Chorus renews Euro Medium Term Note (EMTN) programme
Chorus Limited
Level 10, 1 Willis Street
P O Box 632
Wellington
New Zealand
Email: company.secretary@chorus.co.nz
STOCK EXCHANGE ANNOUNCEMENT
11 April 2019
Chorus renews Euro Medium Term Note (EMTN) programme
Chorus has today lodged an updated Information Memorandum on ASX as part of an annual renewal process
for its existing EMTN programme.
ENDS
Brett Jackson
Investor Relations Manager
Phone: +64 4 896 4039
Mobile: +64 (27) 488 7808
Email: Brett.Jackson@chorus.co.nz
Andrew Hopkinson
Treasurer
Phone: +64 4 896 4016
Mobile: +64 (27) 249 5678
Email: Andrew.Hopkinson@chorus.co.nz
---
INFORMATION MEMORANDUM
CHORUS LIMITED
(incorporated with limited liability in New Zealand)
Guaranteed by
Chorus New Zealand Limited
(incorporated with limited liability in New Zealand)
U.S.$2,000,000,000
Euro Medium Term Note Programme
___________________________________
Under the Euro Medium Term Note Programme described in this Information Memorandum (the "Programme"),
Chorus Limited (the "Issuer" or "Chorus") may from time to time issue notes (the "Notes") unconditionally and
irrevocably guaranteed by Chorus New Zealand Limited (the "Original Guarantor") and any other Guarantors (as
defined below) from time to time.
For the listing of any Notes which are agreed at the time of issue thereof to be listed on the Australian Securities
Exchange ("ASX") operated by ASX Limited (ABN 98 008 624 691) ("ASX Limited"), application will be made by
the Issuer to ASX Limited. There is no assurance that the application to ASX Limited for listing of the Notes will be
approved. Any Notes which are listed on the ASX will not be transferred through, or registered on, the Clearing
House Electronic Sub-Register System ("CHESS") operated by ASX Settlement Pty Limited (ABN 49 008 504 532)
and will not be "Approved Financial Products" for the purposes of that system. Interests in the Notes will instead
be held in, and transferred through, Euroclear and/or Clearstream, Luxembourg, and/or in relation to any Tranche
(as defined below) of Notes, any other clearing system as may be agreed with the Issuer. The Programme also
permits Notes to be issued on the basis that they will not be admitted to listing, trading, and/or quotation by any
competent authority, stock exchange and/or quotation system or to be admitted to listing, trading and/or quotation
by such other or further competent authorities, stock exchanges and/or quotation systems as may be agreed with
the Issuer. The relevant Pricing Supplement (as defined below) in respect of any Tranche of Notes will specify
whether or not such Notes will be listed or quoted.
The ASX assumes no responsibility for the correctness of any of the statements made, opinions expressed or
reports contained in this Information Memorandum, or the merits of the investments to which this Information
Memorandum relates. Listing of any Notes on the ASX is not to be taken as an indication of the merits of the Issuer,
the subsidiaries and associated companies of the Issuer, the Programme or the Notes.
Tranches of Notes may be rated or unrated. Where a Tranche of Notes is rated, the applicable rating(s) will be
specified in the relevant Pricing Supplement. Whether or not each credit rating applied for in relation to a relevant
Tranche of Notes will be issued by a credit rating agency established in the European Union and registered under
Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit
rating agencies (the "CRA Regulation") will be disclosed in the relevant Pricing Supplement. In general, European
regulated investors are restricted from using a rating for regulatory purposes if such rating is not issued by a credit
rating agency established in the European Union and registered under the CRA Regulation unless the rating is
provided by a credit rating agency operating in the European Union before 7 June 2010 which has submitted an
application for registration in accordance with the CRA Regulation and such registration has not been refused. A
rating is not a recommendation to buy, sell or hold Notes and may be subject to suspension, change or withdrawal
at any time by the assigning rating agency.
PRIIPS REGULATION – PROHIBITION OF SALES TO EEA RETAIL INVESTORS – The Notes are not intended
to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to
any retail investor in the European Economic Area (“EEA”). For these purposes, a retail investor means a person
who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended,
“MiFID II”); or (ii) a customer within the meaning of Directive 2002/92/EC as amended or superseded, where that
customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a
qualified investor as defined in Directive 2003/71/EC, as amended or superseded. Consequently no key information
document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling
the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering
or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the
PRIIPs Regulation.
MIFID II PRODUCT GOVERNANCE / TARGET MARKET – The Pricing Supplement in respect of any Notes may
include a legend entitled “MiFID II Product Governance” which will outline the target market assessment in respect
of the Notes and which channels for distribution of the Notes are appropriate. Any person subsequently offering,
selling or recommending the Notes (a “distributor”) should take into consideration the target market assessment;
however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect
of the Notes (by either adopting or refining the target market assessment) and determining appropriate distribution
channels. A determination will be made in relation to each issue about whether, for the purpose of the MiFID Product
Governance rules under EU Delegated Directive 2017/593 (the “MiFID Product Governance Rules”), any Dealer
subscribing for any Notes is a manufacturer in respect of such Notes, but otherwise neither the Arranger nor the
Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the MIFID Product Governance
Rules.
Singapore SFA Product Classification: In connection with Section 309B of the Securities and Futures Act
(Chapter 289) of Singapore (the “SFA”) and the Securities and Futures (Capital Markets Products) Regulations
2018 of Singapore (the “CMP Regulations 2018”), the Issuer has determined, and hereby notifies all relevant
persons (as defined in Section 309A(1) of the SFA), that Notes to be issued under the Programme are ‘prescribed
capital markets products’ (as defined in the CMP Regulations 2018) and Excluded Investment Products (as defined
in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on
Recommendations on Investment Products), unless otherwise specified before an offer of Notes in relation to those
Notes.
Credit ratings are for distribution in Australia only to a person (a) who is not a "retail client" within the meaning of
section 761G of the Corporations Act 2001 (Cth) of Australia (the "Australian Corporations Act") and is also a
sophisticated investor, professional investor or other investor in respect of whom disclosure is not required under
Part 6D.2 or 7.9 of the Corporations Act 2001 of Australia, and (b) who is otherwise permitted to receive credit
ratings in accordance with applicable law in any jurisdiction in which the person may be located. Anyone who is
not such a person is not entitled to receive this Information Memorandum and anyone who receives this Information
Memorandum must not distribute it to any person who is not entitled to receive it.
Investing in Notes issued under the Programme involves certain risks. The principal risk factors that may
affect the abilities of the Issuer and the Original Guarantor to fulfil their respective obligations under the
Notes are discussed under "Risk Factors" below.
Arranger
Citigroup
Dealers
Citigroup HSBC MUFG
10 April 2019
- iii -
CONTENTS
Page
IMPORTANT NOTICES ......................................................................................................... 1
DOCUMENTS INCORPORATED BY REFERENCE ............................................................. 4
GENERAL DESCRIPTION OF THE PROGRAMME ............................................................. 5
OVERVIEW ............................................................................................................................ 6
RISK FACTORS ................................................................................................................... 11
FORMS OF THE NOTES ..................................................................................................... 25
TERMS AND CONDITIONS OF THE NOTES ..................................................................... 30
FORM OF PRICING SUPPLEMENT ................................................................................... 60
SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM .. 75
USE OF PROCEEDS ........................................................................................................... 77
DESCRIPTION OF THE ISSUER AND THE ORIGINAL GUARANTOR ............................ 78
DESCRIPTION OF THE CHORUS GROUP'S BUSINESS ................................................. 80
MANAGEMENT OF THE CHORUS GROUP ...................................................................... 97
TAXATION .......................................................................................................................... 102
SUBSCRIPTION AND SALE .............................................................................................. 104
GENERAL INFORMATION ................................................................................................ 110
DEFINED TERMS .............................................................................................................. 112
- 1 -
IMPORTANT NOTICES
Each of the Issuer and the Original Guarantor (together, the "Responsible Persons") accepts
responsibility for the information contained in this Information Memorandum and declares that,
having taken all reasonable care to ensure that such is the case, the information contained in this
Information Memorandum is, to the best of its knowledge, in accordance with the facts and
contains no omission likely to affect its import.
Each Tranche (as defined herein) of Notes will be issued on the terms set out herein under "Terms
and Conditions of the Notes" (the "Conditions") and any other terms and conditions not contained
herein will be set out in a document specific to such Tranche called a pricing supplement (the
"Pricing Supplement"). This Information Memorandum must be read and construed together
with any supplements hereto and, in relation to any Tranche of Notes which is the subject of a
Pricing Supplement, must be read and construed together with the relevant Pricing Supplement.
The Issuer and the Original Guarantor have confirmed to the Dealers named under "Subscription
and Sale" below that this Information Memorandum contains all information which is (in the
context of the Programme, the issue, offering and sale of the Notes and the guarantee of the
Notes) material; that such information is true and accurate in all material respects and is not
misleading in any material respect; that any opinions, predictions or intentions expressed herein
are honestly held or made and are not misleading in any material respect; that this Information
Memorandum does not omit to state any material fact necessary to make such information,
opinions, predictions or intentions (in the context of the Programme, the issue, offering and sale
of the Notes and the guarantee of the Notes) not misleading in any material respect; and that all
proper enquiries have been made to verify the foregoing.
No person has been authorised to give any information or to make any representation not
contained in or not consistent with this Information Memorandum or any other document entered
into in relation to the Programme or any information supplied by the Issuer or the Original
Guarantor or such other information as is in the public domain and, if given or made, such
information or representation should not be relied upon as having been authorised by the Issuer,
the Original Guarantor or any Dealer.
None of the Dealers, the Trustee nor any of their respective affiliates have authorised the whole
or any part of this Information Memorandum and none of them makes any representation or
warranty or accepts any responsibility as to the accuracy or completeness of the information
contained in this Information Memorandum. Neither the delivery of this Information Memorandum
or any Pricing Supplement nor the offering, sale or delivery of any Note shall, in any
circumstances, create any implication that the information contained in this Information
Memorandum is true subsequent to the date hereof or the date upon which this Information
Memorandum has been most recently amended or supplemented or that there has been no
adverse change, or any event reasonably likely to involve any adverse change, in the prospects
or financial or trading position of the Issuer or the Original Guarantor since the date thereof or, if
later, the date upon which this Information Memorandum has been most recently amended or
supplemented or that any other information supplied in connection with the Programme is correct
at any time subsequent to the date on which it is supplied or, if different, the date indicated in the
document containing the same.
The distribution of this Information Memorandum and any Pricing Supplement and the offering,
sale and delivery of the Notes in certain jurisdictions may be restricted by law. Persons into
whose possession this Information Memorandum or any Pricing Supplement comes are required
by the Issuer, the Original Guarantor and the Dealers to inform themselves about and to observe
any such restrictions. For a description of certain restrictions on offers, sales and deliveries of
Notes and on the distribution of this Information Memorandum or any Pricing Supplement and
other offering material relating to the Notes, see "Subscription and Sale". In particular, the Notes
and the guarantees thereof have not been and will not be registered under the United States
Securities Act of 1933 (as amended) (the "Securities Act") and are subject to U.S. tax law
requirements. Subject to certain exceptions, Notes may not be offered, sold or delivered within
the United States or to U.S. persons.
- 2 -
Neither this Information Memorandum nor any Pricing Supplement constitutes an offer or an
invitation to subscribe for or purchase any Notes and should not be considered as a
recommendation by the Issuer, the Original Guarantor, the Dealers, the Trustee or any of them
that any recipient of this Information Memorandum or any Pricing Supplement should subscribe
for or purchase any Notes. Each recipient of this Information Memorandum or any Pricing
Supplement shall be taken to have made its own investigation and appraisal of the condition
(financial or otherwise) of the Issuer and the Original Guarantor.
The maximum aggregate principal amount of Notes outstanding and guaranteed at any one time
under the Programme will not exceed U.S.$2,000,000,000 (and for this purpose, any Notes
denominated in another currency shall be translated into U.S. dollars at the date of the agreement
to issue such Notes (calculated in accordance with the provisions of the amended and restated
programme agreement dated 10 April 2019 ("Programme Agreement"))). The maximum
aggregate principal amount of Notes which may be outstanding and guaranteed at any one time
under the Programme may be increased from time to time, subject to compliance with the relevant
provisions of the Programme Agreement.
In this Information Memorandum, unless otherwise specified, references to a "Member State" are
references to a Member State of the European Economic Area, references to "U.S.$" or "U.S.
dollars" are to the lawful currency of the United States of America from time to time, references
to "EUR" or "euro" are to the currency introduced at the start of the third stage of European
economic and monetary union, and as defined in Article 2 of Council Regulation (EC) No 974/98
of 3 May 1998 on the introduction of the euro, as amended, references to "£" or "GBP" are to the
lawful currency of the United Kingdom from time to time, and references to "NZD", "NZ$" and
"New Zealand dollars" are to New Zealand dollars.
References to the "Chorus Group" are to the Issuer and its wholly-owned subsidiaries, including
the Original Guarantor, and references to the "Crown" are to Her Majesty the Queen acting in
right of New Zealand. References to "premises" in connection with the Chorus Group's network
are to a single building or structure located on a defined geographical site (such as may be
evidenced by a certificate of title), which has a unique physical address recognised by New
Zealand Post Limited ("NZ Post"), and is occupied by or could readily be occupied by a potential
end-consumer.
The Issuer has prepared audited consolidated financial statements as at and for the years ended
30 June 2018 and 30 June 2017. In addition, half year financial results for the periods ended 31
December 2017 and 31 December 2018 have been prepared and published. The Original
Guarantor has not published, and does not propose to publish, any separate financial statements.
Certain figures and percentages included in this Information Memorandum have been subject to
rounding adjustments; accordingly, figures and percentages shown for the same category
presented in different tables may vary slightly and figures and percentages shown as totals in
certain tables may not be an arithmetic aggregation of the figures or percentages which precede
them.
This Information Memorandum is not, and is not intended to be, a disclosure document within the
meaning of section 9 of the Australian Corporations Act, or a Product Disclosure Statement for
the purposes of Chapter 7 of the Australian Corporations Act. No action has been taken by the
Issuer or any Guarantor that would permit a public offering of Notes in Australia. In particular,
this Information Memorandum has not been lodged with the Australian Securities and
Investments Commission. It is not intended to be used in connection with any offer for which
such disclosure is required and does not contain all the information that would be required by
those provisions if they applied. It is not to be provided in Australia to any "retail client" as defined
in section 761G of the Australian Corporations Act. None of the Issuer or the Guarantors are
licensed to provide financial product advice in respect of the Notes or the Guarantee. Cooling-off
rights do not apply to the acquisition of the Notes.
This Information Memorandum is not, and is not intended to be, a Product Disclosure Statement
for the purposes of Financial Markets Conduct Act 2013 of New Zealand. No action has been
taken by the Issuer or any Guarantor that would permit a public offering of Notes in New Zealand.
- 3 -
In particular, this Information Memorandum has not been lodged with the New Zealand Registrar
of Financial Services Providers. It is not intended to be used in connection with any offer for
which such disclosure is required and does not contain all the information that would be required
by those provisions if they applied.
Certain statements contained in this Information Memorandum, including those set out under
"Risk Factors" and "Description of the Chorus Group's Business", and those incorporated by
reference, constitute "forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms "believe", "estimate",
"anticipate", "intend", "may", "will" or "should" or in each case their negative, or other variations
or comparable terminology. Such forward-looking statements involve risks, uncertainties and
other factors which may cause the actual results, performance or achievements of the Chorus
Group, or industry results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such risks,
uncertainties and other factors include, among others, general economic and business conditions,
industry trends, competition, changes in government regulation, currency fluctuations, changes
in operating strategy or development, political and economic uncertainty and other risks described
in "Risk Factors". There can be no assurance that the results and events contemplated by the
forward-looking statements contained in this Information Memorandum will, in fact, occur. These
forward-looking statements speak only as at the date of this Information Memorandum. The
Issuer and the Original Guarantor will not undertake any obligation to release publicly any
revisions to these forward-looking statements to reflect events, circumstances or unanticipated
events occurring after the date of this Information Memorandum except as required by law or by
any appropriate regulatory authority.
In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named
as the Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s))
in the relevant Pricing Supplement may over-allot Notes or effect transactions, to the
extent permitted by applicable laws, regulations and rules, and other than in the
circumstances where such action would reasonably be expected to affect the price of the
Notes traded within Australia or New Zealand or on a “financial market”, as defined in the
Australian Corporations Act, operated within Australia and with a view to supporting the
price of the Notes at a level higher than that which might otherwise prevail for a limited
period after the Issue Date. However, there is no obligation on such Stabilising Manager(s)
to do this. Any stabilisation action may begin on or after the date on which adequate public
disclosure of the terms of the offer of the relevant Tranche of Notes is made. Such
stabilising, if commenced, may be discontinued at any time, and must be brought to an
end after a limited period. Such stabilising shall be in compliance with all applicable laws,
regulations and rules.
- 4 -
DOCUMENTS INCORPORATED BY REFERENCE
The following documents shall be incorporated in, and form part of, this Information Memorandum:
(a) Chorus' annual audited consolidated financial statements and related notes as at, and for
the financial year ended, 30 June 2017 (including the audit report issued in respect
thereof), as contained on pages 25 to 56 of Chorus' Annual Report for the year ended 30
June 2017, which has been provided to the ASX; and
(b) Chorus' annual audited consolidated financial statements and related notes as at, and for
the financial year ended, 30 June 2018 (including the audit report issued in respect
thereof), as contained on pages 27 to 63 of Chorus' Annual Report for the year ended 30
June 2018, which has been provided to the ASX;
(c) Chorus’ unaudited consolidated financial statements and related notes as at, for the six
months ended, 31 December 2018 (including the independent review report issued in
respect thereof), as contained on pages 4 to 16 of Chorus’ Half Year Results for the six
months ended 31 December 2018); and
(d) the most recently published annual audited consolidated financial statements, and any
interim consolidated financial statements, and related notes of Chorus published and
provided to the ASX subsequently to the date of this Information Memorandum from time
to time; and
(e) each relevant Pricing Supplement,
except that (i) any forecast financial information, or analysis and/or opinions relating to forecast
financial information, contained in the documents referred to at (a) to (d) above shall not be
incorporated by reference in, nor form part of, this Information Memorandum, and (ii) any
statement contained in this Information Memorandum or in a document which is incorporated by
reference in this Information Memorandum shall be deemed to be modified or superseded to the
extent that it is inconsistent with any statement contained in a subsequent such document.
Any information or other documents themselves incorporated by reference, either expressly or
implicitly, in the documents incorporated by reference in this Information Memorandum shall not
form part of this Information Memorandum.
Following the publication of this Information Memorandum a supplement may be prepared by the
Issuer. Statements contained in any such supplement (or contained in any document
incorporated by reference therein) shall, to the extent applicable (whether expressly, by
implication or otherwise), be deemed to modify or supersede statements contained in this
Information Memorandum or in a document which is incorporated by reference in this Information
Memorandum. Any statement so modified or superseded shall not, except as so modified or
superseded, constitute a part of this Information Memorandum.
Copies of documents incorporated by reference in this Information Memorandum can be obtained
from the offices of the Principal Paying Agent at Citigroup Centre, Canada Square, Canary Wharf,
London E14 5LB, United Kingdom.
Internet site addresses in this Information Memorandum are included for reference only and the
contents of any such internet sites are not incorporated by reference into, and do not form part of,
this Information Memorandum.
The Issuer and the Original Guarantor will, in the event of any significant new factor, material
mistake or inaccuracy relating to information included in this Information Memorandum which is
capable of affecting the assessment of any Notes, prepare a supplement to this Information
Memorandum or publish a new Information Memorandum for use in connection with any
subsequent issue of Notes or may provide supplemental or additional information in a Pricing
Supplement in connection with the issue of a particular Tranche of Notes.
