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Security

At Watson AM, we prioritize investor and lender security with a comprehensive suite of guarantees that protect investments across multiple levels:

 

Personal Guarantee from Borrowers
Borrowers are required to provide a personal guarantee. This means the individual borrowing the funds personally commits their own assets as collateral, adding a direct level of assurance that enhances their accountability to meet financial obligations. This guarantee reduces risk for our investors, as the borrower’s assets are on the line, aligning their interests closely with those of Watson AM’s investors

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Mortgage in Property, Land, or Other High-Value Assets
We secure investments by mortgaging carefully selected properties, land, or other high-value assets. This approach gives investors a prioritized, legally binding claim on valuable, appreciating assets. In the unlikely event of default, these assets provide a solid foundation for capital recovery, adding a substantial layer of security. When investing in building or construction projects, our investors are always granted a first-priority mortgage on the land and project.

 

Bank Guarantee
Additionally, our projects are supported by bank guarantees from well-known financial institutions such as Barclays. This provides an institutional level of security, ensuring capital and interest payments are covered even in cases of default. With the involvement of a reputable bank, investors benefit from enhanced trust, transparency, and an additional layer of reliability in the investment process.

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Due Diligence for Project Approval

1. Initial Project Assessment

  • ​Objective: Confirm alignment with investment goals, risk tolerance, and compliance requirements.
    Steps:

    • Conduct a comprehensive review of the project’s business model, financial forecasts, and potential returns.

    • Assess initial risks, including market, operational, and financial risks.

    • Confirm that the borrower or project sponsor provides a bank guarantee (e.g., from HSBC) to secure loans and interest payments.

3. CP (Condition Precedent) List Verification

Objective: Ensure that all critical preconditions for lending are fulfilled before funds are disbursed.

Steps:

  • Work with legal teams to develop a detailed CP list covering requirements like signed contracts, bank guarantees, insurance, and project permits.

  • Obtain confirmation from legal advisors that each CP is met before approving the loan.

5. Security Package Verification

Objective: Safeguard investor funds through a structured security package tailored to project risk.
Steps:

  • Design a security package with a combination of liens, asset pledges, and guarantees, based on the borrower’s asset profile.

    • Engage Danish and Swiss lawyers to validate the enforceability of all security instruments under local laws.

    • Register security agreements with local authorities as needed to ensure enforceability.

7. Compliance and Regulatory Review

Objective: Ensure that all regulatory and compliance requirements are fully met.
Steps:

  • Verify that the project complies with Danish and Swiss financial regulations.

    • Ensure that the project adheres to anti-money laundering (AML) and “Know Your Customer” (KYC) protocols.

    • Confirm that all documentation and processes align with Watson AM’s compliance standards.

2. Legal Due Diligence

  • Objective: Verify compliance with legal standards, confirm borrower’s financial and legal standing, and identify any legal risks.
    Steps:

    • Engage Danish and Swiss lawyers to conduct a thorough background check on the borrower, project sponsors, and related entities.

    • Check for any legal or regulatory issues affecting the borrower or project assets.

    • Validate the legal structure to ensure protection for Watson AM and its investors under Danish and Swiss law.

4. Financial & Collateral Review

Objective: Confirm the borrower’s financial health and ensure collateral security for the loan.
Steps:

  • Review financial statements, cash flow projections, and any relevant fiscal documentation.

    • Secure collateral in the form of assets, mortgages, or other security packages, validated through legal advisors.

    • Confirm that collateral meets the standards set by Watson AM and secures the full value of the loan.

6. Notarial Registration

Objective: Legally register and validate all documents related to the transaction.
Steps:

  • Use a notary to formalize the loan agreement, collateral documents, and any other critical contracts

  • Ensure that all records are notarized and stored according to regulatory standards to facilitate legal recourse if necessary.

  • Maintain a secure record of notarized documents accessible to Watson AM and investors as needed.

8. Final Approval and Documentation

Objective: Obtain formal authorization from Watson AM and ensure all documentation is in place.
Steps:

  • Present the project, due diligence findings, and security package to the approval committee.

    • Obtain signatures from all relevant parties, with final documentation verified and archived.

    • Issue a final report to investors, summarizing due diligence findings, security measures, and expected returns.

9. Ongoing Monitoring

Objective: Continuously assess project performance and risk management.
Steps:

  • Schedule regular check-ins with the borrower for project updates and financial reporting.

    • Engage legal and financial advisors as needed for ongoing assessments.

    • Monitor compliance with the loan terms and trigger enforcement if conditions are breached.

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