ARM Asset Backed liquidators disclose sale information to bondholders

By Caroline Salls

Pittsburgh, March 10 - ARM Asset Backed Securities SA's provisional liquidators disclosed information on an asset purchase agreement after a series of discussions with a $68.78 million sale and purchase agreement counterparty regarding various issues, including confidentiality restrictions, according to notice to bondholders from liquidators Mark James Shaw and Malcolm Cohen of BDO LLP.

As a result of the Commission de Surveillance du Secteur Financier declining to regulate ARM in Luxembourg and the subsequent decision of the FSA to freeze funds invested in bond tranches 9 through 11, the liquidators said the company was unable to purchase new policies, meet operating expenses or pay ongoing premiums on the SLS policies it held.

The liquidators said this led to ARM's directors' decision to sell the SLS portfolio.

This sales process was run by the directors with the assistance of a selection committee involving external experts and overseen by supervisory commissioner Jean-Michel Pacaud.

A sale and purchase agreement was signed on Nov. 2, 2012 between ARM Institutional Investors Delaware Trust, ARM Asset Backed Securities, Financial Credit Investment I Ltd. and Financial Credit Investment I Trust D. The supervisory commissioner approved the sale and purchase agreement.

Under the agreement, all SLS policies held by ARM Institutional Investors Delaware Trust as of the purchase agreement date were sold to Financial Credit Investment I Trust D for $68.78 million, which is to be paid in annual installments of $7.23 million on the last business day of each year until 2021.

A total of $3.73 million of installment payments have been made to date, the notice said.

Under the agreement, there is a requirement that all SLS policies legally transfer to Financial Credit Investment I Trust D. Currently, the liquidators said one policy is yet to be assigned to the purchaser.

The provisional liquidators said they are still in talks with the purchaser to resolve the policy transfer issue as soon as possible.

ARM is a securitization vehicle based in Luxembourg.

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