Rec.Offer by Nat.West - Pt.3
LEGAL & GENERAL GROUP PLC
6 September 1999
PART 3
APPENDIX II
Particulars of the Loan Notes
The Loan Notes will be constituted by a loan note
instrument (the 'Loan Note Instrument'), which will
contain provisions, inter alia, to the following effect.
The issue of the Loan Notes will be conditional on the
Offer becoming or being declared unconditional in all
respects. Elections for Loan Notes in respect of the
maximum cash consideration receivable under the basic
terms of the Offer would involve the issue of
approximately £4.35 billion in nominal amount of Loan
Notes. This amount ignores any additional cash payable by
NatWest in respect of compulsory purchases under sections
428-430F of the Act. The Loan Note Instrument will
contain provisions, inter alia, to the effect set out
below:
1. Form, status, registration and transfer
The Loan Notes will be issued in registered form in
integral multiples of £1 nominal, will be
transferable without restriction, and will
constitute unsecured obligations of NatWest. The
Loan Note Instrument will not contain any
restrictions on borrowings or charging or disposal
of assets by NatWest.
2. Interest
(a) Interest on the outstanding Loan Notes will be
payable (subject to any requirement to deduct or withhold
tax therefrom) by twice yearly instalments in arrears on
30 June and 31 December in each year or, if such a day is
not a business day, on the next following business day
('interest payment dates'). The first payment of
interest on the Loan Notes will be made on 30 June 2000
in respect of the period from (and including) the date of
issue up to (but excluding) 30 June 2000 ('first interest
period'). The period from (and including) 30 June 2000
or any subsequent interest payment date up to (but
excluding) the next following interest payment date is
herein called an 'interest period'.
(b) The rate of interest on the Loan Notes for each
interest period will be the rate per annum which is 1 per
cent. below applicable LIBOR. LIBOR means the arithmetic
mean of the respective rates which are quoted on the
'LIBP' page on the Reuter Monitor Money Rates Service (or
such other page or service as may replace the LIBP page
or such system for the purpose of displaying London
Interbank Offered Rates of leading banks) (rounded down
where necessary to the nearest whole multiple of one-
sixteenth of one per cent.) for six months sterling
deposits at or about 11.00 a.m. on the first Business Day
of the relevant interest period.
(c) If LIBOR cannot be established in accordance with
the provisions of paragraph 2(b) above for any interest
period, then LIBOR for the calculation of the rate of
interest in such interest period shall be calculated by
reference to such rate as HSBC Holdings PLC, or failing
which, Lloyds TSB plc or, failing which, Barclays Bank
PLC, or failing which, a London clearing bank nominated
by NatWest shall reasonably determine on the basis of
quotations made for six months deposits of similar size
and currency on any inter-bank market or market as such
bank shall reasonably select. If LIBOR cannot be
established in accordance with the provisions of the
preceding sentence for any interest period, then the rate
of interest for such interest period shall be the same as
that during the previous interest period.
(d) Each instalment of interest shall be calculated on
the basis of a 365 day year and the number of days
elapsed in the relevant interest period.
3. Repayment of the Loan Notes
(a) Any Loan Notes not previously repaid or purchased or
cancelled under this paragraph or paragraphs 4, 5 or 6
below will be redeemed in full at par on 31 December 2005
(the 'Final Redemption Date') together with accrued
interest (less any applicable tax) up to (but excluding)
that date.
(b) A Noteholder may require all or any part (being £100
in nominal amount or any integral multiple thereof) of
his holding of Loan Notes to be repaid at par together
with accrued interest up to but excluding the date of
payment (less any applicable tax) on any interest payment
date (such date to be not less than one year from the
date of issue of the Loan Notes) falling prior to the
Final Redemption Date by giving not less than thirty
days' notice in writing to expire on or before the
relevant interest payment date accompanied by the
relevant Loan Note.
(c) If, at any time on or after 31 December 2000, 75 per
cent. in nominal value of the Loan Notes has been repaid
or purchased and cancelled or £5 million or less in
nominal value of Loan Notes is outstanding, NatWest shall
have the right, on giving to the remaining Noteholders
not less than thirty days' notice in writing, to redeem
all (but not some only) of the outstanding Loan Notes by
payment of the nominal value thereof together with
accrued interest up to but excluding the date of payment
(less any applicable tax).
