BNP PARIBAS THE ROYAL BANK OF SCOTLAND CREDIT SUISSE FIRST BOSTON

Transcription

1 OFFERING CIRCULAR DATED 16 OCTOBER 2001 CELTIC RESIDENTIAL IRISH MORTGAGE SECURITISATION NO. 7 PLC (incorporated in Ireland with limited liability under registered number ) E615,800,000 Class A Mortgage Backed Floating Rate Notes due 2033 E34,200,000 Class B Mortgage Backed Floating Rate Notes due 2033 Issue Price: 100 per cent Application has been made to the Financial Services Authority in its capacity as the competent authority for listing in the United Kingdom (the U.K. Listing Authority, which term shall include any successor thereto) and to The Irish Stock Exchange Limited (the Irish Stock Exchange, which term shall include any successor thereto) for E615,800,000 Class A Mortgage Backed Floating Rate Notes due 2033 (the Class A Notes ) and E34,200,000 Class B Mortgage Backed Floating Rate Notes due 2033 (the Class B Notes and, together with the Class A Notes, the Notes ) to be issued by Celtic Residential Irish Mortgage Securitisation No. 7 PLC (the Issuer ) to be admitted to the Official Lists of the U.K. Listing Authority and the Irish Stock Exchange. A separate application has been made to London Stock Exchange plc (the London Stock Exchange, which term shall include any successor thereto) for the Notes to be admitted to trading on the London Stock Exchange s market for listed securities. Copies of this offering document (including the Appendix), which comprise approved listing particulars with regard to the Issuer and the Notes in accordance with the listing rules made under Part IV of the Financial Services Act 1986 of the United Kingdom (the Financial Services Act ) and the requirements of the Irish European Communities (Stock Exchange) Regulations, 1984 (as amended) (the Regulations ) have been delivered to the Registrar of Companies in England and Wales for registration in accordance with Section 149 of the Financial Services Act and to the Registrar of Companies in Ireland in accordance with the Regulations. The Notes of each class will initially be represented by a temporary global note in bearer form (each a Temporary Global Note ), without coupons or talons, which will be deposited with Deutsche Bank AG London as common depositary (the Common Depositary ) for Euroclear Bank S.A./N.V., as operator of the Euroclear System ( Euroclear ) and Clearstream Banking, société anonyme ( Clearstream, Luxembourg ) on 22 October 2001 (or such later date as may be agreed between the Issuer and BNP PARIBAS (the Arranger ), the Closing Date ). Each Temporary Global Note will be exchangeable not earlier than 40 days after the Closing Date (and upon certification of non-us beneficial ownership) for interests in a permanent global note representing the Notes of the relevant class (each a Permanent Global Note and, together with each Temporary Global Note, the Global Notes ), each in bearer form without coupons or talons attached, which will also be deposited with the Common Depositary. Save in certain limited circumstances, Notes in definitive form will not be issued in exchange for the Global Notes. Interest on the Notes will accrue from the Closing Date and will be payable monthly in arrear on the 18th day of each calendar month, subject to adjustment for non-business Days (each an Interest Payment Date ), commencing in November The Notes will bear interest at an annual rate equal to the European Interbank Offered Rate ( EURIBOR ) for one month deposits in euro plus, in each case, a margin which will differ for each class of Notes. The margins applicable to each class of Notes, and the periods for which such margins apply, will be as set out below: Class A Notes: 0.26 per cent. per annum up to and including the Interest Payment Date falling in October 2008 and thereafter a margin of 0.52 per cent. per annum. Class B Notes: 0.65 per cent. per annum up to and including the Interest Payment Date falling in October 2008 and thereafter a margin of 1.30 per cent. per annum. The Notes will mature on the Interest Payment Date falling in October 2033 unless previously redeemed. The Notes will be subject to mandatory partial redemption, special redemption and optional redemption in whole before such date in the specific circumstances, and subject to the conditions, described in the terms and conditions of the Notes (the Conditions ) set out below. The Notes will all be constituted by the same trust deed and share in the same security but the Class A Notes will rank in priority to the Class B Notes in point of payment of interest and principal on enforcement of the security. The Class A Notes will rank pari passu and rateably without preference or priority among themselves on enforcement of the security. If any withholding tax is applicable to the Notes, payments of interest on and principal of the Notes will be made subject to such withholding tax, without the Issuer being obliged to pay additional amounts as a consequence. The Notes will be obligations of the Issuer only and will not be guaranteed by, or be the responsibility of, any other person. The Notes will not be obligations of, and will not be guaranteed by, the Note Trustee, the Security Trustee, the Arranger, the Managers, the GIC Provider, the Swap Counterparty, the Servicer, the Agent Bank, the Paying Agents (each as referred to herein), First Active plc ( First Active, in any capacity) or any company in the same group of companies as, or affiliated to, First Active. The net issue proceeds of the Notes will be used by the Issuer to purchase the Mortgages (as defined below) and the related security from First Active. It is expected that the Class A Notes will, when issued, be assigned an AAA rating by Fitch Ratings Ltd ( Fitch ) and an Aaa rating by Moody s Investors Service Limited ( Moody s and together with Fitch the Rating Agencies ). It is expected that the Class B Notes will, when issued, be assigned an A rating by Fitch and an A2 rating by Moody s. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. Particular attention is drawn to the section herein entitled Special Considerations below. BNP PARIBAS ABN AMRO JPMORGAN RABOBANK INTERNATIONAL Arranger BNP PARIBAS Joint Lead Managers Co-managers THE ROYAL BANK OF SCOTLAND CREDIT SUISSE FIRST BOSTON LEHMAN BROTHERS

