FI New Issues – Learning to read and understanding a ...



Documentation IntroductionProcedure Document Name: NA FI New Issues Manual – How to Read and Understand a Bond Prospectus with Call Terms ManualDepartment Name: FI New IssuesPrepared By: Sylwia SzydelkoAnastasia AbrahimVersion 2.0Version Control Map for DocumentationRevision HistoryVersionDateAuthorSummary2.004/02/2014Sylwia SzydelkoAnastasia AbrahimFinal DocumentationTable of Contents TOC \o "1-3" \h \z \u Documentation Introduction PAGEREF _Toc385417202 \h 1Version Control Map for Documentation PAGEREF _Toc385417203 \h 1Executive Summary PAGEREF _Toc385417204 \h 4Definition of 'Prospectus' PAGEREF _Toc385417205 \h 4Types of Prospectus PAGEREF _Toc385417206 \h 4Definition of 'New Issue' PAGEREF _Toc385417207 \h 4Some Bond Terms Definitions: PAGEREF _Toc385417208 \h 5Frequently asked Questions for Bonds: PAGEREF _Toc385417209 \h 8Ten Things about Bonds PAGEREF _Toc385417210 \h 8Dissecting the Prospectus and finding the relevant terms: PAGEREF _Toc385417211 \h 9From Prospectus view: PAGEREF _Toc385417212 \h 10Definition of a callable Bond PAGEREF _Toc385417213 \h 14When can an Issuer redeem a bond? PAGEREF _Toc385417214 \h 14Primary Type of Call Features PAGEREF _Toc385417215 \h 14Different types of Optional Call – Corporates PAGEREF _Toc385417216 \h 14Different types of Mandatory Call – Corporates PAGEREF _Toc385417217 \h 16BondEye Call Screen: PAGEREF _Toc385417218 \h 16Some definitions of fields: PAGEREF _Toc385417219 \h 18Call Amount Restriction: PAGEREF _Toc385417220 \h 18Call Schedule Frequency: PAGEREF _Toc385417221 \h 18Call Timing PAGEREF _Toc385417222 \h 18Call Start Date: PAGEREF _Toc385417223 \h 18Call End Date PAGEREF _Toc385417224 \h 18Call Price Varies from Par Indicator PAGEREF _Toc385417225 \h 19Call Redemption Type: PAGEREF _Toc385417226 \h 19Call Payment Basis: PAGEREF _Toc385417227 \h 19Benchmark: PAGEREF _Toc385417228 \h 19Spread: PAGEREF _Toc385417229 \h 19Make Whole Yield: PAGEREF _Toc385417230 \h 19Min Call Notice/Units PAGEREF _Toc385417231 \h 19Max Call Notice/Units: PAGEREF _Toc385417232 \h 19Call Schedule Calculation/ Generation: PAGEREF _Toc385417233 \h 19How to recognize different types of calls on prospectus: PAGEREF _Toc385417234 \h 20Different ways to see calls on a prospectus: PAGEREF _Toc385417235 \h 20Regular Optional Call: PAGEREF _Toc385417236 \h 21Make Whole Call: PAGEREF _Toc385417237 \h 21Equity Clawback PAGEREF _Toc385417238 \h 22Difference between a make whole call provision and a make whole amount: PAGEREF _Toc385417239 \h 22Examples of Conditional Calls with Make whole amounts PAGEREF _Toc385417240 \h 22Tax Call with Make Whole Amount PAGEREF _Toc385417241 \h 23Redemption upon a Change of Control with Make Whole Amount PAGEREF _Toc385417242 \h 23Executive SummaryThe scope of the documentation is to show how to read a prospectus (Form 424B3, Form 424B5, FWP (Free Writing Prospectus) and Form 8K)Definition of 'Prospectus'A formal legal document, which is required by and filed with the Securities and Exchange Commission that provides details about an investment offering for sale to the public. A prospectus should contain the facts that an investor needs to make an informed investment decision. This is also known as an "offer document."Types of ProspectusThere are two types of prospectuses for stocks and bonds:PreliminaryThe preliminary prospectus is the first offering document provided by a securities issuer and includes most of the details of the business and transaction in question. Some lettering on the front cover is printed in red, which results in the use of the nickname "red herring" for this document.?FinalThe final prospectus is printed after the deal has been made effective and can be offered for sale, and supersedes the preliminary prospectus. It contains finalized background information including such details as the exact number of shares/certificates issued and the precise offering price.FWP – Free Writing ProspectusAny written communication associated with the?offer?to?sell?a?security. A free writing?prospectus?is a supplement to the formal prospectus required by the?Securities and Exchange Commission. It may contain?additional?information about the?business?offering?the security or additional information about the offering itself.Definition of 'New Issue'A reference to a security that has been registered issued and is being sold on a market to the public for the first time. New issues are sometimes referred to as primary shares or new offerings. The term does not necessarily refer to newly issued stocks, although initial public offerings are the most commonly known new issues. Securities that can be newly issued include both debt and equity.Some Bond Terms Definitions:ParThe face value of a bond. Generally $1,000 for corporate issues, with higher denominations such as $10,000 for many government issuesA dollar amount assigned to a security when first issued.At ParA term that refers to a bond, preferred stock or other debt obligation that is trading at its face value. The term "at par" is most commonly used with bonds.A bond that trades at par will have a