Collateral Enhancement (CAPP™)

M·CAM’s Certified Asset Purchase Price (or CAPP™) product is the first, regulated collateral intangible asset product meeting U.S., Asian, and European banking standards and compliant with religious ethical finance requirements. Launched in 1999, this program uniquely links innovation and intangible assets to the global credit market. Using M·CAM’s proprietary intangible asset underwriting platform, all intangible assets held by a borrower are identified. Those with established cash-flows and those which could be transferred to support identifiable cash-flows in third party market applications are aggregated into a special purpose entity in the existing collateral pool. For example, intangible assets that can be included are: patents, copyrights, granted rights, trademarks, exploration rights, air rights, wind rights, source code, long term service agreements, executory contracts, and licenses. Once the acceptable collateral pool has been identified, a “springing” forward purchase contract (or “put” secured by a credit acceptable back-stop) is offered to the bank giving it a time-limited, irrevocable right to sell the intangible asset collateral to M·CAM upon foreclosure. With the addition of the irrevocable, credit acceptable “put” to the bank’s collateral pool, the targeted loan would move from a “questionable” or tier 3 risk-weighted asset to “performing, high quality” or tier 1 risk-weight. Accordingly, the excess of regulatory capital required to be retained would be released and the bank’s regulatory capital position would improve. For banks, collateral enhancements provide investment-grade regulatory capital relief options without resorting to dilutive equity raises. For companies, collateral enhancements mean that, for the first time, they can use their intangibles as cash-equivalent collateral in banking thereby lowering their cost of capital.