| Home
About CATD About DCAT Investor Info Shareholders Only Glossary Contact CATD CATD/DCAT Links |
CATD
The Crescent Center
6075 Poplar Avenue
Suite 125
Memphis, TN 38119
(901) 333-8600
About DCAT Dealers Capital Access Trust, Inc. Dealers Capital Access Trust, Inc. ("DCAT") was incorporated in 1992 with a mission similar to that of CATD; to provide Caterpillar dealers with consistent, low cost, short-term financing to fund the acquisition of inventory and other normal business expenses. DCAT issues investment grade commercial paper ("CP") and uses the proceeds solely to fund its loan program. All loans have the same maturity dates as the CP issued to fund them. DCAT borrowers use the proceeds of loans for working capital and occasionally to fund business acquisitions or stock redemptions. Eligibility to
borrow from DCAT: The DCAT program
is open to members of CATD and other entities who sell (or
whose wholly owned subsidiaries sell) equipment supplied by
Caterpillar or Caterpillar Societe Anonyme Responsabilite
Limitee ("CSARL") pursuant to a Caterpillar or CSARL sales and
service agreement. Eligible borrowers who are not CATD
shareholders must pay a facility fee to participate in the DCAT
program. Credit
Enhancement and Approval Letter Process: Caterpillar Financial Services Corporation
("CFSC") provides Credit Enhancement for the DCAT CP
program. CFSC is a
subsidiary of Caterpillar Inc. A potential DCAT borrower must submit a written application for
Approval Letter together with such financial information as
CFSC may request. Credit approval can be sought prior to the
purchase of a CATD share or payment of a facility fee. Loan Agreement
and Program Documents: Once the
application for Approval Letter and the Approved Amount (credit
limit) is approved, a commitment letter is issued setting forth
proposed financial covenants and other requirements for
closing. Closing documents include a loan agreement with DCAT
and, if required by CFSC, a security agreement with CFSC as
collateral agent for DCAT. After the loan documentation (loan agreement, security agreement, intercreditor agreements and other agreements, as required by CFSC) is complete, CFSC issues the Approval Letter to DCAT and the borrower. All Approval Letters expire on June 30, 2010, but may be extended at the discretion of CFSC. Once the Approval Letter is issued, the borrower is eligible to request advances from DCAT. However, the aggregate Face Amount of the borrower's outstanding loans cannot exceed its Approved Amount. The program documents between DCAT and a borrower do not create a committed credit facility. DCAT is not obligated to fund a borrower's loan request and cannot do so unless it can issue CP to fund the request. The financial condition of the borrower is monitored by CFSC on an ongoing basis and periodic (quarterly or more frequently) reporting is required as a conditioning of maintaining the Approval Letter. CP Issuance and Limitations: DCAT issues commercial paper (CP) in order to fund its short-term loan program, and lends the proceeds to its eligible borrowers on a "match-funded" basis. This means the Face Amount, maturity date and discount rate of CP is the same as the aggregate Face Amount, maturity date and discount rate of the loan(s) it funds. (Although the discount rate of the CP and loan(s) are the same, the rate passed through to a borrower is increased by the Add-on. See All-in Rate and Add-on in the Glossary of DCAT Terms). The maturity date of CP (and the loans(s) it is issued to fund) cannot be more than 270 days from the funding date. Generally, the maturity date of the CP and related loan cannot be less than 7 days from the date of funding. In addition, CP (and the loans(s) it is issued to fund) must mature on or before the expiry date of the underlying Approval Letters. The agreements which govern the structure and operation of DCAT limit the maximum amount of CP it can have outstanding at any point in time. The aggregate Face Amount of outstanding DCAT CP cannot exceed the aggregate Face Amount of outstanding DCAT loans. In addition, the Face Amount of outstanding DCAT CP cannot exceed the overall issuance limit placed on the program by CFSC, as set by CFSC from time to time. Currently, CFSC has set the overall issuance limit at $600 million dollars. Issuing and Paying Agent:The issuing and paying agent is responsible for administering the flow of CP funds and loan repayments between CP investors, DCAT and its borrowers. JP Morgan is the issuing and paying agent for the DCAT CP program. Liquidity Support: Liquidity support for the DCAT program is provided by CFSC. CFSC provides a source of liquidity in case new CP cannot be issued to pay the holders of maturing CP. DCAT does not issue any extendible CP. Under the terms of an agreement between DCAT and CFSC (the "Dealer Loan Purchase Agreement" or "DLPA"), CFSC is obligated to purchase any DCAT loan which is not paid at maturity, provided the loan was made to a borrower for which an Approval Letter was in effect. The purchase price is the Face Amount of the loan. This obligation provides both Credit Enhancement for the loans of DCAT and liquidity for the holders of DCAT CP. The obligation of CFSC to purchase the defaulted loan(s) of any borrower is limited to the Approved Amount for such borrower. If CFSC is required to purchase a defaulted loan from DCAT, it will transfer the purchase price to the account of DCAT at JP Morgan. JP Morgan will use the proceeds of the purchase to pay the maturing DCAT CP which was issued to match fund the defaulted loan, and DCAT will assign the loan to CFSC to complete the purchase. Thereafter CFSC may pursue collection against the borrower. Click herefor an overview of DCAT CP Structure and Credit Enhancement. |