- 5 -
GENERAL DESCRIPTION OF THE PROGRAMME
Under the Programme, the Issuer may from time to time issue Notes denominated in any currency,
subject as set out herein. A summary of the terms and conditions of the Programme and the
Notes appears below. The applicable terms of any Notes will be agreed between the Issuer and
the relevant Dealer prior to the issue of the Notes and will be set out in the Conditions of the Notes
endorsed on, attached to, or incorporated by reference into, the Notes, as modified and
supplemented by the applicable Pricing Supplement attached to, or endorsed on, such Notes, as
more fully described under "Forms of the Notes" below.
The aggregate principal amount of Notes outstanding and guaranteed at any time will not exceed
U.S.$2,000,000,000 or its equivalent in other currencies, subject to increase as described below.
For the purpose of calculating the U.S. dollar equivalent of the aggregate nominal amount of
Notes issued under the Programme from time to time, the maximum aggregate principal amount
of Notes outstanding and guaranteed at any one time under the Programme will not exceed
U.S.$2,000,000,000 (and for this purpose, any Notes denominated in another currency shall be
translated into U.S. dollars at the date of the agreement to issue such Notes (calculated in
accordance with the provisions of the Programme Agreement)). The maximum aggregate
principal amount of Notes which may be outstanding and guaranteed at any one time under the
Programme may be increased from time to time, subject to compliance with the relevant
provisions of the Programme Agreement.
- 6 -
OVERVIEW
The following is an overview of the principal features of the Notes and is qualified in its
entirety by the detailed information appearing elsewhere in this Information Memorandum
and, in particular, under "Terms and Conditions of the Notes". Potential purchasers of Notes
are urged to read this Information Memorandum in its entirety. Terms used in this overview
and not otherwise defined shall have the meaning given to them in the "Terms and
Conditions of the Notes".
Issuer:
Chorus Limited, a limited liability company incorporated
under the Companies Act 1993 of New Zealand with
company number 3454251 and having its registered office
at Level 10, 1 Willis Street, Wellington 6011, New Zealand.
Chorus Limited is the listed holding company of Chorus
New Zealand Limited.
Original Guarantor:
Chorus New Zealand Limited, a limited liability company
incorporated under the Companies Act 1993 of New
Zealand with company number 3454256 and having its
registered office at Level 10, 1 Willis Street, Wellington
6011, New Zealand. Chorus New Zealand Limited is the
operating company in the Chorus Group (which shall
consist of the Issuer and all of its wholly owned
subsidiaries).
Guarantors:
The Original Guarantor and such additional or alternative
subsidiaries of the Issuer as may be appointed from time
to time. The terms of the amended and restated trust deed
dated 10 April 2019 (the "Trust Deed") provide for the
mandatory accession as Guaranteeing Subsidiaries of
each Material Subsidiary (as defined in the Trust Deed) of
the Issuer as a Guarantor of Notes under the Programme
and the release of a Guarantor at the option of the Issuer
upon certification to the Trustee. As at the date of this
Information Memorandum, the Original Guarantor is the
sole Guarantor of Notes issued under the Programme.
Risk Factors:
Investing in Notes issued under the Programme involves
certain risks. The principal risk factors that may affect the
abilities of the Issuer and the Guarantors to fulfil their
respective obligations under the Notes are discussed
under "Risk Factors" below.
Arranger:
Citigroup Global Markets Limited.
Dealers:
Citigroup Global Markets Limited
The Hongkong and Shanghai Banking Corporation
Limited (incorporated in the Hong Kong SAR, acting
through its New Zealand branch)
MUFG Securities Asia Limited
and any other Dealer appointed from time to time by the
Issuer and the Guarantors either generally in respect of
the Programme or in relation to a particular Tranche of
Notes.
Trustee:
The Law Debenture Trust Corporation p.l.c.
Principal Paying Agent:
Citibank, N.A., London Branch.
Registrar:
Citibank, N.A., London Branch.
- 7 -
Listing and Trading:
For the listing of any Notes which are agreed at the time
of issue thereof to be listed on the ASX, application will be
made by the Issuer to ASX Limited. There is no assurance
that the application to ASX Limited for the listing of the
Notes will be approved. Notes which are listed on the ASX
will not be transferred through, or registered on, the
Clearing House Electronic Subregister System operated
by ASX Settlement Pty Limited (ABN 49 008 504 532) and
will not be "Approved Financial Products" for the purposes
of that system.
The Programme also permits Notes to be issued on the
basis that they will not be admitted to listing, trading and/or
quotation by any competent authority, stock exchange
and/or quotation system or to be admitted to listing, trading
and/or quotation by such other or further competent
authorities, stock exchanges and/or quotation systems as
may be agreed with the Issuer.
The relevant Pricing Supplement in respect of the issue of
any Notes will specify whether or not such Notes will be
listed, quoted and/or admitted to trading on a stock or
securities exchange.
Clearing Systems:
Euroclear and/or Clearstream, Luxembourg and/or, in
relation to any Tranche of Notes, any other clearing
system as may be specified in the relevant Pricing
Supplement.
Initial Programme Amount:
Up to U.S.$2,000,000,000 (or its equivalent in other
currencies) aggregate principal amount of Notes
outstanding and guaranteed at any one time.
Issuance in Series:
Notes will be issued in Series. Each Series may comprise
one or more Tranches issued on different issue dates.
The Notes of each Series will all be subject to identical
terms, except that the issue date and the amount of the
first payment of interest may be different in respect of
different Tranches. The Notes of each Tranche will all be
subject to identical terms in all respects save that a
Tranche may comprise Notes of different denominations.
Forms of Notes:
The Notes will be issued in bearer or registered form as
specified in the applicable Pricing Supplement. Notes
may be issued in bearer form only ("Bearer Notes") or in
registered form only ("Registered Notes"), as described
in the "Forms of the Notes". Each Tranche of Notes will
initially be in the form of either a Temporary Global Note,
a Permanent Global Note or a Registered Global Note in
each case as specified in the relevant Pricing Supplement.
Each Global Note which is not intended to be issued in
new global note form (a "Classic Global Note" or "CGN"),
as specified in the relevant Pricing Supplement, will be
deposited on or around the relevant issue date with a
depositary or a common depositary for Euroclear and/or
Clearstream, Luxembourg and/or any other relevant
clearing system and each Global Note which is intended
to be issued in new global note form (a "New Global Note"
or "NGN"), as specified in the relevant Pricing
Supplement, will be deposited on or around the relevant
issue date with a common safekeeper for Euroclear and/or
Clearstream, Luxembourg. Each Temporary Global Note
- 8 -
will be exchangeable for a Permanent Global Note or, if so
specified in the relevant Pricing Supplement, for Definitive
Notes. If the TEFRA D Rules are specified in the relevant
Pricing Supplement as applicable, certification as to non-
U.S. beneficial ownership will be a condition precedent to
any exchange of an interest in a Temporary Global Note
or receipt of any payment of interest in respect of a
Temporary Global Note. Each Permanent Global Note will
be exchangeable for Definitive Notes in accordance with
its terms. Definitive Notes will, if interest-bearing, have
Coupons attached and, if appropriate, a Talon for further
Coupons.
Currencies:
Notes may be denominated in any currency or currencies
as may be agreed between the Issuer and the relevant
Dealer(s), subject to compliance with all applicable legal
and/or regulatory and/or central bank requirements.
Payments in respect of Notes may, subject to such
compliance, be made in and/or linked to, any currency or
currencies other than the currency in which such Notes are
denominated.
Status of the Notes:
Notes will be issued on an unsubordinated basis and will
constitute direct and unconditional obligations of the
Issuer.
Status of the Guarantee:
Notes will be unconditionally and irrevocably guaranteed
by the Guarantors, on an unsubordinated basis
("Guarantee").
Issue Price:
Notes may be issued at any price and either on a fully or
partly paid basis, as specified in the relevant Pricing
Supplement. The price and amount of Notes to be issued
under the Programme will be determined by the Issuer, the
Guarantors and the relevant Dealer(s) at the time of issue
in accordance with prevailing market conditions.
Maturities:
Any maturity as may be agreed between the Issuer and
the relevant Dealer(s), subject, in relation to specific
currencies, to compliance with all applicable legal and/or
regulatory and/or central bank requirements.
Where Notes have a maturity of less than one year and
either (a) the issue proceeds are received by the Issuer in
the United Kingdom or (b) the activity of issuing the Notes
is carried on from an establishment maintained by the
Issuer in the United Kingdom, such Notes must: (i) have
a minimum redemption value of £100,000 (or its
equivalent in other currencies) and be issued only 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; or (ii) be issued in
other circumstances which do not constitute a
contravention of section 19 of the Financial Services and
Markets Act 2000 ("FSMA") by the Issuer.
Redemption:
Notes may be redeemable at par or at such other
Redemption Amount (detailed in a formula or otherwise)
as may be specified in the relevant Pricing Supplement.
- 9 -
Notes may also be redeemable in two or more instalments
on such dates and in such manner as may be specified in
the relevant Pricing Supplement.
Optional Redemption:
Notes may be redeemed before their stated maturity at the
option of the Issuer (either in whole or in part) and/or the
Noteholders to the extent (if at all) specified in the relevant
Pricing Supplement.
Tax Redemption: Except as described in "Optional Redemption" above,
early redemption will only be permitted for tax reasons as
described in Condition 11(b) (Redemption and Purchase -
Redemption for tax reasons).
Interest:
Notes may be interest-bearing or non-interest bearing.
Interest (if any) may accrue at a fixed rate or a floating rate
or other variable rate and the method of calculating
interest may vary between the issue date and the maturity
date of the relevant Series.
Denominations:
Notes will be issued in denominations of €100,000 or such
other denominations as may be agreed between the
Issuer and the relevant Dealer(s) and as indicated in the
applicable Pricing Supplement provided that the minimum
denomination of each Note will be €100,000 (or, if the
Notes are denominated in a currency other than euro, at
least the equivalent amount in such currency) or such
other higher amount as may be required from time to time
by the relevant central bank (or equivalent body) or any
laws or regulations applicable to the relevant Specified
Currency.
Negative Pledge:
The Notes will have the benefit of a negative pledge as
described in Condition 6 (Negative Pledge).
Cross Default:
The Notes will have the benefit of a cross default as
described in Condition 14 (Events of Default and
Enforcement).
Taxation:
All payments in respect of Notes will be made free and
clear of withholding taxes of New Zealand, unless the
withholding is required by law. In that event, the Issuer will
(subject as provided in Condition 13 (Taxation)) pay such
additional amounts as will result in the Noteholders
receiving such amounts as they would have received in
respect of such Notes had no such withholding been
required.
Governing Law:
English law.
Ratings:
The Programme has been rated BBB by S&P Global
Ratings Australia Pty Ltd ("S&P Global") and Baa2 by
Moody's Investors Service Pty Limited ("Moody's").
Tranches of Notes will be rated or unrated. Where a
Tranche of Notes is to be rated, such rating will be
specified in the relevant Pricing Supplement. A rating is
not a recommendation to buy, sell or hold securities and
may be subject to suspension, reduction or withdrawal at
any time by the assigning rating agency.
S&P Global and Moody's are not established in the
European Union and have not applied for registration
under the CRA Regulation. However, their credit ratings
- 10 -
are endorsed by S&P Global Ratings Europe Limited and
Moody's Investors Service Limited respectively pursuant
to and in accordance with the CRA Regulation. Each of
S&P Global Ratings Europe Limited and Moody's
Investors Service Limited is established in the European
Union and is registered under the CRA Regulation (and,
as such is included in the list of the credit rating agencies
published by the European Securities and Markets
Authority on its website).
Selling Restrictions:
For a description of certain restrictions on offers, sales and
deliveries of Notes and on the distribution of offering
material in the United States of America, the European
Economic Area, the United Kingdom, Hong Kong,
Singapore, Japan, Australia and New Zealand, see
"Subscription and Sale" below.
- 11 -
RISK FACTORS
Prospective investors should read and carefully consider the entire Information Memorandum,
including the risks and uncertainties described below. Words and expressions defined in the
"Terms and Conditions of the Notes" below or elsewhere in this Information Memorandum have
the same meanings in this section.
The Issuer and the Original Guarantor believe that the following factors may affect their ability to
fulfil their obligations under Notes issued under the Programme and the Guarantee. All of these
factors are contingencies which may or may not occur and the Issuer and the Original Guarantor
are not in a position to express a view on the likelihood of any such contingency occurring.
Factors which the Issuer or the Original Guarantor believe may be material for the purpose of
assessing the market risks associated with Notes issued under the Programme and the
Guarantee are also described below. Additional risks not currently known to the Issuer or the
Original Guarantor or that they now deem immaterial may also adversely affect the Issuer or the
Original Guarantor or affect an investment in the Notes.
Risks relating to the Issuer
The Issuer is a holding company, and accordingly substantially all of its assets consist of its
shareholding in subsidiary companies within the Chorus Group. As such, a further activity of the
Issuer is to provide financing to subsidiary companies within the Chorus Group and to refinance
these obligations. The ability of the Issuer to satisfy its obligations under the Notes will depend
upon dividend payments and/or other payments to the Issuer by the subsidiary companies within
the Chorus Group and/or financial support it may obtain from the Original Guarantor. The assets
of the Issuer should not therefore be primarily relied upon by prospective investors in making an
investment decision to purchase the Notes. Rather, any investment decision to purchase the
Notes should be based primarily on the strength of the Original Guarantor.
Risks relating to the regulatory environment in which the Chorus Group operates
Regulation of services may adversely affect the Chorus Group's business
At the date of this Information Memorandum, the majority of the Chorus Group's revenue comes
from services that are controlled by regulation (in the case of many copper services) or contract
(in the case of many fibre services), as discussed below.
As at 31 December 2018, approximately 50% of the Chorus Group's revenues were from copper
services with pricing and terms regulated by the New Zealand Commerce Commission (the
"Commerce Commission") under the Telecommunications Act 2001 of New Zealand (the "Telco
Act"). The Chorus Group’s fibre services are not currently subject to price regulation and most
are instead subject to contractual pricing and terms agreed with the New Zealand Government
as part of the Ultra Fast Broadband (“UFB”) contracts.
The Telecommunications (New Regulatory Framework) Amendment Act 2018 (the “Amendment
Act”) establishes the statutory framework for a new regulatory regime. The Amendment Act
passed its third reading in Parliament on 7 November 2018 and received Royal Assent on
12 November 2018. Under the Amendment Act:
from 1 January 2020, the Chorus Group will continue to be obliged to provide certain
regulated copper services in accordance with the existing price and non-price terms
determined by the Commission, except in areas designated by the Commission where
fibre services are available. Where the Chorus Group is obliged to provide the relevant
copper services, the prices will be fixed at the year five price established under the
current regulatory determination, subject to annual CPI adjustment. The Commerce
Commission must review regulation of copper services before the end of 2025 which
could result in further deregulation or new regulation of copper services; and
the Commerce Commission will be required to develop and implement a new regulatory
regime for fibre fixed line services. The new regime for fibre fixed line services will
- 12 -
apply to the Chorus Group, and other entities providing fibre fixed line services, from 1
January 2022. The price (subject to annual CPI adjustment) and non-price terms of
Chorus’ fibre services will continue to be governed by the UFB1 Agreement and the
UFB2 Agreement until the new regulatory regime for fibre services is fully implemented
on 1 January 2022.
Once implemented, the new regime:
caps the revenue the Chorus Group is allowed to generate from its fibre services;
requires Chorus to comply with specified quality standards in the provision of its
regulated services;
provides for regulations requiring Chorus to provide certain fibre services, including
anchor services (a basic broadband fibre service and a basic telephony fibre service), a
direct fibre access service, and unbundled fibre services. Chorus must provide the
services at prices that are no greater than the maximum prices set by regulation in the
case of the anchor and direct fibre access services, and on the terms set by the
regulations. The unbundled fibre service will not have a maximum price set by
regulation initially, but the Minister of Broadcasting, Communications and Digital Media
(“Minister”) may elect to set a maximum price, if it is recommended by the Commission
after the first three year regulatory period; and
provides for regulations requiring Chorus to disclose certain information about its fibre
services to the Commerce Commission.
The Commerce Commission will determine the cap on revenue from fibre services following a
prescribed consultative process. The revenue cap is intended to ensure that Chorus is able to
recover its efficient and prudently incurred costs and is prevented from earning ‘excessive
profits’. The revenue cap will be set in advance of each regulatory control period on the basis of
forecast costs, and therefore there is a risk that actual costs will diverge from forecast. There
are likely to be only limited mechanisms to re-open the revenue cap in the course of each
regulatory control period. While the provisions in the Telco Act for the cap on revenue from
fibre services take account of the costs and losses the Chorus Group has incurred in providing
those services before the new regulatory regime takes effect, the revenue cap is not required to
ensure that the Chorus Group fully recovers those costs and losses.
After the initial three year regulatory period, the Commission may conduct a review and
recommend to the Minister that the regulations be reset so that the regulations provide for a price
cap for all fibre services rather than a revenue cap. If this recommendation is made and the
Minister accepts the recommendation and sets a reset date, the Commission may move to
implement price cap regulation rather than revenue cap regulation.
The Minister will determine the regulations for anchor services, the direct fibre access service and
unbundled fibre service. Those regulations may be reviewed by the Commission. For the first
three year regulatory period, the maximum price of the anchor services and direct fibre access
service must be set by reference to the UFB contract price for the service immediately before the
implementation date, with an annual CPI adjustment. After the first three year regulatory period,
the Commission may recommend that the Minister set a maximum price that is a cost based price.
The new regulatory framework will be implemented through regulations made by the Minister and
determinations made by the Commerce Commission. The first indication of the Commission’s
position is likely to be known in May 2019, and any preliminary view will be subject to two further
rounds of submissions and cross submissions. As at the date of this Information Memorandum
no regulations or determinations have been issued. Accordingly, there is some uncertainty
regarding the regulated terms of the Chorus Group's services from 2022.
While outcomes from future reviews could adversely impact the Chorus Group's operations,
market share, competitiveness, financial performance and financial position as could future
- 13 -
government policies, ministerial decisions, regulator decisions or other regulatory outcomes, the
Chorus Group believes such risks are reduced with the introduction of the new regulatory regime.
The UFB1 Agreement includes a mechanism for the Chorus Group to seek compensation from
CIP if regulatory determinations have an adverse impact before 2020. This compensation
mechanism is limited to NZ$350 million of economic compensation from adjusting arrangements
under the existing contracts and will not involve CIP paying the Chorus Group any amounts above
the agreed approximately NZ$929 million investment. As a result, the compensation mechanism
may not result in the Chorus Group being adequately compensated. The UFB2 Agreement does
not include any such compensation mechanisms.
Non-compliance with the requirements of the new regulatory requirements could result in inquiries,
investigations, litigation and/or fines.
Changes in regulation may require significant further investment without substantial return and
have other consequences
Any regulation, regulatory reviews or determinations affecting the relative prices between copper
and fibre services may impact demand for those services or an unbundled form of such services.
Changes to service specifications and/or non-price terms under any regulatory regime may also
require the Chorus Group to invest in its network or do other things without price increases, other
compensation, or in ways which do not provide it with appropriate cost recovery or an adequate
return on investment.
Any such changes may adversely affect the Chorus Group's revenue and profitability.
Future government policies, ministerial decisions, regulator decisions or other regulatory
outcomes could adversely impact the Chorus Group's operations, market share, competitiveness,
financial performance and financial position.
The Chorus Group is subject to other material regulation
The Chorus Group is subject to other regulatory determinations of the Commerce Commission
including annual fibre information disclosure requirements, a contribution towards the
Telecommunications Development Levy ("TDL") imposed under the Telco Act and Commerce
Commission costs. In addition to enforceable regulatory determinations of the Commerce
Commission, the Chorus Group is subject to other obligations including open access obligations
and telecommunications service obligations under the Telco Act and deeds with the Crown. Non-
compliance with these requirements could result in inquiries, investigations, litigation and/or fines.