yield equal to its coupon, and investors will expect a return equal to the coupon for the risk of lending to the bond issuer. Bonds are quoted at 100 when trading at par.Below ParA term describing a bond whose price is below the face value or principal value, usually $1,000. As bond prices are quoted as a percentage of face value, a price below par would typically be anything less than 100.Bond CovenantA legally binding term of an agreement between a bond issuer and a bond holder. Bond covenants are designed to protect the interests of both parties. Negative or restrictive covenants forbid the issuer from undertaking certain activities; positive or affirmative covenants require the issuer to meet specific requirements.Call ProvisionA provision on a bond or other fixed-income instrument that allows the original issuer to repurchase and retire the bonds. If there is a call provision in place, it will typically come with a time window under which the bond can be called, and a specific price to be paid to bondholders and any accrued interest are defined.Callable bonds will pay a higher yield than comparable non-callable bonds.Callable BondA bond that can be redeemed by the issuer prior to its maturity. Usually a premium is paid to the bond owner when the bond is called.?Also known as a "redeemable bond."Dual Currency BondA debt instrument in which the coupon and principal payments are made in two different currencies.The currency in which the bond is issued, which is called the base currency, will be the currency in which interest payments are made.The principal currency and amount are fixed when the bond is issued.Trading FlatA price that is neither rising nor declining.?A bond that is trading without accrued interest.Income BondA type of debt security in which only the face value of the bond is promised to be paid to the investor, with any coupon payments being paid only if the issuing company has enough earnings to pay for the coupon payment.Put ProvisionA condition that allows a bondholder to resell a bond back to the issuer at a price - which is generally par - on certain stipulated dates prior to maturity.The put provision is an added degree of security for the bondholder, since it establishes a floor price for the bond.?This mitigates the risk of a decline in the bond price in the event of adverse developments such as rising interest rates or deterioration in the credit quality of the bond issuer.IndentureA formal legal agreement, contract, or document, in particular.At MaturitySecurities requiring interest at maturity pricing are those that do not have periodic interest payments, but rather one interest payment made at the maturity of the securityAccretion of DiscountThe increase in the value of a discounted instrument as time passes and it approaches maturity.?The value of the instrument will accrete (grow) at the interest rate implied by the discounted issuance price, the value at maturity and the term to maturity.Accrued InterestA term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, but not yet paid or received. Accrued interest occurs as a result of the difference in timing of cash flows and the measurement of these cash flows.?The interest that has accumulated on a bond since the last interest payment up to, but not including, the settlement date.Dated Date (Interest Accrual Start Date)The date carried on the face of a bond or note from which interest normally begins to accrue.Settlement DateThe date by which an executed security trade must be settled. That is, the date by which a buyer must pay for the securities delivered by the seller.?The settlement date for stocks and bonds is usually three business days after the trade was executed. For government securities and options, the settlement date is usually the next businessIssue DateThe issue date is simply the date on which a bond is issued and begins to accrue interest.Maturity DateThe maturity date is the date on which an investor can expect to have his or her principal repaid. It is possible to buy and sell a bond in the open market prior to its maturity date.Maturity ValueThe amount of money the issuer will pay the holder of a bond at the maturity date. This can also be referred to as “par value” or “face value.”CouponThe coupon rate is the periodic interest payment that the issuer makes during the life of the bond.Yield to MaturitySince bonds trade on the open market, the actual yield an investor receives if they purchase a bond after its issue date (the “yield to maturity”) is different than the coupon rate.Secured BondsAre those that are collateralized by an asset – for instance, property, equipment (usually in the case of airlines, railroads, trucking companies, and the like), or an income stream. This means that in the event that the issuer “defaults” – or fails to make interest and principal payments – the investors have a claim on the issuer’s assets that will enable them to get their money back.Unsecured BondsWhich are also called “debentures,” are not secured by a specific asset, but rather the full faith and credit of the issuer. In other words, the investor has only the issuer’s promise