Complex capital market transactions may on occasion have the
need for an independent party to act as a Security Trustee to
ensure impartiality. Security Trusteeship is a contractual
arrangement between borrower(s), lender(s) and the Security Trustee
whereby the Security Trustee holds security for the benefit of
others; such security may be a debenture over assets, undertakings
of a company or entity or charge over property etc. This
arrangement is usually executed via the Security Trust Deed.
Transactions in which a Security Trustee might be relevant vary
in nature and could include capital market transactions, syndicated
loans or debt for equity swaps. Often used in secured loan issues,
the role of the Security Trustee is to represent the interests of
the noteholders/investors by assuming the benefit of the security
(including the issuers obligations to pay) on behalf of the
noteholders as a group or generally represent/enforce their
interests.