Such circumstances, and or future changes to requirements, may adversely impact revenue and
costs.
Furthermore, certain regulatory and legislative rules limit the Chorus Group's ability to pursue
certain business opportunities and activities and, consequently, may affect the returns it can
generate on its assets. There can be no assurances gained by the Chorus Group as to future
policies, ministerial decisions or regulatory outcomes it may face which could adversely impact
the Chorus Group's operations, market share, competitiveness and financial performance.
Further information on regulation applicable to the Chorus Group is set out under the heading
"Description of the Chorus Group's Business – Regulation of the Chorus Group" below.
Regulatory proceedings and investigations
Regulatory proceedings and investigations in relation to the Chorus Group may in the future
require considerable resources and management attention to be diverted to them, which may
adversely affect the Chorus Group's business and results of operations.
- 14 -
Further information on the Chorus Group's regulatory environment is set out under "Description
of the Chorus Group's Business – Regulatory reviews and litigation" and under "Description of
the Chorus Group's Business – Regulation of the Chorus Group" below.
Risks relating to the Chorus Group's services and business
The Chorus Group faces risks associated with undertaking large projects
The Chorus Group maintains, builds and operates a nationwide fixed line communications
network including copper and fibre optic lines and related infrastructure and technologies
connecting homes, schools, hospitals and business throughout New Zealand. The Chorus Group
sells wholesale services to its retail service provider customers who then sell broadband and
voice services to end-consumers.
Under the UFB Agreements, Chorus is contracted to build, operate and connect a new fibre optic
network to about three-quarters of the 87% of New Zealanders to be covered by the New Zealand
Government's UFB network build. Chorus’ role in the network build involves passing
approximately 1,054,000 premises and reaching an estimated 1.36 million end-consumers by the
end of 2022. At 31 December 2018, Chorus’ fibre rollout was approximately 70% complete.
Although the build process is 70% complete, and therefore the risks are diminishing, Chorus
continues to face the risks typical to large scale, long duration infrastructure and construction
projects, including:
underestimating costs or required timeframes;
unanticipated delays in obtaining materials and equipment;
shortages of labour or materials and equipment;
labour risks associated with a predominantly migrant work force;
increases in the cost of materials or labour that exceed inflation assumptions;
increases in the cost of materials or equipment resulting from foreign exchange
movements;
engineering problems;
work stoppages, particularly labour disputes at third party contractors;
difficulties or delays in obtaining permits and approvals; and
interruptions from adverse weather conditions.
Any of these factors could result in the Chorus Group failing to meet its timetable and budget
estimates.
There are also potentially significant consequences (including financial) for Chorus under the UFB
Agreements if it breaches its UFB design, build, delivery or operation obligations, including:
potentially significant default payments if Chorus fails to meet performance milestones or
service levels;
potentially significant damages claims or specific performance for other breaches;
for prolonged or significant performance failure, CIP may be able to exercise
management step-in rights (in respect of UFB1 only), require payment of liquidated
damages and/or terminate the relevant UFB Agreement. CIP and Chorus have agreed,
- 15 -
for the benefit of the Chorus Group's senior financiers, the obligation to pay these
liquidated damages will be subordinated to Chorus’ senior indebtedness.
Timetable delays may also delay the revenues that the Chorus Group would otherwise earn from
delivering UFB services. Substantial increases in the cost of the project could adversely affect
the Chorus Group's return on investment, future profitability and its ability to raise capital on
acceptable terms.
Demand for fibre services may be volatile
At the date of this Information Memorandum, the number of end-consumers choosing the Chorus
Group's fibre network continues to grow, and the year ending 30 June 2019 is expected to be the
peak year of Chorus’ fibre rollout. A failure by the Chorus Group to manage demand may result
in reputational damage or lead to breaches of the UFB Agreements. Increasing demand may
also result in the acceleration of operating and capital expenditure and funding requirements for
the Chorus Group. Rapid growth in network traffic could also constrain parts of the Chorus
Group's network necessitating further investment.
The demand for services provided by the Chorus Group may be affected by fibre networks built
by other "local fibre companies" ("LFCs") in the approximately 25% of UFB candidate areas not
awarded to the Chorus Group and by alternative technologies that may be developed as
communications technology continues to evolve. See further under "Demand for the Chorus
Group's services may decrease as a result of market factors" below.
The Chorus Group's future revenues and profitability will be affected by both the level of fibre
uptake and the mix of fibre services sold between basic plans and higher-priced premium services.
Because an end-consumer's uptake of fibre will often be accompanied by an offsetting loss of
revenue as the end-consumer disconnects from the copper network, the Chorus Group bears the
cost of initially connecting premises to the fibre network and the profitability of fibre services
depends on the mix between lower priced basic plans and higher priced premium services, the
Chorus Group's profitability may be adversely affected by uptake that is either too low, too high
or that is overly weighted to basic services.
The Chorus Group is dependent on third party contractors and suppliers
The Chorus Group engages a number of external suppliers to build, operate and maintain its
network and to supply services, equipment and materials. Significant failure by these parties
could impact the Chorus Group's ability to meet its other obligations. For example, failure of a
service provider could result in Chorus breaching a UFB Agreement and could affect the Chorus
Group's financial position and performance, and potentially also breach agreements with the retail
service providers (“RSPs”).
The Chorus Group is dependent upon its skilled employees
The Chorus Group is dependent upon skilled and experienced employees to provide its services.
Employee exposure to significant work related pressures over recent years from the
implementation of regulatory and transformational initiatives (including from the UFB process),
the extended uncertainty about the Chorus Group's future structure in a UFB environment and
increasing international employment opportunities has posed a risk to the Chorus Group's ability
to retain experienced and skilled people and industry knowledge. If the Chorus Group is unable
to attract and retain employees with key technical, service or institutional knowledge, this may
impact the Chorus Group's ability to deliver its future plans and materially affect its financial
performance.
Health and safety
Keeping people healthy and safe is a priority of the Chorus Group. This includes a policy that no
business objective will be prioritised over the health and safety of any person in the Chorus
Group's work environments. Key risks in the field include working at heights and in confined
spaces, driving, asbestos, and striking other networks and electrocution. The Chorus Group is
- 16 -
committed to taking all reasonably practicable steps to ensure a safe and secure environment (for
both employees and contractors) and anyone who is in, or in the vicinity of, its workplaces. The
Chorus Group is focused on continued improvement to health and safety practices, and it
continues to work closely with contractors on reducing the risk of work related injuries.
The Chorus Group is investigating instances of employment law breaches by some
subcontractors in its supply chain. The Chorus Group are voluntarily working collaboratively with
its lead service companies and the New Zealand Government’s Ministry of Business, Innovation
and Employment’s labour inspectorate to understand the risks, particularly in relation to migrant
workers, and to implement appropriate controls.
The Chorus Group's network may be constrained, damaged or interrupted
Rapid growth in network traffic could constrain parts of the Chorus Group's network necessitating
further investment to provide additional capacity. This can also require rapid increases in the
workforce of the Chorus Group and its service company partners generally or in particular regions.
There is a risk that such volatility in workforce size can lead to delays and the quality of some
installations falling below expected standards.
The Chorus Group's network infrastructure is vulnerable to damage or interruption from a range
of risks, including equipment failure, cable cuts, power failures, weather, earthquake, fire, long
term climate change and intentional damage.
Interruption to the operations of the Group's network could also result in lost revenue, capital
expenditure, higher operating costs, reputational damage and liability to customers.
The Chorus Group relies on IT systems
The Chorus Group's own information technology ("IT") systems, and those third party systems on
which it relies (including shared legacy systems with Spark New Zealand Limited ("Spark")), sit
within a complex technical and operating environment. This environment continues to grow in
complexity as systems are progressively transitioned from third parties and as copper to fibre
migration continues. These systems also face risks of failure.
The Chorus Group has incident, continuity and emergency management capability in order to
address business disruption events and mitigate associated risks, including those relating to
operation of the Chorus Group's network and IT systems and those of third parties on which it
relies. However, no assurance can be provided that a major failure will not occur requiring
significant and additional unexpected expenditure. Any interruption to the operations of the
Chorus Group's network could result in lost revenue, additional capital expenditure requirements,
higher operating costs, damage to the Chorus Group's reputation and liability to customers. If
failures occur in the new UFB network, it may significantly affect end-consumer perceptions of
the reliability of the network and result in lower fibre uptake.
The Chorus Group may require significant capital resources to fund its business
The Chorus Group has large funding requirements related to the construction of its new fibre
network. The Chorus Group's ability to maintain an appropriate capital structure for its financial
profile, either by refinancing debt on favourable terms or by raising new debt, may be adversely
affected if it experiences a decline in its operating performance or revenues, there is a material
and unexpected increase in capital expenditure, if financial market conditions are volatile or if it is
unable to maintain its credit rating.
This could limit the Chorus Group's access to funding and/or increase its funding costs.
Risks relating to the Chorus Group's customer base and the market for its products and
services
Demand for the Chorus Group's services may decrease as a result of market factors
- 17 -
The Chorus Group's revenue may reduce from any one or more factors, including an increase in
the number of customers and/or end-consumers:
using lines provided by third parties instead of those provided by the Chorus Group,
including the lines of other LFCs in UFB candidate areas not awarded to the Chorus
Group in the New Zealand Government's UFB network build. This exposes the Chorus
Group to increased fixed line competition in those areas, as the LFCs look to take market
share within the fixed line access market by entering into contracts with RSPs to migrate
end-consumers over time from the Chorus Group's copper based products and services
to the LFC fibre based products and services. As the LFCs complete their networks and
attract customers, the Chorus Group is likely to lose market share and revenue in those
areas as end-consumers disconnect from the copper network. Material loss of market
share and any resulting material loss of revenue would likely to have an adverse impact
on the Chorus Group's earnings and profitability;
using mobile or other technologies instead of the Chorus Group's lines, or shifting to lower
cost services provided by the Chorus Group. If such substitution continues within the
New Zealand market, the Chorus Group could experience a decline in the total number
of fixed access lines across both the copper and fibre access network. This in turn could
have an adverse impact on the Chorus Group's revenue and profitability; and/or
using other alternative infrastructure and services instead of those provided by the
Chorus Group.
The above risk factors either individually or in combination may reduce the Chorus Group's
revenues, increase its costs or otherwise adversely impact its financial position and performance.
These risks could be increased if the Chorus Group fails to deliver adequate performance and an
appropriate experience to its customers and end-consumers.
Concentration of the customer base
The Chorus Group has a concentrated customer base consisting predominantly of a small number
of RSPs. The concentration of the Chorus Group's customer base heightens the risk that a
dispute with a customer, or a customer's failure to pay for services (whether as a result of a
dispute or a customer experiencing financial difficulty), will have a material adverse effect on the
Chorus Group's cash flow and financial position.
Future carrying value of assets
Assessing the appropriateness of useful life and residual value estimates of network assets
requires a number of factors to be considered such as the physical condition of the asset,
expected period of use of the asset by the Chorus Group, technological advances, regulation and
expected disposal proceeds from the future sale of the asset.
At the date of this Information Memorandum, the regulatory environment continues to have a
significant impact on the operating environment of the Chorus Group, including its future cash
flows. Changes in regulation, as well as volatility in uptake of fibre and demand for the Chorus
Group's services, may result in impairments or write downs of the carrying value of the Chorus
Group's assets. If realised, these outcomes may reduce the Chorus Group's earnings
performance over time and weaken its balance sheet.
Risks related to the market generally
Set out below is a brief description of the principal market risks, including liquidity risk, exchange
rate risk, interest rate risk and credit risk:
The secondary market generally
Notes may have no established trading market when issued, and one may never develop. If a
market does develop, it may not be very liquid. Therefore, investors may not be able to sell their
Notes easily or at prices that will provide them with a yield comparable to similar investments that
- 18 -
have a developed secondary market. This is particularly the case for Notes that are especially
sensitive to interest rate, currency or market risks, are designed for specific investment objectives
or strategies or have been structured to meet the investment requirements of limited categories
of investors. These types of Notes generally would have a more limited secondary market and
more price volatility than conventional debt securities. Illiquidity may have a severely adverse
effect on the market value of Notes.
Prior to their maturity, the secondary market value of Notes may also be influenced by many
factors including, without limitation, the operating performance of the Chorus Group, prevailing
interest rates, market sentiment or risk aversion generally.
Exchange rate risks and exchange controls
The Issuer will pay principal and interest on the Notes and the Original Guarantor will make any
payments under the Guarantee in the Specified Currency. This presents certain risks relating to
currency conversions if an investor's financial activities are denominated principally in a currency
or currency unit (the "Investor's Currency") other than the Specified Currency. These include
the risk that exchange rates may significantly change (including changes due to devaluation of
the Specified Currency or revaluation of the Investor's Currency) and the risk that authorities with
jurisdiction over the Investor's Currency may impose or modify exchange controls. An
appreciation in the value of the Investor's Currency relative to the Specified Currency would
decrease:
(i) the Investor's Currency-equivalent yield on the Notes;
(ii) the Investor's Currency-equivalent value of the principal payable on the Notes; and
(iii) the Investor's Currency-equivalent market value of the Notes.
Government and monetary authorities may impose (as some have done in the past) exchange
controls that could adversely affect an applicable exchange rate. As a result, investors may
receive less interest or principal than expected, or no interest or principal.
Interest rate risks
Investment in Fixed Rate Notes involves the risk that subsequent changes in market interest rates
may adversely affect the value of the Fixed Rate Notes.
Inflation risk
Noteholders may suffer erosion on the return of their investments due to inflation. Noteholders
would have an anticipated rate of return based on expected inflation rates on the purchase of the
Notes. An unexpected increase in inflation could reduce the actual returns.
Global financial turmoil has in the past led to volatility in international capital markets which may
adversely affect the market price of the Notes
Global financial turmoil has in the past resulted in substantial and continuing volatility in
international capital markets. Any future deterioration in global financial conditions could have a
material adverse effect on worldwide financial markets, which may adversely affect the market
price of the Notes.
Credit ratings may not reflect all risks
One or more independent credit rating agencies may assign credit ratings to the Notes. The
rating(s) (if any) of the Notes will be specified in the applicable Pricing Supplement. The ratings
may not reflect the potential impact of all risks related to structure, market, additional factors
discussed above, and other factors that may affect the value of the Notes.
- 19 -
In general, European regulated investors are restricted under the CRA Regulation from using
credit ratings for regulatory purposes, unless such ratings are issued by a credit rating agency
established in the EU and registered under the CRA Regulation (and such registration has not
been withdrawn or suspended), subject to transitional provisions that apply in certain
circumstances whilst the registration application is pending. Such general restriction will also
apply in the case of credit ratings issued by non-EU credit rating agencies, unless the relevant
credit ratings are endorsed by an EU-registered credit rating agency or the relevant non-EU rating
agency is certified in accordance with the CRA Regulation (and such endorsement action or
certification, as the case may be, has not been withdrawn or suspended). The list of registered
and certified rating agencies published by ESMA on its website in accordance with the CRA
Regulation is not conclusive evidence of the status of the relevant rating agency included in such
list, as there may be delays between certain supervisory measures being taken against a relevant
rating agency and the publication of the updated ESMA list. Certain information with respect to
the credit rating agencies and ratings will be disclosed in the applicable Pricing Supplement.
A credit rating is not a recommendation to buy, sell or hold securities and may be revised or
withdrawn by the rating agency at any time.
An issue may not proceed
The Issuer may decide not to proceed with an issue of Notes under the Programme. Where this
is the case, the investor will have no rights against the Issuer or the Guarantors in relation to any
expense incurred or loss suffered.
Risks related to Notes generally
Notes may not be a suitable investment for all investors
Each potential investor in the Notes must determine the suitability of that investment in light of its
own circumstances. In particular, each investor should have (either alone or with the help of a
financial adviser):
(i) sufficient knowledge and experience in financial and business matters to make a
meaningful evaluation of the Notes, the merits and risks of investing in the Notes, and the
information contained in this Information Memorandum and any applicable supplement or
Pricing Supplement;
(ii) access to, and knowledge of, appropriate analytical tools to evaluate the merits and risks
an investment in the Notes and the impact the Notes will have on its overall investment
portfolio in the context of its particular circumstances;
(iii) sufficient financial resources and liquidity to bear all of the risks of an investment in the
Notes, including Notes with principal or interest payable in one or more currencies, or
where the currency for principal or interest payments is different from the potential
investor's currency;
(iv) a thorough understanding of the terms and conditions of the Notes and be familiar with
the behaviour of any relevant indices and financial markets;
(v) the ability to evaluate (either alone or with the help of a financial adviser) possible
scenarios for economic, interest rate and other factors that may affect an investment in
the relevant Notes and its ability to bear the applicable risks; and
(vi) the expertise to evaluate how the Notes will perform under changing conditions, the
resulting effects on the value of the Notes and the impact on the investor's overall
investment portfolio.
Some Notes are complex financial instruments. Sophisticated institutional investors generally do
not purchase complex financial instruments as stand-alone investments. They purchase complex
- 20 -
financial instruments as a way to reduce risk or enhance yield with an understood, measured,
appropriate addition of risk to their overall portfolios.
Particular issues of Notes may not be an appropriate investment for investors who are
inexperienced with respect to:
(i) the applicable interest rate indices, currencies, other indices or formulas, or redemption
or other rights or options; and
(ii) investments where the amount of principal and/or interest payable (if any) is based on the
price, value, performance or some other factor and/or the creditworthiness of one or more
entities; or investments where a currency of payment and the investor's currency are
different.
Events of Default
Before the Trustee can accelerate the Notes following the occurrence of certain Events of Default,
it must certify that the occurrence of such event is materially prejudicial to the interests of the
Noteholders.
Modification, waivers and substitution
The Conditions contain provisions for calling meetings of Noteholders to consider matters
affecting their interests generally. These provisions permit defined majorities to bind all
Noteholders, including Noteholders who did not attend and vote at the relevant meeting and
investors who voted in a manner contrary to the majority.
The conditions of the Notes also provide that the Trustee may, without the consent of Noteholders,
Receiptholders or Couponholders, agree to:
(i) any modification of, or to the waiver or authorisation of any breach or proposed breach of,
any of the provisions of Notes, the Conditions, the Agency Agreement or the Trust Deed,
or determine that any Event of Default or Potential Event of Default shall not be treated
as such; or
(ii) any modification which is of a formal or minor or technical nature or is made to correct a
manifest error; or
(iii) the substitution of the Original Guarantor or any other Subsidiary as principal debtor under
the Trust Deed and in relation to the Notes, Receipts and Coupons of any Series in place
of the Issuer, in the circumstances described in Condition 18(c).
Change of law
The conditions of the Notes are based on English law in effect as at the date of issue of the
relevant Notes. No assurance can be given as to the impact of any possible judicial decision or
change to English law or administrative practice after the Issue Date of the relevant Notes.
Changes in law, including a change to the Issuer's legal status, control or tax residence and
changes to the law governing the Notes, may alter the rights of investors from those at the time
of the issue and may impact on the ability of an investor to enforce its rights as they existed at the
Issue Date.
Further, changes in governmental policy and regulation may also have an impact on the Issuer
and/or the Guarantors. In addition to changes in laws and regulations, the policies and practices
of government regulators may change and political and diplomatic developments may have an
unexpected or adverse impact on the terms and conditions of the Notes.
- 21 -
Notes where denominations involve integral multiples: Definitive Notes
In relation to Notes which have denominations consisting of a minimum Specified Denomination
plus one or more higher integral multiples of another smaller amount, it is possible that such Notes
may be traded in amounts that are not integral multiples of such minimum Specified Denomination.
In such case an investor who, as a result of trading such amounts, holds an amount which is less
than the minimum Specified Denomination in his account with the relevant clearing system at the
relevant time may not receive a Definitive Note in respect of such holding (should Definitive Notes
be printed) and would need to purchase a principal amount of Notes such that its holding amounts
to a Specified Denomination.
