What are Citi Reset Instalments?

Investing in Citi Reset Instalments is a convenient way of borrowing to invest. There are no intrusive credit checks or complicated loan documents to complete, and no margin calls. Like Citi Instalments the structure involves two separate "instalment" payments (the First Instalment and the Final Instalment) a Loan with a prepaid interest component and a borrowing Fee.

Additionally, the Citi Reset Instalment has a Reset mechanism, which operates to reset the amount of the Loan on each Reset Date. This reset ensures that the level of gearing for each instalment can be maintained, should there be substantial movement in the underlying share price.

The First Instalment
An investor pays a portion of the upfront cost of the Underlying Share to acquire the Citi Reset Instalment and receives a Loan from Citigroup to fund the remaining cost of the Underlying Shares, interest on the Loan and Borrowing Fees. The amount is not fixed until the time of application, and will depend on a number of market variables including the underlying share price, the time remaining to the earlier of the next Reset Date or the Maturity Date, volatility of the Underlying Share price, dividend expectations and prevailing interest rates.

A Holder is entitled to receive all the Dividends (other than Special Dividends), distributions and, depending on their circumstances, available franking credits paid in relation to the Underlying Shares.

For Shareholder Applicants, the First Instalment is the Securities held by the investor that will become the Underlying Shares in respect of the Citi Reset Instalment.

For Rollover Applicants, the First Instalment is the Securities that make up the underlying parcel of the Rollover Instalments that are "rolled" into and will become the Underlying Shares in respect of the Citi Reset Instalments.

The Final Instalment
This is equal to the amount of the Loan, which may change during the term of the investment due to the operation of the reset mechanism on each Reset Date. Investors have the right to pay the Final Instalment at any time until maturity (including on any Reset Date) to complete the purchase of the Underlying Share.

Reset of the Loan
Approximately one month prior to the relevant Reset Date, Citigroup may nominate a New Loan Amount and indicative figures for the New Interest Amounts and New Borrowing Fee. On each Reset Date, Citigroup will reset the amount of the Loan to a level which maintains a similar level of gearing, and to take into account changes in the price of the Underlying Shares, prevailing interest rates and share price volatility. Depending on the amount of the new Loan, Holders may either be:

• entitled to receive a Reset Cashback amount, which will automatically be directed to the subscription for additional Citi Reset Instalments pursuant to the Citi Reset Instalment Reinvestment Plan (or Holders can elect to receive in cash); or
  
• be required to pay the Reset Payment as notified to Holders by Citigroup.

• an easy way to leverage your exposure to shares in leading Australian companies and trusts without the risk of margin calls;
  
  
• benefits of share ownership for a fraction of the upfront cost of the Underlying Shares;
  
  
• receive all ordinary dividends, available franking credits and capital appreciation in respect of the Underlying Shares;
  
  
• pay the Final Instalment at any time prior to maturity and receive the Underlying Shares;
  
  
• enhanced dividend yields and, depending on your circumstances, available franking credits;
  
  
• potential tax benefits (please see the taxation summary in the PDS document);
  
  
• an eligible investment for self-managed super funds (excluding Shareholder Applications);
  
  
• Shareholder Applicants can free up capital for other investments without crystallising capital gains; and
  
  
• a liquid investment that can be traded on ASX.

• Factors Affecting Warrant Value
  
  
• Performance by the Issuer and Guarantor of Obligations
  
  
• Possible Illiquidity of Trading Market
  
  
• General Market Risks
  
  
• Investment Decisions
  
  
• Exercise of Discretion by the Issuer
  
  
• Extraordinary Events
  
  
• Legislative Risks
  
  
• National Guarantee Fund - not a Guarantor in all cases
  
  
• Potential Conflicts of Interest
  
  
• Suspension of Warrant Trading