2 The Issuer accepts responsibility for the information contained in this document (including the Appendix). To the best of the knowledge and belief of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information. The Issuer accepts responsibility accordingly. First Active has provided the description under the heading First Active plc ; First Active has, however, not been involved in the preparation of, and does not accept responsibility for, this document as a whole. BNP PARIBAS has provided the description under the heading The Swap Counterparty ; BNP PARIBAS does not accept responsibility for this document as a whole. No person is authorised in connection with the issue and sale of the Notes to give any information or to make any representation not contained in this document and any such information or representation not contained herein must not be relied upon as having been authorised by the Issuer, First Active, the Arranger or the Managers (as defined in Subscription and Sale below). Neither the delivery of this document nor any offer, sale or solicitation made in connection with the offering of the Notes shall, under any circumstances, constitute a representation or create any implication that there has been no change in the affairs of the Issuer or First Active or the information contained herein since the date hereof or that the information contained herein is correct at any time subsequent to the date hereof. The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act ), and may not be offered, sold or delivered within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Notes are also subject to United States tax law requirements. Other than the approval of this document as listing particulars in accordance with the listing rules made under Part IV of the Financial Services Act and the requirements of the Regulations and the delivery of copies of this document to the Registrar of Companies in England and Wales for registration in accordance with Section 149 of the Financial Services Act and to the Registrar of Companies in Ireland for registration in accordance with the Regulations, no action has been or will be taken to permit a public offering of the Notes or the distribution of this document in any jurisdiction where action for that purpose is required. The distribution of this document and the offering of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this document (or any part hereof) comes are required by the Issuer and the Managers to inform themselves about, and to observe, any such restrictions. For a description of certain further restrictions on offers and sales of Notes and distribution of this document, see Subscription and Sale below. Neither this document nor any part hereof constitutes an offer of or an invitation by, or on behalf of, the Issuer or the Managers to subscribe for or purchase any of the Notes and neither this document, nor any part hereof, may be used for or in connection with an offer to, or solicitation by, any person in any jurisdiction or in any circumstances in which such offer or solicitation is not authorised or is unlawful. References in this document to E and euro are to the lawful currency of the member states of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community, as amended by the Treaty on European Union, and to IR are to the national currency unit of Ireland (other than the euro unit), which is legal tender in Ireland. IN CONNECTION WITH THE DISTRIBUTION OF THE NOTES, THE ARRANGER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILISE OR MAINTAIN THE MARKET PRICE AT A LEVEL WHICH MIGHT NOT OTHERWISE PREVAIL. SUCH STABILISING SHALL BE IN COMPLIANCE WITH ALL RELEVANT LAWS AND REGULATIONS AND MAY BE DISCONTINUED AT ANY TIME. 2

3 TABLE OF CONTENTS SUMMARY INFORMATION SPECIAL CONSIDERATIONS CREDIT STRUCTURE THE ISSUER ACCOUNTANTS REPORT USE OF PROCEEDS FIRST ACTIVE PLC THE SWAP COUNTERPARTY THE MORTGAGES MORTGAGE MANAGEMENT EXPECTED AVERAGE LIFE OF THE CLASS A NOTES AND THE CLASS B NOTES AND ASSUMPTIONS TERMS AND CONDITIONS OF THE NOTES GLOBAL NOTES TAXATION SUBSCRIPTION AND SALE GENERAL INFORMATION APPENDIX APPLICATION FORM INDEX OF DEFINED TERMS

4 SUMMARY INFORMATION The information set out below is a summary of the principal features of the issue of the Notes. This summary should be read in conjunction with, and is qualified in its entirety by, the more detailed information presented elsewhere in this document. The Parties The Issuer The Originator The Servicer The Note Trustee and the Security Trustee Celtic Residential Irish Mortgage Securitisation No. 7 PLC is a public limited company incorporated in Ireland with registered number The issued share capital of the Issuer comprises 40,000 fully paid up ordinary shares of E1, all of which are held by Rargo Limited and the nominees of Rargo Limited, which in turn is owned by GRE Trust Company (Ireland) Limited (in such capacity, the Share Trustee ) and its nominee on discretionary trust for certain charitable institutions. First Active, whose principal place of business is at First Active House, Central Park, Leopardstown, Dublin 18, Ireland. First Active (in such capacity, the Servicer ) will manage and service the Mortgages. If the Servicer s appointment is terminated pursuant to the Mortgage Management and Agency Agreement (as defined below), a substitute servicer (the Substitute Servicer ) approved by the Rating Agencies (as defined below) and the Security Trustee will perform such services. The Note Trustee will be Bankers Trustee Company Limited, whose registered office is Winchester House, 1 Great Winchester Street, London EC2N 2DB. The Note Trustee will be appointed pursuant to a trust deed (the Trust Deed ) to be entered into on the Closing Date between the Issuer and the Note Trustee to represent the interests of the holders of the Notes. The Security Trustee will be Bankers Trustee Company Limited, whose registered office is Winchester House, 1 Great Winchester Street, London EC2N 2DB. The Security Trustee will hold the benefit of the security granted under the Deed of Charge (as defined below) on behalf of the Secured Parties (as defined below) and will be entitled to enforce the security granted in its favour under the Deed of Charge. The GIC Provider The Swap Counterparty On the Closing Date, The Governor and Company of the Bank of Ireland (the parent of a group of subsidiary companies (the Bank of Ireland Group ) operating in the financial services sector, the Bank of Ireland Group being one of the largest financial services groups in Ireland) acting through its branch at Westland Row, Dublin 2, Ireland (the GIC Provider ) will provide the Issuer with a bank account (the GIC Account ) pursuant to the terms of a guaranteed investment contract (the GIC ) to be entered into on the Closing Date between the Issuer, the Security Trustee and the GIC Provider and further described below for the deposit of all collections and other moneys from time to time received by the Issuer in respect of the Mortgages. See further Credit Structure Cash Collection Arrangements below. The swap counterparty on the Closing Date will be BNP PARIBAS (the Swap Counterparty ) acting through its London branch at 10 Harewood Avenue, London NW1 6AA. The Swap Counterparty will provide the Issuer with the benefit of a basis risk swap pursuant to the terms of an interest rate exchange agreement and a confirmation to be entered into on the Closing Date between the Issuer and the Swap Counterparty (the Swap Agreement ). 4

