Balmain Eagle Series

OVERVIEW OF Strategy

The Trustee is of the opinion that the reluctance of the major trading banks to lend to borrowers operating in certain industries has created an unprecedented opportunity for the Trustee to step into the ‘void’ and enjoy outsized pricing for the risk. The Trustee intends to realise this opportunity by investing in asset classes that are no longer adequately catered for by the major banks or existing private lenders (the Target Assets).

This opportunity to invest in the Target Assets extends to several industry types including, without limitation:

1. the resources sector with particular emphasis on non-renewable energy (coal, gas, etc.);
2. any industry sector where the major banks believe an exposure in that sector may no longer comply with their environmental, social and governance policies;
3. any industry sector which the major banks consider to be outside of their respective credit/ risk policies; and,
4. acquisition of loans or portfolios of loans where either the loans or the lender are in some way strategically or financially compromised (generally referred to as non-performing loans or NPLs) and the loans are:
   • no longer capable of being funded/ held by the original lender (for any of the reasons in A, B or C above); or,
   • are displaying default characteristics such that they are no longer eligible for investment by the original lender.
5. the real estate sector in respect of joint ventures and equity participation

Investments in the Target Assets will generally have characteristics that do not readily suit BOT’s preferred investment requirements. For example:

• Duration: The investments may have terms that exceed BOT’s preference for shorter duration loans or may involve amortisation or other capital movements during the term of the loan;
• Interest: The investments may not satisfy BOT’s requirement to pay monthly distributions. Other payment scenarios may include quarterly payments, pre-payments or capitalised interest;
• Asset Type: The investment may comprise asset types (coal, non-performing, etc.) that require significantly more intense management from the Trustee; and,
• Management Fees: The Trustee will not be adequately compensated for the significantly higher degree of management that the Target Assets require to be properly administered.

To properly execute this strategy, the Trustee will offer existing BOT investors the opportunity to invest in the Eagle Series. Each Eagle Series unit class, or BEST, will invest in a specific Target Asset (which may be a single loan or a group of similar loans). Each BEST will be sequentially numbered from 001 onwards.

Each BEST will comprise a single class of Units in BOT which will be separate and discrete from other Units in the Trust.  Specifically, there will be no mingling or co-mingling of the assets in BOT and the respective BEST.

For the sake of clarity, if you invest in the first BEST, being BEST - 001:

1. your investment will only give rise to an interest in the relevant Target Asset held by BEST - 001;
2. the Trustee will calculate the value and entitlements of those Units, including for the purposes of determining the issue price and withdrawal price of Units and the entitlement to income and capital (including on winding up) solely with reference to the value and performance of the Target Assets held by BEST - 001, income, costs and expenses of BEST - 001 and no other BEST; and,
3. the performance of BOT and/ or other BESTs shall have no impact on the value and entitlements of units pertaining to BEST - 001.

Each BEST will be governed by both this Information Memorandum (IM) which will provide the general governance information in respect of each BEST and a Supplementary Information Memorandum (SuppIM) which will provide the specific investment details of the BEST and the specific details of the Target Asset in which the BEST will invest.