If Definitive Notes are issued, holders should be aware that Definitive Notes which have a
denomination that is not an integral multiple of the minimum Specified Denomination may be
illiquid and difficult to trade.
The Guarantees provided by the Guarantors may be limited by applicable laws or subject to
certain defences that may limit their validity and enforceability
The Guarantees given by the Guarantors provide holders of Notes with a direct claim against the
relevant Guarantor in respect of the Issuer's payment obligations under the Notes. Enforcement
of each Guarantee would be subject to certain generally available defences. Local laws and
defences may vary, and may include those that relate to corporate benefit (ultra vires), fraudulent
conveyance or transfer, voidable preference, financial assistance, corporate purpose, liability in
tort, subordination and capital maintenance or similar laws and concepts. They may also include
regulations or defences which affect the rights of creditors generally.
If a court were to find a Guarantee given by a Guarantor, or a portion thereof, void or
unenforceable as a result of such local laws or defences, holders would cease to have any claim
in respect of that Guarantor and would be creditors solely of the Issuer and any remaining
Guarantors and, if payment had already been made under the relevant Guarantee, the court could
require that the recipient return the payment to the relevant Guarantor.
Risks related to a particular issue of Notes
The risks of a particular Note will depend on the terms of the relevant Note, but may include,
without limitation, the possibility of significant changes in:
(i) the values of the applicable currencies, commodities, interest rates or other indices or
formulae; or
(ii) the price, value, performance or any other applicable factor relating to one or more
securities, assets or other property; or
(iii) the creditworthiness of entities other than the Issuer or the Guarantors.
Such risks generally depend on factors over which the Issuer and the Guarantors have no control
and which cannot readily be foreseen, such as economic and political events and the supply of
and demand for the relevant currencies, commodities, securities, assets or other property.
Neither the current nor the historical price, value or performance of:
(i) the relevant currencies, commodities, interest rates or other indices or formulae; or
(ii) the relevant classes of securities, assets or other property; or
(iii) the relevant entities,
should be taken as an indication of future price, value or performance during the term of any Note.
- 22 -
A wide range of Notes may be issued under the Programme. A number of these Notes may have
features which contain particular risks for potential investors. Set out below is a description of the
most common such features:
Notes subject to optional redemption by the Issuer
An optional redemption feature of Notes is likely to limit their market value and the secondary
market of the Notes. During any period when the Issuer may elect to redeem Notes, the market
value of those Notes generally will not rise substantially above the price at which they can be
redeemed. This also may be true prior to any redemption period.
The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest
rate on the Notes. At those times, an investor generally would not be able to reinvest the
redemption proceeds at an effective interest rate as high as the interest rate on the Notes being
redeemed and may only be able to do so at a significantly lower rate. Potential investors should
consider reinvestment risk in light of other investments available at that time.
The value of and return on any Notes linked to a benchmark may be adversely affected by ongoing
national and international regulatory reform in relation to benchmarks
So-called benchmarks such as the Euro Interbank Offered Rate ("EURIBOR") and other indices
which are deemed “benchmarks” (each a "Benchmark" and together, the "Benchmarks"), to
which the interest on securities may be linked, have become the subject of regulatory scrutiny
and recent national and international regulatory guidance and proposals for reform. Some of these
reforms are already effective while others are still to be implemented. These reforms may cause
the relevant benchmarks to perform differently than in the past, or have other consequences
which may have a material adverse effect on the value of and the amount payable under the
Notes.
International proposals for reform of Benchmarks include the European Council’s Regulation (EU)
2016/1011 on indices used as benchmarks in financial instruments and financial contracts or to
measure the performance of investment funds (the "Benchmark Regulation") which was
published in the Official Journal on 29 June 2016. In addition to the aforementioned regulation,
there are numerous other proposals, initiatives and investigations which may impact Benchmarks.
Any changes to a Benchmark as a result of the Benchmark Regulation or other initiatives, could
have a material adverse effect on the costs and risks of administering or otherwise participating
in the setting of a Benchmark and complying with any such regulations or requirements. Such
factors may have the effect of discouraging market participants from continuing to administer or
participate in certain Benchmarks, trigger changes in the rules or methodologies used in certain
Benchmarks or lead to the disappearance of certain Benchmarks.
For example, the sustainability of LIBOR has been questioned as a result of the absence of
relevant active underlying markets and possible disincentives (including possibly as a result of
regulatory reforms) for market participants to continue contributing to such benchmarks. On 27
July 2017, the United Kingdom Financial Conduct Authority (the “FCA”) announced that it will no
longer persuade or compel banks to submit rates for the calculation of the LIBOR benchmark
after 2021 (the “FCA Announcement”). In a further speech on 12 July 2018, the FCA emphasised
that market participants should not rely on the continued publication of LIBOR after the end of
2021, which indicates that the continuation of LIBOR on the current basis cannot and will not be
guaranteed after 2021. In addition, on 29 November 2017, the Bank of England and the FCA
announced that, from January 2018, its Working Group on Sterling Risk-Free Rates has been
mandated with implementing a broad-based transition to the Sterling Overnight Index Average
(“SONIA”) over the next four years across sterling bond, loan and derivative markets, so that
SONIA is established as the primary sterling interest rate benchmark by the end of 2021.
Separate workstreams are also underway in Europe to reform EURIBOR using a hybrid
methodology and to provide a fallback by reference to a euro risk-free rate (based on a euro
overnight risk-free rate as adjusted by a methodology to create a term rate).
- 23 -
The potential elimination of the LIBOR benchmark or any other benchmark, or changes in the
manner of administration of any benchmark, could require an adjustment to the interest provisions
of the terms and conditions, or result in other consequences, in respect of any Notes linked to
such benchmark (including but not limited to Floating Rate Notes whose interest rates are linked
to LIBOR (or such other benchmark) which may, depending on the manner in which the LIBOR
(or such other) benchmark is to be determined under the terms and conditions, result in the
effective application of a fixed rate based on the rate which applied in the previous period when
LIBOR (or such other benchmark) was available). Any such consequence could have a material
adverse effect on the value of and return on any such Notes.
Dual Currency Notes
The Issuer may issue Notes with principal or interest payable in one or more currencies which
may be different from the currency in which the Notes are denominated.
Potential investors should be aware that:
(i) the market price of such Notes may be volatile;
(ii) they may receive no interest;
(iii) payment of principal or interest may occur at a different time or in a different currency than
expected; and
(iv) the amount of principal payable at redemption may be less than the nominal amount of
such Notes or even zero, so they may lose all or a substantial portion of their principal.
Partly Paid Notes
The Issuer may issue Notes where the issue price is payable in more than one instalment. Failure
to pay any subsequent instalment could result in an investor losing all of its investment.
Variable rate Notes with a multiplier or other leverage factor
Notes with variable interest rates can be volatile investments. If they are structured to include
multipliers or other leverage factors, or caps or floors, or any combination of those features or
other similar related features, their market values may be even more volatile than those for
securities that do not include those features.
Inverse Floating Rate Notes
Inverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon
a reference rate such as LIBOR. The market values of those Notes typically are more volatile
than market values of other conventional floating rate debt securities based on the same
reference rate (and with otherwise comparable terms). Inverse Floating Rate Notes are more
volatile because an increase in the reference rate not only decreases the interest rate of the Notes,
but may also reflect an increase in prevailing interest rates, which further adversely affects the
market value of these Notes.
Fixed/Floating Rate Notes
Fixed/Floating Rate Notes may bear interest at a rate that converts from a fixed rate to a floating
rate, or from a floating rate to a fixed rate. Where the Issuer has the right to effect such a
conversion, this will affect the secondary market and the market value of the Notes since the
Issuer may be expected to convert the rate when it is likely to produce a lower overall cost of
borrowing. If the Issuer converts from a fixed rate to a floating rate in such circumstances, the
spread on the Fixed/Floating Rate Notes may be less favourable than then prevailing spreads on
comparable Floating Rate Notes tied to the same reference rate. In addition, the new floating
rate at any time may be lower than the rates on other Notes. If the Issuer converts from a floating
- 24 -
rate to a fixed rate in such circumstances, the fixed rate may be lower than then prevailing rates
on its Notes.
An investment in fixed rate Notes involves the risk that subsequent changes in market interest
rates may adversely affect the value of such fixed rate notes. Increases in relevant interest rates
may adversely affect the market value of the Notes.
Notes issued at a substantial discount or premium
The market values of Notes issued at a substantial discount or premium to their nominal amount
tend to fluctuate more in relation to general changes in interest rates than do prices for
conventional interest-bearing securities. Generally, the longer the remaining term of the
securities, the greater the price volatility as compared to conventional interest-bearing securities
with comparable maturities.
Legal considerations relating to an investment in Notes
The investment activities of certain investors are or may be subject to legal investment laws and
regulations, or review or regulation by certain authorities. Each potential investor should consult
their legal advisers to determine whether and to what extent:
(i) Notes are legal investments for it;
(ii) Notes can be used as collateral for various types of borrowing; and
(iii) other restrictions apply to its purchase or pledge of any Notes.
Financial institutions should consult their legal advisers or the appropriate regulators to determine
the appropriate treatment of the Notes under any applicable risk-based capital or similar rules.
- 25 -
FORMS OF THE NOTES
Bearer Notes
Each Tranche of Bearer Notes will initially be in the form of either a temporary bearer global note
(the "Temporary Global Note"), without interest coupons, or a permanent bearer global note (the
"Permanent Global Note"), without interest coupons, in each case as specified in the relevant
Pricing Supplement. Each Temporary Global Note or, as the case may be, Permanent Global
Note (each a "Global Bearer Note") which is not intended to be issued in new global note ("NGN")
form, as specified in the relevant Pricing Supplement, will be deposited on or around the issue
date of the relevant Tranche of the Notes with a depositary or a common depositary for Euroclear
Bank SA/NV ("Euroclear") and/or Clearstream Banking S.A. ("Clearstream, Luxembourg")
and/or any other relevant clearing system, and each Global Bearer Note which is intended to be
issued in NGN form, as specified in the relevant Pricing Supplement, will be deposited on or
around the issue date of the relevant Tranche of the Notes with a common safekeeper for
Euroclear and/or Clearstream, Luxembourg.
On 13 June 2006 the European Central Bank (the "ECB") announced that Notes in NGN form are
in compliance with the "Standards for the use of EU securities settlement systems in ESCB credit
operations" of the central banking system for the euro (the "Eurosystem"), provided that certain
other criteria are fulfilled. At the same time the ECB also announced that arrangements for Notes
in NGN form will be offered by Euroclear and Clearstream, Luxembourg as of 30 June 2006 and
that debt securities in global bearer form issued through Euroclear and Clearstream, Luxembourg
after 31 December 2006 will only be eligible as collateral for Eurosystem operations if the NGN
form is used.
The relevant Pricing Supplement will also specify whether United States Treasury Regulation
§1.163-5(c)(2)(i)(C) (the "TEFRA C Rules") or United States Treasury Regulation
§1.163-5(c)(2)(i)(D) (the "TEFRA D Rules") are applicable in relation to the Notes or, if the Notes
do not have a maturity of more than 365 days, that neither the TEFRA C Rules nor the TEFRA D
Rules are applicable.
Temporary Global Note exchangeable for Permanent Global Notes
If the relevant Pricing Supplement specifies the form of Notes as being "Temporary Global Note
exchangeable for a Permanent Global Note", then the Notes will initially be in the form of a
Temporary Global Note which will be exchangeable, in whole or in part, for interests in a
Permanent Global Note, without interest coupons, not earlier than 40 days after the issue date of
the relevant Tranche of the Notes upon certification as to non-U.S. beneficial ownership. No
payments will be made under the Temporary Global Note unless exchange for interests in the
Permanent Global Note is improperly withheld or refused. In addition, interest payments in
respect of the Notes cannot be collected without such certification of non-U.S. beneficial
ownership.
Whenever any interest in the Temporary Global Note is to be exchanged for an interest in a
Permanent Global Note, the Issuer shall procure (in the case of first exchange) the delivery of a
Permanent Global Note to the bearer of the Temporary Global Note or (in the case of any
subsequent exchange) an increase in the principal amount of the Permanent Global Note in
accordance with its terms against:
(i) presentation and (in the case of final exchange) presentation and surrender of the
Temporary Global Note to or to the order of the Principal Paying Agent; and
(ii) receipt by the Principal Paying Agent of a certificate or certificates of non-U.S. beneficial
ownership.
The principal amount of Notes represented by the Permanent Global Note shall be equal to the
aggregate of the principal amounts specified in the certificates of non-U.S. beneficial ownership
provided, however, that in no circumstances shall the principal amount of Notes represented by
- 26 -
the Permanent Global Note exceed the initial principal amount of Notes represented by the
Temporary Global Note.
If:
(a) the Permanent Global Note has not been delivered or the principal amount thereof
increased by 5.00 p.m. (London time) on the seventh day after the bearer of the
Temporary Global Note has requested exchange of an interest in the Temporary Global
Note for an interest in a Permanent Global Note; or
(b) the Temporary Global Note (or any part thereof) has become due and payable in
accordance with the Terms and Conditions of the Notes or the date for final redemption
of the Temporary Global Note has occurred and, in either case, payment in full of the
amount of principal falling due with all accrued interest thereon has not been made to the
bearer of the Temporary Global Note in accordance with the terms of the Temporary
Global Note on the due date for payment,
then the Temporary Global Note (including the obligation to deliver a Permanent Global Note) will
become void at 5.00 p.m. (London time) on such seventh day (in the case of (a) above) or at 5.00
p.m. (London time) on such due date (in the case of (b) above) and the bearer of the Temporary
Global Note will have no further rights thereunder (but without prejudice to the rights which the
bearer of the Temporary Global Note or others may have under the Trust Deed).
The Permanent Global Note will become exchangeable, in whole but not in part only and at the
request of the bearer of the Permanent Global Note, for Bearer Notes in definitive form
("Definitive Notes"):
(a) on the expiry of such period of notice as may be specified in the Pricing Supplement; or
(b) at any time, if so specified in the Pricing Supplement; or
(c) if the Pricing Supplement specifies "in the limited circumstances described in the
Permanent Global Note", then if either of the following events occurs:
(i) Euroclear or Clearstream, Luxembourg or any other relevant clearing system is
closed for business for a continuous period of 14 days (other than by reason of
legal holidays) or announces an intention permanently to cease business; or
(ii) any of the circumstances described in Condition 14 (Events of Default and
Enforcement) occurs.
Whenever the Permanent Global Note is to be exchanged for Definitive Bearer Notes, the Issuer
shall procure the prompt delivery (free of charge to the bearer) of such Definitive Bearer Notes,
duly authenticated and with Coupons and Talons attached (if so specified in the Pricing
Supplement), in an aggregate principal amount equal to the principal amount of Notes
represented by the Permanent Global Note to the bearer of the Permanent Global Note against
the surrender of the Permanent Global Note to or to the order of the Principal Paying Agent within
30 days of the bearer requesting such exchange.
If:
(a) Definitive Bearer Notes have not been duly delivered by 5.00 p.m. (London time) on the
thirtieth day after the bearer has requested exchange of the Permanent Global Note for
Definitive Bearer Notes; or
(b) the Permanent Global Note was originally issued in exchange for part only of a Temporary
Global Note representing the Notes and such Temporary Global Note becomes void in
accordance with its terms; or
- 27 -
(c) the Permanent Global Note (or any part thereof) has become due and payable in
accordance with the Terms and Conditions of the Notes or the date for final redemption
of the Permanent Global Note has occurred and, in either case, payment in full of the
amount of principal falling due with all accrued interest thereon has not been made to the
bearer in accordance with the terms of the Permanent Global Note on the due date for
payment,
then the Permanent Global Note (including the obligation to deliver Definitive Bearer Notes) will
become void at 5.00 p.m. (London time) on such thirtieth day (in the case of (a) above) or at 5.00
p.m. (London time) on the date on which such Temporary Global Note becomes void (in the case
of (b) above) or at 5.00 p.m. (London time) on such due date ((c) above) and the bearer of the
Permanent Global Note will have no further rights thereunder (but without prejudice to the rights
which the bearer of the Permanent Global Note or others may have under the Trust Deed).
Temporary Global Note exchangeable for Definitive Bearer Notes
If the relevant Pricing Supplement specifies the form of Notes as being "Temporary Global Note
exchangeable for Definitive Bearer Notes" and also specify that the TEFRA C Rules are
applicable or that neither the TEFRA C Rules or the TEFRA D Rules are applicable, then the
Notes will initially be in the form of a Temporary Global Note which will be exchangeable, in whole
but not in part, for Definitive Bearer Notes not earlier than 40 days after the issue date of the
relevant Tranche of the Notes.
If the relevant Pricing Supplement specifies the form of Notes as being "Temporary Global Note
exchangeable for Definitive Bearer Notes" and also specifies that the TEFRA D Rules are
applicable, then the Notes will initially be in the form of a Temporary Global Note which will be
exchangeable, in whole or in part, for Definitive Bearer Notes not earlier than 40 days after the
issue date of the relevant Tranche of the Notes upon certification as to non-U.S. beneficial
ownership. Interest payments in respect of the Notes cannot be collected without such
certification of non-U.S. beneficial ownership.
Whenever the Temporary Global Note is to be exchanged for Definitive Bearer Notes, the Issuer
shall procure the prompt delivery (free of charge to the bearer) of such Definitive Bearer Notes,
duly authenticated and with Coupons and Talons attached (if so specified in the relevant Pricing
Supplement), in an aggregate principal amount equal to the principal amount of the Temporary
Global Note to the bearer of the Temporary Global Note against the surrender of the Temporary
Global Note to or to the order of the Principal Paying Agent within 30 days of the bearer
requesting such exchange.
If:
(a) Definitive Bearer Notes have not been duly delivered by 5.00 p.m. (London time) on the
thirtieth day after the bearer has requested exchange of the Temporary Global Note for
Definitive Bearer Notes; or
(b) the Temporary Global Note (or any part thereof) has become due and payable in
accordance with the Terms and Conditions of the Notes or the date for final redemption
of the Temporary Global Note has occurred and, in either case, payment in full of the
amount of principal falling due with all accrued interest thereon has not been made to the
bearer in accordance with the terms of the Temporary Global Note on the due date for
payment,
then the Temporary Global Note (including the obligation to deliver Definitive Bearer Notes) will
become void at 5.00 p.m. (London time) on such thirtieth day (in the case of (a) above) or at 5.00
p.m. (London time) on such due date (in the case of (b) above) and the bearer of the Temporary
Global Note will have no further rights thereunder (but without prejudice to the rights which the
bearer of the Temporary Global Note or others may have under the Trust Deed).
- 28 -
Permanent Global Note exchangeable for Definitive Bearer Notes
If the relevant Pricing Supplement specifies the form of Notes as being "Permanent Global Note
exchangeable for Definitive Bearer Notes", then the Notes will initially be in the form of a
Permanent Global Note which will be exchangeable in whole, but not in part, for Definitive Bearer
Notes:
(a) on the expiry of such period of notice as may be specified in the relevant Pricing
Supplement; or
(b) at any time, if so specified in the relevant Pricing Supplement; or
(c) if the relevant Pricing Supplement specifies "in the limited circumstances described in the
Permanent Global Note", then if either of the following events occurs:
(i) Euroclear or Clearstream, Luxembourg or any other relevant clearing system is
closed for business for a continuous period of 14 days (other than by reason of
legal holidays) or announces an intention permanently to cease business; or
(ii) any of the circumstances described in Condition 14 (Events of Default and
Enforcement) occurs.
