illustrative example of disclosure of a contractual arrangement that could require p 611827

Illustrative example of disclosure of a contractual arrangement that could require parental support to a consolidated structured entity

The parent company has given a contractual commitment to its subsidiary, SPE Limited, whereby if the assets held as collateral by SPE Limited for its issued loan notes fall below a credit rating of ‘AAA’ then the parent will substitute assets of an equivalent fair value with an ‘AAA’ rating. The maximum fair value of assets to be substituted is £10,000,000. The parent will not suffer a loss on any transaction arising from this commitment but will receive assets with a lower credit rating from those substituted.