Invest in a Credit-Linked Security linked to Hertz Corporation, returning 7.25% p.a.
The information below is a summary of this investment opportunity. Investors must obtain and read the ‘Product Disclosure Document’ for this security dated 13 February 2024 (PDS), along with the ‘C2 Accumulator – Deferred Purchase Agreement – Master PDS’ dated 21 October 2022 (Master PDS) before investing in this opportunity.
Overview
The Hertz Corporation (Hertz) is a wholly owned subsidiary of Hertz Global Holdings Inc. Hertz is one of the largest worldwide vehicle rental companies and operates brands including Hertz, Dollar and Thrifty throughout North America, Europe, the Caribbean, Latin America, Africa, the Middle East, Asia, Australia and New Zealand. Additionally, Hertz operates the Firefly vehicle rental brand and the Hertz 24/7 car sharing business in international markets. It also sells vehicles through Hertz Car Sales.
The security provides Investors with the opportunity to make an AUD investment, yet gain exposure to returns based on the credit risk of Hertz (an opportunity usually available only to investors wishing to make a market-sized investment (USD 500,000) denominated in USD). All currency exposure has been fully hedged by the Issuer.
By investing in this security, investors will receive regular income in the form of coupons and 100% of the face value of your investment on maturity – all in AUD.
Note Disclosure Documents
- C2 Accumulator – Deferred Purchase Agreement – Master PDS (October 2022);
- C2 Market Linked Products Series 2024/1 – Hertz Corporation PDS
Marketing Documentation
Key Terms
| Issuer | C2 Specialist Investment Pty Ltd ACN 622 433 032 |
|---|---|
| Custodian | C2 Nominees Pty Ltd (ACN 624 366 981 |
| Arranger | C2 Financial Services Pty Ltd ACN 621 428 635 AFSL 502171 |
| Coupon | 7.25%pa (fixed), paid quarterly |
| Maturity Date | 5 July 2028 |
| Issue Price | $100 |
| Minimum Investment | $10,000 |
| ABE Code | C2HF072528 |
Risks
This is an overview of the main risks associated with this investment. Further (and more complete) details of the main risks associated with this security are set out in the PDS.
- Capital invested is at risk –There is no capital protection or guarantee by the Australian government or any other party (including the Issuer). Therefore, if the Issuer or Hertz default, you may not receive the amount you have invested on maturity.
- Credit exposures to Hertz– The return on this security incorporates a ‘credit transaction’ where the return is linked to the prices, levels, rates or contingencies related to a four year credit linked note (maturing on 5 July 2028) which is linked to a Hertz bond, issued in USD and paying 5.00%pa, maturing on 1 December 2029 (or an equivalent successor) (Hertz Bond). If Hertz suffers a ‘credit event’ (eg bankruptcy, failure to make a payment in respect of the Hertz Bond etc) (Credit Event), you may lose some or all of your investment.
- Credit Exposure to Issuer and any ‘Hedge Counterparty’ –
- In addition to the credit risks associated with Hertz (as outlined above), investors also bear credit risk with respect to the Issuer and, indirectly, to any entity with whom the Issuer has entered into a contract to hedge its obligations under the security (Hedge Counterparty).
- Historical Performance –Historical performance of Hertz or the Issuer are not an indication of their future performance.
- Liquidity risk – If you want to sell your securities before the Maturity Date, there may be a delay, or you may not be able to do so, or may not be able to do so within your desired timeframe.
- Extended Maturity- The Maturity Date may be extended in the case of a Credit Event or extension by the Issuer. If the Maturity Date is extended as a result of any Credit Event, coupons will not accrue beyond the original scheduled Maturity Date.
- Early Maturity -In certain circumstances the Issuer may elect to redeem these securities early (eg the Issuer reasonably determines that it may not be able to rely on the hedging contracts it has entered into with the Hedge Counterparty, you become bankrupt or insolvent etc);
- Custodian risk – The Custodian is a related party of the Issuer. There is a risk that the Custodian may be unable to perform its obligations under the Custody Deed and investors may not receive certain money when such amounts become due to them. However, the Custodian is a special purpose vehicle set up to act as Custodian for these types of securities and other structured products and has no other obligations.