to repay but no claim on specific collateral.Frequently asked Questions for Bonds:What is an “offer” within the meaning of the federal securities laws, and why is it relevant to the communications rules?The term “offer” is defined broadly in Section 2(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”), as “every attempt or offer to dispose of, or solicitation of an offer to buy for value.” The Securities Act regulates all offers of securities unless there is an available exemption. b. Exemptions are available for private or limited offerings, offerings made outside the United States and offerings of certain exempt securities. Who Issues Bonds?Corporations issue bonds as a way to borrow large sums of money. Companies have two basic ways to raise money for expansion, acquisitions, or other uses. They can issue stock or borrow the moneyCorporate bonds usually come in $1,000 denominations and have maturities ranging up to 40 years, but are usually ernments and governmental agencies also use bonds to raise money. U.S. Treasury Bonds are the most secure investments in the world because the U.S. Government backs them with its "full faith and credit."U.S. Treasury issues come in several maturities and denominations. Other U.S. agencies issue bonds to fund such things as mortgages and other government programs.Municipal governments also issue bonds, which they often use to build roads or perform other infrastructure projects.Ten Things about BondsBonds aren’t as complex as they may seem. Despite the numerous titles used to describe them – fixed-income securities, debt instruments, credit securities, etc. – bonds are nothing more than a fancy IOU?in which the terms, pay-back date and interest rate are carefully spelled out in a legal document.Bonds have a reputation for safety. And that reputation is well-deserved. But that doesn’t mean that bonds are risk free. In fact, bond investors tend to worry about things that stock investors never worry about,?like inflation and liquidity risk.Bonds move in the opposite direction of interest rates. When rates rise, bonds fall. And vice versa. If you buy a bond and hold it until it matures, swings in interest rates and the resulting swings in the bond’s price won’t matter. But if you sell your bond before it matures, the price it fetches will be largely related to the interest rate environment.Bonds are more complicated than stocks. Whereas stocks come in only a handful of varieties and are offered only by public corporations, bonds are sold by corporations, the federal government, government-sponsored agencies, cities, states and other public authorities. Bonds also come in nearly endless varieties – from short-term notes to bonds that take 30 years to mature.As complicated as bonds may be, it helps to realize that all the bonds issued in the U.S. fall into one of three categories. First, there’s the extremely safe debt of the federal government and its agencies. Second, there are the safe bonds sold by corporations, cities and states. Those two forms of bond are called “investment grade.” Third, there are the risky bonds sold by those same corporations, cities and states. Those bonds are called below-investment grade, or junk bonds.It’s easy to tell at a glance whether a bond is investment grade or junk (and where it falls on the continuum between the two. A number of Wall Street companies “rank” bonds by safety. These credit rating agencies, including Moody’s, Standard & Poor’s and Fitch Ratings,?publish simple “grades” on all debt issues.There’s an entire class of bond aimed at providing tax-free returns. Cities and states issue municipal bonds, or munis, to raise money to pay for schools, highways and a slew of other projects. And interest payments on the bonds are free of federal taxes. But despite the tax break,?munis aren’t for everyone.The key to understanding the bond market lies in understanding a financial concept called a?yield curve, which is a graphical representation of the relationship between the interest rate that a bond pays and when that bond matures. Once you learn to read curves (and calculate the spread between curves), you can make informed comparisons between bond issues.The bond market is the basis of other, more complex markets. Savvy investors can buy futures and options on bonds just as they can them on stocks. The bond market has also developed countless?derivative?investments. Of these, the best known are?credit default swaps, which are used to protect investors from default risk.Much of the bond market takes place in an opaque, unfriendly corner of Wall Street where smaller investors are particularly vulnerable. The secondary market, or over-the-counter market, is not recommended for average investors. Things aren’t quite as shady as they once were. But it’s no place to venture unless you’re willing to do a lot of researching and a lot of negotiating. Thus for the vast majority of investors considering a foray into debt investing,?buying a bond mutual fund is the way to go. Bond funds are free of the liquidity risk of individual bonds. Investors can use them to diversify their holdings (something