Schedule 2: Terms and Conditions of the Notes
Note that this is part of the Fiscal Agency Agreements. The terms and conditions are broken down as follows:1. Status, Guarantee, Form, Denomination and Title
If you have read the Purchase and Fiscal Agency Agreements, you are already familiar with the guarantee. The discussion on the ranking in priority of payment, however, is found on this part. The Notes shall rank pari passu with all other present and future External Indebtedness of the Issuer and those guaranteed by the Guarantor. We usually watch out for this provision because banks usually draft all indebtedness.
2. Transfer of Notes - Just a declaration that the Notes are issuable only as fully registered global securities and limitations as regards transfer and exchange. This provision is standard for Notes issued under Rule 144A and Reg S.
3. Negative Pledge - Non creation of secuirty interest on its assets. This is also a standard provision
4. Interest - Rate of Interest is determined by the fiscal agent or its duly appointed successor (the Agent Bank) from the Screen Rate. If this is not available, the Agent Bank, at least 2 Reference Banks will provide such rates. the arithmetic mean will be the determined Rate of Interest. Worst case scenario is adopting the Rate at the last preceding the (day before the last recent) Interest Determination Date.
It is interesting to note that Reference Banks means the principal New York Office of each four major banks engaged in the London interbank market selected by the Agent Bank. Screen Rate, on the other hand, is Moneyline Telerate Page 3750 or such other service (like Bloomberg) as may be nominated by the British Banker's Association.
Interest Determination Date means the second Banking Day in London before the commencement of the Interest Period for which the rate shall apply. I still have to check this, if the Determination Date falls on Wednesday then it's Tuesday.
Note that if coupon payment is semi-annual, the computed interest against the principla must be divided into 2.
5. Redemption and Purchase - Basically, it's the maturity date and the option of the Issuer and the Guarantor to purchse the Notes in the open market.
6. Payments - nothing much here, just a description of the delivery
7. Taxation - all payment sof principal and interest in respect of the Notes shall be made free and clear of and without withholding or deduction for any taxes..blah..blah...blah. Standard provision unless there's a new tax ruling.
8. Events of Default - This is important and must always be read and negotiated. Curing periods should be stretched as long as possible. We were able to stretch up to 90 days. Payment default, Cross-default (Issuer has US$25 Million aggregate principla amount that is due and payable as a result of default), any event or condition the accelerates maturity of any External Indebtedness amounting at least USD$25 Million, bankruptcy, moratorium, law ceasing Issuer's existence, Guarantor ceasing IMF membership.
9.Prescription
10. Replacement of Notes
11. Meeting and Amendments
12. Further Issues - issue further securoties having the same terms and conditions as the Notes in all respects ( re-opening, tap)
13. Substitution - amendment to the Fiscal Agency Agreement
14. Notices
15. Governing Law, Waiver of Immunity, Jurisdiction - should be similar with the provisions of the Fiscal Agency Agreement. Similar in principle with the Purchase Agreement.
posted by JD @ 2:18 PM
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