Address:  Octagon Point, St Paul's, 5 Cheapside, London, EC2V 6AA, UK    Phone: +352 20882760      Email: contact@luxfin.co.uk

Loans Against Securities

Securities Financing

Collateralized Stock Loans
Traditional commercial banks have long extended loans and credit facilities that are collateralized by hard physical assets, such as real estate and physical equipment, or by a business’s receivables and other income streams. Pledging those assets as collateral for a loan does not affect the borrower’s continued equitable ownership of the assets, but only assures the lender that an asset is identified to recoup the value of the loan in the event that the borrower does not repay the loan principal. Collateralized stock loans operate in accordance with this model.
Luxembourg Capital Partners’s Collateralized Stock Loan (CSL) program gives our clients an opportunity to borrow a percentage of the cash value of their publicly-traded securities with no restrictions on how the proceeds of the loan will be used. The primary limitations on an LFG CSL are that the securities must meet certain trading history and volume standards to enable our CSL underwriters to assess an agreeable loan-to-value ratio for the CSL.
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In most situations, Luxembourg Capital Partners will close a CSL in less than 21 days after a client submits a complete loan application to us. LFG will then prepare and deliver a custom Securities Lending Agreement (SLA) to the client with instructions for transferring the collateral stock, in electronic format, into a third-party custodial account. After the client executes the SLA and arranges for transfer of the collateral, LFG will fund the principal balance of the loan and disburse certain negotiated loan origination and administrative fees that are fully defined in the SLA. All loan funding is accomplished by wire transfer of loan proceeds into a client’s designated account.
Luxembourg Capital Partners’s CSL program is intended for accredited investors that meet minimum asset and income standards and that have substantial knowledge, sophistication, and experience in transactions involving publicly-traded securities. Our CSL clients include asset management firms, hedge funds, insurance companies, pension plans, and ultra-high net worth individuals that hold large investment portfolios.

loan process:

Luxembourg Capital Partners’s loan process is relatively straightforward:
1
The borrower initiates a loan request by providing information about the proposed collateral securities and the amount of loan requested.

2

Luxembourg Capital Partners reviews the proposed collateral and, if the securities are acceptable as collateral for a CSL, LFG creates a non-binding offer and term sheet.

3

The borrower countersigns and returns the term sheet along with a completed copy of LFG’s “Know Your Client” information questionnaire and all documents and materials specified in that questionnaire.

4

The entire application package is submitted to underwriting. If approved, Luxembourg Capital Partners sends a custom SLA to the borrower with instructions for transfer of the collateral into a custodial account.

5

Upon receipt of a signed SLA and verification of the deposit of the collateral in the custodial account, Luxembourg Capital Partners disburses the CSL proceeds.

Features and benefits

Key features and benefits of an LFG CSL include:
Most publicly-traded equity securities can be used as collateral, even if they do not satisfy marginability standards
LFG offers loans with principal balances of US$2 million to US$25 million, and will consider larger principal balances on a case-by-case basis
All LFG CSL transactions are conducted and closed with the strictest standards of confidentiality and full protection of the client’s interests
Loan terms of two to five years are available, with potential extensions for up to an additional five years
LFG is the direct lender in all of its CSL transactions
The collateral securities must not be subject to any restrictions, liens, or claims
Loan underwriting is not dependent on and has no effect on the client’s credit rating
The client pays quarterly simple interest at favorable market-based rates during the loan term
All CSLs are non-recourse, and a client can elect to walk away from the loan with no liability apart from forfeiture of the collateral securities
Dividends declared and paid by the issuer of the collateral securities are held for the client’s benefit and are returned to the client at the end of the loan term upon repayment of the principal balance of the loan
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UK
Octagon Point, St Paul's
5 Cheapside, London
EC2V 6AA, UK
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