Microsoft Word - 18916794_4.DOCAVOCA CREDIT OPPORTUNITIES PLC (a public limited company incorporated under the laws of Ireland with a registered number of 424581) €20,000,000 Class E-8 Subordinated Notes due 2086
Avoca Credit Opportunities PLC (the "Issuer") may from time to time issue further notes, the terms and conditions of which are described in this prospectus (the "Prospectus"). This Prospectus relates to the Class E-8 Subordinated Notes (as defined below).
The Issuer has already issued its €200,000,000 VF-1 Senior Secured Variable Funding Notes due 2014 (the "VF-1 Notes"), €70,000,000 Class A-1 Senior Secured Floating Rate Notes due 2014 (the "Initial Issuance Class A Notes"), €8,750,000 Class B-1 Second Senior Secured Floating Rate Notes due 2014 (the "Initial Issuance Class B Notes"), €8,750,000 Class C-1 Third Senior Secured Floating Rate Notes due 2014 (the "Initial Issuance Class C Notes"), €4,500,000 Class D-1 Fourth Senior Secured Floating Rate Notes due 2014 (the "Initial Issuance Class D Notes"), €30,500,000 Class E-1 Subordinated Notes due 2086 (the "Initial Issuance Class E-1 Subordinated Notes"), €10,000,000 Class E-2 Subordinated Notes due 2086 (the "Initial Issuance Class E-2 Subordinated Notes") and €10,000,000 Class E-3 Subordinated Notes due 2086 (the "Initial Issuance Class E-3 Subordinated Notes", which together with the Initial Issuance Class E-1 Subordinated Notes and the Initial Issuance Class E-2 Subordinated Notes comprise the "Initial Issuance Class E Subordinated Notes", and together with the VF-1 Notes, the Initial Issuance Class A Notes, the Initial Issuance Class B Notes, the Initial Issuance Class C Notes and the Initial Issuance Class D Notes comprise the "Initial Issuance Notes"). The Initial Issuance Notes were the subject of an offering circular dated 2 August 2007 (the "Initial Offering Circular") and were issued and secured pursuant to a master trust deed (the "Master Trust Deed") dated 2 August 2007 (the "Initial Closing Date"), made between (amongst others) the Issuer and Deutsche Trustee Company Limited in its capacity as trustee (the "Trustee"), together with various trust instruments dated the Initial Closing Date supplemental thereto (such trust instruments together with the Master Trust Deed, the "Initial Trust Deed").
The Issuer has also issued its €20,000,000 Class E-4 Subordinated Notes due 2086 (the "March 2008 Issuance Class E-4 Subordinated Notes") and €5,000,000 Class E-5 Subordinated Notes due 2086 (the "March 2008 Issuance Class E-5 Subordinated Notes", which together with the March 2008 Issuance Class E-4 Subordinated Notes comprise the "March 2008 Issuance Class E Subordinated Notes"). The March 2008 Issuance Class E Subordinated Notes were the subject of a supplemental offering circular dated 14 March 2008 (the "March 2008 Issuance Offering Circular") and were issued and secured pursuant to the Master Trust Deed and a trust instrument supplemental thereto dated 10 March 2008 (the "March 2008 Closing Date"), made between (amongst others) the Issuer and the Trustee.
The Issuer has also issued its €30,000,000 Class I-1 Intervening Notes due 2014 (the "November 2008 Issuance Class I-1 Intervening Notes"). The November 2008 Issuance Class I-1 Intervening Notes were the subject of a supplemental offering circular dated 11 November 2008 (the "November 2008 Issuance Offering Circular") and were issued and secured pursuant to the Master Trust Deed and a trust instrument supplemental thereto dated 11 November 2008 (the "November 2008 Closing Date") made between (amongst others) the Issuer and the Trustee.
The Issuer has also issued its €30,000,000 Class E-6 Subordinated Notes due 2086 (the "September 2009 Issuance Class E Subordinated Notes"). The September 2009 Issuance Class E Subordinated Notes were the subject of a supplemental offering circular dated 11 September 2009 (the "September 2009 Issuance Offering Circular") and were issued and secured pursuant to the Master Trust Deed and a trust instrument supplemental thereto dated 10 September 2009 (the "September 2009 Closing Date") made between (amongst others) the Issuer and the Trustee.
The Issuer has also issued its €30,000,000 Class E-7 Subordinated Notes due 2086 (the "December 2009 Issuance Class E Subordinated Notes" and, together with the Initial Issuance Notes, the March 2008 Issuance Class E Subordinated Notes, the November 2008 Issuance Class I-1 Intervening Notes and the September 2009 Issuance Class E Subordinated Notes, the "Issued Notes"). The December 2009 Issuance Class E Subordinated Notes were the subject of a supplemental offering circular dated 10 December 2009 (the "December 2009 Issuance Offering Circular") and were issued and secured pursuant to the Master Trust Deed and a trust instrument supplemental thereto dated 10 December 2009 (the "December 2009 Closing Date") made between (amongst others) the Issuer and the Trustee.
On 4 June 2009 the Issuer repurchased and cancelled €8,750,000 in principal amount of its Initial Issuance Class B Notes, €4,750,000 in principal amount of its Initial Issuance Class C Notes and €2,500,000 in principal amount of its Initial Issuance Class D Notes. On 10 December 2009 the Issuer redeemed €30,000,000 in principal amount of its November 2008 Issuance Class I-1 Intervening Notes.
This Prospectus does not change or amend the terms and conditions of the Initial Issuance Notes, the March 2008 Issuance Class E Subordinated Notes, the November 2008 Issuance Class I-1 Intervening Notes, the September 2009 Issuance Class E Subordinated Notes or the December 2009 Issuance Class E Subordinated Notes. The provisions of this Prospectus relate to the issuance of the Class E-8 Subordinated Notes. The Class E-8 Subordinated Notes will be issued and secured pursuant to a trust instrument which is supplemental to the Master Trust Deed (such trust instrument together with the Initial Trust Deed and the supplemental trust instruments dated 10 March 2008, 11 November 2008, 10 September 2009 and 10 December 2009 referred to above, the "Trust Deed").
The Issuer will issue €20,000,000 Class E-8 Subordinated Notes due 2086 (the "Class E-8 Subordinated Notes" or the "December 2010 Issuance Class E Subordinated Notes" and, together with the Issued Notes, the "Notes") on 10 December 2010 (the "December 2010 Closing Date"). For the purposes of this Prospectus, "Specified Notes", shall include the December 2010 Issuance Class E Subordinated Notes.
The December 2010 Issuance Class E Subordinated Notes will be initially offered at the prices specified in the section of this Prospectus headed "Overview" or such other prices as may be negotiated at the time of sale.
The assets securing the Issued Notes and the December 2010 Issuance Class E Subordinated Notes will consist primarily of a portfolio of loans, high yield securities and special opportunity investments in respect of which Avoca Capital Holdings is acting as investment manager (the "Investment Manager"). The acquisition of such portfolio was financed by advances made pursuant to the VF-1 Notes which rank pari passu with the Class A Notes and the issue proceeds of the other Issued Notes. Additional external financing may also be obtained prior to or subsequent to the December 2010 Closing Date which will also be secured on the portfolio and may rank pari passu with one or more classes of Notes.
The December 2010 Issuance Class E Subordinated Notes, at the Investment Manager’s discretion and providing certain conditions for disbursement of the same are met, will receive Class E Restricted Disbursements (as defined herein) on Payment Dates (see Condition 3(d) (Restricted Payments) and Condition 3(c) (Payment of Amounts)). The Rated Notes and the Class E Subordinated Notes will be subject to mandatory redemption and optional redemption, in each case, as described herein (see Condition 7 (Redemption)).
The Rated Notes, the Intervening Notes and the Class E Subordinated Notes will be subject to mandatory redemption and optional redemption, in each case, as described herein (see Condition 7 (Redemption))
See the section of this Prospectus headed "Risk Factors" for a discussion of certain factors to be considered in connection with an investment in the December 2010 Issuance Class E Subordinated Notes.
This Prospectus comprises a prospectus for the purposes of Article 5 of Directive 2003/71/EC (the "Prospectus Directive"). This Prospectus has been approved by the Central Bank of Ireland, as competent authority under the Prospectus Directive. The Central Bank of Ireland only approves this Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. Application has been made to the Irish Stock Exchange for the Class E-8 Subordinated Notes to be admitted to the Official List and trading on its regulated market.
A copy of this Prospectus has been or will be delivered to the Registrar of Companies in Ireland for registration in accordance with the Prospectus Directive and Regulation 38 of the Irish Prospectus (Directive 2003/71/EC) Regulations 2005 (the "Prospectus Regulations").
The December 2010 Issuance Class E Subordinated Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or the securities laws of any state of the United States or any other jurisdiction. The December 2010 Issuance Class E Subordinated Notes will be offered only outside the United States to non-U.S. Persons in offshore transactions in compliance with Regulation S ("Regulation S") under the Securities Act ("Regulation S Notes"). The December 2010 Issuance Class E Subordinated Notes may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Neither the Issuer nor the pool of underlying assets will be registered under the Investment Company Act. Interests in the December 2010 Issuance Class E Subordinated Notes will be subject to certain restrictions on transfer, and each purchaser of December 2010 Issuance Class E Subordinated Notes offered hereby in making its purchase will be deemed to have made certain acknowledgements, representations and agreements. See "Plan of Distribution" and "Transfer Restrictions".
Any investment in the December 2010 Issuance Class E Subordinated Notes does not have the status of a bank deposit and is not within the scope of the deposit protection scheme operated by the Central Bank of Ireland. The Issuer is not regulated by the Central Bank of Ireland.
The credit ratings included or referred to in this Prospectus have been issued by Fitch Ratings, Moody’s or S&P, each of which is established in the European Union and each of which has applied to be registered under Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies.