5 The Agent Bank and the Principal Paying Agent The Agent Bank and the Principal Paying Agent under an agency agreement (the Agency Agreement ) to be entered into by the Issuer on the Closing Date will be Deutsche Bank AG London of Winchester House, 1 Great Winchester Street, London EC2N 2DB. 5

6 Terms and Conditions of the Notes Status, form and denomination Each class of Notes will be constituted by the Trust Deed and each class of Notes will be secured by the same security. The Class A Notes will rank pari passu and rateably without preference or priority in point of payment of interest and principal on enforcement of security. The Class A Notes will rank in priority to the Class B Notes in point of payment of interest and principal on enforcement of the security. The Trust Deed contains provisions requiring the Note Trustee to have regard to the interests of the holders for the time being of the Class A Notes (the Class A Noteholders ) and the holders for the time being of the Class B Notes (the Class B Noteholders and, together with the Class A Noteholders, the Noteholders ) as if they formed a single class, but, where there is, in the Note Trustee s opinion, a conflict between such interests, the Trust Deed requires the Note Trustee to have regard, as between the holders for the time being of the Class A Notes and the Class B Notes, to the interests of the Class A Noteholders. The Trust Deed contains provisions limiting the powers of the Class B Noteholders, inter alia, to pass any Extraordinary Resolution (as described in Condition 11 below) or to request or direct the Note Trustee to take any action which may affect the interests of the Class A Noteholders. The Trust Deed contains provisions to the effect that the Class A Noteholders or, if none of the Class A Notes remain outstanding, the Class B Noteholders, shall have the power to remove any Note Trustee or Security Trustee and shall have the power to approve any appointment of a new Note Trustee or Security Trustee as proposed by the Issuer. The Notes will be obligations of the Issuer only and will not be guaranteed by, or be the responsibility of, any person other than the Issuer. In particular, the Notes will not be obligations or responsibilities of, or guaranteed by, the Note Trustee, the Security Trustee, the Arranger, the Managers, the GIC Provider, the Swap Counterparty, the Servicer, the Agent Bank, the Paying Agents, First Active or any company in the same group of companies as, or affiliated to, First Active. The Class A Notes and the Class B Notes, which will be in denominations of E100,000, subject in each case to pro rata redemption of Notes of the same class, will initially be represented by a single Temporary Global Note for that class. Interests in each Temporary Global Note will, upon certification as to non-us beneficial ownership, be exchangeable, subject as provided under Global Notes below, for interests in a Permanent Global Note for that class upon the Exchange Date (as defined under Global Notes below). The Permanent Global Notes of each class will not be exchangeable for definitive Notes of that class save in certain limited circumstances (see further Global Notes below). Interest Interest on the Notes is payable by reference to successive interest periods (each an Interest Period ) and will be payable in arrear in euro and in respect of the Principal Amount Outstanding (as defined in Condition 5(f)) of each class of Notes on the 18th day of each calendar month, (unless such day is not a day on which commercial banks and foreign exchange markets settle payments in London and Dublin and is not a TARGET Settlement Date (as defined in the Condition 4(d)(ii)) (a Business Day ), in which case interest will be payable on the next such day) (each such day being an Interest Payment Date ). The first Interest Period will commence on (and include) the Closing Date and end on (but exclude) the Interest Payment Date falling in November Each successive Interest Period will commence on (and include) an Interest Payment Date and end on (but exclude) the next succeeding Interest Payment Date. Interest on the Class A Notes will be payable at an annual rate equal to the sum of EURIBOR for one month deposits in euro plus in the case of the Class A Notes a margin of 0.26 per cent. per annum up to and including the Interest Payment Date falling in October 2008 and, thereafter, a margin of 0.52 per cent. per annum. Interest on the Class B Notes will be payable at an annual rate equal to EURIBOR for one month deposits in euro plus a margin of 0.65 per cent. per annum up to and including the Interest Payment Date falling in October 2008 and, thereafter, a margin of 1.30 per cent. per annum, subject as further described below. The holders of the Class B Notes will only be entitled to receive payments of interest on the Class B Notes on any Interest Payment Date to the extent that the Issuer has funds available for the purpose and in accordance with the Priority of Payments (as defined below). Such payment will only be made after making payment on such Interest Payment Date of any amounts ranking in priority to payments of interest on the Class B Notes (including, inter alia, all amounts of interest payable on the relevant Interest Payment Date in respect of the Class A Notes and, in 6