that’s nearly impossible for anyone other than the wealthy to do with individual bonds.) It’s pretty easy to find out what the fees and loads (sales commissions) on any fund may be. And there are thousands of funds that don’t charge a load and keep fees to a minimum.Dissecting the Prospectus and finding the relevant terms:From FWP view:From Prospectus view:Definition of a callable BondCallable or redeemable bonds are bonds that can be redeemed or paid off by the issuer prior to the bonds' maturity date.When an issuer calls its bonds, it pays investors the call price (usually the face value of the bonds) together with accrued interest to date and, at that point, stops making interest payments.Call provisions are often part of corporate and municipal bonds, but usually not bonds issued by the federal government.When can an Issuer redeem a bond?An issuer may choose to redeem a callable bond when current interest rates drop below the interest rate on the bond.That way the issuer can save money by paying off the bond and issuing another bond at a lower interest rate.?This is similar to refinancing the mortgage on your house so you can make lower monthly payments.?Primary Type of Call FeaturesOptional Redemption - Allows the issuer, at its option, to redeem the bonds. Many municipal bonds, for example, have optional call features that issuers may exercise after a period of years, often ten years.Sinking Fund Redemption- Requires the issuer to regularly set aside money for the redemption of the bonds before maturity.Extraordinary Redemption - Allows the issuer to call its bonds before maturity if certain specified events occur, such as the project for which the bond was issued to finance has been damaged or destroyed.Different types of Optional Call – CorporatesRegularThis is redemption with no provisionsMake Whole The provision allows the borrower to pay off instruments remaining debt early. The borrower (instrument issuer) has to make a lump sum payment derived from a formula based on the net present value (NPV) of future coupon payments that will not be paid because of the call.Equity (Clawback)The provision allows a company an option to redeem a preset fraction of the instrument within a preset period at a predetermined price as long as the funds used for the debt redemption come from an equity offering.Clean-up BuybackThe provision allows a company an option in securitization transactions in which it may reduce its own administrative expenses by buying back the remaining issue when the principal has been reduced to an insignificant amount, usually to less than 10% of the original issueConvertible - Soft Call The provision dictates that a premium will be paid by the issuer if early redemption occurs. This is to increase securities'?attractiveness, a soft call provision acts as an added restriction for issuers should they decide to redeem the issue early. Ratings DowngradeThe provision allows the company to buy back its instruments if the rating of the instruments is downgraded. Asset Sales The provision allows a company to buy back its instruments if an asset sale occurs. Asset sale is when the seller gives the buyer control over the assets transferred, and also any residual interest, without recourse to the seller.Covenant Violation The provision allows a company to buy back its instruments if violation of covenants occurs which is an agreement between bank and borrower that dictate the way a company manages its finances while indebted to the bank Tax Law Change (Capital Event) The provision allows a company to buy back its instruments that if Tax law change occurs that affects the company Change of Control The provision allows a company to buy back its instruments, sometimes at a premium, should a change of control occur.Destruction of Equipment The provision allows a company to buy back its instruments if there is destruction of Company EquipmentGaming Law Violation The provision allows a company to buy back its instruments if the company is in violation of any gaming laws.Drop in Receivables The provision allows a company to buy back its instruments if the company has a drop in Receivables which is the decrease of the amount owed to the company whether or not they are currently due.Different types of Mandatory Call – CorporatesAutocallableThe provision allows a company to buy back the market-linked instrument, which can be redeemed prior to the scheduled maturity date if certain predetermined market conditions are achieved. The criterion for deciding whether the product is automatically matured (‘auto-called’) is whether the underlying reference index is above a predetermined level. BondEye Call Screen:Some definitions of fields:Call Amount Restriction: A restrictive covenant imposed on the borrower that identifies whether or not this issue must be called in whole or may be called in parts.Example: “The Notes may be redeemed, in whole or in part” – In Whole or In Part“The Company may (on any one or more occasions) redeem up to 35% of the aggregate principal amount of notes issued under the Indenture” – Partial“in whole, at any time “ – In wholeCall Schedule Frequency: How is the call scheduled?Call Timing: Timing of callCall Start Date: Start Date of Call provisionCall End Date: Call End date of the provision*Note* only use for: Coupon Dates, Specific Dates : call period before maturity date unless it is a single dateAt any time : ONLY IF THERE IS A REGULAR CALL attachedCall Price Varies from Par Indicator: if the issue call price is higher not 100%Call Redemption Type: how call is redeemedCall Payment Basis: the way the call redemption is calculatedBenchmark: The benchmark of the make wholeSpread: the basis point of the make whole callMake Whole Yield: used for basis point only if the Benchmark is Fixed YieldMin Call Notice/Units: the minimum period that the issuer can send out notice for call redemptionMax Call Notice/Units: the maximum period that the issuer can send out notice for call redemptionCall Schedule Calculation/ Generation:If payment frequency is semiannual, or (monthly), or (quarterly) and the redemption or call information is callable on interest payments dates then we put the issue as on coupon days only. We put the dates in the schedule for each date from the par call date until maturity.If payment frequency is monthly or (quarterly) and the redemption or call information is semi-annual then we put the call in as onset the call timing to specific dates. We put in those dates from the par call date until maturity for each date in the schedule. The Call Schedule Frequency should be set to Semi Annual as wellIf payment frequency is semi- annual and the redemption or call information is either (monthly) or (quarterly) then we put set the call timing as to on specific dates. We put in each of those dates from the par call date until maturity for the schedule if it’s (monthly) or (quarterly) The Call Schedule Frequency should be monthly or quarterly, as specified in the documentation.If the call date is callable only on one date then we put that in as callable on specific dates. We put that one date in the schedule. The Call Schedule Frequency should be Single Call Date.If the call date is on or after a date then we put it in as at any time. An example is “on or after June 3, 2004”. Then we put it as at any time and put in the schedule will only contain that one date.How to recognize different types of calls on prospectus:Different ways to see calls on a prospectus:Regular Optional Call:On and after August 15, 2017, the Company may redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, on the Notes to the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period beginning on August?15 of each of the years indicated below:On or after?:??Price?:August 15, 2017??103.313%August 15, 2018??102.208%August 15, 2019??101.104%August 15, 2020 and thereafter??100.000%Make Whole Call:Make-whole call @ T+50 bps prior to August?15, 2017orIn addition, at any time prior to August 15, 2017, the Notes may be redeemed by the Company, upon not less than 30 nor more than 60 days’ notice, in whole or in part, at the Company’s option, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued but unpaid interest, if any, to, the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date).“Applicable Premium” means with respect to any redemption date, the greater of (i)?1.0% of the principal amount of such Note and (ii)?the excess of (A)?the present value at such redemption date of (1)?100.0% of the principal amount of such Note plus (2)?all required remaining scheduled interest payments due on such Note through August 15, 2017 (excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (B)?the principal amount of such Note, in each case as calculated by the Company or on behalf of the Company by such Person as the Company shall designate;?provided that such calculation shall not be a duty or obligation of the Trustee.“Treasury Rate” means, with respect to a redemption date, the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available at least two Business Days prior to such redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such redemption date to August 15, 2017;?provided?, however, that if the period from the redemption date to such date is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the redemption date to such date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.Equity ClawbackEQUITY CLAWBACK: At any time prior to August?15, 2015, we may redeem up to 35% of the original principal amount of the notes with the proceeds of one or more equity offerings of our common shares at a redemption price of 106.625% of the principal amount of the notes, together with accrued and unpaid interest, if any, to the date of redemption.Difference between a make whole call provision and a make whole amount:Make whole call provision - A provision in some bond agreements allowing the issuer to redeem the bond before maturity if it gives bondholders a lump-sum payment equal to the net present value of coupons they would have received, had the bond not been called. A make-whole call provision allows the issuer to reduce the amount of debt on its balance sheet, if need be, while also limiting bondholders' risk. If a make whole amount is on a regular