Dated 17 December 2010
PRIORITIES OF NOTES
The Class A Notes will rank pari passu with any External Senior Permitted Debt and the rights of any Secured Hedging Counterparties and rateably without any preference among themselves for all purposes and in priority to the Class B Notes and any External Second Senior Permitted Debt, the Class C Notes and any External Third Senior Permitted Debt, the Class D Notes and any External Fourth Senior Permitted Debt, the Intervening Notes and any External Intervening Permitted Debt and the Class E Subordinated Notes. The Class B Notes will rank pari passu with any External Second Senior Permitted Debt and rateably without any preference among themselves for all purposes and in priority to the Class C Notes and any External Third Senior Permitted Debt, the Class D Notes and any External Fourth Senior Permitted Debt, the Intervening Notes and any External Intervening Permitted Debt and the Class E Subordinated Notes. The Class C Notes will rank pari passu with any External Third Senior Permitted Debt and rateably without any preference among themselves for all purposes and in priority to the Class D Notes and any External Fourth Senior Permitted Debt, the Intervening Notes and any External Intervening Permitted Debt and the Class E Subordinated Notes. The Class D Notes will rank pari passu with any External Fourth Senior Permitted Debt and rateably without any preference among themselves for all purposes and in priority to the Intervening Notes and any External Intervening Permitted Debt and the Class E Subordinated Notes. The Intervening Notes and any External Intervening Permitted Debt will rank amongst itself in accordance with any Intervening Indebtedness Priority of Payments and in priority to the Class E Subordinated Notes. The Class E Subordinated Notes will rank rateably without any preference among themselves for all purposes but subordinate to the Rated Notes and any External Senior Permitted Debt, the rights of Secured Hedging Counterparties, External Second Senior Permitted Debt, External Third Senior Permitted Debt, External Fourth Senior Permitted Debt, the Intervening Notes and any External Intervening Permitted Debt.
LIMITED RECOURSE AND NON-PETITION
The VF Notes and the Notes are limited recourse obligations of the Issuer which are payable solely out of amounts received by or on behalf of the Issuer in respect of the Collateral. The net proceeds of the realisation of the security over the Collateral following a Transaction Default or the aggregate proceeds of liquidation of the Collateral may be insufficient to pay all amounts due to the VF Noteholders and Noteholders after making payments to other creditors (including any External Creditors) of the Issuer ranking prior thereto or pari passu therewith. In the event of a shortfall in such proceeds, the Issuer will not be obliged to pay, and the other assets (including the Issuer Irish Account and the rights of the Issuer under the Corporate Administration Agreement) of the Issuer will not be available for payment of, such shortfall and all claims in respect of which shall be extinguished (see Condition 4 (Security)).
RESPONSIBILITY
The Issuer accepts responsibility for the information contained in this Prospectus (save for the information contained in the sections of this Prospectus headed "Description of the Investment Manager" and "Description of the Collateral Administrator - General"). To the best of the knowledge and belief of the Issuer (which has taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information. Neither Deutsche Bank AG, London Branch nor the Trustee accepts responsibility for the accuracy, adequacy, reasonableness or completeness of the information contained therein. The delivery of this Prospectus at any time does not imply that the information herein is correct at any time subsequent to the date of this Prospectus.
The Investment Manager accepts responsibility for the information contained in the section of this Prospectus headed "Description of the Investment Manager". To the best of the knowledge and belief of the Investment Manager (which has taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information. None of Deutsche Bank AG, London Branch, the Trustee and the Issuer accepts responsibility for the accuracy, adequacy, reasonableness or completeness of the information contained therein.
The Collateral Administrator accepts responsibility for the information contained in the section of this Prospectus headed "Description of the Collateral Administrator - General". To the best of the knowledge and belief of the Collateral Administrator (which has taken all reasonable care to ensure
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that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information. None of Deutsche Bank AG, London Branch (other than in its capacity as Collateral Administrator), the Trustee and the Issuer accepts responsibility for the accuracy, adequacy, reasonableness or completeness of the information contained therein.
DISCLAIMER
None of the Initial Purchaser, the Trustee, the Investment Manager (save in respect of the section of this Prospectus headed "Description of the Investment Manager"), the Collateral Administrator (save in respect of the section of this Prospectus headed "Description of the Collateral Administrator - General"), any Agent or any other party (including any Secured Hedging Counterparty) has separately verified the information contained in this Prospectus and, accordingly, none of the Initial Purchaser, the Trustee, the Investment Manager (save as specified above), the Collateral Administrator (save as specified above), any Agent or the Issuer (save for the Issuer as specified above in relation to the acceptance of responsibility) or any other party (including any Secured Hedging Counterparty) makes any representation, recommendation or warranty, express or implied, regarding the accuracy, adequacy, reasonableness or completeness of the information contained in this Prospectus or in any further notice or other document which may at any time be supplied in connection with the VF Notes or the Notes or accepts any responsibility or liability therefor. None of the Initial Purchaser, the Trustee, the Investment Manager, the Collateral Administrator (save as specified above), any Agent or any other party (including any Secured Hedging Counterparty) undertakes to review the financial condition or affairs of the Issuer during the life of the arrangements contemplated by this Prospectus nor to advise any investor or potential investor in the VF Notes or the Notes of any information coming to the attention of any of the aforementioned parties which is not included in this Prospectus.
OFFER/INVITATION/DISTRIBUTION RESTRICTIONS
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF, OR AN INVITATION BY OR ON BEHALF OF THE ISSUER, THE INITIAL PURCHASER OR ANY OF THEIR AFFILIATES, THE INVESTMENT MANAGER, THE COLLATERAL ADMINISTRATOR OR ANY OTHER PERSON TO SUBSCRIBE FOR OR PURCHASE ANY OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES. THE DISTRIBUTION OF THIS PROSPECTUS AND THE OFFERING OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY LAW. PERSONS INTO WHOSE POSSESSION THIS PROSPECTUS COMES ARE REQUIRED BY THE ISSUER AND THE INITIAL PURCHASER TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY SUCH RESTRICTIONS. IN PARTICULAR, THE COMMUNICATION CONSTITUTED BY THIS PROSPECTUS IS DIRECTED ONLY AT PERSONS WHO (I) ARE OUTSIDE THE UNITED KINGDOM AND ARE OFFERED AND ACCEPT THIS PROSPECTUS IN COMPLIANCE WITH SUCH RESTRICTIONS OR (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS ETC.) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 OR WHO OTHERWISE FALL WITHIN AN EXEMPTION SET FORTH IN SUCH ORDER SO THAT SECTION 21(1) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 DOES NOT APPLY TO THE ISSUER (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS COMMUNICATION MUST NOT BE DISTRIBUTED TO, ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS COMMUNICATION RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. FOR A DESCRIPTION OF CERTAIN FURTHER RESTRICTIONS ON OFFERS AND SALES OF DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES AND DISTRIBUTION OF THIS PROSPECTUS, SEE "PLAN OF DISTRIBUTION" AND "TRANSFER RESTRICTIONS" BELOW.
UNAUTHORISED INFORMATION
IN CONNECTION WITH THE ISSUE AND SALE OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES, NO PERSON IS AUTHORISED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORISED BY OR ON BEHALF OF THE ISSUER, THE INITIAL
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PURCHASER, THE TRUSTEE, ANY AGENT, THE INVESTMENT MANAGER OR THE COLLATERAL ADMINISTRATOR. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION CONTAINED IN IT IS CORRECT AS AT ANY TIME SUBSEQUENT TO ITS DATE.
GENERAL NOTICE
FOR A DISCUSSION OF CERTAIN FACTORS REGARDING THE ISSUER AND THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES, SEE "RISK FACTORS".
SEE "TRANSFER RESTRICTIONS" BELOW FOR CERTAIN TERMS AND CONDITIONS OF THE OFFERING OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES HEREUNDER.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES AND THE OFFERING THEREOF DESCRIBED HEREIN, INCLUDING THE MERITS AND RISKS INVOLVED.
EACH PURCHASER OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES MUST COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN FORCE IN EACH JURISDICTION AT ANY TIME IN WHICH IT PURCHASES, OFFERS OR SELLS SUCH DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES OR POSSESSES OR DISTRIBUTES THIS PROSPECTUS AND MUST OBTAIN ANY CONSENT, APPROVAL OR PERMISSION REQUIRED FOR THE PURCHASE, OFFER OR SALE BY IT OF SUCH DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES UNDER THE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTIONS TO WHICH IT IS SUBJECT OR IN WHICH IT MAKES SUCH PURCHASES, OFFERS OR SALES, AND NONE OF THE ISSUER, THE INITIAL PURCHASER (OR ANY OF THEIR AFFILIATES), THE INVESTMENT MANAGER, THE TRUSTEE OR THE COLLATERAL ADMINISTRATOR SPECIFIED HEREIN SHALL HAVE ANY RESPONSIBILITY THEREFOR.
THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER APPLICABLE SECURITIES LAWS (INCLUDING UNITED STATES FEDERAL AND STATE SECURITIES LAWS). INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, EACH OFFEREE (AND EACH EMPLOYEE, REPRESENTATIVE, OR OTHER AGENT OF SUCH OFFEREE) MAY DISCLOSE TO ANY AND ALL OTHER PERSONS, WITHOUT LIMITATION OF ANY KIND, THE TAX TREATMENT AND TAX STRUCTURE OF THE TRANSACTIONS DESCRIBED HEREIN (INCLUDING THE OWNERSHIP AND DISPOSITION OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES) AND ALL MATERIALS OF ANY KIND (INCLUDING OPINIONS OR OTHER TAX ANALYSES) THAT ARE PROVIDED TO THE OFFEREE RELATING TO SUCH TAX TREATMENT AND TAX STRUCTURE. HOWEVER, ANY SUCH DISCLOSURE OF THE TAX TREATMENT, TAX STRUCTURE AND OTHER TAX- RELATED MATERIALS SHALL NOT BE MADE FOR THE PURPOSE OF OFFERING TO SELL THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES OFFERED HEREBY OR SOLICITING AN OFFER TO PURCHASE ANY SUCH DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES AND IF SUCH INFORMATION IS REQUIRED TO BE KEPT CONFIDENTIAL TO THE EXTENT REASONABLY NECESSARY TO COMPLY WITH APPLICABLE SECURITIES LAWS. FOR PURPOSES OF THIS PARAGRAPH, THE TERMS "TAX TREATMENT" AND "TAX STRUCTURE" HAVE THE MEANING GIVEN TO SUCH TERMS UNDER UNITED STATES TREASURY REGULATION SECTION 1.6011-4(c) AND APPLICABLE U.S. STATE AND LOCAL LAW. IN GENERAL, THE TAX TREATMENT OF A TRANSACTION IS THE PURPORTED OR CLAIMED U.S. TAX TREATMENT OF THE TRANSACTION, AND THE TAX STRUCTURE OF A TRANSACTION IS ANY FACT THAT
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MAY BE RELEVANT TO UNDERSTANDING THE PURPORTED OR CLAIMED U.S. TAX TREATMENT OF THE TRANSACTION.