7 certain circumstances, the replenishing of principal losses incurred in respect of any defaulted Mortgage after completion of enforcement procedures in respect thereof), all as provided in the Conditions, the Deed of Charge and the Mortgage Management and Agency Agreement and as described below in Summary Information Priority of Payments. Any interest on any Class B Notes not paid on an Interest Payment Date will itself accrue interest and will be paid to the holder of such Class B Notes on subsequent Interest Payment Dates to the extent the Issuer has funds available for such purpose, after paying in full on such Interest Payment Date all payments ranking in priority thereto as aforesaid. Withholding tax Payments of interest and principal will be made subject to any applicable withholding or deduction for or on account of any tax and neither the Issuer nor the Paying Agents will be obliged to pay any additional amounts as a consequence. Final redemption Unless previously redeemed in full, each class of Notes will mature at its Principal Amount Outstanding on the Interest Payment Date falling in October 2033 together with accrued but unpaid interest thereon. Mandatory redemption Prior to enforcement of the security for the Notes, the Class A Notes will, and the Class B Notes may, be subject to mandatory redemption in part on each Interest Payment Date in an amount equal to the Class A Available Redemption Funds and the Class A/B Available Redemption Funds, respectively (each as defined in Condition 5(b)). In certain circumstances further described in Condition 5(b), the Class B Notes will be redeemed at the same time as, and pro rata with, the Class A Notes once the ratio of the Principal Amount Outstanding of the Class A Notes to Class B Notes is equal to or less than 12:1 and may, in certain very limited circumstances, be the only class of Notes redeemed whilst the Class A Notes are still outstanding PROVIDED THAT the aggregate Principal Amount Outstanding of the Class B Notes shall not, so long as the Class A Notes remain outstanding, be reduced to below 50 per cent. of the Principal Amount Outstanding of the Class B Notes as at the Closing Date. Optional redemption Each class of Notes will, in accordance with Condition 5(c), be subject to redemption in whole but not in part at their Principal Amount Outstanding plus accrued but unpaid interest thereon up to and including the date of repayment, at the option of the Issuer, on giving not more than 60 nor less than 30 days notice to the Note Trustee and to the Noteholders pursuant to Condition 5: (i) (ii) on any Interest Payment Date from and including the Interest Payment Date falling in October 2008; or on any Interest Payment Date on which the aggregate Principal Amount Outstanding of all the Notes then outstanding is less than E65 million, provided that the Issuer has, prior to giving such notice, satisfied the Note Trustee that it will have the necessary funds to discharge any amounts required under the Deed of Charge to be paid on that Interest Payment Date in priority to each class of Notes then outstanding. Special redemption On the Closing Date, the Issuer will apply E488,635,491 of the net proceeds of the Notes to purchase from First Active mortgages having a principal amount outstanding, as of 30 September 2001 (the Cut-Off Date ) of E489,410,325 (the New Mortgages ). The balance of the net proceeds of the Notes, E160,589,669 will be deposited into the GIC Account. On the Completion Date, subject to the satisfaction of certain conditions, the Issuer will apply such moneys credited to the GIC Account to purchase from First Active mortgages owned by First Active and which are financed and secured pursuant to the terms of the Loan Facility (as defined in The Mortgages, below) having a principal amount outstanding, as of the Cut-Off Date, of E160,589,669 (the Refinanced Mortgages ). If, by the Completion Date, the Refinanced Mortgages have not been sold by First Active to the Issuer pursuant to a mortgage sale agreement to be dated the Closing Date between First Active, the Issuer and the Security Trustee (the Mortgage Sale Agreement ) (because, for example, the conditions to completion of such sale and purchase have not been satisfied), an early mandatory redemption payment in an aggregate principal amount of 7

8 E160,589,669 (the Special Redemption Amount ) shall be applied, pro rata, to each class of Notes and a special redemption (a Special Redemption ) will occur two Business Days thereafter (the Special Redemption Date ). The Special Redemption Amount in respect of each class of Notes shall be, in respect of each Note within that Class, a pro rata amount of the Principal Amount Outstanding of that Note together (to the extent that the Issuer has funds available for such purpose) with accrued but unpaid interest from, and including, the Closing Date up to, but excluding, the Special Redemption Date. The Issuer shall fund the Special Redemption Amount in full on the Special Redemption Date out of the moneys standing at that time to the credit of the GIC Account. Amounts of accrued but unpaid interest shall be funded from interest earned on the GIC Account and from the Issuer s other sources of income. Redemption for taxation or other reasons In the event of certain tax changes affecting the Notes and/or the Swap Agreement, including in the event that the Issuer is or will be obliged to make any withholding or deduction from payments in respect of the Notes and/or in respect of the Swap Agreement (although the Issuer will not have any obligation to pay additional amounts in respect of any such withholding or deduction), the Issuer may (but is not obliged to) redeem all (but not some only) of the Notes at their Principal Amount Outstanding together with accrued but unpaid interest thereon up to and including the date of repayment, subject to and in accordance with the provisions set out in Condition 5(e). No class of Notes may be redeemed under such circumstances unless the other classes of Notes (or such of them as are then outstanding) are also redeemed in full at the same time. Ratings It is expected that the Class A Notes, when issued, will be assigned an AAA rating by Fitch and an Aaa rating by Moody s. It is expected that the Class B Notes, when issued, will be assigned an A rating by Fitch and A2 rating by Moody s. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the Rating Agencies. Any reference to matters approved by the Rating Agencies refers to confirmation that the proposed action would not adversely affect or cause the withdrawal of the then current rating of the Notes. Listing Application has been made to the U.K. Listing Authority and to the Irish Stock Exchange for the Notes to be admitted to the Official Lists of the U.K. Listing Authority and the Irish Stock Exchange respectively. Application has also been made to the London Stock Exchange for the Notes to be admitted for trading on the London Stock Exchange s market for listed securities. Purchases The Issuer is not permitted to purchase Notes. Security and application of funds Security for the Notes Pursuant to a deed of charge (the Deed of Charge ) to be entered into on the Closing Date by, inter alios, the Issuer, the Security Trustee, the Principal Paying Agent and any other paying agent (together with the Principal Paying Agent, the Paying Agents ), the Notes, together with other obligations of the Issuer, will be secured, inter alia, by a first ranking fixed charge over the Mortgages and their related security and all other interests sold or agreed to be sold to the Issuer pursuant to the Mortgage Sale Agreement, an assignment by way of security of the Issuer s rights and benefits under certain agreements relating to the transaction and a first ranking fixed charge over the Issuer s interest in the GIC Account (which security may be by way of floating charge and thus rank behind claims of certain creditors preferred by law). In addition, subject as mentioned above, the Notes will be secured by a first ranking floating charge over all of the property, assets and undertakings of the Issuer not subject to any fixed charge (together with the other security interests described above, the Security ). The Class A Notes and the Class B Notes will be constituted by the Trust Deed and will share the Security but, in the event of the Security being enforced, the Class A Notes will rank in priority to the Class B Notes. The Class A Notes will rank pari passu and rateably without preference or priority among themselves upon enforcement of the security. 8

