some sections the term contractor company has been replaced with Purchaser /lessee.
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9. Residential & Commercial When does it expire?
An Equity Bond ceases when the Contract of Sale is completed,
Equity Bond FAQ’s terminated, rescinded or the Guarantee Bond expiry date
occurs, whichever happens first. The Deposit Guarantee Bond
also terminates when a claim is paid by Equity Bonds,
Frequently Asked Questions the Guarantor.
How do they work?
What happens if the buyer defaults under the
Outlaying a large cash deposit (for example $50,000 on a
$500,000 property can be complicated or impractical if buyer’s
Contract of Sale?
funds are already tied up in an existing property or other If the buyer defaults under the Contract of Sale, the seller is
investments. The convenience of using an Equity Bond will entitled to retain the deposit. The seller can claim the guaranteed
attract some buyers having difficulty accessing the full cash amount from Equity Bonds. This amount will be paid to the
deposit. The Equity Bond is legally effective and accepted by stakeholder nominated in the contract within fourteen days
sellers in all States and Territories. (However, it’s usually paid within four days) of Equity Bonds
being supplied with the necessary documentation. Equity
Who can apply? Bonds will then recover the money from the purchaser.
Anyone wishing to purchase a residential or commercial
property can apply for an Equity Bond. This may include
existing property owners wanting to purchase property,
investors wanting to expand their property portfolio, property
developers and first home buyers.
Can it be used at auction?
Yes. The flexibility of a residential or commercial Equity Bond
is one of its key features. An Equity Bond Deposit Guarantee
can be issued prior to an auction. The Bond amount is fixed
but not the property details, so buyers can attend a number
of auctions. The purchaser simply completes the vendor and
property details on the Guarantee Bond Certificate when they
are the successful bidder.
Will the seller / vendor accept the Equity Bond?
The Equity Bond is legal. It is available for residential &
commercial property purchases in all states & territories. It
is at the sole discretion of the vendor to accept it. However,
the seller is often anxious to obtain a Contract of Sale on the
property and secure a deposit commitment from the buyer.
An Equity Bond can usually be organized within 24 hours of
the contracts being signed.
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10. Why do buyers and sellers like residential
Equity Bonds?
Property purchasers are in favour of using an Equity Bond
because it allows them to keep their cash until settlement.
Shorter term guarantee bonds (up to 6 months) appeal to
homeowners upgrading to a new property or investors who
wish to purchase property when the opportunity arises, but
have funds tied up in non-liquid assets. Longer term guarantee
bonds appeal to people who are buying property under
construction or “off the plan”, therefore not tying up liquid
assets for extended periods of time.
Vendors accept Equity Bonds because it acts as a financial
guarantee and can assist in the sale of their property.
Does an Equity Bond cost less than other
deposit options?
Yes, compared with the interest costs associated with financing
a cash deposit by other means, an Equity Bond is a very cost
effective option.
How do I get one?
The ease of obtaining an Equity Bond is one of its
main attractions.
Strategy International Insurance Group, Inc.
Applications can be downloaded from -
www.equitybonds.com.au, completed and faxed to either of the
Melbourne or Sydney officers. An Equity Bond will normally be
issued within 24 hours.
Visit: www.equitybonds.com.au
Phone: 1300 736 516
Fax: (02) 9369 2110
Equity Bonds Head Office
Building 1 2 / 16 Warner Street
Securitised by Strategy Insurance Limited. (OTC/BB: SGYI) Oakleigh VIC 3166
Australia
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