INFORMATION AS TO PLACEMENT WITHIN THE UNITED STATES
THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES ARE TO BE PURCHASED FOR INVESTMENT ONLY AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED BY AN INVESTOR DIRECTLY OR INDIRECTLY WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OF U.S. PERSONS (AS DEFINED IN REGULATION S) EXCEPT PURSUANT TO OR IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. FOR CERTAIN RESTRICTIONS ON RESALE, SEE "FORM OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES" AND "TRANSFER RESTRICTIONS". A TRANSFER OF DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES IS SUBJECT TO THE RESTRICTIONS DESCRIBED HEREIN, INCLUDING THAT NO SALE, PLEDGE, TRANSFER OR EXCHANGE MAY BE MADE OF ANY DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES (1) EXCEPT AS PERMITTED UNDER (A) THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION AS DESCRIBED HEREIN, (B) APPLICABLE STATE SECURITIES LAWS AND (C) APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION, (2) EXCEPT IN COMPLIANCE WITH THE CERTIFICATION AND OTHER REQUIREMENTS SET FORTH IN THE TRUST DEED AND THE ISSUER CHARTER, RESPECTIVELY AND (3) IN A DENOMINATION LESS THAN THE AUTHORISED DENOMINATION. THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES ARE SUBJECT TO FURTHER RESTRICTIONS ON TRANSFER. SEE "TRANSFER RESTRICTIONS".
THE ISSUER HAS NOT BEEN REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT COMPANY ACT"), BY REASON OF THE EXEMPTION FROM REGISTRATION CONTAINED IN SECTION 3(c)(7) THEREOF. NO TRANSFER OF DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES WHICH WOULD HAVE THE EFFECT OF REQUIRING THE ISSUER TO REGISTER AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT WILL BE PERMITTED.
THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH, OR APPROVED BY, ANY UNITED STATES FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES CANNOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS THEY ARE SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. FOR A DESCRIPTION OF CERTAIN RESTRICTIONS ON RESALE AND TRANSFER, SEE "PLAN OF DISTRIBUTION" AND "TRANSFER RESTRICTIONS".
EACH PURCHASER OF DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES FROM THE INITIAL PURCHASER SOLD OUTSIDE THE UNITED STATES IN RELIANCE ON REGULATION S WILL BE DEEMED TO REPRESENT THAT IT (I) IS NOT A U.S. PERSON, (II) IS AWARE THAT THE SALE TO IT IS BEING MADE IN RELIANCE ON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY REGULATION S THEREUNDER, (III) IS ACQUIRING SUCH DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH IT EXERCISES SOLE INVESTMENT DISCRETION, NONE OF WHICH IS A U.S. PERSON, AND (IV) IS NOT PURCHASING SUCH DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES WITH A VIEW TO THE RESALE,
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DISTRIBUTION OR OTHER DISPOSITION THEREOF IN THE UNITED STATES OR TO A U.S. PERSON.
NEITHER THE ISSUER NOR THE PORTFOLIO HAS BEEN REGISTERED AS AN "INVESTMENT COMPANY" UNDER THE INVESTMENT COMPANY ACT, IN RELIANCE ON THE EXCLUSION CONTAINED IN SECTION 3(C)(7) THEREOF. NO TRANSFER OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES THAT WOULD HAVE THE EFFECT OF REQUIRING THE ISSUER OR THE PORTFOLIO TO REGISTER AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT WILL BE PERMITTED.
THIS PROSPECTUS HAS BEEN PREPARED BY THE ISSUER SOLELY FOR USE IN CONNECTION WITH THE OFFERING OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES DESCRIBED HEREIN (THE "OFFERING") AND THE ADMISSION TO TRADING OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES ON THE REGULATED MARKET OF THE IRISH STOCK EXCHANGE. EACH OF THE ISSUER AND THE INITIAL PURCHASER RESERVES THE RIGHT TO REJECT ANY OFFER TO PURCHASE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES IN WHOLE OR IN PART FOR ANY REASON, OR TO SELL LESS THAN THE STATED INITIAL PRINCIPAL AMOUNT OF ANY DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES OFFERED HEREBY. THIS SUPPLEMENTAL OFFERING CIRCULAR IS PERSONAL TO EACH OFFEREE TO WHOM IT HAS BEEN DELIVERED BY THE ISSUER, THE INITIAL PURCHASER OR ANY AFFILIATE THEREOF AND DOES NOT CONSTITUTE AN OFFER TO ANY OTHER PERSON OR TO THE PUBLIC GENERALLY TO SUBSCRIBE FOR OR OTHERWISE ACQUIRE THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES. DISTRIBUTION OF THIS SUPPLEMENTAL OFFERING CIRCULAR TO ANY PERSONS OTHER THAN THE OFFEREE AND THOSE PERSONS, IF ANY, RETAINED TO ADVISE SUCH OFFEREE WITH RESPECT THERETO IS UNAUTHORISED AND ANY DISCLOSURE OF ANY OF ITS CONTENTS, WITHOUT THE PRIOR WRITTEN CONSENT OF THE ISSUER, IS PROHIBITED.
GENERAL NOTICE TO RESIDENTS OF THE EU AND EEA
IN RELATION TO EACH MEMBER STATE OF THE EUROPEAN ECONOMIC AREA WHICH HAS IMPLEMENTED THE PROSPECTUS DIRECTIVE (EACH, A "RELEVANT MEMBER STATE"), THE INITIAL PURCHASER HAS REPRESENTED AND AGREED THAT WITH EFFECT FROM AND INCLUDING THE DATE ON WHICH THE PROSPECTUS DIRECTIVE IS IMPLEMENTED IN THAT RELEVANT MEMBER STATE (THE "RELEVANT IMPLEMENTATION DATE") IT HAS NOT MADE AND WILL NOT MAKE AN OFFER OF DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED BY THIS PROSPECTUS TO THE PUBLIC IN THAT RELEVANT MEMBER STATE OTHER THAN: (A) AT ANY TIME TO LEGAL ENTITIES WHICH ARE AUTHORISED OR REGULATED TO OPERATE IN THE FINANCIAL MARKETS OR, IF NOT SO AUTHORISED OR REGULATED, WHOSE CORPORATE PURPOSE IS SOLELY TO INVEST IN SECURITIES, (B) AT ANY TIME TO ANY LEGAL ENTITY WHICH HAS TWO OR MORE OF (1) AN AVERAGE OF AT LEAST 250 EMPLOYEES DURING THE LAST FINANCIAL YEAR, (2) A TOTAL BALANCE SHEET OF MORE THAN €43,000,000 AND (3) AN ANNUAL NET TURNOVER OF MORE THAN €50,000,000, AS SHOWN IN ITS LAST ANNUAL OR CONSOLIDATED ACCOUNTS, (C) TO FEWER THAN 100 NATURAL OR LEGAL PERSONS (OTHER THAN QUALIFIED INVESTORS AS DEFINED IN THE PROSPECTUS DIRECTIVE) SUBJECT TO OBTAINING THE PRIOR CONSENT OF THE INITIAL PURCHASER, OR (D) AT ANY TIME IN ANY OTHER CIRCUMSTANCES WHICH DO NOT REQUIRE THE PUBLICATION BY THE ISSUER OF A PROSPECTUS PURSUANT TO ARTICLE 3 (2) OF THE PROSPECTUS DIRECTIVE. FOR THESE PURPOSES, THE EXPRESSION AN "OFFER OF DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES TO THE PUBLIC" IN RELATION TO ANY DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES IN ANY RELEVANT MEMBER STATE MEANS THE COMMUNICATION IN ANY FORM AND BY ANY MEANS OF SUFFICIENT INFORMATION ON THE TERMS OF THE OFFER AND THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES TO BE OFFERED SO AS TO ENABLE AN INVESTOR TO DECIDE TO PURCHASE OR SUBSCRIBE FOR THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES THE SAME MAY BE VARIED IN THAT
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MEMBER STATE BY ANY MEASURE IMPLEMENTING THE PROSPECTUS DIRECTIVE IN THAT MEMBER STATE AND THE EXPRESSION "PROSPECTUS DIRECTIVE" MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING MEASURE IN EACH RELEVANT MEMBER STATE.
NOTICE TO RESIDENTS OF GERMANY
THE INITIAL PURCHASER HAS AGREED TO COMPLY WITH THE FOLLOWING SELLING RESTRICTIONS APPLICABLE TO THE FEDERAL REPUBLIC OF GERMANY.
PURSUANT TO THE SUBSCRIPTION AGREEMENT, THE INITIAL PURCHASER HAS AGREED THAT IT SHALL NOT OFFER OR SELL THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES IN THE FEDERAL REPUBLIC OF GERMANY OTHER THAN IN COMPLIANCE WITH THE RESTRICTIONS CONTAINED IN THE GERMAN SECURITIES PROSPECTUS ACT (WERTPAPIERPROSPEKTGESETZ) AND THE GERMAN INVESTMENT ACT (INVESTMENTGESETZ), RESPECTIVELY, AND ANY OTHER LAWS AND REGULATIONS APPLICABLE IN THE FEDERAL REPUBLIC OF GERMANY GOVERNING THE ISSUE, THE OFFERING AND THE SALE OF SECURITIES.
THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES MAY NEITHER BE, NOR BE INTENDED TO BE, DISTRIBUTED BY WAY OF PUBLIC OFFERING, PUBLIC ADVERTISEMENT OR IN A SIMILAR MANNER WITHIN THE MEANING OF THE GERMAN SECURITIES PROSPECTUS ACT AND THE GERMAN INVESTMENT ACT NOR SHALL THE DISTRIBUTION OF THIS PROSPECTUS OR ANY OTHER DOCUMENT RELATING TO THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES CONSTITUTE SUCH PUBLIC OFFER. IN ADDITION, THE INITIAL PURCHASER HAS AGREED THAT IT HAS OFFERED, SOLD OR ADVERTISED AND THAT IT WILL OFFER, SELL OR ADVERTISE THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES ONLY TO PERMITTED INSTITUTIONAL INVESTORS ("INSTITUTIONAL INVESTORS") WITHIN THE MEANING OF THE LEAFLET OF THE GERMAN FEDERAL FINANCIAL SUPERVISORY AGENCY (BUNDESANSTALT FÜR FINANZDIENSTLEISTUNGSAUFSICHT - BAFIN) DATED APRIL 2005 IN THE FEDERAL REPUBLIC OF GERMANY AND THIS PROSPECTUS MAY NOT BE PASSED ON TO ANY OTHER PERSON OR ENTITY IN THE FEDERAL REPUBLIC OF GERMANY. FURTHERMORE, EACH SUBSEQUENT TRANSFEREE/PURCHASER OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES WILL BE DEEMED TO REPRESENT THAT IF IT IS A PERSON OR ENTITY IN THE FEDERAL REPUBLIC OF GERMANY IT IS AN INSTITUTIONAL INVESTOR AND TO AGREE NOT TO OFFER, SELL OR ADVERTISE THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES TO ANY PERSON OR ENTITY IN THE FEDERAL REPUBLIC OF GERMANY WHO IS NOT AN INSTITUTIONAL INVESTOR.
THE DISTRIBUTION OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES HAS NOT BEEN NOTIFIED AND THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES ARE NOT REGISTERED OR AUTHORISED FOR PUBLIC DISTRIBUTION IN THE FEDERAL REPUBLIC OF GERMANY UNDER THE GERMAN INVESTMENT ACT. THIS PROSPECTUS HAS NOT BEEN FILED OR DEPOSITED WITH THE GERMAN FEDERAL FINANCIAL SUPERVISORY AGENCY.
PROSPECTIVE GERMAN INVESTORS IN THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES ARE URGED TO SEEK INDEPENDENT TAX ADVICE AND TO CONSULT THEIR PROFESSIONAL ADVISORS AS TO THE LEGAL AND TAX CONSEQUENCES THAT MAY ARISE FROM THE APPLICATION OF THE GERMAN INVESTMENT TAX ACT TO THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES AND NEITHER THE ISSUER NOR THE INITIAL PURCHASER ACCEPTS ANY RESPONSIBILITY IN RESPECT OF THE GERMAN TAX POSITION OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES.
ANMERKUNG FÜR EINWOHNER VON DEUTSCHLAND
DER ERSTKÄUFER HAT SICH GEMÄß ZEICHNUNGSVERTRAG DAMIT EINVERSTANDEN ERKLÄRT, DASS ER DIE NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E
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DIE NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DIE SCHULDVERSCHREIBUNGEN DÜRFEN WEDER TATSÄCHLICH, NOCH DARF BEABSICHTIGT WERDEN, DASS SIE IM WEGE DES ÖFFENTLICHEN ANBIETENS, DER ÖFFENTLICHEN WERBUNG ODER IN ÄHNLICHER WEISE IM SINNE DES WERTPAPIERPROSPEKTGESETZES UND DES INVESTMENTGESETZES VERTRIEBEN WERDEN, NOCH SOLL DIE AUSHÄNDIGUNG DIESES VERKAUFSPROSPEKTES ODER EINES ANDEREN, MIT DEN NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN ODER DEN SCHULDVERSCHREIBUNGEN IN VERBINDUNG STEHENDEN DOKUMENTS EIN SOLCHES ÖFFENTLICHES ANGEBOT BZW. ÖFFENTLICHEN VERTRIEB DARSTELLEN. DER ERSTKÄUFER HAT SICH AUßERDEM DAMIT EINVERSTANDEN ERKLÄRT, DASS ER DIE NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN ODER DIE SCHULDVERSCHREIBUNGEN NUR INSTITUTIONELLEN INVESTOREN ("INSTITUTIONELLE ANLEGER") IM SINNE DES MERKBLATTES DER BUNDESANSTALT FÜR FINANZDIENSTLEISTUNGSAUFSICHT (BAFIN) VOM APRIL 2005 IN DER BUNDESREPUBLIK DEUTSCHLAND ANGEBOTEN, AN DIESE VERKAUFT ODER BEI IHNEN UM DEN KAUF DER NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DER SCHULDVERSCHREIBUNGEN GEWORBEN HAT, BZW. ANBIETEN, AN DIESE VERKAUFEN ODER BEI IHNEN UM DEN KAUF DER NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DER SCHULDVERSCHREIBUNGEN WERBEN WIRD. DIESER VERKAUFSPROSPEKT DARF NICHT AN ANDERE PERSONEN ODER RECHTSPERSONEN IN DER BUNDESREPUBLIK DEUTSCHLAND AUSGEHÄNDIGT WERDEN. DES WEITEREN SICHERT JEDER NACHFOLGENDE ERWERBER ODER KÄUFER DER NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DER SCHULDVERSCHREIBUNGEN, DER EINE PERSON ODER RECHTSPERSON IN DER BUNDESREPUBLIK DEUTSCHLAND IST, ZU, DASS ER EIN INSTITUTIONELLER INVESTOR IST UND ERKLÄRT SICH DAMIT EINVERSTANDEN, DIE NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DIE SCHULDVERSCHREIBUNGEN NUR PERSONEN ODER RECHTSPERSONEN IN DER BUNDESREPUBLIK DEUTSCHLAND ANZUBIETEN, AN DIESE ZU VERKAUFEN ODER BEI IHNEN UM DEN KAUF DER NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DER SCHULDVERSCHREIBUNGEN ZU WERBEN, DIE SOLCHE INSTITUTIONELLEN INVESTOREN SIND.
DER VERTRIEB DER NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DER SCHULDVERSCHREIBUNGEN WURDE NICHT ANGEZEIGT UND DIE NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DIE SCHULDVERSCHREIBUNGEN SIND AUCH NICHT REGISTRIERT ODER ZUM ÖFFENTLICHEN VERTRIEB IN DER BUNDESREPUBLIK DEUTSCHLAND IM SINNE DES INVESTMENTGESETZES ZUGELASSEN. DER VERKAUFSPROSPEKT IST NICHT BEI DER BUNDESANSTALT FÜR FINANZDIENSTLEISTUNGSAUFSICHT EINGEREICHT ODER HINTERLEGT WORDEN.
POTENTIELLEN DEUTSCHEN INVESTOREN WIRD DRINGEND EMPFOHLEN, UNABHÄNGIGEN STEUERRAT EINZUHOLEN UND IHRE BERATER ZU DEN RECHTLICHEN UND STEUERLICHEN FOLGEN ZU BEFRAGEN, DIE SICH AUS EINER ANWENDUNG DES DEUTSCHEN INVESTMENTSTEUERGESETZES AUF DIE NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DIE SCHULDVERSCHREIBUNGEN ERGEBEN KÖNNTEN. WEDER DER EMITTENT (NOCH DER ERSTKÄUFER) ÜBERNIMMT IRGENDEINE HAFTUNG HINSICHTLICH DER DEUTSCHEN STEUERLICHEN BEHANDLUNG DER NACHRANGIGEN DECEMBER 2010 ISSUANCE CLASS E SCHULDVERSCHREIBUNGEN UND DER SCHULDVERSCHREIBUNGEN.
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UNITED KINGDOM
EACH PURCHASER OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES (I) IS A PERSON WHOSE ORDINARY ACTIVITIES INVOLVE IT IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF ITS BUSINESS AND (II) HAS NOT OFFERED OR SOLD AND WILL NOT OFFER OR SELL THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES OTHER THAN TO PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESSES OR WHO IT IS REASONABLE TO EXPECT WILL ACQUIRE, HOLD, MANAGE OR DISPOSE OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESSES WHERE THE ISSUE OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES WOULD OTHERWISE CONSTITUTE A CONTRAVENTION OF SECTION 19 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (THE "FSMA") BY THE ISSUER.
ANY INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY (WITHIN THE MEANING OF SECTION 21 OF THE FSMA) IN CONNECTION WITH THE ISSUE OR SALE OF ANY DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES MAY ONLY BE COMMUNICATED OR CAUSED TO BE COMMUNICATED IN CIRCUMSTANCES IN WHICH SECTION 21(1) OF THE FSMA DOES NOT APPLY TO THE ISSUER.
EACH PURCHASER OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES MUST COMPLY WITH ALL APPLICABLE PROVISIONS OF THE FSMA WITH RESPECT TO ANYTHING DONE BY IT IN RELATION TO THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES IN, FROM, OR OTHERWISE INVOLVING THE UNITED KINGDOM.
NOTICE TO RESIDENTS OF IRELAND
THE INITIAL PURCHASER HAS REPRESENTED, WARRANTED AND AGREED THAT:
(a) IT WILL NOT UNDERWRITE THE ISSUE OF, OR PLACE THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES, OTHERWISE THAN IN CONFORMITY WITH THE PROVISIONS OF THE IRISH EUROPEAN COMMUNITIES (MARKETS IN FINANCIAL INSTRUMENTS) REGULATIONS 2007 ("MIFID REGULATIONS"), INCLUDING, WITHOUT LIMITATION, REGULATIONS 7 AND 152 THEREOF AND ANY CODES OF CONDUCT USED IN CONNECTION THEREWITH AND THE PROVISIONS OF THE INVESTOR COMPENSATION ACT 1998 (TO THE EXTENT APPLICABLE);
(b) IT WILL NOT UNDERWRITE THE ISSUE OF, OR PLACE, THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES, OTHERWISE THAN IN CONFORMITY WITH THE PROVISIONS OF THE IRISH CENTRAL BANK ACTS 1942 TO 2010 (AS AMENDED) AND ANY CODES OF CONDUCT RULES MADE UNDER SECTION 117(1) OF THE CENTRAL BANK ACT 1989;
(c) IT WILL NOT UNDERWRITE THE ISSUE OF, OR PLACE, OR DO ANYTHING IN IRELAND IN RESPECT OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES OTHERWISE THAN IN CONFORMITY WITH THE PROVISIONS OF THE IRISH PROSPECTUS (DIRECTIVE 2003/71/EC) REGULATIONS 2005 AND ANY RULES ISSUED UNDER SECTION 51 OF THE IRISH INVESTMENT FUNDS, COMPANIES AND MISCELLANEOUS PROVISIONS ACT 2005, BY THE CENTRAL BANK OF IRELAND; AND
(d) IT WILL NOT UNDERWRITE THE ISSUE OF, PLACE OR OTHERWISE ACT IN IRELAND IN RESPECT OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES, OTHERWISE THAN IN CONFORMITY WITH THE PROVISIONS OF THE IRISH MARKET ABUSE (DIRECTIVE 2003/6/EC) REGULATIONS 2005 AND ANY RULES ISSUED UNDER SECTION 34 OF THE IRISH INVESTMENT FUNDS, COMPANIES AND MISCELLANEOUS PROVISIONS ACT 2005 BY THE CENTRAL BANK OF IRELAND.