9 Priority of Payments Revenue Prior to the enforcement of the security under the Deed of Charge, amounts standing to the credit of the GIC Account (as referred to below) and amounts due to be paid to the Issuer and credited to the GIC Account, and which in each case will be recorded in the Revenue Ledger (as referred to below) in accordance with the provisions of the Deed of Charge and the Mortgage Management and Agency Agreement, will comprise, as at each Calculation Date (being the fourth Business Day prior to an Interest Payment Date) the sum of: (i) (ii) (iii) (iv) (v) (vi) (vii) all payments (other than amounts representing principal) from time to time received by the Issuer into the GIC Account from First Active and which First Active has received into its Collection Accounts (as defined below) from Borrowers (as defined below) in respect of the Mortgages (but which will exclude all amounts of Pre-Closing Interest and Pre-Completion Interest (as defined below) (if any) and payments by Borrowers (as defined in The Mortgages, below) in respect of insurance premiums and early redemption fees, in respect of which sums First Active is entitled to be paid) (see further Credit Structure Cash Collection Arrangements, below); all other payments (other than amounts representing principal) received by the Issuer into the GIC Account pursuant to the terms of the Mortgage Sale Agreement and the Mortgage Management and Agency Agreement; the proceeds of any drawing from the Liquidity Reserve (as defined below); the proceeds of any drawing from the Reserve Fund (as defined below); interest received on the GIC Account and amounts received from the proceeds of certain eligible investments made by, or on behalf of, the Issuer; any amount by which the credit balance of the Reserve Fund exceeds the Reserve Fund Required Amount (as defined below); and any payments to be received by the Issuer pursuant to the Swap Agreement on the next succeeding Interest Payment Date, (such amount being hereafter referred to as Available Revenue Funds ) which will be applied by the Issuer on the next succeeding Interest Payment Date as follows (in each case only if and to the extent that payments or provisions of a higher order of priority have been made in full): (i) (ii) (iii) first, in or towards satisfaction, pro rata, according to the respective amounts thereof, of (a) the fees or other remuneration and indemnity payments (if any) payable to the Security Trustee and any costs, charges, liabilities and expenses incurred by it under the provisions of the Deed of Charge and any other Relevant Document (as defined below) to which it is a party, together with interest thereon as provided for therein, and (b) the fees or other remuneration and indemnity payments (if any) payable to the Note Trustee and any costs, charges, liabilities and expenses incurred by it under the terms of the Conditions, the Trust Deed and the Deed of Charge, together with interest thereon as provided for therein; secondly, in or towards satisfaction, pro rata, according to the respective amounts thereof, of (a) the fees and expenses (other than any incurred on issue of the Notes (if any)) of the Rating Agencies, any legal advisers, accountants and auditors and the corporate services provider appointed by the Issuer, in each case together with value added tax (if applicable) thereon, (b) the fees, expenses and any indemnity payments due to the Paying Agents and the Agent Bank incurred under the provisions of the Agency Agreement and the Deed of Charge, in each case together with value added tax (if applicable) thereon, and (c) all amounts due and payable to the Irish Revenue Commissioners in respect of the Issuer s liability to corporation tax (insofar as payment cannot be satisfied out of profits); thirdly, to pay (except to the extent already paid to any Substitute Servicer since the preceding Interest Payment Date) to any Substitute Servicer the monthly management fee (inclusive of value added tax), payable pursuant to the Mortgage Management and Agency Agreement and the Deed of Charge, such fee being up to a maximum of the product of 0.50 per cent. (or such greater percentage as may be agreed between such Substitute Servicer and the Security Trustee upon confirmation from the Rating Agencies that the then current rating of the Notes would not be adversely affected or withdrawn) of the aggregate principal balance of the Mortgages on the Calculation Date immediately preceding the relevant Interest 9