Whenever the Permanent Global Note is to be exchanged for Definitive Bearer Notes, the Issuer
shall procure the prompt delivery (free of charge to the bearer) of such Definitive Bearer Notes,
duly authenticated and with Coupons and Talons attached (if so specified in the Pricing
Supplement), in an aggregate principal amount equal to the principal amount of Notes
represented by the Permanent Global Note to the bearer of the Permanent Global Note against
the surrender of the Permanent Global Note to or to the order of the Principal Paying Agent within
30 days of the bearer requesting such exchange.
If:
(a) Definitive Bearer Notes have not been duly delivered by 5.00 p.m. (London time) on the
thirtieth day after the bearer has requested exchange of the Permanent Global Note for
Definitive Bearer Notes; or
(b) the Permanent Global Note (or any part thereof) has become due and payable in
accordance with the Terms and Conditions of the Notes or the date for final redemption
of the Permanent Global Note has occurred and, in either case, payment in full of the
amount of principal falling due with all accrued interest thereon has not been made to the
bearer in accordance with the terms of the Permanent Global Note on the due date for
payment,
then the Permanent Global Note (including the obligation to deliver Definitive Bearer Notes) will
become void at 5.00 p.m. (London time) on such thirtieth day (in the case of (a) above) or at 5.00
p.m. (London time) on such due date ((b) above) and the bearer of the Permanent Global Note
will have no further rights thereunder (but without prejudice to the rights which the bearer of the
Permanent Global Note or others may have under the Trust Deed).
Registered Notes
The Registered Notes of each Tranche will initially be represented by a global note in registered
form, without Receipts or Coupons, (a "Registered Global Note") which will be deposited with a
common depositary for, and registered in the name of a common nominee of, Euroclear and
Clearstream, Luxembourg.
Payments of principal, interest and any other amount in respect of a Registered Global Note will,
in the absence of provision to the contrary, be made to the person shown on the Register (as
defined in Condition 12(C)) as the registered holder of the Registered Global Note. None of the
Issuer, the Trustee, the Guarantors, any Paying Agent or the Registrar will have any responsibility
- 29 -
or liability for any aspect of the records relating to or payments or deliveries made on account of
beneficial ownership interests in any Registered Global Note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Payments of principal, interest or any other amount in respect of the Registered Notes in definitive
form will, in the absence of provision to the contrary, be made to the persons shown on the
Register on the relevant Record Date immediately preceding the due date for payment in the
manner provided in that Condition.
Interests in a Registered Global Note will be exchangeable (free of charge), in whole but not in
part, for definitive Registered Notes without receipts, interest coupons or talons attached only
upon the occurrence of an Exchange Event. For these purposes, "Exchange Event" means that
(i) an Event of Default has occurred, (ii) the Issuer has been notified that Euroclear or
Clearstream, Luxembourg is closed for business for a continuous period of 14 days (other than
by reason of holiday, statutory or otherwise) or have announced an intention permanently to
cease business or have in fact done so and, in any such case, no successor clearing system
acceptable to the Trustee is available or (iii) the Issuer has or will become subject to adverse tax
consequences which would not be suffered or required were the Notes represented by the
Registered Global Note in definitive form. The Issuer will promptly give notice to Noteholders in
accordance with Condition 16 if an Exchange Event occurs. In the event of the occurrence of an
Exchange Event, Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any
holder of an interest in such Registered Global Note) or the Trustee may give notice to the
Registrar requesting exchange and, in the event of the occurrence of an Exchange Event as
described in (iii) above, the Issuer may also give notice to the Registrar and the Trustee
requesting exchange. Any such exchange shall occur not later than 10 days after the date of
receipt of the first relevant notice by the Registrar.
Terms and Conditions applicable to the Notes
The terms and conditions applicable to any Definitive Bearer Note will be endorsed on that Note
and will consist of the terms and conditions set out under "Terms and Conditions of the Notes"
below and the provisions of the relevant Pricing Supplement which supplements, amends and/or
replaces those terms and conditions.
The terms and conditions applicable to any Note in global form will differ from those terms and
conditions which would apply to the Note were it in definitive form to the extent described under
"Summary of Provisions Relating to the Notes while in Global Form" below.
Legend concerning United States persons
In the case of any Tranche of Bearer Notes having a maturity of more than 365 days, the Notes
in global form, the Notes in definitive form and any Coupons and Talons appertaining thereto will
bear a legend to the following effect:
"Any United States person who holds this obligation will be subject to limitations under
the United States income tax laws, including the limitations provided in Sections 165(j)
and 1287(a) of the Internal Revenue Code."
- 30 -
TERMS AND CONDITIONS OF THE NOTES
The following is the text of the terms and conditions which, as supplemented, amended and/or
replaced by the relevant Pricing Supplement, will be endorsed on each Note in definitive form
issued under the Programme. The terms and conditions applicable to any Note in global form will
differ from those terms and conditions which would apply to the Note were it in definitive form to
the extent described under "Summary of Provisions Relating to the Notes while in Global Form"
below.
1. Introduction
(a) Programme: Chorus Limited (the "Issuer") has established a Euro Medium Term Note
Programme (the "Programme") for the issuance of up to U.S.$2,000,000,000 in
aggregate principal amount of notes (the "Notes") guaranteed by Chorus New Zealand
Limited (the "Original Guarantor") and certain other subsidiaries of the Issuer from time
to time (together with the Original Guarantor, the "Guarantors").
(b) Pricing Supplement: Notes issued under the Programme are issued in series (each a
"Series") and each Series may comprise one or more tranches (each a "Tranche") of
Notes. Each Tranche is the subject of a pricing supplement (the "Pricing Supplement")
which supplements these terms and conditions (the "Conditions"). The terms and
conditions applicable to any particular Tranche of Notes are these Conditions as
supplemented, amended and/or replaced by the relevant Pricing Supplement. In the
event of any inconsistency between these Conditions and the relevant Pricing
Supplement, the relevant Pricing Supplement shall prevail.
(c) Trust Deed: The Notes are constituted by, are subject to, and have the benefit of, an
amended and restated trust deed dated 10 April 2019 (as amended or supplemented from
time to time, the "Trust Deed") between the Issuer, the Original Guarantor and The Law
Debenture Trust Corporation p.l.c. as trustee (the "Trustee", which expression includes
all persons for the time being trustee or trustees appointed under the Trust Deed).
(d) Paying Agency Agreement: The Notes are the subject of an amended and restated issue
and paying agency agreement dated 28 September 2016 (the "Paying Agency
Agreement") between, amongst others, the Issuer, the Original Guarantor, Citibank, N.A.,
London Branch as principal paying agent (the "Principal Paying Agent", which
expression includes any successor principal paying agent appointed from time to time in
connection with the Notes), the paying agents named therein (together with the Principal
Paying Agent, the "Paying Agents", which expression includes any successor or
additional paying agents appointed from time to time in connection with the Notes),
Citibank, N.A., London Branch as transfer agent (together with the Paying Agents, the
"Agents") and the Trustee.
(e) The Notes: All subsequent references in these Conditions to "Notes" are to the Notes
which are the subject of the relevant Pricing Supplement and may be issued in bearer or
registered form. Copies of the relevant Pricing Supplement are available for viewing at
Citibank, N.A., London Branch, Citigroup Centre, Canada Square, Canary Wharf London
E14 5LB, United Kingdom and copies may be obtained from Citibank, N.A., London
Branch, Citigroup Centre, Canada Square, Canary Wharf London E14 5LB, United
Kingdom.
(f) Summaries: Certain provisions of these Conditions are summaries of the Trust Deed and
the Paying Agency Agreement and are subject to their detailed provisions. The holders
of the Notes (the "Noteholders") and the holders of the related interest coupons, if any,
(the "Couponholders" and the "Coupons", respectively) are bound by, and are deemed
to have notice of, all the provisions of the Trust Deed and the Paying Agency Agreement
applicable to them. Copies of the Trust Deed and the Paying Agency Agreement are
available for inspection by Noteholders during normal business hours at the Specified
Offices of each of the Paying Agents, the initial Specified Offices of which are set out
below.
- 31 -
2. Interpretation
(a) Definitions: In these Conditions the following expressions have the following meanings:
"Accrual Yield" has the meaning given in the relevant Pricing Supplement;
"Additional Business Centre(s)" means the city or cities specified as such in the relevant
Pricing Supplement;
"Additional Financial Centre(s)"
means the city or cities specified as such in the relevant
Pricing Supplement;
"Asset" shall include an interest in, or in the assets of, any joint venture, partnership or
similar venture (whether or not incorporated) in which any one or more of the Issuer and
the Guarantors are participant(s);
"Borrowed Moneys Indebtedness" means:
(a) indebtedness for moneys borrowed;
(b) indebtedness in respect of guarantees or similar indemnities;
(c) acceptance credits;
(d) indebtedness in respect of negotiable instruments;
(e) money owing in respect of interest rate and cross-currency swaps; and
(f) payments under rental or lease arrangements entered into primarily for the
purpose of raising or obtaining finance;
"Business Day" means:
(a) in relation to any sum payable in euro, a TARGET Settlement Day and a day on
which commercial banks and foreign exchange markets settle payments generally
in each (if any) Additional Business Centre; and
(b) in relation to any sum payable in a currency other than euro, a day on which
commercial banks and foreign exchange markets settle payments generally in the
Principal Financial Centre of the relevant currency and in each (if any) Additional
Business Centre;
"Business Day Convention", in relation to any particular date, has the meaning given in
the relevant Pricing Supplement and, if so specified in the relevant Pricing Supplement,
may have different meanings in relation to different dates and, in this context, the following
expressions shall have the following meanings:
(a) "Following Business Day Convention" means that the relevant date shall be
postponed to the first following day that is a Business Day;
(b) "Modified Following Business Day Convention" or "Modified Business Day
Convention" means that the relevant date shall be postponed to the first following
day that is a Business Day unless that day falls in the next calendar month in
which case that date will be the first preceding day that is a Business Day;
(c) "Preceding Business Day Convention" means that the relevant date shall be
brought forward to the first preceding day that is a Business Day;
- 32 -
(d) "FRN Convention", "Floating Rate Convention" or "Eurodollar Convention"
means that each relevant date shall be the date which numerically corresponds
to the preceding such date in the calendar month which is the number of months
specified in the relevant Pricing Supplement as the Specified Period after the
calendar month in which the preceding such date occurred provided, however,
that:
(i) if there is no such numerically corresponding day in the calendar month in
which any such date should occur, then such date will be the last day
which is a Business Day in that calendar month;
(ii) if any such date would otherwise fall on a day which is not a Business Day,
then such date will be the first following day which is a Business Day
unless that day falls in the next calendar month, in which case it will be
the first preceding day which is a Business Day; and
(iii) if the preceding such date occurred on the last day in a calendar month
which was a Business Day, then all subsequent such dates will be the last
day which is a Business Day in the calendar month which is the specified
number of months after the calendar month in which the preceding such
date occurred; and
(e) "No Adjustment" means that the relevant date shall not be adjusted in
accordance with any Business Day Convention;
"Calculation Agent" means, in relation to the Notes of any Series, the Principal Paying
Agent or such other Person specified in the relevant Pricing Supplement as the party
responsible for calculating the Rate(s) of Interest and Interest Amount(s) and/or such
other amount(s) as may be specified in the relevant Pricing Supplement;
"Calculation Amount" has the meaning given in the relevant Pricing Supplement;
"Coupon Sheet" means, in respect of a Bearer Note, a coupon sheet relating to the Note;
"Day Count Fraction" means, in respect of the calculation of an amount for any period of
time (the "Calculation Period"), such day count fraction as may be specified in these
Conditions or the relevant Pricing Supplement and:
(a) if "Actual/Actual (ICMA)" is so specified, means:
(i) where the Calculation Period is equal to or shorter than the Regular Period
during which it falls, the actual number of days in the Calculation Period
divided by the product of (1) the actual number of days in such Regular
Period and (2) the number of Regular Periods in any year; and
(ii) where the Calculation Period is longer than one Regular Period, the sum
of:
(A) the actual number of days in such Calculation Period falling in the
Regular Period in which it begins divided by the product of (1) the
actual number of days in such Regular Period and (2) the number
of Regular Periods in any year; and
(B) the actual number of days in such Calculation Period falling in the
next Regular Period divided by the product of (a) the actual
number of days in such Regular Period and (2) the number of
Regular Periods in any year;
(iii) if "Actual/Actual (ISDA)" is so specified, means the actual number of
days in the Calculation Period divided by 365 (or, if any portion of the
- 33 -
Calculation Period falls in a leap year, the sum of (A) the actual number of
days in that portion of the Calculation Period falling in a leap year divided
by 366 and (B) the actual number of days in that portion of the Calculation
Period falling in a non-leap year divided by 365);
(iv) if "Actual/365 (Fixed)" is so specified, means the actual number of days
in the Calculation Period divided by 365;
(v) if "Actual/360" is so specified, means the actual number of days in the
Calculation Period divided by 360;
if "30/360" is so specified, the number of days in the Calculation Period
divided by 360, calculated on a formula basis as follows
Day Count Fraction =
where:
"Y
1
" is the year, expressed as a number, in which the first day of the
Calculation Period falls;
"Y
2
" is the year, expressed as a number, in which the day immediately
following the last day included in the Calculation Period falls;
"M
1
" is the calendar month, expressed as a number, in which the first day
of the Calculation Period falls;
"M
2
" is the calendar month, expressed as number, in which the day
immediately following the last day included in the Calculation Period falls;
"D
1
" is the first calendar day, expressed as a number, of the Calculation
Period, unless such number would be 31, in which case D
1
will be 30; and
"D
2
" is the calendar day, expressed as a number, immediately following
the last day included in the Calculation Period, unless such number would
be 31 and D
1
is greater than 29, in which case D
2
will be 30";
if "30E/360" or "Eurobond Basis" is so specified, the number of days in
the Calculation Period divided by 360, calculated on a formula basis as
follows:
Day Count Fraction =
where:
"Y
1
" is the year, expressed as a number, in which the first day of the
Calculation Period falls;
"Y
2
" is the year, expressed as a number, in which the day immediately
following the last day included in the Calculation Period falls;
"M
1
" is the calendar month, expressed as a number, in which the first day
of the Calculation Period falls;
"M
2
" is the calendar month, expressed as a number, in which the day
immediately following the last day included in the Calculation Period falls;
360
)()](30[)](360[
121212
DDMMxYYx
360
)()](30[)](360[
121212
DDMMxYYx
- 34 -
"D
1
" is the first calendar day, expressed as a number, of the Calculation
Period, unless such number would be 31, in which case D
1
will be 30; and
"D
2
" is the calendar day, expressed as a number, immediately following
the last day included in the Calculation Period, unless such number would
be 31, in which case D
2
will be 30; and
if "30E/360 (ISDA)" is so specified, the number of days in the Calculation
Period divided by 360, calculated on a formula basis as follows:
Day Count Fraction =
where:
"Y
1
" is the year, expressed as a number, in which the first day of the
Calculation Period falls;
"Y
2
" is the year, expressed as a number, in which the day immediately
following the last day included in the Calculation Period falls;
"M
1
" is the calendar month, expressed as a number, in which the first day
of the Calculation Period falls;
"M
2
" is the calendar month, expressed as a number, in which the day
immediately following the last day included in the Calculation Period falls;
"D
1
" is the first calendar day, expressed as a number, of the Calculation
Period, unless (i) that day is the last day of February or (ii) such number
would be 31, in which case D
1
will be 30; and
"D
2
" is the calendar day, expressed as a number, immediately following
the last day included in the Calculation Period, unless (i) that day is the
last day of February but not the Maturity Date or (ii) such number would
be 31, in which case D
2
will be 30,
provided, however, that in each such case the number of days in the Calculation
Period is calculated from and including the first day of the Calculation Period to
but excluding the last day of the Calculation Period;
"Early Redemption Amount (Tax)" means, in respect of any Note, its principal amount
or such other amount as may be specified in, or determined in accordance with, the
relevant Pricing Supplement;
"Early Termination Amount" means, in respect of any Note, its principal amount or such
other amount as may be specified in, or determined in accordance with, these Conditions
or the relevant Pricing Supplement;
"Extraordinary Resolution" has the meaning given to it in the Trust Deed;
"Final Redemption Amount" means, in respect of any Note, its principal amount or such
other amount as may be specified in, or determined in accordance with, the relevant
Pricing Supplement;
"First Interest Payment Date" means the date specified in the relevant Pricing
Supplement;
"Fixed Coupon Amount" has the meaning given in the relevant Pricing Supplement;
360
()](30[)](360[
)121212
DDMMxYYx
- 35 -
"Group" has the meaning given to it in the Trust Deed.
"Guarantee of the Notes" means the guarantee of the Notes given by the Guarantors in
the Trust Deed;
"Initial Rate of Interest" means the Rate of Interest applicable with respect to the first
Interest Period;
"Interest Amount" means, in relation to a Note and an Interest Period, the amount of
interest payable in respect of that Note for that Interest Period;
"Interest Commencement Date" means in relation to any interest-bearing Note, the date
specified in the relevant Pricing Supplement from which the Note bears interest or, if no
date is specified therein, the Issue Date;
"Interest Determination Date" has the meaning given in the relevant Pricing Supplement;
"Interest Payment Date" means the First Interest Payment Date and any other date or
dates specified as such in, or determined in accordance with the provisions of, the relevant
Pricing Supplement and, if a Business Day Convention is specified in the relevant Pricing
Supplement:
(a) as the same may be adjusted in accordance with the relevant Business Day
Convention; or
(b) if the Business Day Convention is the FRN Convention, Floating Rate Convention
or Eurodollar Convention and an interval of a number of calendar months is
specified in the relevant Pricing Supplement as being the Specified Period, each
of such dates as may occur in accordance with the FRN Convention, Floating
Rate Convention or Eurodollar Convention at such Specified Period of calendar
months following the Interest Commencement Date (in the case of the first Interest
Payment Date) or the previous Interest Payment Date (in any other case);
"Interest Period" means each period beginning on (and including) the Interest
Commencement Date or any Interest Payment Date and ending on (but excluding) the
next Interest Payment Date;
"ISDA Definitions" means the 2006 ISDA Definitions (as amended and updated as at the
date of issue of the first Tranche of the Notes of the relevant Series (as specified in the
relevant Pricing Supplement) as published by the International Swaps and Derivatives
Association, Inc.);
"Issue Date" has the meaning given in the relevant Pricing Supplement;
"Margin" has the meaning given in the relevant Pricing Supplement;
"Maturity Date" has the meaning given in the relevant Pricing Supplement;
"Maximum Redemption Amount" has the meaning given in the relevant Pricing
Supplement;
"Minimum Redemption Amount" has the meaning given in the relevant Pricing
Supplement;
"Noteholder" and (in relation to a Note) "holder" means (in the case of a Bearer Note)
the bearer of a Note and (in the case of a Registered Note) a person in whose name the
Note is registered in the Register (or in the case of joint holders the first named thereof)
save that, for so long as the Notes of any Series are represented by a Global Note each
person who has for the time being a particular principal amount of such Notes credited to
- 36 -
his securities account in the records of Clearstream, Luxembourg or Euroclear shall be
deemed to be the Noteholder in respect of the principal amount of such Notes for all
purposes hereof other than for the purpose of payments in respect thereof, the right to
which shall be vested, as against the Issuer, solely in the bearer, in the case of a Bearer
Note in Global Note form, or registered holder in the case of a Registered Global Note in
accordance with and subject to the terms of the Trust Deed and such Global Note;
"Optional Redemption Amount (Call)" means, in respect of any Note, its principal
amount or such other amount as may be specified in, or determined in accordance with,
the relevant Pricing Supplement;
"Optional Redemption Amount (Put)" means, in respect of any Note, its principal
amount or such other amount as may be specified in, or determined in accordance with,
the relevant Pricing Supplement;
"Optional Redemption Date (Call)" has the meaning given in the relevant Pricing
Supplement;
"Optional Redemption Date (Put)" has the meaning given in the relevant Pricing
Supplement;
"Participating Member State" means a Member State of the European Communities
which adopts the euro as its lawful currency in accordance with the Treaty;
"Payment Business Day" means:
(a) if the currency of payment is euro, any day which is:
(i) a day on which commercial banks and foreign exchange markets settle
payments in any Additional Financial Centre(s) specified herein; and
(ii) a TARGET Settlement Day; or
(b) if the currency of payment is not euro, any day on which commercial banks and
foreign exchange markets settle payments in the principal financial centre for such
currency;
"Person" means any individual, company, corporation, firm, partnership, joint venture,
association, organisation, state or agency of a state or other entity, whether or not having
separate legal personality;
"Principal Financial Centre" means, in relation to any currency, the principal financial
centre for that currency provided, however, that:
(a) in relation to euro, it means the principal financial centre of such Member State of
the European Communities as is selected (in the case of a payment) by the payee
or (in the case of a calculation) by the Calculation Agent; and
(b) in relation to New Zealand dollars, it means Wellington and Auckland;
"Put Option Notice" means a notice which must be delivered to a Paying Agent by any
Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;
"Put Option Receipt" means a receipt issued by a Paying Agent to a depositing
Noteholder upon deposit of a Note with such Paying Agent by any Noteholder wanting to
exercise a right to redeem a Note at the option of the Noteholder;
"Rate of Interest" means the rate or rates (expressed as a percentage per annum) of
interest payable in respect of the Notes specified in the relevant Pricing Supplement or
- 37 -
calculated or determined in accordance with the provisions of these Conditions and/or the
relevant Pricing Supplement;
"Redemption Amount" means, as appropriate, the Final Redemption Amount, the Early
Redemption Amount (Tax), the Optional Redemption Amount (Call), the Optional
Redemption Amount (Put), the Early Termination Amount or such other amount in the
nature of a redemption amount as may be specified in, or determined in accordance with
the provisions of, the relevant Pricing Supplement;
"Reference Banks" has the meaning given in the relevant Pricing Supplement or, if none,
four major banks selected by the Calculation Agent in the market that is most closely
connected with the Reference Rate;
"Reference Price" has the meaning given in the relevant Pricing Supplement;
"Reference Rate" has the meaning given in the relevant Pricing Supplement;
"Regular Period" means:
(a) in the case of Notes where interest is scheduled to be paid only by means of
regular payments, each period from and including the Interest Commencement
Date to but excluding the first Interest Payment Date and each successive period
from and including one Interest Payment Date to but excluding the next Interest
Payment Date;
(b) in the case of Notes where, apart from the first Interest Period, interest is
scheduled to be paid only by means of regular payments, each period from and
including a Regular Date falling in any year to but excluding the next Regular Date,
where "Regular Date" means the day and month (but not the year) on which any
Interest Payment Date falls; and
(c) in the case of Notes where, apart from one Interest Period other than the first
Interest Period, interest is scheduled to be paid only by means of regular
payments, each period from and including a Regular Date falling in any year to
but excluding the next Regular Date, where "Regular Date" means the day and
month (but not the year) on which any Interest Payment Date falls other than the
Interest Payment Date falling at the end of the irregular Interest Period .