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THIS PROSPECTUS AND THE INFORMATION CONTAINED HEREIN IS FOR THE USE SOLELY OF THE PERSON TO WHOM IT IS ADDRESSED. ACCORDINGLY, IT MAY NOT BE REPRODUCED IN WHOLE OR IN PART, NOR MAY ITS CONTENTS BE DISTRIBUTED IN WRITING OR ORALLY TO ANY THIRD PARTY AND IT MAY BE READ SOLELY BY THE PERSON TO WHOM IT IS ADDRESSED AND HIS/HER PROFESSIONAL ADVISERS.
NOTICE TO RESIDENTS OF DENMARK
THIS PROSPECTUS HAS NOT BEEN AND WILL NOT BE FILED WITH OR APPROVED BY THE DANISH FINANCIAL SUPERVISORY AUTHORITY OR ANY OTHER REGULATORY AUTHORITY IN THE KINGDOM OF DENMARK. THE INITIAL PURCHASER HAS REPRESENTED AND AGREED THAT THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES HAVE NOT BEEN OFFERED OR SOLD AND MAY NOT BE OFFERED, SOLD OR DELIVERED DIRECTLY OR INDIRECTLY IN DENMARK, UNLESS IN COMPLIANCE WITH CHAPTERS 6 OR 12 OF THE DANISH ACT ON TRADING IN SECURITIES AND EXECUTIVE ORDERS ISSUED PURSUANT THERETO AS AMENDED FROM TIME TO TIME. ACCORDINGLY, THIS SUPPLEMENTAL OFFERING CIRCULAR MAY NOT BE MADE AVAILABLE NOR MAY INTERESTS IN THE ISSUER OTHERWISE BE MARKETED AND OFFERED FOR SALE IN DENMARK OTHER THAN IN CIRCUMSTANCES WHICH ARE DEEMED NOT TO BE A MARKETING OR AN OFFER TO THE PUBLIC IN DENMARK.
NOTICE TO RESIDENTS OF AUSTRALIA
NO OFFERING CIRCULAR, DISCLOSURE DOCUMENT, OFFERING MATERIAL OR ADVERTISEMENT IN RELATION TO THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES HAS BEEN LODGED WITH THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION OR THE AUSTRALIAN STOCK EXCHANGE LIMITED. ACCORDINGLY, A PERSON MAY NOT (A) MAKE, OFFER OR INVITE APPLICATIONS FOR THE ISSUE, SALE OR PURCHASE OF THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES WITHIN, TO OR FROM AUSTRALIA (INCLUDING AN OFFER OR INVITATION WHICH IS RECEIVED BY A PERSON IN AUSTRALIA) OR (B) DISTRIBUTE OR PUBLISH THIS PROSPECTUS OR ANY OTHER OFFERING CIRCULAR, DISCLOSURE DOCUMENT, OFFERING MATERIAL OR ADVERTISEMENT RELATING TO THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES IN AUSTRALIA, UNLESS (I) THE MINIMUM AGGREGATE CONSIDERATION PAYABLE BY EACH OFFEREE IS THE U.S. DOLLAR EQUIVALENT OF AT LEAST AUD500,000 (DISREGARDING MONEYS LENT BY THE OFFEROR OR ITS ASSOCIATES) OR THE OFFER OTHERWISE DOES NOT REQUIRE DISCLOSURE TO INVESTORS IN ACCORDANCE WITH PART 6D.2 OF THE CORPORATIONS ACT 2001 (CWITH) OF AUSTRALIA AND (II) SUCH ACTION COMPLIES WITH ALL APPLICABLE LAWS AND REGULATIONS.
NOTICE TO RESIDENTS OF SWEDEN
THIS PROSPECTUS IS FOR THE RECIPIENT ONLY AND MAY NOT IN ANY WAY BE FORWARDED TO ANY OTHER PERSON OR TO THE PUBLIC IN SWEDEN. IT HAS NOT AND WILL NOT BE REGISTERED WITH THE SWEDISH FINANCIAL SUPERVISORY AUTHORITY PURSUANT TO THE SWEDISH FINANCIAL INSTRUMENTS TRADING ACT (1991:980, AS AMENDED). ACCORDINGLY, THIS PROSPECTUS MAY NOT BE MADE AVAILABLE, NOR MAY THE DECEMBER 2010 ISSUANCE CLASS E SUBORDINATED NOTES OTHERWISE BE MARKETED AND OFFERED IN SWEDEN, OTHER THAN IN CIRCUMSTANCES WHICH ARE DEEMED NOT TO BE AN OFFER TO THE PUBLIC IN SWEDEN UNDER THE FINANCIAL INSTRUMENTS TRADING ACT.
CURRENCIES
In this document, unless otherwise specified or the context otherwise requires, all references to "EUR", "Euro" and "€" are to the single currency introduced in January 1999 pursuant to the Treaty establishing the European Community as amended, and references to "U.S. Dollars" and "U.S.$" are to the lawful currency of the United States.
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The language of this Prospectus is English. Any foreign language text that is included with or within this document has been included for convenience purposes only and does not form part of this Prospectus.
STABILISATION
In connection with this issue, Deutsche Bank AG, London Branch (the "Stabilising Manager") (or persons acting on behalf of the Stabilising Manager) may over-allot December 2010 Issuance Class E Subordinated Notes (provided that the aggregate principal amount of December 2010 Issuance Class E Subordinated Notes allotted does not exceed 105 per cent. of the aggregate principal amount of the December 2010 Issuance Class E Subordinated Notes) or effect transactions with a view to supporting the market price of the December 2010 Issuance Class E Subordinated Notes at a level higher than that which might otherwise prevail. However, there is no obligation on the Stabilising Manager (or any person acting on behalf of the Stabilising Manager) to do this. Any stabilisation action may begin on or after the December 2010 Closing Date and, if begun may be ended at any time, but it must end no later than the earlier of 30 days after the December 2010 Closing Date and 60 days after the date of the allotment of the December 2010 Issuance Class E Subordinated Notes. Such stabilising shall be in compliance with all applicable laws, regulations and rules. For a description of these activities, see "Plan of Distribution".
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1
OVERVIEW
The following overview ("Overview") does not purport to be complete and is qualified in its entirety by reference to the detailed information appearing elsewhere in this Prospectus and related documents referred to herein. Capitalised terms not specifically defined in this Overview have the meanings set out in Condition 1 (Definitions) of the section of this Prospectus headed "Terms and Conditions" or the "Market Valuation Manual" included herein or are defined elsewhere in this Prospectus. References to a "Condition" are to the specified Condition in the section of this Prospectus headed "Terms and Conditions" below. For a discussion of certain risk factors to be considered in connection with an investment in the December 2010 Issuance Class E Subordinated Notes, see the section of this Prospectus headed "Risk Factors". The terms of External Permitted Debt will be set out in the External Permitted Debt Document relating thereto.
Issuer Avoca Credit Opportunities PLC, a public company incorporated with limited liability under the laws of Ireland with a registered number of 424581.
The issued share capital of the Issuer is directly or indirectly owned by Deutsche International Finance (Ireland) Limited which holds such share capital on trust for certain charitable purposes. The Issuer will not have any assets other than (i) the assets that comprise the Collateral from time to time, (ii) its rights to the Issuer Irish Account and under the Corporate Administration Agreement and (iii) its rights as a parent in respect of any Hedging SPEs. The rights and assets of the Issuer (excluding its rights under the Corporate Administration Agreement or to the Issuer Irish Account) will be charged or assigned by way of security to the Trustee as security for the Issuer's obligations under the Notes and to its other Secured Creditors (see the section of this Overview headed "Security for the Notes" below).
Investment Manager Avoca Capital Holdings
VF-1 Notes and Notes:
Initial Moody's Rating1 of at least:
Reduced Moody's Rating1,8:
Initial Offer Price2
VF-1 €200,000,000 Rate + 0.36%4 2 August 2007 "AAA" "Aaa" "A3" 10 September 2014
100%
2 August 2007 "AAA" "Aaa" "A3" 10 September 2014
100%
2 August 2007 "AA" "Aa2" n/a 10 September 2014
100%
2 August 2007 "A" "A2" "B3" 10 September 2014
100%
2 August 2007 "BBB" "Baa2" "Caa1" 10 September 2014
100%
- - 10 September 2014
Class E-1 €30,500,000 -6 2 August 2007 - - 10 September 2086
100%
Class E-2 €10,000,000 -6 2 August 2007 - - 10 September 2086
100%
2
Initial Moody's Rating1 of at least:
Reduced Moody's Rating1,8:
Class E-3 €10,000,000 -6 2 August 2007 - - 10 September 2086
100%
Class E-4 €20,000,000 -6 10 March 2008 - - 10 September 2086
100%
Class E-5 €5,000,000 -6 10 March 2008 - - 10 September 2086
100%
- - 10 September 2086
- - 10 September 2086
- - 10 September 2086
100%
1 The ratings assigned to the VF-1 Notes, Class A-1 Notes, the Class B-1 Notes, the Class C-1 Notes and the Class D-1
Notes address the timely payment of interest and the ultimate payment of principal. The Class E-1 Subordinated Notes, the Class E-2 Subordinated Notes, the Class E-3 Subordinated Notes, the Class E-4 Subordinated Notes, the Class E-5 Subordinated Notes, the Class E-6 Subordinated Notes, the Class E-7 Subordinated Notes and the Class E-8 Subordinated Notes are not rated. 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 applicable Rating Agency.
2 The Initial Purchaser may offer the VF-1 Notes and the Specified Notes at other prices as may be negotiated at the time of sale.
3 The Issuer issued the VF-1 Notes to the Initial Purchaser on or about the Initial Closing Date and the principal amount shown here represents the Total VF-1 Commitments as defined in the section of this Prospectus headed "Description of the Terms and Conditions of the VF-1 Notes". Following the transfer of the VF-1 Notes to an Eligible Transferee, the Issuer may serve an Increase Request in respect of the VF-1 Notes.