10 Payment Date divided by twelve, together with all and any costs and expenses incurred by the Substitute Servicer during such Calculation Period (together with VAT thereon, if applicable), subject to and in accordance with the provisions of the Mortgage Management and Agency Agreement and the Deed of Charge; (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) fourthly, in or towards satisfaction, pro rata, according to the respective amounts thereof, of (a) all amounts of interest due and payable in respect of the Class A Notes and the coupons appertaining thereto (the Class A Coupons ) (if any) and (b) all amounts due and payable to the Swap Counterparty under the Swap Agreement; fifthly, if a Portfolio Trigger Event (as defined below) has occurred and is continuing, to the Reserve Fund, if required, until the credit balance on the Reserve Fund Ledger (as referred to herein) has reached the Reserve Fund Required Amount; sixthly, if a Portfolio Trigger Event has occurred and is continuing, in or towards the reduction of amounts debited to the Principal Deficiency Ledger (as defined below), until the debit balance of the Principal Deficiency Ledger has reached an amount equal to the sum of the amount standing to the credit of the Reserve Fund Ledger plus the Principal Amount Outstanding at such time of the Class B Notes less the sum of the aggregate principal balance outstanding of all Mortgages which are 24 months or more in arrears multiplied by 30 per cent. (provided that, following the application of such amount, there shall not be a credit balance on the Principal Deficiency Ledger); seventhly, in or towards satisfaction, pro rata, according to the respective amounts thereof, of any further amounts by way of fees due and payable to the Substitute Servicer for the immediately preceding Calculation Period to the extent not paid under item (iii) above; eighthly, in or towards satisfaction of all amounts of interest due and payable in respect of the Class B Notes and the coupons appertaining thereto (the Class B Coupons ) (if any); ninthly, to pay to the Servicer the monthly management fee (inclusive of value added tax thereon) payable under the Mortgage Management and Agency Agreement, such fee being equal to the product of 0.15 per cent. of the aggregate principal balance of the Mortgages on the Calculation Date immediately preceding the relevant Interest Payment Date divided by twelve, together with all costs and expenses incurred by the Servicer during such Calculation Period (together with VAT thereon, if applicable), subject to and in accordance with the terms of the Mortgage Management and Agency Agreement and the Deed of Charge; tenthly, if a Portfolio Trigger Event has either not occurred, or has occurred but is not continuing, to the Reserve Fund (if required), until the credit balance of the Reserve Fund Ledger has reached the Reserve Fund Required Amount; eleventhly, to the extent not reduced to zero under item (vi) above, in or towards the reduction of amounts debited to the Principal Deficiency Ledger, until the debit balance of the Principal Deficiency Ledger has reached zero; twelfthly, in or towards paying commission to First Active for the sale of the Mortgages; thirteenthly, in or towards payment to First Active of all amounts of accrued but unpaid interest under the Subordinated Loan (as defined below); and fourteenthly, the surplus (if any) to the Issuer, up to an amount not to exceed 0.01 per cent. of the Available Revenue Funds on any Interest Payment Date, (together, the Priority of Payments ). For the purposes of the foregoing: A Calculation Period means the period from (and including) a Calculation Date (or, in respect of the first such period, the Closing Date) to (but excluding) the next succeeding Calculation Date. A Portfolio Trigger Event will occur if, at any time, the sum of the aggregate principal balance outstanding of all Mortgages which are 24 months or more in arrears multiplied by 30 per cent. plus the debit balance on the Principal Deficiency Ledger is equal to or greater than the sum of the amount standing to the credit of the Reserve Fund Ledger plus the Principal Amount Outstanding at such time of the Class B Notes. 10

11 See further the section entitled Credit Structure for a description of the Reserve Fund, the Reserve Fund Required Amount, the Liquidity Reserve (as referred to below) and the Principal Deficiency Ledger. Payments may be made out of the Revenue Ledger on the GIC Account other than on an Interest Payment Date only to pay amounts of the type described in items (ii)(c) which are due on such date or any sums due or overdue to third parties not otherwise included in items (i) to (xiv) and which are incurred in the ordinary course of the Issuer s business or to pay to First Active any Pre-Completion Interest, insurance premiums and early redemption fees paid by Borrowers, to which First Active is entitled under the Mortgage Sale Agreement. Principal Prior to the enforcement of the security under the Deed of Charge, amounts standing to the credit of the GIC Account including payments and pre-payments on the Mortgages and which will be recorded in a principal ledger (the Principal Ledger ) in accordance with the provisions of the Deed of Charge and the Mortgage Management and Agency Agreement will comprise, as at each Calculation Date, the sum of: (i) (ii) (iii) (iv) the credit balance of the Principal Ledger as at the opening of business on such Calculation Date; the amount (if any) to be applied in reducing the Principal Deficiency Ledger on the next succeeding Interest Payment Date pursuant to items (vi) or (xi) (as applicable) of the Priority of Payments; the amount (if any) of the Liquidity Reserve as at such Calculation Date which is in excess of the Liquidity Reserve Limit; and the amount (if any) in the Retained Principal Ledger as defined in the section The Mortgages as at such Calculation Date which is in excess of the Retained Principal Required Amount, less the amount (if any) required to be utilised on the next succeeding Interest Payment Date: (i) (ii) first, in establishing or replenishing the Liquidity Reserve to the Liquidity Reserve Limit; and secondly, in establishing or replenishing the Retained Principal Ledger to the Retained Principal Required Amount, (such amount being hereafter referred to as Available Redemption Funds and from which the Class A Available Redemption Funds and the Class B Available Redemption Funds will be calculated by the Servicer on the relevant Calculation Date), and will be applied by the Issuer on the next succeeding Interest Payment Date in or towards repaying principal due or overdue on the Class A Notes and thereafter, upon the occurrence of certain events further described in Condition 5(b), repaying principal due or overdue on the Class A Notes and the Class B Notes, respectively, pro rata. If the Class A Notes are thereby all redeemed, Available Redemption Funds will thereafter be applied on each Interest Payment Date in redeeming, in whole or in part, the Class B Notes. Further, provided that the Class B Notes are thereby all redeemed, Available Redemption Funds will thereafter be applied on each Interest Payment Date in repaying principal outstanding and unpaid on the Subordinated Loan under the terms of the Subordinated Loan Agreement. The Issuer has the right to redeem in full all of the Notes at their Principal Amount Outstanding together with accrued but unpaid interest on any Interest Payment Date from and including the Interest Payment Date falling in October 2008 pursuant to Condition 5(c). Payments may be made out of the Principal Ledger within the GIC Account to purchase Further Advances (as defined in The Mortgages, below) made by First Active on the Mortgages and to purchase Mortgage Master Advances (as defined in The Mortgages, below) from First Active. If on any day there is an insufficient amount standing to the credit of the Principal Ledger to purchase Further Advances and/or Mortgage Master Advances from First Active, the shortfall shall be debited to the Retained Principal Ledger. See further the section The Mortgages for a description of the Retained Principal Ledger and the Retained Principal Required Amount. The order of priority of payments for the Notes upon enforcement of the Security is described in Condition 2. There is no intention to accumulate any long-term surpluses in the Issuer. 11