"Relevant Date" means, in relation to any payment, whichever is the later of (a) the date
on which the payment in question first becomes due and (b) if the full amount payable has
not been received in the Principal Financial Centre of the currency of payment by the
Principal Paying Agent or the Trustee on or prior to such due date, the date on which (the
full amount having been so received) notice to that effect has been given to the
Noteholders;
"Relevant Financial Centre" has the meaning given in the relevant Pricing Supplement;
"Relevant Screen Page" means the page, section or other part of a particular information
service (including, without limitation, Reuters) specified as the Relevant Screen Page in
the relevant Pricing Supplement, or such other page, section or other part as may replace
it on that information service or such other information service, in each case, as may be
nominated by the Person providing or sponsoring the information appearing there for the
purpose of displaying rates or prices comparable to the Reference Rate;
"Relevant Time" has the meaning given in the relevant Pricing Supplement;
"Reserved Matter" means any proposal:
(a) to change any date fixed for payment of principal or interest in respect of the Notes,
to reduce the amount of principal or interest payable on any date in respect of the
- 38 -
Notes, to alter the method of calculating the amount of any payment in respect of
the Notes or the date for any such payment;
(b) to effect the exchange or substitution of the Notes for, or the conversion of the
Notes into, shares, bonds or other obligations or securities of the Issuer, the
Guarantor or any other person or body corporate formed or to be formed (other
than as permitted under Clause 8.3 of the Trust Deed);
(c) to change the currency in which amounts due in respect of the Notes are payable;
(d) to modify any provision of the guarantee of the Notes (other than as permitted
under Clause 8.3 of the Trust Deed);
(e) to change the quorum requirements relating to meetings or the majority required
to pass an Extraordinary Resolution; or
(f) to amend this definition;
"Security Interest" means any mortgage, charge, pledge, lien or other security interest
including, without limitation, anything analogous to any of the foregoing under the laws of
any jurisdiction, but not including a security interest in relation to personal property that is
created or provided for by:
(i) a transfer of an account receivable or chattel paper;
(ii) a lease for a term of more than one year; or
(iii) a commercial consignment,
that does not secure payment or performance of an obligation;
"Specified Currency" has the meaning given in the relevant Pricing Supplement;
"Specified Denomination(s)" has the meaning given in the relevant Pricing Supplement;
"Specified Office" has the meaning given in the Paying Agency Agreement;
"Specified Period" has the meaning given in the relevant Pricing Supplement;
"Subsidiary" means, in relation to any Person (the "first Person") at any particular time,
any other Person (the "second Person"):
(a) whose affairs and policies the first Person controls or has the power to control,
whether by ownership of share capital, contract, the power to appoint or remove
members of the governing body of the second Person or otherwise; or
(b) whose financial statements are, in accordance with applicable law and generally
accepted accounting principles, consolidated with those of the first Person;
"Talon" means a talon for further Coupons;
"TARGET2" means the Trans-European Automated Real-Time Gross Settlement
Express Transfer payment system which utilises a single shared platform and which was
launched on 19 November 2007;
"TARGET Settlement Day" means any day on which TARGET2 is open for the settlement
of payments in euro;
"Total Tangible Assets" has the meaning given to it in the Trust Deed;
- 39 -
"Treaty" means the Treaty establishing the European Communities, as amended;
"Zero Coupon Note" means a Note specified as such in the relevant Pricing Supplement.
(b) Interpretation: In these Conditions:
(i) if the Notes are Zero Coupon Notes, references to Coupons and Couponholders
are not applicable;
(ii) if Talons are specified in the relevant Pricing Supplement as being attached to the
Notes at the time of issue, references to Coupons shall be deemed to include
references to Talons;
(iii) if Talons are not specified in the relevant Pricing Supplement as being attached
to the Notes at the time of issue, references to Talons are not applicable;
(iv) any reference to principal shall be deemed to include the Redemption Amount,
any additional amounts in respect of principal which may be payable under
Condition 13 (Taxation), any premium payable in respect of a Note and any other
amount in the nature of principal payable pursuant to these Conditions;
(v) any reference to interest shall be deemed to include any additional amounts in
respect of interest which may be payable under Condition 13 (Taxation) and any
other amount in the nature of interest payable pursuant to these Conditions;
(vi) references to Notes being "outstanding" shall be construed in accordance with the
Trust Deed;
(vii) if an expression is stated in Condition 2(a) to have the meaning given in the
relevant Pricing Supplement, but the relevant Pricing Supplement gives no such
meaning or specifies that such expression is "not applicable" then such
expression is not applicable to the Notes;
(viii) any reference to the Trust Deed or the Paying Agency Agreement shall be
construed as a reference to the Trust Deed or the Paying Agency Agreement, as
the case may be, as amended and/or supplemented up to and including the Issue
Date of the Notes; and
(ix) any reference to a provision of any statute shall be deemed also to refer to any
statutory modification or re-enactment thereof or any statutory instrument, order
or regulation made thereunder or under such modification or re-enactment.
3. Form, Denomination and Title
The Notes are in bearer form or in registered form as specified in the applicable Pricing
Supplement and, in the case of definitive Notes, serially numbered, in the Specified
Currency and the Specified Denomination(s). Notes of one Specified Denomination may
not be exchanged for Notes of another Specified Denomination.
All Registered Notes shall have the same Specified Denomination.
This Note may be a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note or a
combination of any of the foregoing, depending upon the Interest Basis shown in the
applicable Pricing Supplement.
This Note may be an Instalment Note, a Dual Currency Note, a Partly Paid Note or a
combination of any of the foregoing, depending upon the Redemption/Payment Basis
shown in the applicable Pricing Supplement.
- 40 -
Definitive Bearer Notes are issued with Coupons attached, unless they are Zero Coupon
Notes in which case references to Coupons and Couponholders in these Terms and
Conditions are not applicable.
Subject as set out below, title to the Bearer Notes, Receipts and Coupons will pass by
delivery and title to the Registered Notes will pass upon registration of transfers in
accordance with the provisions of the Paying Agency Agreement. The Issuer, the
Guarantors, the Trustee and any Agent may deem and treat the bearer of any Bearer
Note or Registered Note as the absolute owner thereof free of any equity, set-off or
counterclaim on the part of the Issuer against the original or any intermediate holder of
such Bearer Note or Registered Note (whether or not such Bearer Note or Registered
Note shall be overdue and notwithstanding any notation of ownership or writing thereon
or notice of any previous loss or theft thereof) for all purposes but, in the case of any
Global Note, without prejudice to the provisions set out in the next succeeding paragraph.
For so long as any of the Notes is represented by a Bearer Global Note held on behalf of
Euroclear Bank SA/NV ("Euroclear") and/or Clearstream Banking S.A. ("Clearstream,
Luxembourg"), each person (other than Euroclear or Clearstream, Luxembourg) who is
for the time being shown in the records of Euroclear or of Clearstream, Luxembourg as
the holder of a particular nominal amount of such Notes (in which regard any certificate
or other document issued by Euroclear or Clearstream, Luxembourg as to the nominal
amount of such Notes standing to the account of any person shall be conclusive and
binding for all purposes save in the case of manifest error) shall be treated by the Issuer,
the Guarantors, the Trustee and the Agents as the holder of such nominal amount of such
Notes for all purposes other than with respect to the payment of principal or interest on
such nominal amount of such Notes, for which purpose the bearer of the relevant Bearer
Global Note or, as the case may be, the registered holder of the Registered Global Note
shall be treated by the Issuer, the Guarantors, the Trustee and any Agent as the holder
of such nominal amount of such Notes in accordance with and subject to the terms of the
relevant Global Note and the expressions "Noteholder" and "holder of Notes" and
related expressions shall be construed accordingly.
Notes which are represented by a Global Note will be transferable only in accordance with
the rules and procedures for the time being of Euroclear and Clearstream, Luxembourg,
as the case may be. References to Euroclear and/or Clearstream, Luxembourg shall,
whenever the context so permits, be deemed to include a reference to any additional or
alternative clearing system approved by the Issuer, the Guarantors, the Principal Paying
Agent and the Trustee (whether specified in the applicable Pricing Supplement or
otherwise).
4. Transfers of Registered Notes
(a) Transfers of interests in Registered Global Notes: Transfers of beneficial interests in
Registered Global Notes will be effected by Euroclear or Clearstream, Luxembourg, as
the case may be, and, in turn, by other participants and, if appropriate, indirect participants
in such clearing systems acting on behalf of beneficial transferors and transferees of such
interests. A beneficial interest in a Registered Global Note will, subject to compliance with
all applicable legal and regulatory restrictions, be transferable for Notes in definitive form
or for a beneficial interest in another Registered Global Note only in the authorised
denominations set out in the applicable Pricing Supplement and only in accordance with
the rules and operating procedures for the time being of Euroclear or Clearstream,
Luxembourg, as the case may be and in accordance with the terms and conditions
specified in the Paying Agency Agreement.
(b) Transfers of Registered Notes in definitive form: A Registered Note in definitive form may,
upon the terms and subject to the conditions set forth in the Trust Deed, be transferred in
whole or in part (in the authorised denominations set out in the applicable Pricing
Supplement). In order to effect any such transfer (i) the holder or holders must (a)
surrender the Registered Note for registration of the transfer of the Registered Note (or
the relevant part of the Registered Note) at the specified office of the Registrar or any
- 41 -
Transfer Agent, with the form of transfer thereon duly executed by the holder or holders
thereof or his or their attorney or attorneys duly authorised in writing and (b) complete and
deposit such other certifications as may be required by the Registrar or, as the case may
be, the relevant Transfer Agent and (ii) the Registrar or, as the case may be, the relevant
Transfer Agent must, after due and careful enquiry, be satisfied with the documents of
title and the identity of the person making the request. Any such transfer will be subject
to such reasonable regulations as the Issuer and the Registrar may from time to time
prescribe. Subject as provided above, the Registrar or, as the case may be, the relevant
Transfer Agent will, within three business days (being for this purpose a day on which
banks are open for business in the city where the specified office of the Registrar or, as
the case may be, the relevant Transfer Agent is located) of the request (or such longer
period as may be required to comply with any applicable fiscal or other laws or regulations)
authenticate and deliver, or procure the authentication and delivery of, at its specified
office to the transferee or (at the risk of the transferee) send by uninsured mail to such
address as the transferee may request, a new Registered Note in definitive form of a like
aggregate nominal amount to the Registered Note (or the relevant part of the Registered
Note) transferred. In the case of the transfer of part only of a Registered Note in definitive
form, a new Registered Note in definitive form in respect of the balance of the Registered
Note not transferred will be so authenticated and delivered or (at the risk of the transferor)
sent to the transferor.
(c) Costs of registration: Noteholders will not be required to bear the costs and expenses of
effecting any registration of transfer as provided above, except for any costs or expenses
of delivery other than by regular uninsured mail and except that the Issuer may require
the payment of a sum sufficient to cover any stamp duty, tax or other governmental charge
that may be imposed in relation to the registration.
(d) Closed Periods: The Issuer shall not be required:
(i) in the event of a partial redemption of Notes under Condition 11(d):
(A) to register the transfer of Registered Notes (or parts of Registered Notes)
during the period beginning on the 65
th
day before the date of the partial
redemption and ending on the day on which notice is given specifying the
serial numbers of Notes called (in whole or in part) for redemption (both
inclusive); or
(B) to register the transfer of any Registered Note, or part of a Registered
Note, called for redemption; or
(ii) to register the transfer of Registered Notes (or parts of Registered Notes) (A)
during the period of 10 Business Days in London immediately prior to any Record
Date in respect of that Note or (B) during the period commencing on the Record
Date in respect of the final Interest Payment Date in respect of that Note and
ending on such Interest Payment Date.
5. Status and Guarantee
(a) Status of the Notes: The Notes constitute direct and unconditional obligations of the
Issuer which will at all times rank pari passu among themselves and at least pari passu
with all other present and future unsecured obligations of the Issuer, save for such
obligations as may be preferred by provisions of law that are both mandatory and of
general application.
(b) Guarantee of the Notes: The Guarantors have in the Trust Deed unconditionally and
irrevocably guaranteed the due and punctual payment of all sums expressed to be
payable by the Issuer under the Trust Deed in respect of the Notes, Receipts or Coupons.
This Guarantee of the Notes constitutes direct and unconditional obligations of each
Guarantor which will at all times rank at least pari passu with all other present and future
- 42 -
unsecured obligations of the Guarantor, save for such obligations as may be preferred by
provisions of law that are both mandatory and of general application.
6. Negative Pledge
(a) Save as provided herein and in paragraph (b) below, so long as any of the Notes remain
outstanding (as defined in the Trust Deed) the Issuer and the Guarantors will not create
or permit to exist any Security Interest over any of their respective Assets to secure any
indebtedness or liabilities (direct or contingent) for Borrowed Moneys Indebtedness
unless the Issuer or the relevant Guarantor, as the case may be, shall simultaneously with
or prior to the creation of such Security Interest, take or procure to be taken any and all
action necessary to procure that the benefit of the Security Interest is extended equally
and rateably to the Notes, provided that this covenant shall not apply to, and accordingly
the Issuer and any of the Guarantors shall be at liberty to create or permit to exist without
breach hereof, any Security Interest:
(i) arising by operation of law or statute in the ordinary course of business, or
securing taxes or other governmental or regulatory levies, duties or imposts, or
any Security Interest in the nature of a contractor's, supplier's or vendor's lien, so
long as (in each of the foregoing cases) the payment of the money secured
thereby is not in default or the liability therefor of the Issuer or the relevant
Guarantor is being contested by appropriate proceedings; or
(ii) created over any Asset acquired, constructed, repaired, maintained or improved,
for the sole purpose of financing or refinancing the cost of such acquisition,
construction, repair, maintenance or improvement, or over the land upon which
such Asset is situated, provided that any Security Interest created pursuant to this
paragraph:
(A) secures no more than the fair value of the Asset (as acquired, constructed,
maintained or improved) as at the time such Security Interest is created;
and
(B) does not secure Borrowed Money Indebtedness owed to Crown
Infrastructure Partners Limited; or
(iii) over any Assets of the Subsidiary which becomes a Guaranteeing Subsidiary after
the date of the Trust Deed, which existed, or which such Subsidiary was
contractually bound to enter into, at the date it became a Guaranteeing Subsidiary
and which was not created in anticipation of such Subsidiary becoming a
Guaranteeing Subsidiary; or
(iv) over any Assets acquired by the Issuer or the relevant Guarantor after the date of
the Trust Deed, which existed at the date of, and was not created in anticipation
of, the acquisition thereof by the Issuer or the relevant Guarantor concerned; or
(v) created or permitted to exist over the whole or any part of its right, title or interest
(whether by way of shareholding, partnership share or otherwise) in, or in the
Assets of, any joint venture, partnership or similar venture (whether or not
incorporated) the sole purpose of which is the development or exploitation of a
project (a "Project Venture"), to secure Borrowed Moneys Indebtedness incurred
by the Issuer or the relevant Guarantor in connection with its interest in such
Project Venture and created or permitted to exist only in favour of a participant or
participants therein, provided no such participant is Crown Infrastructure Partners
Limited; or
(vi) over Assets of the Issuer or the relevant Guarantor comprising cash, deposits,
financial instruments or other monetary Assets, where such Security Interest does
not extend to other Assets of the Issuer or the relevant Guarantor and is created
to secure new borrowings or indebtedness undertaken or incurred to raise or
- 43 -
acquire such cash, deposits, instruments or other monetary Assets and the giving
of such Security Interest is consistent with ordinary banking or business principles
or practices then current and applicable in the relevant market and/or jurisdiction
in relation to indebtedness of that nature; or
(vii) created in substitution for any Security Interest otherwise permitted hereunder; or
(viii) in favour of the Issuer or the relevant Guarantor provided that the Issuer or the
relevant Guarantor, as the case may be, in whose favour it is created retains at
all times the sole beneficial ownership of and all rights, powers and benefits in
relation to such Security Interest; or
(ix) created with the prior written consent of the Trustee after, if the Trustee so requires,
approval by an Extraordinary Resolution (as defined in the Trust Deed) of the
Noteholders.
(b) Notwithstanding the provisions of paragraph (a) above, the Issuer/Guarantor(s) may, in
addition to and separately from the Security Interests permitted under paragraph (a)
above, create or permit to exist any Security Interest of any nature over any of its or their
Assets to secure any Borrowed Moneys Indebtedness if and to the extent that the
aggregate principal amount of the Borrowed Moneys Indebtedness so secured by all such
Security Interests created or permitted to subsist by this paragraph (b) (but other than any
Security Interests attaching only to Assets which are not included in the Total Tangible
Assets of the Group) does not exceed five per cent of the Total Tangible Assets of the
Group.
7. Fixed Rate Note Provisions
(a) Application: This Condition 7 (Fixed Rate Note Provisions) is applicable to the Notes only
if the Fixed Rate Note Provisions are specified in the relevant Pricing Supplement as
being applicable.