4 The rate applicable to the VF-1 Notes shall be either an Interbank Rate or a Cost of Funds Rate, each as defined in the section of this Prospectus headed "Description of the Terms and Conditions of the VF-1 Notes".
5 Adjusted for the first Interest Period in accordance with Condition 6(c) (Rate of Interest).
6 No interest is payable but the Noteholders may receive payments of Class E Restricted Disbursements on Payment Dates (see Condition 3(d) (Restricted Payments) and Condition 3(c) (Payment of Amounts)).
7 On 4 June 2009 the Issuer repurchased and cancelled €8,750,000 in principal amount of its Initial Issuance Class B Notes, €4,750,000 in principal amount of its Initial Issuance Class C Notes and €2,500,000 in principal amount of its Initial Issuance Class D Notes. On 10 December 2009 the Issuer redeemed €30,000,000 in principal amount of its November 2008 Issuance Class I-1 Intervening Notes.
8 On 13 August 2009, Moody's announced that the ratings assigned to the Rated Notes were reduced as detailed above.
Trustee Deutsche Trustee Company Limited
Registrar, Transfer Agent and Exchange Agent
Deutsche Bank Trust Company Americas
Collateral Administrator Deutsche Bank AG, London Branch
Custodian Deutsche Bank AG, London Branch
Principal Paying Agent Deutsche Bank AG, London Branch
Irish Paying Agent Deutsche International Corporate Services (Ireland) Limited
Initial Purchaser Deutsche Bank AG, London Branch
3
Eligible Purchasers Each Class of the Initial Issuance Notes, the VF-1 Notes and the March 2008 Issuance Class E Subordinated Notes were offered:
(a) outside of the United States to non-U.S. Persons (as defined in Regulation S under the Securities Act) in "offshore transactions" in reliance on Regulation S under the Securities Act; and
(b) to U.S. Persons who are both "qualified institutional buyers" (as defined in Rule 144A under the Securities Act) in reliance on Rule 144A under the Securities Act and Qualified Purchasers for purposes of Section 3(c)(7) of the Investment Company Act.
Each of the November 2008 Issuance Class I-1 Intervening Notes, the September 2009 Issuance Class E Subordinated Notes and the December 2009 Issuance Class E Subordinated Notes were offered and the December 2010 Issuance Class E Subordinated Notes will only be offered, outside the United States to non-U.S. Persons (as defined in Regulation S under the Securities Act) in "offshore transactions" in reliance on regulation S under the Securities Act.
Payment Dates 10 December, 10 March, 10 June and 10 September in each year, commencing (subject to adjustment for non Business Days in accordance with the Conditions) on the following dates:
(a) in respect of each Class of the Initial Issuance Notes and the VF-1 Notes, 10 December 2007;
(b) in respect of each Class of the March 2008 Issuance Class E Subordinated Notes, 10 June 2008;
(c) in respect of the September 2009 Issuance Class E Subordinated Notes, 10 December 2009;
(d) in respect of the December 2009 Issuance Class E Subordinated Notes, 10 March 2010; and
(e) in respect of the December 2010 Issuance Class E Subordinated Notes, 10 March 2011.
Note Interest and Disbursements
Interest in respect of the Notes of each Class (other than the Class E Subordinated Notes) will be payable quarterly in arrear on each Payment Date. Interest in respect of the Class E Subordinated Notes which are Interest Bearing Notes will be payable on each Class E Payment Date at the sole discretion of the Investment Manager and provided certain conditions for payment of the same are met. The Investment Manager (on behalf of the Issuer) shall not be obliged to pay any Interest Payment Amount to Holders of Class E Subordinated Notes which are Interest Bearing Notes on any Class E Payment Date. To the extent that the same are payable, any Class E Restricted Disbursements (see the section of this Overview headed "Restricted Payments" below) will be payable on each Payment Date.
Restricted Payments The only sums available to Class E Subordinated Noteholders (other than the Holders of Class E Subordinated Notes which are Interest Bearing Notes) in the nature of principal or interest
4
prior to the maturity of the Class E Subordinated Notes on or in respect of the Class E Subordinated Notes will be certain Class E Restricted Disbursements which will only be available if certain conditions are satisfied and only then, subject to the Investment Manager's discretion (see Condition 3(c) (Payment of Amounts)). Holders of Class E Subordinated Notes which are Interest Bearing Notes may also, at the Investment Manager's sole discretion and providing certain conditions are met, receive Interest Payment Amounts on each Class E Payment Date (see Condition 20 (Specific Conditions)). The Investment Manager (on behalf of the Issuer) shall not be obliged to pay any Interest Payment Amount to Holders of Class E Subordinated Notes which are Interest Bearing Notes on any Class E Payment Date.
Deferral of Interest While any Class A Note is Outstanding, any interest payable on the Class B Notes that would be payable to Class B Noteholders on a Payment Date but is not paid by reason of the Intercreditor Arrangements shall be added to the Principal Amount Outstanding of the Class B Notes on such date and will thereafter cease to be payable as interest (but will, to the extent permitted by law, bear interest at the applicable Rate of Interest). The addition of interest on the Class B Notes to the Principal Amount Outstanding thereof in lieu of the cash payment of such interest as aforesaid shall be deemed to satisfy the payment of such interest and shall not constitute an Event of Default under the Conditions and shall (i) upon the payment of any principal on the Class B Notes be repaid prior to the repayment of the same, (ii) unless prohibited under the Trust Deed, any External Senior Permitted Debt Document, any External Second Senior Permitted Debt Document or the Intercreditor Arrangements, be repaid as soon as the Issuer (or the Investment Manager on the Issuer's behalf) deems such repayment prudent provided that the Issuer (or the Investment Manager on the Issuer's behalf) shall have delivered a written certificate to the Trustee stating that there will be sufficient funds available to pay all amounts due on the following Payment Date and (iii) not be entitled to the benefit of any make whole premium (see Condition 6(e) (Non Payment of Interest)).
While any Class A Note or any Class B Note is Outstanding, any interest payable on the Class C Notes that would be payable to Class C Noteholders on a Payment Date but is not paid by reason of the Intercreditor Arrangements shall be added to the Principal Amount Outstanding of the Class C Notes on such date and will thereafter cease to be payable as interest (but will, to the extent permitted by law, bear interest at the applicable Rate of Interest). The addition of interest on the Class C Notes to the Principal Amount Outstanding thereof in lieu of the cash payment of such interest as aforesaid shall be deemed to satisfy the payment of such interest and shall not constitute an Event of Default under the Conditions and shall (i) upon the payment of any principal on the Class C Notes be repaid prior to the repayment of the same, (ii) unless prohibited under the Trust Deed, any External Senior Permitted Debt Document, any External Second Senior Permitted Debt Document, any External Third Senior Permitted Debt Document or the Intercreditor Arrangements, be repaid as soon as the Issuer (or the Investment Manager on the Issuer's behalf)
5
deems such repayment prudent provided that the Issuer (or the Investment Manager on the Issuer's behalf) shall have delivered a written certificate to the Trustee stating that there will be sufficient funds available to pay all amounts due on the following Payment Date and (iii) not be entitled to the benefit of any make whole premium (see Condition 6(e) (Non Payment of Interest)).
While any Class A Note, Class B Note or Class C Note is Outstanding, any interest payable on the Class D Notes that would be payable to Class D Noteholders on a Payment Date but is not paid by reason of the Intercreditor Arrangements shall be added to the Principal Amount Outstanding of the Class D Notes on such date and will thereafter cease to be payable as interest (but will, to the extent permitted by law, bear interest at the applicable Rate of Interest). The addition of interest on the Class D Notes to the Principal Amount Outstanding thereof in lieu of the cash payment of such interest as aforesaid shall be deemed to satisfy the payment of such interest and shall not constitute an Event of Default under the Conditions and shall (i) upon the payment of any principal on the Class D Notes be repaid prior to the repayment of the same, (ii) unless prohibited under the Trust Deed, any External Senior Permitted Debt Document, any External Second Senior Permitted Debt Document, any External Third Senior Permitted Debt Document, any External Fourth Senior Permitted Debt Document or the Intercreditor Arrangements, be repaid as soon as the Issuer (or the Investment Manager on the Issuer's behalf) deems such repayment prudent provided that the Issuer (or the Investment Manager on the Issuer's behalf) shall have delivered a written certificate to the Trustee stating that there will be sufficient funds available to pay all amounts due on the following Payment Date and (iii) not be entitled to the benefit of any make whole premium (see Condition 6(e) (Non Payment of Interest)).
While any Class A Note, Class B Note, Class C Note or Class D Note is Outstanding, any interest payable on any Intervening Notes that would be payable to Intervening Noteholders on a Payment Date but is not paid by reason of the Intercreditor Arrangements shall be added to the Principal Amount Outstanding of such Intervening Notes on such date and will thereafter cease to be payable as interest (but will, to the extent permitted by law, bear interest at the applicable Rate of Interest). The addition of interest on any Intervening Notes to the Principal Amount Outstanding thereof in lieu of the cash payment of such interest as aforesaid shall be deemed to satisfy the payment of such interest and shall not constitute an Event of Default under the Conditions and shall (i) upon the payment of any principal on such Intervening Notes be repaid prior to the repayment of the same, (ii) unless prohibited under the Trust Deed, any External Senior Permitted Debt Document, any External Second Senior Permitted Debt Document, any External Third Senior Permitted Debt Document, any External Fourth Senior Permitted Debt Document, any Intervening Permitted Debt Document or the Intercreditor Arrangements, be repaid as soon as the Issuer (or the Investment Manager on the Issuer's behalf) deems such repayment prudent provided that the Issuer (or the Investment Manager on the Issuer's behalf) shall have delivered a written certificate to the Trustee
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stating that there will be sufficient funds available to pay all amounts due on the following Payment Date and (iii) not be entitled to the benefit of any make whole premium (see Condition 6(e) (Non Payment of Interest)).
Failure to disburse any interest on Class E Subordinated Notes in accordance with Condition 20 (Specific Conditions) at any time shall not constitute an Event of Default. For the avoidance of doubt, any interest payable on any Class E Subordinated Note which is an Interest Bearing Note that would be payable to a Class E Subordinated Noteholder on a Class E Payment Date but is not paid by reason of the Intercreditor Arrangements or the terms outlined in Condition 20 (Specific Conditions) shall not be added to the Principal Amount Outstanding of such Class E Subordinated Note and shall cease to be payable thereon with effect from such Payment Date (see Condition 6 (Interest)).