12 The Mortgages All of the Mortgages to be purchased by the Issuer from First Active will consist of variable or fixed rate mortgage loans that meet certain lending criteria. See further the section entitled The Mortgages for a description of the mortgage products to be purchased by the Issuer on the Closing Date, in respect of the New Mortgages, and the Completion Date, in respect of the Refinanced Mortgages. All of the Mortgages were originated by First Active and are secured by way of first fixed legal mortgages over residential properties situated in Ireland. Each of the Mortgages is governed by Irish law. First Active may agree to convert Mortgages into other mortgage products. If such conversion does not satisfy certain conditions (as set out in The Mortgages Conversion of Mortgages ) and the Rating Agencies have notified the Servicer that following any such conversion the then current rating applicable to the Notes will be downgraded, the Issuer shall be obliged as soon as practicable to sell to a third party all of its right, title and interest in such Mortgage for a price no less than the outstanding principal balance of such Mortgage together with any arrears and accrued but unpaid interest thereon. The Security Trustee, the Issuer and the Servicer will have the benefit of Warranties (as defined in The Mortgages Warranties and Repurchase below) given by First Active in relation to the Mortgages, including warranties in relation to the lending criteria applied in advancing the Mortgages. The Mortgage Pool from time to time will comprise (i) the New Mortgages, (ii) from the Completion Date, the Refinanced Mortgages (subject to the satisfaction of certain conditions), (iii) any Converted Mortgages (as defined in The Mortgages below), (iv) any Mortgage Master Advances and (v) any Mortgages which are the subject of Further Advances, but will exclude Mortgages which have been repaid in full or which have been repurchased by First Active following a breach of a Warranty. Structure Diagram The structure diagram below is an indicative summary of the principal features of the transaction. The structure diagram must be read in conjunction with, and is qualified in its entirety by, the detailed information presented elsewhere in this Offering Circular. Mortgage Pool Class A and Class B Notes Note Trustee First Active PLC (as Originator and Servicer) Principal and Interest on Mortgages Issue Proceeds ( ) Sale of Mortgages Principal and Interest on Notes Issue Proceeds ( ) Celtic Residential Irish Mortgage Securitisation No. 7 PLC Issue of Notes Security Security Trustee Basis Swap Agreement Administration Fee Subordinated Loan Administration Services GIC 12

13 SPECIAL CONSIDERATIONS The following is a summary of certain aspects of the issue of the Notes about which prospective Noteholders should be aware. The summary is not intended to be exhaustive and prospective Noteholders should read the detailed information set out in the section entitled Credit Structure and elsewhere in this document. The Issuer s ability to meet its obligations under the Notes The ability of the Issuer to meet its obligations in full in respect of payments of interest and principal on the Notes, including following the occurrence of any event of default by the Issuer (an Event of Default as set out in Condition 9), will depend upon and is limited to (i) the receipt by it of funds, through the Servicer, from Borrowers in respect of their Mortgages, (ii) the receipt by it of interest from the GIC Account or otherwise from certain eligible investments and (iii) the receipt by it of funds from the Swap Counterparty under the Swap Agreement. In addition, the Issuer will have available to it the Liquidity Reserve and the Reserve Fund for the purposes specified in Credit Structure below. On enforcement of the security under the Deed of Charge, the obligation of the Issuer to repay moneys due and owing to the Noteholders will depend upon whether the Mortgages can be realised to obtain an amount sufficient to effect repayment thereof. It should be noted that there is no recognised secondary market in Ireland for the sale of mortgage portfolios. From the net proceeds of the issue of the Notes, E160,589,669 will be held in the GIC Account in the name of the Issuer and which will be recorded in the Refinanced Mortgages Ledger (as defined below). The rights of the Issuer in respect of such moneys will be assigned by way of first fixed security in favour of the Security Trustee. If, on the Completion Date, the Refinanced Mortgages are not sold by First Active to the Issuer, the Special Redemption of the Notes will occur, primarily utilising the sums standing to the credit of the GIC Account. Even though Noteholders will, in these circumstances, receive the Special Redemption Amount, there may nevertheless be a loss of investment opportunity to Noteholders. Collectability of Loans The collectability of amounts due under the Mortgages is subject to credit, liquidity and interest rate risks and will generally fluctuate in response to, among other things, market interest rates, general economic conditions, the financial standing of Borrowers and other similar factors. Other factors (which may not affect real estate values) may have an impact on the ability of Borrowers to repay Mortgages. Loss of earnings, illness, divorce and other similar factors may lead to an increase in delinquencies and bankruptcy filings by Borrowers and could ultimately have an adverse impact on the ability of Borrowers to repay Mortgages. In addition, the ability of the Issuer to dispose of a property at a price sufficient to repay the amounts outstanding under a Mortgage will depend upon the availability of buyers for the property. Risks of Losses Associated with Declining Property Values The Security for the Notes consists of, inter alia, the Issuer s interest in the Mortgages. This security may be affected by, among other things, a decline in property values. No assurance can be given that values of the properties have remained or will remain at the level at which they were on the dates of origination of the related Mortgages. If the residential property market in Ireland should experience an overall decline in property values, such a decline could, in certain circumstances, result in the value of the security created by the Mortgages being significantly reduced and, ultimately, may result in losses to the Noteholders if the security is required to be enforced. Geographic Concentration of Mortgaged Properties Certain geographic regions in Ireland will from time to time experience weaker regional economic conditions and housing markets than will other regions and, consequently, will experience higher rates of loss and delinquency on mortgage loans generally. There are concentrations of properties within certain regional areas which may present risk considerations in addition to those generally present for similar mortgage loan asset backed securities without such concentrations. As to the geographic distribution of the Mortgage Pool see Distribution Mortgages by Region Table 5, below. 13

