[Summary/Discussion] ConsolFreight Series 2

Hi Everoyne,

We - the ConsolFreight team - are excited to share here with the community our latest pool on Centrifuge Tinlake. We again financed freight invoices for logistics operations. Please note that this pool is already closed, but we will keep you posted on further opportunities to invest with us. Here is the investor summary:

Summary

We are pleased to announce the ConsolFreight Series 2 DROP Token (“CF2DROP”), which represents our second offering to gain exposure to cash flows associated with freight forwarding invoices. Consol Freight LLC (“ConsolFreight”) has launched ConsolFreight Pilot LLC (the “Issuer”), a Delaware series limited liability company, which will offer for sale to investors tokens, as described below, corresponding to certain payment obligations owed to the Issuer by various freight forwarders in connection with factoring and reverse factoring transactions.
The Issuer will issue two tranches of ERC-20 tokens: DROP Tokens and TIN Tokens. The DROP Tokens will make up 90% of the total asset pool, which is estimated to be equal to $300,000, and will be offered for sale to investors on the terms described herein and in the Subscription Agreement provided to prospective investors. The TIN Tokens will make up the remaining 10% of the total asset pool, which is estimated to be equal to $33,334, and will be subject to first losses up to the full amount of their value and to act as a buffer against losses to investors in the DROP Tokens. The Issuer will target a 10% Internal Rate of Return on DROP, which takes into account the effects of cash drag.

Participating counterparties

For this controlled deployment, the asset pool will consist of up to ten freight forwarders (collectively, the “Freight Forwarders”). The four returning freight forwarders who participated in the first deployment will collectively receive approximately 60% of the capital and the six new freight forwarders will receive approximately 40% of the capital.

Summary of Term

About the Asset Originator

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ConsolFreight is a SaaS freight technology provider that empowers the digital transformation of the shipping industry. The founding team combines 50+ years of experience running successful freight forwarding businesses in the U.S., Latin America, and Europe. Our services expand from offering a marketplace for freight forwarders and procurement of logistics services, to digital contract management solutions for freight forwarders and carriers to trade finance solutions.
The ConsolFreight ecosystem currently counts on several partnerships with renowned freight forwarding networks such as X2 Logistics Networks, Globalink, and has secured more than 600 freight forwarders as exclusive trade lane providers.

Pool Description

The aggregate value of the assets owned by the Issuer is expected to be $333,334. The Issuer will acquire invoices from the Freight Forwarders in respect of factoring and reverse factoring transactions with an aggregate value of approximately $350,877 and an average invoice size of $7,000.
With respect to their relationships with freight forwarders, ConsolFreight and the Issuer employ a rigorous due diligence process at the outset of any such relationship that considers the freight forwarder’s operational history, and historical accounts receivable performance, as well as background checks and other forms of operational identity verification. Freight Forwarders seeking financing for factoring or reverse factoring transactions through ConsolFreight are required to upload specified transaction documents to ConsolFreight’s credit analysis system, which assesses the quality of the freight forwarder’s invoices, including customary checks for fraud, liens, corporate authorization and enforceability and possession of required licenses.
The counterparty exposure in respect of the majority of the transactions financed by ConsolFreight is to high quality, global companies which have business relationships with ConsolFreight extending for three or more years.

Payment Summary

The typical supply chain payment structure flows from the Shipper, who places the order, to the Freight Forwarder, who is the broker, to the Carrier, who transports the cargo to the Shipper.
Shipper → Freight Forwarder → Carrier

Factoring

In a factoring agreement, the Issuer provides third party financing to advance payment to the Freight Forwarder and collects from the Shipper in 30 to 45 days. In a factoring deal, the Issuer’s relationship is with the supplier (the Freight Forwarder).
Shipper ↔ Issuer ↔ Freight Forwarder
Payments in respect of factoring transactions will be as follows:

  • The Issuer will advance payment including all fees to Freight Forwarders;
  • On due date invoice payments are made by Shippers to the Issuer;
  • The account is owned by the Issuer.

Reverse Factoring

In a reverse factoring agreement, the Issuer provides third party financing that advances payment to Carriers and collects from the Freight Forwarder. In a reverse factoring deal, the Issuer’s relationship is with the buyer (the Freight Forwarder).
Freight Forwarder ↔ Issuer ↔ Carrier
Payments in respect of reverse factoring transactions will be as follows:

  • The Issuer will advance payment to Carriers;
  • On due date, payments including all fees are made by Freight Forwarders to the Issuer;
  • The account is owned by the Issuer.

FOR DETAILS PLEASE CONTACT CONSOLFREIGHT.

DISCLAIMER: Nothing contained in this executive summary is to be construed as a solicitation or offer, or recommendation, to buy or sell any interest in any note or other security, or to engage in any other transaction, and the content herein does not constitute, and should not be considered to constitute, an offer of securities. No statement herein made constitutes an offer to sell or a solicitation of an offer to buy a note or other security.

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