January 31,
2002
Cash Loans for Equities/Stock or Stock Loans
Please accept this as our
letter of introduction.
Enclosed is information
regarding the ECLA (Equity Collateralized Loan Arrangement). ECLA creates liquidity while
simultaneously protecting value of equity holdings (providing market downturn
protection). This product is
available to key employees, officers and major shareholders or any shareholder
of publicly traded companies. It provides liquidity while overcoming the barrier
of large block sales. Outright
sales have limited appeal either because of triggering tax events or because of
control restrictions on sales of issues.
Also, the ECLA is a private event unlike selling your securities, which
is a public event. We
safeguard our clients confidentiality. We insulate our clients and
provide liquidity with total financial privacy. If you have any questions please
call.
ECLA is much more than a
loan; it enables you to receive significant liquidity from your stock portfolio
without triggering a taxable event.
Since the stock loan is both non-recourse (no personal financials
required) and non-callable, it provides downside protection in the event the
securities decline in value. Also,
there are no or minimal margin calls, so you have no worries of a cash squeeze
in the event of a market downturn.
No matter what happens to the value of your stocks, you have unlimited
upside potential with no downside risk.
Please Note:
We
can finance shares out of margin account status thereby with a more attractive
rate and term.
Key
Features:
a)
No Margin Maintenance Requirements
In most cases there are no margin maintenance requirements on the
loan.
b) Non-Callable - The loan will not be
called during its term.
c)
Non-Recourse The shares are the
only collateral for the loan. There
is no personal recourse in the event of default. If the securities are worth less than
the value of the original loan and what you owe at maturity, you may walk away
and pay nothing else. You only
surrender your stock to satisfy the loan obligation.
d)
High Loan to Value with Tax-free
Liquidity - We can offer you 40% to 80% LTV, depending on the
securities. Also, no triggered tax
events. This means you can enjoy
the liquidity of your position without selling shares and creating a tax
liability.
e)
Unlimited Upside Potential - Since
you arent selling your position, you retain ownership of your securities. You continue to benefit from your
stocks appreciation.
f)
Market Down Turn Protection - As
there are no margin maintenance requirements, you have no worries of cash
squeeze in the event of a market downturn, no matter what happens to the value
of your stocks.
g) Flexible Terms - The term of the loan
is generally for a one year period with up to four annual extensions.
h)
Very Attractive Low Interest Rate
Prime to Prime + four; Approximately 5% to 9% respectively. In special circumstances sub-Prime based
financing is available.
I) Payment Structure - interest only
payable quarterly.
j)
Fast Closing/Funding the complete
procedure time is from 48 hrs to 2
weeks.
When you want liquidity and
need to take cash out of your security holdings, you are faced with either
selling it or taking a margin loan.
The first causes a taxable event; the second exposes you to the risk of a
margin call. We offer a very
attractive alternative that can produce more cash without the risk.
With Best Regards,
Al Morrison
Sr.
Vice President
Diversified
Financial Group, Inc.
3905
Vincennes Road, Suite 303
Indianapolis,
Indiana 46268
Phone
(317) 471-3575
Fax: (317) 471-3573
Email
address
[EMAIL PROTECTED]