14 Risk of Losses Associated with Endowment Mortgages Approximately 4.63 per cent. of the Provisional Mortgage Pool (as defined in The Mortgages below) by value constitute Endowment Mortgages (as defined in The Mortgages below). Endowment Mortgages are originated with a requirement that the Borrower pay scheduled interest payments and premiums into an endowment policy. There is no scheduled amortisation of principal. Consequently, upon the maturity of an Endowment Mortgage, the Borrower will be required to make a bullet payment that will represent the entirety of the Principal Balance (as referred to herein) of the relevant Mortgage. The ability of such a borrower to repay an Endowment Mortgage at maturity will depend on the performance of the related endowment policy, with the Borrower s ability to meet any shortfall depending on such Borrower s ability to obtain funds from another source, the financial condition of the Borrower, tax laws and general economic conditions at the time. Yield and Payment Considerations The yield to maturity of the Notes of each class will depend on, inter alia, the amount and timing of payment of principal (including Special Redemption of the Notes (if any), prepayments, sale proceeds arising on enforcement of a Mortgage and repurchases by First Active due to, inter alia, breaches of the Warranties under the Mortgage Sale Agreement) on the Mortgages and the price paid by the Noteholders. Such yield may be adversely affected by a higher or lower than anticipated rate of prepayments on the Mortgages or a Special Redemption of the Notes, (if any). Prepayments may result in connection with refinancings, sales of properties by Borrowers voluntarily or as a result of enforcement proceedings under the relevant Mortgages, as well as the receipt of proceeds from buildings insurance and life insurance policies. In addition, repurchases of Mortgages required to be made under the Mortgage Sale Agreement will have the same effect as a prepayment of such Mortgages or by a Special Redemption of the Notes (if any). The rate of prepayment of Mortgages cannot be predicted and is influenced by a wide variety of economic, social and other factors, including prevailing mortgage market interest rates, the availability of alternative financing, local and regional economic conditions and homeowner mobility. Therefore, no assurance can be given as to the level of prepayments that the Mortgages will experience. See further Expected Average Life of the Class A Notes and the Class B Notes and Assumptions, below. Enforcement Action Upon enforcement of the Security for the Notes, the Security Trustee will have recourse only to the Mortgages and their related security and any other assets of the Issuer then in existence. The Issuer and the Security Trustee will have no recourse to First Active, other than as provided in the Mortgage Sale Agreement in respect of a breach of a Warranty (see Searches, Investigations and Warranties below). There can be no assurance that the Mortgages and their Related Security will realise an amount sufficient to redeem all of the Notes in full. The Issuer and/or the Security Trustee may not be able to sell the Mortgages on appropriate terms should either of them be required to do so. The terms on which the Security for the Notes will be held will provide that, upon enforcement, payments will rank in the order of priority set out in Condition 2(b)(ii) of the Notes. In the event that the Security for the Notes is enforced, no amounts will be paid to the Class B Noteholders until all amounts owing to the Class A Noteholders have been paid in full. Arrears Mortgages The Mortgages to be purchased by the Issuer with the proceeds of the issue of the Notes and comprising part of the security for the Notes will include certain Mortgages in respect of which payments due from Borrowers as at 31 August 2001 were in arrears (as to which see Characteristics of the Provisional Mortgage Pool Table 10 ). The Refinanced Mortgages were originated between five and seven years ago, and will, as a result, include a proportionately higher amount of Arrears Mortgages (as defined below) than the New Mortgages. However, over the same period of time (1996 to the end of the second quarter of 2001), the average price of a house has increased from E87,202 to E187,784 and the average price of a second-hand house has increased from E85,629 to E213,030 (Source Irish Department of the Environment). Converted Mortgages In certain circumstances First Active may agree to requests by Borrowers to convert their Mortgages into other types of mortgage product that do not form part of the New Mortgages or the Refinanced Mortgages. In this 14