(b) Accrual of interest: The Notes bear interest from the Interest Commencement Date at the
Initial Rate of Interest payable in arrear on each Interest Payment Date, subject as
provided in Condition 12 (Payments). Each Note will cease to bear interest from the due
date for final redemption unless, payment of the Redemption Amount is improperly
withheld or refused, in which case it will continue to bear interest in accordance with this
Condition 7 (as well after as before judgment) until whichever is the earlier of (i) the day
on which all sums due in respect of such Note up to that day are received by or on behalf
of the relevant Noteholder and (ii) the day which is seven days after the Principal Paying
Agent or the Trustee has notified the Noteholders that it has received all sums due in
respect of the Notes up to such seventh day (except to the extent that there is any
subsequent default in payment).
(c) Fixed Coupon Amount: The amount of interest payable in respect of each Note for any
Interest Period shall be the relevant Fixed Coupon Amount and, if the Notes are in more
than one Specified Denomination, shall be the relevant Fixed Coupon Amount in respect
of the relevant Specified Denomination.
(d) Calculation of interest amount: The amount of interest payable in respect of each Note
for any period for which a Fixed Coupon Amount is not specified shall be calculated by
applying the Rate of Interest to the Calculation Amount, multiplying the product by the
relevant Day Count Fraction, rounding the resulting figure to the nearest sub-unit of the
Specified Currency (half a sub-unit being rounded upwards) and multiplying such rounded
figure by a fraction equal to the Specified Denomination of such Note divided by the
Calculation Amount. For this purpose a "sub-unit" means, in the case of any currency
other than euro, the lowest amount of such currency that is available as legal tender in
the country of such currency and, in the case of euro, means one cent.
- 44 -
(e) Step-up rate of interest: If this Condition 7(e) is specified as applicable in the applicable
Pricing Supplement, the Rate of Interest will be the Initial Rate of Interest specified in the
applicable Pricing Supplement. The Initial Rate of Interest shall be subject to adjustment
(each such adjustment, a "Rate Adjustment") in the event of a Step-up Rating Change
(if any) or a subsequent Step-down Rating Change (if any), as the case may be, in
accordance with the following provisions. Any Rate Adjustment shall apply in respect of
the Interest Period commencing on the Interest Payment Date falling on or immediately
following the date of the relevant Step-up Rating Change or Step-down Rating Change,
as the case may be, until either a further Rate Adjustment becomes effective or the date
of redemption, as the case may be.
For any Interest Period commencing on or after the first Interest Payment Date
immediately following the date of a Step-up Rating Change, if any, the Rate of Interest
shall be increased by the Ratings Downgrade Step-up Margin specified in the applicable
Pricing Supplement.
In the event that a Step-down Rating Change occurs after the date of a Step-up Rating
Change (or on the same date but subsequent thereto), then for any Interest Period
commencing on the first Interest Payment Date following the date of such Step-down
Rating Change, the Rate of Interest shall be the Initial Rate of Interest.
The Issuer shall use all reasonable efforts to maintain credit ratings for Notes issued, or
to be issued, by it from both Rating Agencies (as defined below). In the event that either
Rating Agency fails to or ceases to assign a rating to Notes issued, or to be issued, by
the Issuer, the Issuer shall use all reasonable efforts to obtain a rating of Notes issued, or
to be issued, by it from a Substitute Rating Agency (as defined below), and references in
this Condition 7(e) to Moody's or S&P Global (each as defined below), as the case may
be, or the ratings thereof, shall be to such Substitute Rating Agency or, as the case may
be, the equivalent ratings thereof. In the event that such a rating is not obtained from a
Substitute Rating Agency, then, for the purposes of the foregoing adjustments to the Rate
of Interest, the ratings assigned by the remaining Rating Agency shall be deemed also to
be the ratings assigned by the other Rating Agency.
In the event that both Rating Agencies fail to or cease to assign a rating to Notes issued,
or to be issued, by the Issuer and the Issuer fails to obtain a rating of Notes issued, or to
be issued, by it from a Substitute Rating Agency, a Step-up Rating Change will be deemed
to have occurred on the date of such failure but not otherwise. If a rating of Notes issued,
or to be issued, by the Issuer is subsequently assigned by one or more Rating Agencies
or a Substitute Rating Agency, then if such rating (or ratings if more than one) is at least
Baa3, in the case of Moody's, or at least BBB-, in the case of S&P Global, or the equivalent
ratings in the case of a Substitute Rating Agency, a Step-down Rating Change will be
deemed to have occurred on the date of such assignment.
The Rate of Interest will only be subject to adjustment due to a Step-up Rating Change or
a deemed Step-up Rating Change as provided above upon the first occurrence on or after
the Interest Commencement Date of a Step-up Rating Change and may occur only once.
An adjustment to the Rate of Interest following the occurrence of a Step-down Rating
Change or a deemed Step-down Rating Change as provided above may only occur once
and, in any event, only after the occurrence of the Step-up Rating Change.
The Issuer shall cause each Rating Change (if any) and the applicable Rate of Interest to
be notified to the Principal Paying Agent, the Trustee, any stock exchange on which the
relevant Notes are for the time being listed and the Noteholders (in accordance with
Condition 20) as soon as practicable after such Rating Change.
- 45 -
In this Condition:
"Rating Agencies" means Moody's Investor Service Limited ("Moody's") and S&P Global
Ratings, a division of S&P Global Inc. ("S&P Global"), any of their successors and any
Substitute Rating Agency;
"Rating Change" means a Step-up Rating Change and/or a Step-down Rating Change;
"Step-down Rating Change" means, subject as provided above in relation to a deemed
Step-down Rating Change, the first public announcement after a Step-up Rating Change
by both Rating Agencies of an increase in, or confirmation of, the rating of Notes issued,
or to be issued, by the Issuer to at least Baa3, in the case of Moody's, and to at least
BBB-, in the case of S&P Global. For the avoidance of doubt, any further increases in the
credit rating of Notes issued, or to be issued, by the Issuer above Baa3, in the case of
Moody's, or above BBB-, in the case of S&P Global, shall not constitute a Step-down
Rating Change;
"Step-up Rating Change" means, subject as provided above in relation to a deemed
Step-up Rating Change, the first public announcement by either or both Rating Agencies
of a decrease in the rating of Notes issued, or to be issued, by the Issuer to below Baa3,
in the case of Moody's, or below BBB-, in the case of S&P Global. For the avoidance of
doubt, any further decrease in the credit rating of Notes issued, or to be issued, by the
Issuer below Baa3, in the case of Moody's, or below BBB-, in the case of S&P Global,
shall not constitute a Step-up Rating Change;
"Substitute Rating Agency" means a rating agency of equivalent international standing
by the Issuer;
(f) Minimum Volume/Coupon Step-up: If this Condition 7(f) is specified as applicable in the
applicable Pricing Supplement the Rate of Interest applicable to the Notes shall be subject
to adjustment in accordance with the applicable Pricing Supplement.
8. Floating Rate Note Provisions
(a) Application: This Condition 8 (Floating Rate Note Provisions) is applicable to the Notes
only if the Floating Rate Note Provisions are specified in the relevant Pricing Supplement
as being applicable.
(b) Accrual of interest: The Notes bear interest from the Interest Commencement Date at the
Initial Rate of Interest payable in arrear on each Interest Payment Date, subject as
provided in Condition 12 (Payments). Each Note will cease to bear interest from the due
date for final redemption unless payment of the Redemption Amount is improperly
withheld or refused, in which case it will continue to bear interest in accordance with this
Condition 8 (as well after as before judgment) until whichever is the earlier of (i) the day
on which all sums due in respect of such Note up to that day are received by or on behalf
of the relevant Noteholder and (ii) the day which is seven days after the Principal Paying
Agent has notified the Noteholders that it has received all sums due in respect of the
Notes up to such seventh day (except to the extent that there is any subsequent default
in payment).
(c) Screen Rate Determination: If Screen Rate Determination is specified in the relevant
Pricing Supplement as the manner in which the Rate(s) of Interest is/are to be determined,
the Rate of Interest applicable to the Notes for each Interest Period will be determined by
the Calculation Agent on the following basis:
(i) if the Reference Rate is a composite quotation or customarily supplied by one
entity, the Calculation Agent will determine the Reference Rate which appears on
the Relevant Screen Page as of the Relevant Time on the relevant Interest
Determination Date;
- 46 -
(ii) in any other case, the Calculation Agent will determine the arithmetic mean of the
Reference Rates which appear on the Relevant Screen Page as of the Relevant
Time on the relevant Interest Determination Date;
(iii) if, in the case of (i) above, such rate does not appear on that page or, in the case
of (ii) above, fewer than two such rates appear on that page or if, in either case,
the Relevant Screen Page is unavailable, the Calculation Agent will:
(A) request the principal Relevant Financial Centre office of each of the
Reference Banks to provide a quotation of the Reference Rate at
approximately the Relevant Time on the Interest Determination Date to
prime banks in the Relevant Financial Centre interbank market in an
amount that is representative for a single transaction in that market at that
time; and
(B) determine the arithmetic mean of such quotations; and
(iv) if fewer than two such quotations are provided as requested, the Calculation Agent
will determine the arithmetic mean of the rates (being the nearest to the Reference
Rate, as determined by the Calculation Agent) quoted by major banks in the
Principal Financial Centre of the Specified Currency, selected by the Calculation
Agent, at approximately 11.00 a.m. (local time in the Principal Financial Centre of
the Specified Currency) on the first day of the relevant Interest Period for loans in
the Specified Currency to leading European banks for a period equal to the
relevant Interest Period and in an amount that is representative for a single
transaction in that market at that time,
and the Rate of Interest for such Interest Period shall be the sum of the Margin and the
rate or (as the case may be) the arithmetic mean so determined; provided, however,
that if the Calculation Agent is unable to determine a rate or (as the case may be) an
arithmetic mean in accordance with the above provisions in relation to any Interest Period,
the Rate of Interest applicable to the Notes during such Interest Period will be the sum of
the Margin and the rate or (as the case may be) the arithmetic mean last determined in
relation to the Notes in respect of a preceding Interest Period.
(d) ISDA Determination: If ISDA Determination is specified in the relevant Pricing
Supplement as the manner in which the Rate(s) of Interest is/are to be determined, the
Rate of Interest applicable to the Notes for each Interest Period will be the sum of the
Margin and the relevant ISDA Rate where "ISDA Rate" in relation to any Interest Period
means a rate equal to the Floating Rate (as defined in the ISDA Definitions) that would
be determined by the Calculation Agent under an interest rate swap transaction if the
Calculation Agent were acting as Calculation Agent for that interest rate swap transaction
under the terms of an agreement incorporating the ISDA Definitions and under which:
(i) the Floating Rate Option (as defined in the ISDA Definitions) is as specified in the
relevant Pricing Supplement;
(ii) the Designated Maturity (as defined in the ISDA Definitions) is a period specified
in the relevant Pricing Supplement; and
(iii) the relevant Reset Date (as defined in the ISDA Definitions) is either (A) if the
relevant Floating Rate Option is based on the London inter-bank offered rate
(LIBOR) for a currency, the first day of that Interest Period or (B) in any other case,
as specified in the relevant Pricing Supplement.
(e) Maximum or Minimum Rate of Interest: If any Maximum Rate of Interest or Minimum Rate
of Interest is specified in the relevant Pricing Supplement, then the Rate of Interest shall
in no event be greater than the maximum or be less than the minimum so specified.
- 47 -
(f) Calculation of Interest Amount: The Calculation Agent will, as soon as practicable after
the time at which the Rate of Interest is to be determined in relation to each Interest Period,
calculate the Interest Amount payable in respect of each Note for such Interest Period.
The Interest Amount will be calculated by applying the Rate of Interest for such Interest
Period to the Calculation Amount, multiplying the product by the relevant Day Count
Fraction, rounding the resulting figure to the nearest sub-unit of the Specified Currency
(half a sub-unit being rounded upwards) and multiplying such rounded figure by a fraction
equal to the Specified Denomination of the relevant Note divided by the Calculation
Amount. For this purpose a "sub-unit" means, in the case of any currency other than
euro, the lowest amount of such currency that is available as legal tender in the country
of such currency and, in the case of euro, means one cent.
(g) Calculation of other amounts: If the relevant Pricing Supplement specifies that any other
amount is to be calculated by the Calculation Agent, the Calculation Agent will, as soon
as practicable after the time or times at which any such amount is to be determined,
calculate the relevant amount. The relevant amount will be calculated by the Calculation
Agent in the manner specified in the relevant Pricing Supplement.
(h) Publication: The Calculation Agent will cause each Rate of Interest and Interest Amount
determined by it, together with the relevant Interest Payment Date, and any other
amount(s) required to be determined by it together with any relevant payment date(s) to
be notified to the Paying Agents and each competent authority, stock exchange and/or
quotation system (if any) by which the Notes have then been admitted to listing, trading
and/or quotation as soon as practicable after such determination but (in the case of each
Rate of Interest, Interest Amount and Interest Payment Date) in any event not later than
the first day of the relevant Interest Period. Notice thereof shall also promptly be given to
the Noteholders. The Calculation Agent will be entitled to recalculate any Interest Amount
(on the basis of the foregoing provisions) without notice in the event of an extension or
shortening of the relevant Interest Period. If the Calculation Amount is less than the
minimum Specified Denomination the Calculation Agent shall not be obliged to publish
each Interest Amount but instead may publish only the Calculation Amount and the
Interest Amount in respect of a Note having the minimum Specified Denomination.
(i) Notifications etc: All notifications, opinions, determinations, certificates, calculations,
quotations and decisions given, expressed, made or obtained for the purposes of this
Condition by the Calculation Agent will (in the absence of manifest error) be binding on
the Issuer, the Guarantors, the Paying Agents, the Noteholders and the Couponholders
and (subject as aforesaid) no liability to any such Person will attach to the Calculation
Agent in connection with the exercise or non-exercise by it of its powers, duties and
discretions for such purposes.
9. Zero Coupon Note Provisions
(a) Application: This Condition 9 (Zero Coupon Note Provisions) is applicable to the Notes
only if the Zero Coupon Note Provisions are specified in the relevant Pricing Supplement
as being applicable.
(b) Late payment on Zero Coupon Notes: If the Redemption Amount payable in respect of
any Zero Coupon Note is improperly withheld or refused, the Redemption Amount shall
thereafter be an amount equal to the sum of:
(i) the Reference Price; and
(ii) the product of the Accrual Yield (compounded annually) being applied to the
Reference Price on the basis of the relevant Day Count Fraction from (and
including) the Issue Date to (but excluding) whichever is the earlier of (i) the day
on which all sums due in respect of such Note up to that day are received by or
on behalf of the relevant Noteholder and (ii) the day which is seven days after the
Principal Paying Agent has notified the Noteholders that it has received all sums
- 48 -
due in respect of the Notes up to such seventh day (except to the extent that there
is any subsequent default in payment).
10. Dual Currency Note Provisions
(a) Application: This Condition 10 (Dual Currency Note Provisions) is applicable to the Notes
only if the Dual Currency Note Provisions are specified in the relevant Pricing Supplement
as being applicable.
(b) Rate of Interest: If the rate or amount of interest falls to be determined by reference to an
exchange rate, the rate or amount of interest payable shall be determined in the manner
specified in the relevant Pricing Supplement.
11. Redemption and Purchase
(a) Scheduled redemption: Unless previously redeemed, or purchased and cancelled, the
Notes will be redeemed at their Final Redemption Amount on the Maturity Date, subject
as provided in Condition 12 (Payments).
(b) Redemption for tax reasons: The Notes may be redeemed at the option of the Issuer in
whole, but not in part:
(i) at any time (if the Floating Rate Note Provisions are not specified in the relevant
Pricing Supplement as being applicable); or
(i) on any Interest Payment Date (if the Floating Rate Note Provisions are not
specified in the relevant Pricing Supplement as being applicable),
on giving not less than 30 nor more than 60 days' notice to the Noteholders (which notice
shall be irrevocable), at their Early Redemption Amount (Tax), together with interest
accrued (if any) to the date fixed for redemption, if, immediately before giving such notice,
the Issuer satisfies the Trustee that:
(A) (1) the Issuer has or will become obliged to pay additional amounts as provided
or referred to in Condition 13 (Taxation) as a result of any change in, or
amendment to, the laws or regulations of New Zealand or any political subdivision
or any authority thereof or therein having power to tax (including, without limitation,
any increase in the rate of Approved Issuer Levy payable pursuant to the Stamp
and Cheque Duties Act 1971 (NZ)), or any change in the application or official
interpretation of such laws or regulations (including a holding by a court of
competent jurisdiction), which change or amendment becomes effective on or
after the date of issue of the first Tranche of the Notes; and (2) such obligation
cannot be avoided by the Issuer taking reasonable measures available to it (but
not including paying the increased amount of Approved Issuer Levy); or
(B) (1) a Guarantor has or (if a demand was made under the Guarantee of the Notes)
would become obliged to pay additional amounts as provided or referred to in
Condition 13 (Taxation) as a result of any change in, or amendment to, the laws
or regulations of New Zealand or any political subdivision or any authority thereof
or therein having power to tax (including, without limitation, any increase in the
rate of Approved Issuer Levy payable pursuant to the Stamp and Cheque Duties
Act 1971 (NZ)), or any change in the application or official interpretation of such
laws or regulations (including a holding by a court of competent jurisdiction), which
change or amendment becomes effective on or after the date of issue of the first
Tranche of the Notes and (2) such obligation cannot be avoided by the Guarantor
taking reasonable measures available to it (but not including paying the increased
amount of Approved Issuer Levy),
provided, however, that no such notice of redemption shall be given earlier than:
- 49 -
(1) where the Notes may be redeemed at any time, 90 days prior to the
earliest date on which the Issuer or the relevant Guarantor would be
obliged to pay such additional amounts if a payment in respect of the
Notes were then due or (as the case may be) a demand under the
Guarantee of the Notes were then made; or
(2) where the Notes may be redeemed only on an Interest Payment Date, 60
days prior to the Interest Payment Date occurring immediately before the
earliest date on which the Issuer or the relevant Guarantor would be
obliged to pay such additional amounts if a payment in respect of the
Notes were then due or (as the case may be) a demand under the
Guarantee of the Notes were then made.
Prior to the publication of any notice of redemption pursuant to this paragraph, the
Issuer shall deliver or procure that there is delivered to the Trustee a certificate
signed by two directors of the Issuer stating that the Issuer is entitled to effect
such redemption and setting forth a statement of facts showing that the conditions
precedent to the right of the Issuer so to redeem have occurred. The Trustee shall
be entitled to accept such certificate as sufficient evidence of the satisfaction of
the circumstances set out above, in which event it shall be conclusive and binding
on the Noteholders. Upon the expiry of any such notice as is referred to in this
Condition 11(b), the Issuer shall be bound to redeem the Notes in accordance
with this Condition 11.
(c) Redemption at the option of the Issuer: If the Call Option is specified in the relevant Pricing
Supplement as being applicable, the Notes may be redeemed at the option of the Issuer
in whole or, if so specified in the relevant Pricing Supplement, in part on any Optional
Redemption Date (Call) at the relevant Optional Redemption Amount (Call) on the Issuer's
giving not less than 30 nor more than 60 days' notice to the Noteholders (which notice
shall be irrevocable and shall oblige the Issuer to redeem the Notes or, as the case may
be, the Notes specified in such notice on the relevant Optional Redemption Date (Call) at
the Optional Redemption Amount (Call) plus accrued interest (if any) to such date).
