Investors Central – Redeemable Preference Shares (Unlisted)

By Jason Fittler

Investors Central is an entity established to raise capital to fund the expansion of Finance One an automotive lending business specializing in lending to individuals with poor credit histories.

Investors Central is issuing Redeemable Preference Shares to raise $25 million, primarily to fund the lending requirements of Finance One.

Redeemable Preference Securities are debt securities, the company pays investors interest on the amount they invest and on the maturity date the principal investment amount is repaid in full.

Securities are issued with a $1.00 face value, with a minimum initial investment amount of $25,000. Several investment terms are available.

Interest is paid monthly in arrears, the interest rate ranges from 11% to 16% depending on the time invested and the amount invested.

Amounts payable to Redeemable Preference Share holders are paid in preference to ordinary shareholders, but behind the $11,141,902 in Unsecured Notes already on issue (Unsecured Notes are a debt instruments under which Investors Central is liable to make monthly interest repayments and repay the principal on maturity – notes mature at various dates ranging from 31/12/13 to 30/06/13, after which Redeemable Preference Shares will rank first in the capital structure)

These Preference Shares are unlisted, as such there exists no secondary market to buy or sell your shares. Investments should be considered non-liquid for the fixed term of the investment.

Investors must give notice at least 20 days before maturity if they wish to redeem their investment otherwise the funds will be rolled into a new issue of Preference Shares for the same Fixed Investment Term.

Investment in Redeemable Preference Shares is subject to certain risks, investors should be aware of these risks as they might affect the value of any investment in the Redeemable Preference Shares:

Finance One operates a lending business, which loans money to borrowers looking to purchase a motor vehicle. Raised funds will be used to write loans at a margin to the rate at which investor central is able to borrow funds from investors. If there is no demand for loans written by Finance One the company will be unable to generate revenue to fund interest payments to investors. Factors, which may contribute to a lack of demand, include poor economic conditions and competitive pricing pressures.

As Finance One specializes in lending to individuals with poor credit histories these individuals may be regarded as being higher risk of defaulting on their loans. In most cases the value of the motor vehicle will provide a variable degree of security in the event of default. Regardless if a significant number of borrowers default on their repayments Finance One may not be in a position to make payments to Investors Central, affecting their ability to make principal and interest repayments to Preference Shareholders.

Investors Central and Finance One have operated as a consolidated entity since 1 July 2009 and historical financial statements indicate annual net operating profit after tax has increased annually since.

Financial Forecasts released by the company make assumptions, which could be considered reasonable and prudent.

The Investors Central Redeemable Preference Shares offer investors a considerable amount of fixed income over a set period.

We believe these Preference Shares represent an attractive investment opportunity for investors who can understand and tolerate the risks involved.

The monthly cut off date for applications is the 25th day of each month. New Preference Shares are issued on the first business day of each month.

For more information about Investors Central – Redeemable Preference Shares please contact us on 07 4771 4577.