4. Repayment on default
Each Noteholder will be entitled to require all or
any part (being £1 nominal amount or any integral
multiple thereof) of the Loan Notes held by him to
be repaid at par together with accrued interest up
to but excluding the date of payment (less any
applicable tax) if:
(a) any principal or interest on any of the Loan Notes
held by that Noteholder shall fail to be paid in full
within thirty days after the due date for payment
thereof; or
(b) an order is made or an effective resolution is
passed for the winding up or dissolution of NatWest
(other than a voluntary winding up for the purposes of
amalgamation or reconstruction or a members' voluntary
winding up on terms previously approved by an
Extraordinary Resolution of Noteholders (as defined in
the Loan Note Instrument)); or
(c) an encumbrancer takes possession of or a trustee,
receiver, administrator or similar officer is appointed
or an administration order is made in respect of NatWest
or in respect of the whole or substantially the whole of
the undertaking or property of NatWest and such person
has not been paid out or discharged within thirty days.
5. Purchase of the Loan Notes
NatWest may at any time purchase any Loan Notes by
tender (available to all Noteholders alike) or by
private treaty or otherwise at any price.
6. Cancellation
Any Loan Notes repaid, redeemed or purchased as
referred to above shall be cancelled and shall not
be available for re-issue.
7. Additional Notes
Each Noteholder shall have the right on giving sixty
days' prior written notice to expire on any interest
payment date (other than 31 December 2005) to
NatWest to acquire (by subscription at their nominal
value of an amount up to or equal to such
Noteholder's holding of Loan Notes, such amount to
be payable in full on subscription) additional loan
notes to be issued by a subsidiary of NatWest
('Additional Notes') on terms and conditions
substantially the same as those applicable to the
Loan Notes, except that the Additional Notes shall
not carry any right to acquire additional
securities. The rate of interest on the Additional
Notes shall be the same rate of interest as on the
Loan Notes and NatWest shall procure that the issuer
of the Additional Notes shall have a net worth equal
to or more than the value of the Offer for the
period from the date of issue of the Additional
Notes until and including the date on which all the
Additional Notes are redeemed or repaid (or, at
NatWest's option, NatWest may provide a guarantee of
the Additional Notes if the issuer of the Additional
Notes does not have such a net worth).
8. Modifications
The provisions of the Loan Note Instrument and the
rights of Noteholders will be subject to
modification, abrogation or compromise in any
respect with the sanction of an Extraordinary
Resolution of the Noteholders with the consent of
NatWest.
9. Further Loan Notes
Provision will be made in the Loan Note Instrument
to enable NatWest to make further issues of loan
notes so as to form a single series with the Loan
Notes.
10. Listing
No application has been or is intended to be made
for the Loan Notes to be listed or dealt in on any
stock exchange.
11. Governing Law
The Loan Notes and the Loan Note Instrument will be
governed by and construed in accordance with English
law.
Footnotes for Document
1 on the basis of a NatWest Share price of 1143p (being
the closing middle market price on Friday, 3 September
1999) and assuming final terms of 0.10936 of a New
NatWest Share per Legal & General Share.
1 being the closing middle market price of a NatWest
Share on Thursday, 2 September 1999, the day before
announcement of talks between NatWest and Legal &
General.
2 being the closing middle market price of a NatWest
Share on Friday, 3 September 1999, the last dealing day
before announcement of the Offer.
1 NatWest Group costs for 1998, excluding disposals,
revenue investment and restructuring were £4,055 million.
2 NatWest UK costs (excluding revenue investment and
restructuring) for 1997 were £2,439 million (including
restatements for certain businesses transferred).
1 EPI is calculated as new annual premiums plus one tenth
of single premiums and does not include sales of unit
trusts, PEPs and ISAs.
1 These amounts are expected to be generated by the end
of 2002.
2 The pro forma adjustments have been tax effected at the
standard rate of UK corporation tax for each period, as
appropriate
3 Average equity is based upon NatWest's average equity
plus £6.4 billion arising from the satisfaction of the
purchase consideration
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