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VANCOUVER, BC, September 11, 2015 /24-7PressRelease/ -- Project Financing has long been a sour point for many international firms and professionals, with mundane applications and extensive due diligence. Enter Churchill & Sagan. Churchill & Sagan has long been a veteran in Securities Lending, being featured in The Securities Lending Times in 2013 for various transactions. In this market they noticed that a great majority of clients were attempting to utilize their product for unconventional means, including project financing.
"In securities lending or leasing, the main market historically has been hedge funds or institutional managers that are trying to avoid margin calls. This was our bread and butter earlier in our firm years." said Dave Hodgson President and New Application Specialist.
"Over time we noticed that we were really starting to get some creative clients that were attempting to use our product to trigger a facility for use in a project financing venture. Its something that really appealed to us to grow our product."
However Churchill & Sagan noticed an issue right away. All though the characteristic all these clients shared was creativity, many did not have banking relations with existing facilities or ways to monetize the securities. Thats where the Project Financing Program was born, which essentially is a one stop shop for clients seeking project financing, with lower rates and terms they might achieve by themselves. As Churchill & Sagan puts it, they feel as they can compete with any structure out there and try to keep rates as low as possible, by leveraging their own collateral for clients benefits.
Clients first engage Churchill & Sagan for a securities loan or lease. If interested, Churchill & Sagan will inform the client. Moving a few steps ahead clients will place the required Bank Fee into a Churchill & Sagan nominated escrow account, with a basic escrow agreement that holds the funds for up to 20 days.
During this period Churchill & Sagan will provide evidence that securities are ready to be loaned for the clients benefit, which will allow them to lock in a facility against the collateral. In simplest form, Churchill & Sagan has 20 days to provide both the collateral and the credit facility against that collateral, to the benefit of the client. If at any time during the 20 day period the client chooses another avenue, funds are immediately returned, nor are they at risk.
Using a $50,000,000.00 securities loan, the Churchill & Sagan total rate would be 5.75%, with 2.75 placed into escrow. Adding in facilities cost of roughly 1% to 2%, clients can keep cost below 8% in that bracket to borrow 95% of the loaned securities.
The program is not without hurdles as Hodgson explains, "We do get a lot of unqualified clients asking questions, or realistically looking for free money. For example clients will often say they do not have funds for escrow, or will not place funds in escrow. My personal favourite is the client that demands the funds are held with a specific attorney. We even get clients that want us to loan the collateral for free, setup a facility then get our fees from that facility."
"We take the position that we are providing a multi-million dollar securities loan; we need protection. We want to see that the clients have the Bank Fee, and we want to see that it can be moved freely to an escrow firm that we trust and cannot be manipulated."
"On top of that, and probably most important is that we cannot get a credit facility setup without this. The facility provider due diligence is mostly based on that Bank Fee sitting freely in an escrow account. If its not, then they won't engage. They want to work with real clients, this is not free money in any way."
All though the program calls for a 20 day hold in escrow, Churchill & Sagan states the program can be completed in a quickly as a week. Stating the speed is always reliant on the client, and how quickly they can provide proper paper work.
Churchill & Sagan is a Panama City and Vancouver based international boutique securities lending firm. We have been featured in major new publications such as the Wall Street Journal and ABC News.
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