call, then it is a make whole callMake whole amount - means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. Make whole amount can be used with any conditional call: change of control; tax law change; and so onExamples of Conditional Calls with Make whole amountsTax Call with Make Whole AmountUpon the occurrence of a Tax Event (as defined below), the Companywill have the right to shorten the maturity of the Debentures (as defined below) to the minimum extent required, in the opinion of nationally recognized independent tax counsel, such that, after the shortening of the maturity, interest paid on the Debentures will be deductible for United States federal income tax purposes or, if such counsel is unable to opine definitively as to such minimum period, the minimum extent so required as determined in good faith by the Board of Directors of the Company. In the event that the Company elects to exercise its right to shorten the maturity date of the Debentures on the occurrence of a Tax Event, the Company shall mail a notice of shortened maturity to each Holder of Debentures by first-class mail not more than 60 days after the occurrence of such Tax Event, stating the new maturity date of the Debenture. Such notice shall be effective immediately upon mailing. "Tax Event" means that the Company shall have received an opinion of nationally recognized tax counsel to the effect that, as a result of (a) any amendment to, clarification of, or change (including any announced prospective amendment, clarification or change) in any law, or any regulation there under, of the United States, (b) any judicial decision, official administrative pronouncement, ruling, regulatory procedure, notice or announcement, including any notice or announcement of intent to adopt or promulgate any ruling, regulatory procedure or regulation (any of the foregoing, an "Administrative or Judicial Action"), or (c) any amendment to, clarification of, or change in, any official position with respect to, or any interpretation of, an Administrative or Judicial Action or law or regulation of the United States that differs from the theretofore generally accepted position or interpretation, in each case, occurring on or after May 18, 1998, there is more than an insubstantial increase in the risk that interest paid by the Company on the Debentures is not, or will not be, deductible, in whole or in part, by the Company for United States federal income tax purposes. In addition, if a Tax Event occurs and in the opinion of nationally recognized independent tax counsel there would, notwithstanding any shortening of the maturity of the Debentures, be more than an insubstantial risk that interest paid by the Company on the Debentures is not, or will not be, deductible, in whole or in part, by the Company for United States federal income tax purposes, the Company shall have the right, within 90 days following the occurrence of such Tax Event, to redeem the Debentures in whole (but not in part) on no less than 30 or more 60 days' notice mailed to Holders of the Debentures, at a redemption price equal to the greater of (i) 100% of the principal amount of the Debentures, and (ii) the sum of the present value of the Remaining Scheduled Payments thereon discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 20 basis points, together in either case with accrued interest on the principal amount being redeemed to the date of redemption. Redemption upon a Change of Control with Make Whole AmountRedemption upon a Change of Control?Before September 1, 2008, the Issuer may also redeem the Notes, as a whole but not in part, upon the occurrence of a Change of Control, upon not less than 30 nor more than 60 days’ prior notice (but in no event more than 90 days after the occurrence of such Change of Control), at a redemption price equal to 100% of the Accreted Value thereof plus the Applicable Premium as of, and accrued and unpaid interest thereon, if any, to, the date of redemption (a “ Change of Control Redemption Date ”).?“ Applicable Premium ” means, with respect to any Note on any Change of Control Redemption Date, the greater of (i) 1.0% of the Accreted Value of such Note on the Change of Control Redemption Date and (ii) the excess of (A) the present value at such Change of Control Redemption Date of the redemption price of such Note at September 1, 2008, computed using a discount rate equal to the Treasury Rate with respect to such Change of Control Redemption Date, plus 50 basis points over (B) the Accreted Value of such Note.?“ Treasury Rate ” means, with respect to any Change of Control Redemption Date, the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available at least two business days prior to such Change of Control Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such Change of Control Redemption Date to September 1, 2008; provided , however , that if the period from such Change of Contr9/01/ol Redemption Date to September 1, 2008 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from such Change of Control Redemption Date to September 1, 2008 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download