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ELF Incentive Program FAQ

The ELF Incentive Program has been placed on hold as ECT is currently in Voluntary Suspension pending an announcement.

The ELF Incentive Program will re-open following ECT’s return to official quotation on the ASX and will be extended a further seven days. 

Frequently Asked Questions

Q: When does the ELF Incentive offer open and when does it close?

A: The ELF Incentive Offer period opens on 18 February 2019 and closes at 5 pm (AEST) on 22 March 2019.

Please refer to the following announcements from ECT (ASX:ECT) for further details on the ELF Incentive Offer, including the use of repayment funds raised.

All ELF borrowers will receive an individual e-mail detailing their offer.

 

Q: When does the Oversubscription close?

A: The Oversubscription also closes at 5 pm (AEST) on 22 March 2019.

 

Q: How long do I have to repay my ELF loan to receive an interest waiver?

A: All full ELF loan repayments achieved during the Incentive Offer and Oversubscription period, including normal loan repayments, must be received by 5 pm (AEST) on 22 March 2019.

 

Q: What does a 30% discount to one-third of my ELF loan balance mean?

A: This can be illustrated by an example:

ELF Loan Balance (as at 31/1/19) $10,000
Loan amount available for Incentive Offer (33.33%) $3,333
Max Incentive Offer available $3,333 x (1-0.3)
Equals $2,333

This means that a $2,333 loan repayment will reduce your ELF Loan balance by $3,333 (a discount of $1,000 during the Incentive Offer period).

The 30% discount applies to payments made prior to 5pm (AEST) on 1 March 2019.

 

Q: What does a 17% discount to one third of my ELF loan balance mean?

A: This can be illustrated by an example:

ELF Loan Balance (as at 31/1/19) $10,000
Loan amount available for Incentive Offer (33.33%) $3,333
Max Incentive Offer available $3,333 x (1-0.17)
Equals $2,766

This means that a $2,766 loan repayment will reduce your ELF Loan balance by $3,333 (a discount of $567 during the Incentive Offer period after 5 pm (AEST) on 1 March 2019 and before 5 pm (AEST) on 22 March 2019.

 

Q: Do I have to pay my interest for the current period to 30 January 2019?

A: All ELF Borrowers are expected to have paid or capitalised their loan interest in the normal manner for the period 31/7/18 – 30/1/19. Final ELF loan balances, including interest accrued during the current 6-month period, are measured after the cut-off date for the current interest cycle (i.e. on 15 Feb 2019), with Loan balances being calculated effective 31 January 2019.

 

Q: How do I know if I have been successful in receiving Oversubscriptions? How much am I entitled to?

A: Oversubscriptions will be allocated on a ‘first in’ basis. That is, allocations will be fulfilled in the order in which applications are received. The maximum you can apply for is limited by your remaining ELF loan balance. The Oversubscription amount must be remitted to ECT Finance by the same dates as the Incentive Offer, being 5 pm (AEST) on 1 March 2019 to receive a 30% discount, or between 2 March 2019 and by 5 pm (AEST) on 22 March 2019 to receive a 17% discount. ECT Finance reserves the right to scale back any Oversubscriptions. Any Oversubscription amounts remitted to ECT Finance, and subsequently not allocated in full (e.g. due to high demand), will be refunded within 3 business days after the close of the Incentive Offer period.

 

Q: How do I accept the ELF Incentive Offer or Oversubscriptions?

A: To accept the ELF Incentive Offer, please visit the ECTF website and apply online.

You must also remit funds to ECT Finance by the close date of the ELF Incentive Offer (1 March 2019 for 30% discount, 22 March 2019 for 17% discount). The same conditions apply for acceptance of any Oversubscriptions. 

 

Q: Can I accept my Incentive Offer application by post?

A: ECT Finance prefers to communicate via e-mail and via the ECT Finance website.

However, there are currently a small number of ELF Borrowers without access to e-mail.

Please contact us on 03 9849 6203 if you have not received an email with your application details or are unable to apply online.

 

Q: Can I pay down my ELF Loan entirely? When do I get my shares? Where do they get sent?

A: Should you elect to repay your ELF Loan (as at 31 January 2019) in full by taking advantage of the Incentive Offer, via the Oversubscription, and/or paying down your ELF Loan in the normal way (or any combination thereof), you may expect to have access to the Secured Shares within 5 business days of receipt of your repayments by ECT Finance (ECTF). ECTF will endeavour to confirm receipt of funds via e-mail within 48 hours. All full ELF loan repayments during the Incentive Offer and Oversubscription period will not accrue interest beyond 31 January 2019.

ELF Secured Shares will be released to an SRN in your name. If you instruct us to do so in advance of repayment, we can send to your nominated Holder Identification Number (HIN). Please e-mail ECT Finance instructions if you would like to do this.

 

Q: Who do I contact if I have any questions on the Incentive Offer or Oversubscription?

A: Please contact ECT Finance by e-mail for any queries on the Incentive Offer info@ectfinance.com.au

 

Q: What are the tax implications of the Incentive Offer?

A: Please note that there may be individual tax implications associated with the Incentive Offer. You may wish to seek professional tax advice relating to the Incentive Offer.

 

Q: I have been paying the interest in ‘6-month arrears’. Why are the ELF loan holders that have elected to ‘capitalise’ their interest, paying nothing to reduce their loan balance, being offered the same (30%) discount? 

A: When we structured the ELF Incentive Program, we did consider the effect of unfairly rewarding those that were capitalising their interest versus those that had paid their interest on an ongoing basis.

