Reference no: EM133114934

SuperUni, a superannuation for universities employees, owns some Commonwealth Bank capital notes. SuperUni accepts to lend its capital notes to Killlinvest, an investment bank, for a 15 day loan. Killinvest puts a sale order for the capital notes the day after it found a lender. The buyer of the capital notes is Aussie, a managed fund.15 days after the settlement of the lending agreement, the capital notes need to be returned to the original owner and Killinvest needs to put a buy order for these capital notes during the last day of the loan. The original owner puts a sale order for the capital notes the day after the borrower has put the order to return them.

1. Four days after the lending agreement was established, a capital trigger event takes place.  Using your knowledge about capital notes and lending agreement, discuss what effects the capital trigger event is likely to have on the entities involved in our story.
2. On the day the return of the capital notes is due, Killinvest decides that it does not want to buy back the capital notes. What are Killinvest alternative options?