Principal Payments on the Notes Principal payments on the Notes may be made in the following circumstances:
(a) on the applicable Maturity Date therefor,
(b) to Electing Class E Subordinated Noteholders in respect of Class E Subordinated Notes (i) on any Optional Redemption Date subject to the Liquidity Limitation Procedure and the Split Redemption Procedure (together with certain other conditions) and (ii) on any Delayed Payment Date,
(c) in relation to the Class E Subordinated Notes, if the Principal Amount Outstanding thereof falls below €25,000,000, subject to the Investment Manager's discretion and certain other conditions
(d) on any Payment Date following the occurrence of a Note Tax Event subject to certain conditions,
(e) following an offer by the Issuer to all the Noteholders of a Class or Classes of Notes to purchase such Class or Classes, subject to certain other conditions;
(f) following a breach of the Over-Collateralisation Tests in the event that the Prepayment Cure Methodology or Projection Cure Methodology is employed to remedy the same;
(g) to the Holders of any Interest Bearing Notes of an Associated Mandatory Redemption Class in the event of a mandatory redemption of the same, and
(h) on any Redemption Date following the exercise by the Issuer (upon the instruction of the Investment Manager) of its right to optionally redeem any Class of Rated Notes in whole or in part, subject to certain conditions as set out in Condition 7(c) (Redemption at the Option of the Issuer).
See Condition 5(c) (Over-Collateralisation Failure and Collateralisation Shortfall Dates) and Condition 7 (Redemption).
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Redemption Prices The Redemption Price of each Class of Rated Notes will be (a) 100 per cent. of the Principal Amount Outstanding of the Notes to be redeemed, plus (b) accrued and unpaid interest thereon to the day of redemption (including any accrued and unpaid deferred interest and, in the case of the Class B Notes, the Class C Notes, the Class D Notes or Intervening Notes, any applicable Blocked Junior Note Interest).
The Redemption Price for each Class E Subordinated Note will be an amount equal to (i) the aggregate proceeds of liquidation of Collateral designated by reference to the Net Asset Value allocable to such Class E Subordinated Note, net of the Investment Manager’s good faith estimate of expenses for legal, accounting and administrative costs associated with redemption or (ii) as applicable, its pro rata share (based on the Net Asset Value allocable to it) of the aggregate proceeds of realisation of the security over the Collateral remaining following application thereof in accordance with the Intercreditor Priority of Payments, which amounts may comprise Class E Restricted Disbursements.
Non-Call Periods (a) In respect of the Rated Notes, the period from and including the Initial Closing Date to, but excluding, the Payment Date falling in September 2010, (b) in respect of the Initial Issuance Class E-1 Subordinated Notes and the Initial Issuance Class E-3 Subordinated Notes, the period from (and including) the Initial Closing Date to (but excluding) the Payment Date falling in September 2010 (in the case of Initial Issuance Class E-3 Subordinated Notes, subject to Condition 20 (Specific Conditions)), (c) in respect of the Initial Issuance Class E-2 Subordinated Notes, the period from (and including) the Initial Closing Date to (but excluding) the Payment Date falling in September 2008, (d) in respect of the March 2008 Issuance Class E-4 Subordinated Notes and the March 2008 Issuance Class E-5 Subordinated Notes, the period from (and including) the March 2008 Closing Date to (but excluding) the Payment Date falling in September 2010, (e) in respect of the November 2008 Issuance Class I-1 Intervening Notes, the period from (and including) the November 2008 Closing Date to (but excluding) the Payment Date falling in December 2009, (f) in respect of the September 2009 Issuance Class E Subordinated Notes, the period from (and including) the September 2009 Closing Date to (but excluding) the Payment Date falling in September 2010, (g) in respect of the December 2009 Issuance Class E Subordinated Notes, the period from (and including) the December 2009 Closing Date to (but excluding) the Payment Date falling in September 2011 and (h) in respect of the December 2010 Issuance Class E Subordinated Notes, the period from (and including) the December 2010 Closing Date to (but excluding) the Payment Date falling in December 2011.
Security for the Notes The Notes (together with the External Permitted Debt) will be secured in favour of the Security Trustee for the benefit of the Secured Creditors (including the External Creditors) by security over the Collateral. The Notes (together with the External Permitted Debt) will also be secured by charges or assignments by way of security over the Issuer's other rights and assets, including its rights under certain of the agreements described herein but excluding its rights in respect of the Issuer Irish Account and the Corporate Administration Agreement
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(see Condition 4 (Security)).
Credit Enhancement The Notes will have the benefit of limited credit enhancement in the form of over-collateralisation provided by the excess of the Market Value of Issuer Investments over the total outstanding amount of Permitted Indebtedness (see the section of this Overview headed "Over-Collateralisation Testing" below). In general, the amount of indebtedness that the Issuer will be able to incur will depend on the types of assets, the credit rating of such assets, the historical volatility in the market value of such assets and the respective obligor and industry concentration levels of such assets comprising Issuer Investments, as determined in accordance with the Market Valuation Manual. In addition, the Class A Notes will have additional credit enhancement in the form of the subordination of the Class B Notes, External Second Senior Permitted Debt, Class C Notes, External Third Senior Permitted Debt, the Class D Notes, External Fourth Senior Permitted Debt, any Intervening Indebtedness and Class E Subordinated Notes while the Class B Notes will have additional credit enhancement in the form of the subordination of the Class C Notes, External Third Senior Permitted Debt, the Class D Notes, External Fourth Senior Permitted Debt, any Intervening Indebtedness and the Class E Subordinated Notes, the Class C Notes will have additional credit enhancement in the form of the subordination of the Class D Notes, External Fourth Senior Permitted Debt, any Intervening Indebtedness and the Class E Subordinated Notes, the Class D Notes will have additional credit enhancement in the form of subordination of any Intervening Indebtedness and the Class E Subordinated Notes, and any Intervening Indebtedness will have additional credit enhancement in the form of the subordination of the Class E Subordinated Notes. There can be no assurance that the subordination mentioned in this paragraph will remain unchanged during the life of the Notes, nor that the credit enhancement in the form of over-collateralisation mentioned above will not be removed in the future following a decline in the Market Value of the Issuer’s investments. (See the section of this Prospectus headed "Risk Factors – Removal of Credit Enhancement").
VF-1 Senior Secured Variable Funding Notes
The Issuer has also funded itself through the issue of variable funding notes (the "VF-1 Notes") in accordance with the Trust Deed and a trust instrument supplemental thereto constituting the VF-1 Notes (the Trust Deed and such supplemental trust instrument being, together, the "VF-1 Instrument"). Pursuant to the VF-1 Instrument, each VF-1 Noteholder committed to advance funds (each such advance, a "COF Advance" or an "Interbank Advance", and each an "Advance"), as set out in the VF-1 Instrument, to the Issuer in Euro or an Optional Currency (as defined in the section of this Prospectus headed "Description of the Terms and Conditions of the VF-1 Notes"), in aggregate principal amount of up to the equivalent of €200,000,000. Each Advance under the VF-1 Notes will be applied by the Issuer (or the Investment Manager on the Issuer's behalf), in the acquisition of Issuer Investments or in order to pay any interest outstanding on the Notes or to pay Class E Restricted Disbursements. The VF-1 Noteholders must also satisfy certain ratings criteria. If any VF-1 Noteholder fails to satisfy the rating requirements set out in the
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VF-1 Instrument or otherwise defaults on its obligation to provide Advances under the VF-1 Instrument, (i) the Issuer may at its option upon at least ten Business Days' notice to the VFN Agent and such VF-1 Noteholder, replace such VF-1 Noteholder or (ii) (in the event of a failure to satisfy the rating requirements) such VF-1 Noteholder may, with the consent of the Issuer, post collateral for the benefit of the Issuer in an amount, in a manner and of a type reasonably acceptable to the Issuer and the Rating Agencies, subject to the VF-1 Noteholders maintaining a short-term S&P issuer credit rating of at least "A-3" or a short-term Moody’s rating of at least "P- 3", provided that if such VF-1 Noteholder chooses not to post collateral, paragraph (i) above shall continue to apply. (See the section of this Prospectus headed "Description of the Terms and Conditions of the VF-1 Notes").
External Permitted Debt Pursuant to the Security Documents and Intercreditor Arrangements, the Issuer may, in addition to the VF-1 Notes, from time to time enter into new arrangements for the incurrence of other External Permitted Debt, secured on the Collateral (see the section of this Prospectus headed "Description of the Security and Intercreditor Deed" below). In the event that it does so, the Issuer, acting through the Listing Agent, will procure that details of the same are provided to the Irish Stock Exchange in such manner as the Irish Stock Exchange deems fit.
Types and Ranks of Indebtedness
Under the Transaction Documents the Issuer may, subject to the restrictions and conditions contained therein, incur Permitted Indebtedness with effect from the Initial Closing Date. Permitted Indebtedness may comprise Senior Indebtedness, Second Senior Indebtedness, Third Senior Indebtedness, Fourth Senior Indebtedness, Intervening Indebtedness and Subordinated Indebtedness. Each such level of Permitted Indebtedness may comprise both debt issued in the form of Notes and debt advanced by External Creditors, as follows: (i) Senior Indebtedness may comprise Class A Notes (as defined in the Conditions) and External Senior Permitted Debt, (ii) Second Senior Indebtedness may comprise Class B Notes (as defined in the Conditions) and External Second Senior Permitted Debt, (iii) Third Senior Indebtedness may comprise Class C Notes (as defined in the Conditions) and External Third Senior Permitted Debt, (iv) Fourth Senior Indebtedness may comprise Class D Notes (as defined in the Conditions) and External Fourth Senior Permitted Debt, (v) Intervening Indebtedness may comprise Intervening Notes and Intervening Indebtedness advanced by an External Creditor and (vi) Subordinated Indebtedness may comprise Class E Subordinated Notes and Subordinated Indebtedness advanced by an External Creditor. All such Permitted Indebtedness will be subject to the terms of and, after the Initial Closing Date, may only be issued in accordance with, the Security and Intercreditor Deed. The Permitted Indebtedness which the Issuer intends to issue and enter into on the Initial Closing Date will be (x) the VF-1 Notes and (y) the Class A-1 Notes, the Class B-1 Notes, the Class C-1 Notes, the Class D-1 Notes and the Class E Subordinated Notes. After the Initial Closing Date the Issuer may incur further Permitted Indebtedness in the form of Notes (see Condition 17 (Further Issues) and the section of this Prospectus headed "Description of the Trust Deed Note
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Issuance Procedure") and in the form of advances made by External Creditors (see the section of this Prospectus headed "Description of the Security and Intercreditor Deed – Additional Permitted Credit").
