The Asset Production Program

INTRODUCTION:
Common throughout Europe and Asia, in partnership with large multinational companies like Lloyd’s of London and others, wealthy asset holders and landowners have long understood the value of ‘pledging’ their high value assets to create additional income.

Since early 2000, many state and local governments throughout the United States have begun ‘leasing’ their unproductive assets in a very similar manner.  With eight years in the public sector and billions of dollars of successfully leverage assets the funds “Asset Production Program” is now being extended to the private business and investor community allowing them to take full advantage of assets they own that may be stagnant or they have trouble lending against for one reason or another.

PROGRAM OVERVIEW:
Many large insurance companies and developers around the world utilize assets ‘pledged’ or ‘leased’ to them to help strengthen their balance sheets and qualify for better programs, rates and pricing.  Government bodies, corporations, and wealthy private individuals can also leverage their personal assets by pledging their assets directly or by utilizing a Standby Letter of Credit that is created as an ‘instrument’ on behalf of the asset which will then be pledged to the named company.  In some instances their may be only a partial pledge of an asset and we often see this in mining or timber operations.

The entities or individuals pledging said assets receive a fixed return per annum (often times paid quarterly dependent upon the agreement) on the value of the asset or SBLC.  The assets are not typically used to underwrite insurance or development projects but, rather, to simply show greater financial strength on behalf of the company and improve the entity’s overall credit rating or allow them to take advantage of their own leverage components in their business practice.  Naturally, an improved credit rating or enhanced balance sheet allows these companies to generate additional revenues.

Through the Asset Production Program, a client can thus monetize virtually any type of asset of $10M value or greater, generating income by ‘pledging’ the asset/s to the fund’s global network of developers and insurance providers.

ASSETS ACCEPTED:
As noted above, asset value must at least be $10M USD to qualify for the MGF Program

• Commercial and Residential Real Estate Holdings
• Precious metal reserves, concentrates, mines, commodities, etc.
• Fine art/auto collections, jewels, oil or gas (domestic and international)
• Financial Instruments:  CMO, CD, MTN, BG, LOC, etc. but must be at least A-Rated or better

PROGRAM SPECIFICS:
-The entity/individual pledging the asset or SBLC retains ownership of and all rights to the use of the asset during the ‘pledge period.’  However, the asset is not allowed to be SOLD until the pledge status is released.
-Liquidity can exist with pledged assets.  If your asset is currently earning income we will allow that to continue but must evaluate on a case by case basis to ensure it will not affect our abilities to leverage the asset in any way.
-Term:  This can very but is usually a 1-2 year term and will be negotiated directly by the principal parties.
-The asset owner will typically be offered multiple programs/pledge options and will have full discretion over which option he/she feels is best suit for their needs and comforts
-There are no out-of-pocket expenses to keep the process moving outside of the initial application fee of $10,000 to gain access to the principal parties/fund
-The entity pledging will receive a percentage of the asset value as a pay out each year the asset is pledged as residual income minus any fees and commissions.  Pay-outs may occur up-front or monthly or quarterly.  Upon the first successful payout your application fee is refunded in full and you are no longer required to pay future application fees should you come forward with other assets.
-Most transactions are completed in 30-45 days.
-The option to put a reinsurance policy in play does exist for your asset and helps to mitigate the potential for any asset risk/loss.
-This IS NOT A LOAN or a refinance of any nature and there is no debt to repay.
-Client does not have to be a US Citizen or reside in the United States.
-The client must own the asset personally or have controlling interest in order to move forward with our program.
-The program is highly transparent and MGF is readily available to answer any questions every step of the way from start to close of your pledge.

SAMPLE PROCESS:

1. The owner of the asset:
1. Sign NDA or NCND with referring broker and submit application fee
2. Submit all relevant documents pertaining to ownership of the asset and detailed description of the asset which will be submitted along with your personal contact information to the Fund
3. If client currently has an LOC or Insurance Wrap in place on their current asset we ask this info also be submitted with your initial package (but is not necessary if either are not in place)
2. The fund will review all submitted materials and offer an “Invitation and Term Sheet.”
3. The contract is negotiated between all parties involved; the asset holder is encouraged to have counsel/advisors involved throughout the process.
4. The client offers to pledge the asset directly or via an SLOC for the program term.
5. The insurance company or developer who chooses to accept the pledged asset issues the final contract documentation.
6. Move toward funding a client will receive his/her payout immediately following funding and is paid via a jointly established escrow account.
7. As noted, process usually takes 30-45 days

SAMPLE OFFERINGS:

1. A low risk insurer offered 6-10% average annual returns, to be used for credit enhancement, worker’s comp plan, etc.  A 24 month minimum tern applied which could be extended for up to 10 years, at the client’s discretion.  A draft was produced within a week of the signed term sheet.
2. A catastrophic insurer who writes industry loss waivers (ILWs) no focused on single events but, rather, on “levels of industry loss” offered payouts of 20% net per year, with a minimum term of 24 months.  ILWs are much more predictable than generic catastrophe underwriting.

A terrorism re-insurer, middle to low risk, offered a 9.6% annual net payout in year 1 and 15.6% per year thereafter; the term of the program was up to 5 years.  The company was seeking between $300M and $1B.