CAPITAL NOTESGPG Finance plc ("the Company") is a company established and organised in England and has securities quoted on the New Zealand Debt Market ("NZDX"). The Company's sole activity is to provide funding for the Guinness Peat Group plc ("GPG") or its subsidiary companies (together the "GPG Group") by issuing Capital Notes and lending the proceeds to companies within the GPG group at a margin above its average cost of funds. Two issues of Capital Notes by the Company remain outstanding and both issues are quoted on the NZDX. Summary terms and conditions of both issues are set out below. The first issue was originally made in 2003. Following a roll-over in 2008 there remain outstanding NZ$76,851,000 of these notes bearing interest at 9% per annum (the "2008 Notes"). The second issue of the Company's Capital Notes which remains outstanding was made in 2006, raising NZ$350 million and bearing interest at a rate of 8.3% per annum ("the 2006 Notes"). The 2006 Notes have an initial election date of 15 November 2012, immediately prior to which the Company is required to propose terms and conditions on which 2006 Noteholders may elect to roll over their 2006 Notes. Noteholders would then be entitled to elect to retain some or all of their 2006 Notes for a further period on the new terms and conditions and to convert some or all of these Notes into ordinary shares in GPG. Such elections would be subject to (i) GPG's overriding right (at its option) on the election date to purchase for cash some or all of the 2006 Notes for their principal amount, together with any accrued and unpaid interest, and (ii) specified earlier purchase at a premium by GPG on terms set out in the trust deed that established the 2006 Notes. The 2008 Notes have similar terms and conditions to the 2006 Notes, the main differences being that the 2008 Notes bear interest at a different rate, have an initial election date of 15 December 2013 and are subject to the condition that the Company or GPG may purchase all or any of the 2008 Notes at any time without payment of a premium on giving 180 days' notice. The obligations of the Company under the 2006 and 2008 Notes are guaranteed by GPG on a subordinated basis. If the interest payments on the Capital Notes are not paid on the due date, for as long as such payments remain unpaid GPG covenants not to pay any dividends or make certain other returns of capital or distributions in respect of its ordinary shares. The Company has lent to GPG on a subordinated basis the proceeds from the two issues of Capital Notes and receives interest income on those loans. The loans attract interest at an average fixed rate of 9.63% per annum. No amounts were in arrears at 31 December 2009. Repayment of the loans may not be demanded by the Company except on commencement of a liquidation of GPG. However, to the extent that the Capital Notes are exchanged for ordinary shares in GPG, or purchased by GPG and cancelled, or GPG is required to make a payment under its guarantee of the Capital Notes, an equivalent amount of the loans shall be deemed to have been satisfied. Further details of the terms and conditions of these Capital Notes can be found in GPG’s or GPG Finance’s Annual Reports, and in the relevant circulars to be found in this section of this website. 03/11/2008 Election Notice letter to holders of 2003 Capital Notes
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