Intercreditor Arrangements The Security Documents will contain certain intercreditor arrangements pursuant to which the rights of Noteholders and Holders of other Permitted Indebtedness from time to time will be established. Pursuant to these arrangements the Class A Notes will rank pari passu with, inter alia, any External Senior Permitted Debt and the rights of any Secured Hedging Counterparties in priority to the Class B Notes and any External Second Senior Permitted Debt that will in turn rank pari passu and in priority to the Class C Notes and any External Third Senior Permitted Debt that will in turn rank pari passu and in priority to the Class D Notes and any External Fourth Senior Permitted Debt that will in turn rank pari passu and in priority to any Intervening Indebtedness, which will rank amongst itself in accordance with the Intervening Indebtedness Priority of Payments and will in turn rank in priority to any Subordinated Indebtedness (including the Class E Subordinated Notes) which will also in turn rank pari passu. Upon enforcement of the security created pursuant to the Security Documents the liquidation proceeds will be applied in accordance with the Intercreditor Priority of Payments (see the section of this Prospectus headed "Description of the Security and Intercreditor Deed" below).
Prepayment Amounts Senior Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods) (see the section of this Overview headed "Blockage Periods") if, at any time, any Senior Indebtedness is required to be prepaid, (x) no payment shall be made on account of the principal of, premium (if any) or interest on, or commitment fees (if any) or breakage costs (if any) with respect to, the Class B Notes, External Second Senior Permitted Debt, Class C Notes, External Third Senior Permitted Debt, Class D Notes, External Fourth Senior Permitted Debt or any Intervening Indebtedness and (y) no payment, including in respect of Class E Restricted Disbursements and any Interest Payment Amount in respect of the Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made (see Condition 3(i) (Prepayment Amounts)).
Second Senior Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods) (see the section of this Overview headed "Blockage Periods") if, at any time, any Second Senior Indebtedness is required to be prepaid, (x) no payment shall be made on account of the principal of, premium (if any) or interest on, or commitment fees (if any) or breakage costs (if any) with respect to, the Class C Notes, External Third Senior Permitted Debt, Class D Notes, External Fourth Senior Permitted Debt or any Intervening Indebtedness and (y) no payment, including in respect of Class E Restricted Disbursements and any Interest Payment Amount in respect of the Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made (see
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Condition 3(i) (Prepayment Amounts)).
Third Senior Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods) (see the section of this Overview headed "Blockage Periods") if, at any time, any Third Senior Indebtedness is required to be prepaid, (x) no payment shall be made on account of the principal of, premium (if any) or interest on, or commitment fees (if any) or breakage costs (if any) with respect to, Class D Notes, External Fourth Senior Permitted Debt, any Intervening Indebtedness and (y) no payment, including in respect of Class E Restricted Disbursements and any Interest Payment Amount in respect of the Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made (see Condition 3(i) (Prepayment Amounts)).
Fourth Senior Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods) (see the section of this Overview headed "Blockage Periods") if, at any time, any Fourth Senior Indebtedness is required to be prepaid, (x) no payment shall be made on account of the principal of, premium (if any) or interest on, or commitment fees (if any) or breakage costs (if any) with respect to any Intervening Indebtedness and (y) no payment, including in respect of Class E Restricted Disbursements and any Interest Payment Amount in respect of the Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made (see Condition 3(i) (Prepayment Amounts)).
Intervening Indebtedness Prepayment Amounts Without prejudice to Condition 3(h) (Blockage Periods) (see the section of this Overview headed "Blockage Periods") if, at any time, any Intervening Indebtedness is required to be prepaid, no payment, including in respect of Class E Restricted Disbursements and Interest Payment Amount in respect of the Class E Subordinated Notes which are Interest Bearing Notes, shall be made with respect to the Holders of Subordinated Indebtedness (including the Holders of Class E Subordinated Notes) until such prepayment has been made (see Condition 3(i) (Prepayment Amounts)).
The Portfolio The portfolio of Collateral that the Issuer may acquire from time to time may consist of high yield securities, loans and special opportunity investments such as distressed debt. Other than the certain restrictions on the characteristics that Issuer Investments must have when the Issuer (or Investment Manager on its behalf) enters into a binding commitment to acquire them ("Acquisition Criteria") (see the section of this Prospectus headed "Description of the Portfolio and Market Valuation Methodology – Acquisition Criteria for Issuer Investments"), the Investment Management Agreement does not prescribe specific eligibility criteria with which Issuer Investments must comply, however the Market Valuation Manual includes certain limitations on the concentrations of Issuer Investments that will be taken into account for the purpose of computing compliance with the Over- Collateralisation Tests (see the section of this Overview
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headed "Portfolio Excesses" below).
Issuer Investments For the purpose of the Market Valuation Manual, Issuer Investments may include Cash, Cash Equivalents, Government Securities, Loans, Securities, and Hedging Transactions (each as defined in the Market Valuation Manual).
Ongoing Acquisition and Disposal of Issuer Investments
Pursuant to the Investment Management Agreement and the Trust Deed, the Issuer is at liberty (subject to the Acquisition Criteria) to acquire and dispose of investments constituting Issuer Investments on a rolling basis throughout the life of the VF Notes and the Notes. Whether such Issuer Investments will be taken into account in determining compliance with the Over-Collateralisation Tests established pursuant to the Market Valuation Manual (see the section of this Overview headed "The Market Valuation Manual" below) will depend on the same not comprising Excluded Issuer Investments (see also the section of this Overview headed "Portfolio Excesses" below). In addition, pursuant to the Intercreditor Arrangements (see the section of this Overview headed "Intercreditor Arrangements" above), the Issuer is permitted to enter into borrowing arrangements additional to those provided under the VF Notes. The amount of such additional debt, together with amounts Outstanding under the VF Notes and the Notes at any time is, in addition to the composition of Issuer Investments at any time, factored into the calculations determining compliance or otherwise with the Over-Collateralisation Tests (see definition of "Over-Collateralisation Tests" in the Market Valuation Manual).
The Market Valuation Manual The Issuer's investment strategy is governed by the Over- Collateralisation Tests set out in the Market Valuation Manual. The Over-Collateralisation Tests comprise formulae according to which the Rating Agencies determine the permitted amount of Senior Indebtedness, Second Senior Indebtedness, Third Senior Indebtedness and Fourth Senior Indebtedness based upon the composition of its assets in the form of Issuer Investments at any time. For each level of seniority of such indebtedness, each of the Asset Categories between A-1 and K-2 is allocated a specific Advance Rate (see the matrices referred to in the definition of "Advance Rate" in the Market Valuation Manual). The Advance Rates obtained by application of these matrices in turn determine the applicable S&P Advance Amount and Moody's Advance Amount by reference to which (together with reference to the Market Value of Issuer Investments (see the section of this Overview headed "Ascertaining Market Value and Market Price" below) in the relevant Asset Categories) the Over-Collateralisation Tests are then computed (see definition of "Over- Collateralisation Tests", "Senior Advance Amount", "Second Senior Advance Amount", "Third Senior Advance Amount", "Fourth Senior Advance Amount" and "Market Value" in the Market Valuation Manual). The Market Valuation Manual is included in full in this Prospectus and annexed to each of the Trust Deed and the Investment Management Agreement of which, respectively, it forms a part.
Portfolio Excesses Although certain concentration parameters are contained in the Market Valuation Manual (see definition of "Excess Issuer Investments" in the Market Valuation Manual) they are not strict limitations in themselves but determine which Issuer
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Investments at any time may be taken into consideration when computing compliance with the Over-Collateralisation Tests. Any Issuer Investments which are acquired in such percentages that their concentration exceeds the relevant parameters will be deemed Excess Issuer Investments and excluded from the Over-Collateralisation Tests (see definitions of "Excluded Issuer Investments", "Non Excluded Issuer Investments", "S&P Advance Amount", "Moody's Advance Amount", "Fourth Senior Advance Amount", "Third Senior Advance Amount", "Second Senior Advance Amount", "Senior Advance Amount", "Fourth Senior Over-Collateralisation Test", "Third Senior Over-Collateralisation Test", "Second Senior Over- Collateralisation Test", "Senior Over-Collateralisation Test" and "Over-Collateralisation Tests" in the Market Valuation Manual).
Ascertaining Market Value and Market Price
The Market Valuation Manual provides a mechanism for obtaining the Market Value of Cash, Cash Equivalents, Unquoted Investments and other Issuer Investments. The Market Value of certain Issuer Investments is calculated by reference to the Market Value Price of the same. The Market Value Price is the bid price for each Issuer Investment at such date obtained from an Approved Source (as defined in the Market Valuation Manual), namely any of (a) the lower of two, or the average of three, prices quoted by Approved Dealers or Approved Investment Banking Firms, (b) in the case of an Approved Exchange, the closing price on such Approved Exchange (or if such Approved Exchange is closed for business at such date, then the most recent available closing price) or (c) the price obtained from an Approved Pricing Service (see definition of "Market Value" and "Market Value Price" in the Market Valuation Manual).
The principal purpose of ascertaining the relevant Market Value of Issuer Investments is to employ the same in determining compliance with the Over-Collateralisation Tests.
Over-Collateralisation Testing Pursuant to the Trust Deed and the Security and Intercreditor Deed, the Issuer will procure that the Investment Manager, on behalf of the Issuer, shall, on each Business Day that any Rated Notes remain Outstanding, determine whether the Over- Collateralisation Tests have been satisfied on such Business Day. This supports the Issuer's obligation pursuant to the Market Valuation Manual to (A)(i) calculate (or procure calculation by the Investment Manager of) the Market Value of each Issuer Investment that is not an Unquoted Investment on (x) the Valuation Date for each calendar week and (y) to the extent that a Market Value Price therefor is determined using an Approved Pricing Service, on each Business Day and (ii) to