ELF ‘arrears borrowers’ generally enjoy interest rates 200bp lower than 6-month ‘capitalised borrowers’ (for LSR > 85%). In addition, 6-month ‘capitalised borrowers’ pay a management fee of 2% p.a. (1% per 6-months). As such, full pay-out figures are higher for 6-month ‘capitalised borrowers’.

ECT Finance has the discretion to guarantee oversubscriptions and invites borrowers to get in touch should they have any further queries info@ectfinance.com.au

 

Examples

Example 1 – Partial ELF Loan Repayment

Borrower A:

  • Has an ELF loan balance of $10,000 (including accrued interest and fees, as at 31 January 2019) secured against 1,000,000 ECT shares;
  • Is on the “6-month Capitalised” option with an interest rate of 11.64% p.a. and an LSR of 111% as at 31 January 2019;
  • Elects to take up the incentive offer of a 30% discount on one-third of their current ELF Loan balance. One-third of the loan balance is ~$3,333 (as at 31 January 2019);
  • Is eligible to receive­ a 30% discount off ~$3,333, reducing the payable amount by $1,000 to ~$2,333;
  • Pays ~$2,333 before 1 March 2019, locking in the 30% discount;
  • The new ELF loan balance, after the discount and cash payment, is reduced by ~$3,333, from $10,000 to ~$6,667, despite only having paid ~$2,333;
  • Borrower A’s LSR has now also reduced from 111% to ~74%;
  • As a result, Borrower A’s interest rate has also fallen by 300 basis points (i.e. 3%) from 11.64% to 8.64% (effective from 31 January 2019) – see Interest Payment Matrix above.

 

Example 2 – Full ELF Loan Repayment (via oversubscription application)

Borrower B:

  • Has an ELF loan balance of $10,000 (including accrued interest and fees, as at 31 January 2019) secured against 1,000,000 ECT shares;
  • Is on the “6-month Capitalised” option with an interest rate of 11.64% p.a. and an LSR of 111% as at 31 January 2019;
  • Elects to take up the incentive offer of 30% discount on one-third of their current ELF loan balance. One-third of the loan balance is ~$3,333 as at 31 January 2019;
  • Is eligible to receive a 30% discount off ~$3,333, reducing the payable amount by $1,000 to $2,333;
  • Pays $2,333 before 1 March 2019, locking in the 30% discount;
  • The new ELF loan balance, after the discount and cash payment, is reduced by ~$3,333, from $10,000 to ~$6,667, despite only having paid ~$2,333;
  • Borrower B also applied for the oversubscription on the remaining ~$6,667;
  • Borrower B is granted the full oversubscription allocation and pays a further ~$4,667 (i.e. 30% or ~$2,000 discount off the remaining $6,667), which repays their ELF Loan in full;
  • ECTF releases 1,000,000 ECT shares to Borrower B within 5 business days of receipt of funds.

 

Example 3 – Partial ELF Loan Repayment (via full payment of the eligible amount and a further partial loan payment via the oversubscription application)

Borrower C:

  • Has an ELF loan balance of $10,000 (including accrued interest and fees, as at 31 January 2019) secured against 1,000,000 ECT shares;
  • Is on the “6-month Capitalised” option with an interest rate of 11.64% p.a. and an LSR of 111% as at 31 January 2019;
  • Elects to take up the incentive offer of 30% discount on one-third of their current ELF loan balance. One-third of the loan balance is ~$3,333 as at 31 January 2019;
  • Is eligible to receive a 30% discount off ~$3,333, reducing the payable amount by $10,000 to ~$2,333;
  • Pays ~$2,333 before 1 March 2019, locking in the 30% discount;
  • Borrower C also applied for an oversubscription of $1,000 of the remaining ~$6,667;
  • Borrower C is granted the requested oversubscription allocation and pays a further $1,000, receiving an additional discount of $428.57 ($1,000/(1-0.30)).
  • The new ELF loan balance, after the discounts and cash payment, is reduced by ~$4,762, from $10,000 to ~$5,238, despite only having paid ~$3,333.

Reference Table

The below table provides a quick reference guide for the incentive calculation.

30%

17%

Loan balance 31/1/19

One third of loan

Discount Amount payable Revised loan balance Discount Amount payable

Revised loan balance

 5,000

 1,667  500  1,167  3,333  283  1,383  3,333

 10,000

 3,333  1,000  2,333  6,667  567  2,767

 6,667

 15,000  5,000  1,500  3,500  10,000  850  4,150

 10,000

 20,000

 6,667  2,000  4,667  13,333  1,133  5,533  13,333
 25,000  8,333  2,500  5,833  16,667  1,417  6,917

 16,667

 50,000

 16,667  5,000  11,667  33,333  2,833  13,833  33,333
 100,000  33,333  10,000  23,333  66,667  5,667  27,667

 66,667

 150,000

 50,000  15,000  35,000  100,000  8,500  41,500  100,000
 200,000  66,667  20,000  46,667  133,333  11,333  55,333

 133,333

 250,000

 83,333  25,000  58,333  166,667  14,167  69,167  166,667
 300,000  100,000  30,000  70,000  200,000  17,000  83,000

 200,000

 350,000

 116,667  35,000  81,667  233,333  19,833  96,833  233,333
 400,000  133,333  40,000  93,333  266,667  22,667  110,667

 266,667

 500,000

 166,667  50,000  116,667  333,333  28,333  138,333  333,333
 600,000  200,000  60,000  140,000  400,000  34,000  166,000

 400,000

 700,000

 233,333  70,000  163,333  466,667  39,667  193,667  466,667
 800,000  266,667  80,000  186,667  533,333  45,333  221,333

 533,333

 900,000

 300,000  90,000  210,000  600,000  51,000  249,000  600,000
 1,000,000  333,333  100,000  233,333  666,667  56,667  276,667

 666,667