SECURIZATION ACTIVITIES
RISK SECURITIZATION
A company can securitize risks of all kinds, such as those linked to external political, commercial, climatic events, or exchange risks, rendering of legal decisions, etc.
In order to guarantee the sustainability of the company, it drafts with Lake Wood a securitization agreement under which Lake Wood undertakes through an underlying compartment, created for this purpose, to assume alone, jointly or partially, the risks linked to the realization or not of the above events.
The company is thus relieved of the potentially negative consequences of taking this risk into account in its activity. It transfers the risk and the corresponding potential charge to a compartment of Lake Wood, which undertakes to reimburse it, in whole or in part, for the negative effects linked to the occurrence of the event (underlying the risk).
The risk is thus transferred to Lake Wood, (compartment) which can obtain financing from external investors willing to bear the risk, that is to say, to discount its occurrence. Investors receive securities in return.
If the risk materializes, the compartment pays the company compensation based on the terms of the contract. If it does not materialize, the compartment retains the premium paid by the company, thus constituting a result to be distributed among the investors.
This ability to assume the widest risks linked to an activity carried out by a third party enables many cases to be securitized with Lake Wood: the occurrence of a political risk for exporters, the occurrence of climatic risks (sun, rain, drought, hail, snow, cold, hot), problems related to the successful completion of any type of contract, the occurrence of a choice made by a third party, a legislative change, the expiry of a contract, a condition in an agreement, a death, a bankruptcy, the outcome of an amicable or legal dispute, variations in the price of raw materials or exchange parity, etc.
SECURIZATION OF REAL ESTATE
A natural or legal person may transfer to a compartment of Lake Wood the ownership of an immovable he owns or of a right relating to this immovable, and if necessary reserve the right to occupy it for example until his death or for a specified period. The right to the building is assigned to the compartment in return for the issuance of (registered) shares or bearer bonds.
The beneficiary may transfer or sell these securities to other holders and the latter will collect the income relating to their rights such as rents or capital gains on disposals. This technique allows a group of investors to acquire an important building via Lake Wood without having to assume the investment alone. It also facilitates the transmission of a immovable to his estate.
SECURIZATION OF RECEIVABLES
When a company has receivables due from third parties, the risk of non-recovery due to past due dates or to the debtors themselves will render the receivables non-refundable or only partially. A reduction in value or a provision must then be recorded on the company's balance sheet in order to comply with accounting rules. Then it is possible to securitize with Lake Wood these receivables by transferring their property with the risks of non-recovery, to a compartment of Lake Wood. The compartment of Lake Wood acquires the receivables at an agreed price taking into account a price reduction based on the risk of loss of receivables.
The company thus separated from its risk assets by receiving a price, certainly lower than its nominal value, but allowing it to free up liquidity which remained blocked. The compartment of Lake Wood, in its capacity as owner of the receivables, will receive all reimbursements as well as interest and accessories
SECURIZATION OF AN ACTIVITY
A natural or legal person holds rights over an industrial or service activity, for example collection of commissions, recurring commercial activity, rental of goods, etc.
The natural or legal person can securitize this activity by transferring to a compartment within Lake Wood the ownership of future revenues, which will result from it. External investors can finance the acquisition of the business and receive securities in return. The income generated by the activity, after deduction of charges, will be distributed to the holders of the securities issued within the framework of securitization.