FCC Proudreed Properties 2005 HSBC SG CORPORATE ...

RISK FACTORS
The following is a summary of certain aspects of the Notes about which prospective Noteholders should be
aware. This summary is not intended to be exhaustive and prospective Noteholders should also read the
detailed information set out elsewhere in this Offering Circular and reach their own views prior to making
any investment decision.
1. Risks Relating to the Notes and the Issuer
Liability under the Notes
The Notes will be obligations of the Issuer only. The Notes will not be obligations or responsibilities of,
or guaranteed by, any person or entity other than the Issuer. In particular, the Notes will not be obligations
or responsibilities of, or guaranteed by, any of the Management Company, the Custodian, the Lenders, the
Joint Lead Managers, the Borrowers Account Banks, the Issuer Account Bank, the Cash Manager, the
Paying Agents, the Hedging Providers, the Liquidity Facility Provider, the Property Manager, the FCC
Servicers, the Noteholder Representatives or any of the Borrowers or the Parent Obligors or any of their
respective affiliates. Furthermore, no person other than the Issuer will accept any liability whatsoever to
Noteholders in respect of any failure by the Issuer to pay any amount due under the Notes.
Limited resources of the Issuer
The Issuer has been established as a fonds commun de créances and is not carrying on any business other
than the purchase of the Receivables, the issue of the Units and the Notes and transactions ancillary
thereto. The ability of the Issuer to meet its obligations under the Notes will be principally dependent on
the receipt by it of collections in respect of the Receivables (corresponding to payments made by the
Borrowers under the Commercial Mortgage Loans), the receipt of funds from the Hedging Providers
under the relevant Hedging Agreements and, in the circumstances described in this Offering Circular, the
Liquidity Facility Provider. Other than the foregoing, prior to the enforcement of any Obligor Security,
the Issuer will not have any other significant funds available to it to meet its obligations under the Notes
and in respect of any payment ranking in priority to, or pari passu with, the Notes.
Availability of the Liquidity Facility
If there is a Liquidity Shortfall as determined by the Management Company on any Determination Date,
the Management Company (on behalf of the Issuer) will request a drawdown of funds under the Liquidity
Facility (in accordance with the terms of the Liquidity Facility Agreement). The maximum amount
available to be drawn in aggregate under the Liquidity Facility is u26 million (as reduced in proportion
to reductions in the Principal Amount Outstanding on the Notes), which may not be sufficient at any given
time to meet the Issuer’s payment obligations in full. The Liquidity Facility will only be available to
provide liquidity and will not be a source of credit support for the Notes (please see the section entitled
‘‘Priorities and conflicts of interest in respect of the Notes’’ below). For further details as to the terms of the
Liquidity Facility Agreement, see further the section entitled ‘‘Resources Available to the Borrowers and
the Issuer’’.
Obligor Security
Upon the occurrence of a Loan Event of Default under a Commercial Mortgage Loan and following
enforcement of the relevant Obligor Security, recourse for repayment of the relevant Commercial
Mortgage Loan will be available only in respect of the Secured Properties comprised within the Property
Portfolio of the relevant Borrower Group and the shares of the relevant Borrower owned by the Parent
Obligors, monies within the relevant Borrower Accounts relating to rental income, insurance proceeds
and proceeds of sale (if any) derived from that Property Portfolio (and any interest earned on them) and
rent payable by Occupational Tenants of the Secured Properties to the extent notified of the assignment
thereof.
Any enforcement under the Obligor Security Documents may not result in immediate realisation of the
relevant Obligor Security Assets and a significant delay could be experienced in recovery by the Issuer of,
inter alia, amounts owed under the affected Commercial Mortgage Loan. There can be no assurance that
the Issuer would recover all amounts secured upon enforcement of the Obligor Security and, accordingly,
sufficient funds may not be realised or available to make all required payments to the Issuer and,
accordingly, the Issuer may not have sufficient funds available to make all required payments to the
relevant Noteholders.
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