(d) Partial redemption: If the Notes are to be redeemed in part only on any date in accordance
with Condition 11(c) (Redemption at the option of the Issuer), in the case of Bearer Notes
the Notes to be redeemed shall be selected by the drawing of lots in such place as the
Principal Paying Agent approves and in such manner as the Principal Paying Agent
considers appropriate, subject to compliance with applicable law, the rules of each
competent authority, stock exchange and/or quotation system (if any) by which the Notes
have then been admitted to listing, trading and/or quotation and the notice to Noteholders
referred to in Condition 11(c) (Redemption at the option of the Issuer) shall specify the
serial numbers of the Notes so to be redeemed, and, in the case of Registered Notes,
each shall be redeemed in part in the proportion which the aggregate principal amount of
the outstanding Notes to be redeemed on the relevant Optional Redemption Date (Call)
bears to the aggregate principal amount of outstanding Notes on such date. If any
Maximum Redemption Amount or Minimum Redemption Amount is specified in the
relevant Pricing Supplement, then the Optional Redemption Amount (Call) shall in no
event be greater than the maximum or be less than the minimum so specified.
(e) Redemption at the option of Noteholders: If the Put Option is specified in the relevant
Pricing Supplement as being applicable, the Issuer shall, at the option of the holder of any
Note redeem such Note on the Optional Redemption Date (Put) specified in the relevant
Put Option Notice at the relevant Optional Redemption Amount (Put) together with interest
(if any) accrued to such date. In order to exercise the option contained in this Condition
11(e), the holder of a Note must, not less than 30 nor more than 60 days before the
relevant Optional Redemption Date (Put), deposit a duly completed Put Option Notice in
the form obtainable from the Paying Agent and, in the case of a Put Option Notice relating
to Definitive Notes, such Definitive Notes with any Paying Agent. The Paying Agent with
which a Note is so deposited shall deliver a duly completed Put Option Receipt to the
depositing Noteholder. No Note, once deposited with a duly completed Put Option Notice
- 50 -
in accordance with this Condition 11(e), may be withdrawn; provided, however, that if,
prior to the relevant Optional Redemption Date (Put), any such Note becomes
immediately due and payable or, upon due presentation of such Definitive Note, the
payment of such redemption moneys is improperly withheld or refused, the relevant
Paying Agent shall mail notification thereof to the depositing Noteholder at such address
as may have been given by such Noteholder in the relevant Put Option Notice and shall
hold such Note at its Specified Office for collection by the depositing Noteholder against
surrender of the relevant Put Option Receipt. For so long as any outstanding Note is held
by a Paying Agent in accordance with this Condition 11(e), the depositor of such Note
and not such Paying Agent shall be deemed to be the holder of such Note for all purposes.
(f) No other redemption: The Issuer shall not be entitled to redeem the Notes otherwise than
as provided in paragraphs (a) to (e) above.
(g) Early redemption of Zero Coupon Notes: Unless otherwise specified in the relevant
Pricing Supplement, the Redemption Amount payable on redemption of a Zero Coupon
Note at any time before the Maturity Date shall be an amount equal to the sum of:
(i) the Reference Price; and
(ii) the product of the Accrual Yield (compounded annually) being applied to the
Reference Price from (and including) the Issue Date to (but excluding) the date
fixed for redemption or (as the case may be) the date upon which the Note
becomes due and payable.
Where such calculation is to be made for a period which is not a whole number of years,
the calculation in respect of the period of less than a full year shall be made on the basis
of such Day Count Fraction as may be specified in the Pricing Supplement for the
purposes of this Condition 11(g) or, if none is so specified, a Day Count Fraction of
30E/360.
(h) Purchase: The Issuer, a Guarantor or any of their respective Subsidiaries may at any
time purchase Notes in the open market or otherwise and at any price, provided that (in
the case of Bearer Notes) all unmatured Coupons are purchased therewith.
(i) Cancellation: All Notes so redeemed or purchased by the Issuer, a Guarantor or any of
their respective Subsidiaries and any unmatured Coupons attached to or surrendered with
them shall be cancelled and may not be reissued or sold.
12. Payments
(A) Payments Generally
(a) Payments in New York City: Payments of principal or interest may be made at the
Specified Office of a Paying Agent in New York City if (i) the Issuer has appointed Paying
Agents outside the United States with the reasonable expectation that such Paying
Agents will be able to make payment of the full amount of the interest on the Notes in the
currency in which the payment is due when due, (ii) payment of the full amount of such
interest at the offices of all such Paying Agents is illegal or effectively precluded by
exchange controls or other similar restrictions and (iii) payment is permitted by applicable
United States law.
(b) Payments subject to fiscal laws: Payments will be subject in all cases to (i) any fiscal or
other laws and regulations applicable thereto in the place of payment, but without
prejudice to the provisions of Condition 13 (Taxation) and (ii) any withholding or deduction
required pursuant to an agreement described in Section 1471(b) of the U.S. Internal
Revenue Code of 1986 (the "Code") or otherwise imposed pursuant to Sections 1471
through 1474 of the Code, any regulations or agreements thereunder, any official
interpretations thereof, or (without prejudice to the provisions of Condition 13 (Taxation))
any law implementing an intergovernmental approach thereto.
- 51 -
(c) Payments on business days: If the due date for payment of any amount in respect of any
Note or Coupon is not a Payment Business Day in the place of presentation, the holder
shall not be entitled to payment in such place of the amount due until the next succeeding
Payment Business Day in such place and shall not be entitled to any further interest or
other payment in respect of any such delay.
(d) Partial payments: If a Paying Agent makes a partial payment in respect of any Note or
Coupon presented to it for payment, such Paying Agent will endorse thereon or, in the
case of Registered Notes, record upon the Register a statement indicating the amount
and date of such payment.
(B) Payments in respect of Bearer Notes
(a) Principal: Payments of principal shall be made only against presentation and (provided
that payment is made in full) surrender of Bearer Notes at the Specified Office of any
Paying Agent outside the United States by cheque drawn in the currency in which the
payment is due on, or by transfer to an account denominated in that currency (or, if that
currency is euro, any other account to which euro may be credited or transferred) and
maintained by the payee with, a bank in the Principal Financial Centre of that currency.
(b) Interest: Payments of interest shall, subject to paragraph (f) below, be made only against
presentation and (provided that payment is made in full) surrender of the appropriate
Coupons at the Specified Office of any Paying Agent outside the United States in the
manner described in paragraph (a) above.
(c) Deductions for unmatured Coupons: If the relevant Pricing Supplement specifies that the
Fixed Rate Note Provisions are applicable and a Bearer Note is presented without all
unmatured Coupons relating thereto:
(i) if the aggregate amount of the missing Coupons is less than or equal to the
amount of principal due for payment, a sum equal to the aggregate amount of the
missing Coupons will be deducted from the amount of principal due for payment;
provided, however, that if the gross amount available for payment is less than
the amount of principal due for payment, the sum deducted will be that proportion
of the aggregate amount of such missing Coupons which the gross amount
actually available for payment bears to the amount of principal due for payment;
and
(ii) if the aggregate amount of the missing Coupons is greater than the amount of
principal due for payment:
(A) so many of such missing Coupons shall become void (in inverse order of
maturity) as will result in the aggregate amount of the remainder of such
missing Coupons (the "Relevant Coupons") being equal to the amount
of principal due for payment; provided, however, that where this sub-
paragraph would otherwise require a fraction of a missing Coupon to
become void, such missing Coupon shall become void in its entirety; and
(B) a sum equal to the aggregate amount of the Relevant Coupons (or, if less,
the amount of principal due for payment) will be deducted from the amount
of principal due for payment; provided, however, that, if the gross
amount available for payment is less than the amount of principal due for
payment, the sum deducted will be that proportion of the aggregate
amount of the Relevant Coupons (or, as the case may be, the amount of
principal due for payment) which the gross amount actually available for
payment bears to the amount of principal due for payment.
Each sum of principal so deducted shall be paid in the manner provided in
paragraph (a) above against presentation and (provided that payment is made
in full) surrender of the relevant missing Coupons.
- 52 -
(d) Unmatured Coupons void: If the relevant Pricing Supplement specifies that this
Condition 12(B)(d) is applicable or that the Floating Rate Note Provisions are applicable,
on the due date for final redemption of any Note or early redemption in whole of such Note
pursuant to Condition 11(b) (Redemption for tax reasons), Condition 11(e) (Redemption
at the option of Noteholders), Condition 11(c) (Redemption at the option of the Issuer) or
Condition 14 (Events of Default and Enforcement), all unmatured Coupons relating
thereto (whether or not still attached) shall become void and no payment will be made in
respect thereof.
(e) Payments on business days: If the due date for payment of any amount in respect of any
Bearer Note or Coupon is not a Payment Business Day in the place of presentation, the
holder shall not be entitled to payment in such place of the amount due until the next
succeeding Payment Business Day in such place and shall not be entitled to any further
interest or other payment in respect of any such delay.
(f) Payments other than in respect of matured Coupons: Payments of interest other than in
respect of matured Coupons shall be made only against presentation of the relevant
Bearer Notes at the Specified Office of any Paying Agent outside the United States (or in
New York City if permitted by paragraph (c) above).
(g) Partial payments: If a Paying Agent makes a partial payment in respect of any Bearer
Note or Coupon presented to it for payment, such Paying Agent will endorse thereon a
statement indicating the amount and date of such payment.
(h) Exchange of Talons: On or after the maturity date of the final Coupon which is (or was at
the time of issue) part of a Coupon Sheet relating to the Bearer Notes, the Talon forming
part of such Coupon Sheet may be exchanged at the Specified Office of the Principal
Paying Agent for a further Coupon Sheet (including, if appropriate, a further Talon but
excluding any Coupons in respect of which claims have already become void pursuant to
Condition 15 (Prescription). Upon the due date for redemption of any Bearer Note, any
unexchanged Talon relating to such Note shall become void and no Coupon will be
delivered in respect of such Talon.
(C) Payments in respect of Registered Notes
(a) Principal: Payments of principal (other than instalments of principal prior to the final
instalment) in respect of each Registered Note (whether or not in global form) will be made
against presentation and surrender (or, in the case of part payment of any sum due,
endorsement) of the Registered Note at the Specified Office of the Registrar or any of the
Paying Agents. Such payments will be made by transfer to the Designated Account (as
defined below) of the holder (or the first named of joint holders) of the Registered Note
appearing in the register of holders of the Registered Notes maintained by the Registrar
(the "Register") at the close of business on the fifteenth day (being for the purpose of this
paragraph (a) a day on which banks are open for business in the city where the specified
office of the Registrar is located) before the relevant due date (the "Record Date").
Notwithstanding the previous sentence, if (i) a holder does not have a Designated Account
or (ii) the nominal amount of the Notes held by a holder is less than U.S.$250,000 (or its
approximate equivalent in any other Specified Currency), payment will instead be made
by a cheque in the Specified Currency drawn on a Designated Bank (as defined below).
For these purposes, "Designated Account" means the account (which, in the case of a
payment in Japanese Yen to a non-resident of Japan, shall be a non-resident account)
maintained by a holder with a Designated Bank and identified as such in the Register and
"Designated Bank" means (in the case of payment in a Specified Currency other than
euro) a bank in the principal financial centre of the country of such Specified Currency
(which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be
Sydney and Wellington respectively) and (in the case of a payment in euro) any bank
which processes payments in euro.
(b) Interest: Payments of interest and payments of instalments of principal (other than the
final instalment) in respect of each Registered Note (whether or not in global form) will be
- 53 -
made by a cheque in the Specified Currency drawn on a Designated Bank and mailed by
uninsured mail on the business day in the city where the specified office of the Registrar
is located immediately preceding the relevant due date to the holder (or the first named
of joint holders) of the Registered Note appearing in the Register at the close of business
on the fifteenth day (whether or not such fifteenth day is a business day) before the Record
Date at his address shown in the Register on the Record Date and at his risk. Upon
application of the holder to the specified office of the Registrar not less than three business
days in the city where the specified office of the Registrar is located before the due date
for any payment of interest in respect of a Registered Note, the payment may be made
by transfer on the due date in the manner provided in the preceding paragraph. Any such
application for transfer shall be deemed to relate to all future payments of interest (other
than interest due on redemption) and instalments of principal (other than the final
instalment) in respect of the Registered Notes which become payable to the holder who
has made the initial application until such time as the Registrar is notified in writing to the
contrary by such holder. Payment of the interest due in respect of each Registered Note
on redemption and the final instalment of principal will be made in the same manner as
payment of the principal in respect of such Registered Note.
13. Taxation
(a) Gross up: All payments of principal and interest in respect of the Notes and the Coupons
by or on behalf of the Issuer or a Guarantor shall be made free and clear of, and without
withholding or deduction for or on account of, any present or future taxes, duties,
assessments or governmental charges of whatever nature imposed, levied, collected,
withheld or assessed by or on behalf of New Zealand or any political subdivision therein
or any authority therein or thereof having power to tax, unless the withholding or deduction
of such taxes, duties, assessments, or governmental charges is required by law. In that
event, the Issuer or (as the case may be) the relevant Guarantor shall pay such additional
amounts as will result in receipt by the Noteholders and the Couponholders after such
withholding or deduction of such amounts as would have been received by them had no
such withholding or deduction been required, except that no such additional amounts shall
be payable in respect of any Note or Coupon:
(i) held by or on behalf of a holder in respect of which the liability to such taxes, duties,
assessments or governmental charges in respect of such Note or Coupon arises
by reason of its having some connection with the jurisdiction by which such taxes,
duties, assessments or charges have been imposed, levied, collected, withheld or
assessed other than the mere holding of the Note or Coupon; or
(ii) presented for payment in New Zealand if such withholding or deduction would not
have been required if the Note or Coupon was presented for payment outside
New Zealand; or
(iii) where such withholding or deduction is for or on account of New Zealand resident
withholding tax; or
(iv) held by or on behalf of a holder which is associated with the Issuer or the relevant
Guarantor for the purposes of the Approved Issuer Levy or non-resident
withholding tax rules in the Income Tax Act 2007 of New Zealand or which holds
the Note or Coupon or derives the interest jointly with a New Zealand resident; or
(v) where the relevant Note or Coupon is presented for payment more than 30 days
after the Relevant Date except to the extent that the holder of such Note or
Coupon would have been entitled to such additional amounts on presenting such
Note or Coupon for payment on the last day of such period of 30 days.
(b) Resident Withholding Tax: The Issuer or the Guarantors (as applicable) are required by
law to deduct New Zealand resident withholding tax from the payment of interest to the
holder of any Note on any Interest Payment Date or the Maturity Date, if:
- 54 -
(i) the holder is a resident of New Zealand for income tax purposes or otherwise
receives payments of principal or interest from the Issuer or a Guarantor subject
to the New Zealand resident withholding tax rules (a "New Zealand Holder"); and
(ii) at the time of such payment the New Zealand Holder does not hold a valid
certificate of exemption for New Zealand resident withholding tax purposes (and
otherwise does not have exempt status for New Zealand resident withholding tax
purposes).
Prior to any Interest Payment Date or Maturity Date any New Zealand Holder:
(i) must notify the Issuer or the Guarantors (as applicable) or a Paying Agent that the
New Zealand Holder is the holder of a Note; and
(ii) must notify the Issuer or the Guarantors (as applicable) or a Paying Agent of any
circumstances, and provide the Issuer or the Guarantors (as applicable) or the
relevant Paying Agent with any information, that may enable the Issuer or the
Guarantors (as applicable) to make the payment of interest to the New Zealand
Holder without deduction on account of a New Zealand resident withholding tax.
A New Zealand Holder must notify the Issuer and the Guarantors (as applicable), prior to
any Interest Payment Date or the Maturity Date, of any change in the New Zealand
Holder's circumstances from those previously notified that could affect the Issuer's or a
Guarantor's payment or withholding obligations in respect of any Note. By accepting
payment of the full face amount of a Note or any interest thereon on any Interest Payment
Date or Maturity Date, a New Zealand Holder will be deemed to have indemnified the
Issuer or the Guarantors (as applicable) for all purposes in respect of any liability which
the Issuer or the Guarantors (as applicable) may incur for not deducting any amount from
such payment on account of New Zealand resident withholding tax.
(c) Taxing jurisdiction: If the Issuer or the Guarantor becomes subject at any time to any
taxing jurisdiction other than New Zealand, references in these Conditions to New
Zealand shall be construed as references to New Zealand and/or such other jurisdiction.
14. Events of Default and Enforcement
If any of the following events occurs, then the Trustee at its discretion may and, if so
requested in writing by holders of at least one quarter of the aggregate principal amount
of the outstanding Notes or if so directed by an Extraordinary Resolution, shall (subject to
the Trustee in each case, being indemnified and/or secured and/or prefunded to its
satisfaction having certified in writing that the happening of any of the events described in
paragraphs (c), (d), (f) and (in the case of any event having an analogous effect to any of
the foregoing) (g) below, is in its opinion materially prejudicial to the interests of the
Noteholders) give written notice to the Issuer declaring the Notes to be immediately due
and payable, whereupon they shall become immediately due and payable at their Early
Termination Amount together with accrued interest (if any) without further action or
formality:
(a) default is made in the payment of any principal or interest due in respect of the
Notes or any of them and the default continues for a period of 14 days; or
(b) the Issuer or any Guarantor fails to perform or observe any of its other obligations
under these Conditions or the Trust Deed and (except in any case where the
failure is incapable of remedy when no such continuation or notice as is
hereinafter mentioned will be required) the failure continues for the period of 30
days next following the service by the Trustee on the Issuer or the relevant
Guarantor (as the case may be) of notice requiring the same to be remedied; or
(c) any Borrowed Moneys Indebtedness of the Issuer or any Guarantor exceeding
NZ$10,000,000 (in aggregate) or its equivalent in any other currency is not repaid
- 55 -
on its original maturity date (or within any applicable grace periods), or becomes
due and payable by reason of default before its original maturity date, other than
where contested in good faith by appropriate proceedings; or
(d) the Issuer or any Guarantor is unable to pay its debts as they fall due, commences
negotiations with any one or more of its creditors with a view to the readjustment
or rescheduling of its indebtedness generally, or makes a general assignment for
the benefit of or an arrangement or composition with or for the benefit of its
creditors; or
(e) any order is made by any competent court or an effective resolution is passed or
legislation is enacted for the liquidation, winding up or dissolution of the Issuer or
any Guarantor, or a statutory manager is appointed in respect of the Issuer or any
Guarantor under the Corporations (Investigations and Management) Act 1989 of
New Zealand or any analogous or replacement legislation, or any analogous
proceedings are taken in respect of the Issuer or any Guarantor, or the Issuer or
any Guarantor ceases or threatens in writing to cease to carry on the whole or
substantially the whole of its business, other than for the purposes of a
reconstruction, amalgamation or reorganisation where the Issuer or the relevant
Guarantor, as the case may be, is solvent and which (except in the case of an
amalgamation with, or the distribution of Assets to, another Guarantor or
Guarantors) has been approved by the Trustee; or
(f) an encumbrancer takes possession or a receiver is appointed of the whole or any
material part of the Assets or undertaking of the Issuer or any Guarantor, or a
distress or execution in an amount exceeding NZ$10,000,000 (or its equivalent in
any other currency) is levied or enforced upon or sued out against all or any
material part of the Assets or undertaking of the Issuer or any Guarantor, except
where the same is discharged or stayed within 30 days of commencement or is
contested by the Issuer or such Guarantor in good faith by appropriate
proceedings; or
(g) any event occurs which under the laws of any relevant jurisdiction has an
analogous effect to any of the events referred to in the foregoing paragraphs.
The Trustee may at any time, at its discretion and without further notice, institute such
proceedings against the Issuer and/or a Guarantor as it may think fit to recover any
amounts due in respect of the Notes which are unpaid or to enforce any of its rights under
this Trust Deed or the Conditions but it shall not be bound to do so unless (i) it shall have
been so directed by an Extraordinary Resolution or so requested in writing by the holders
of at least one-quarter in principal amount of the outstanding Notes, and (ii) it shall have
been indemnified and/or secured and/or prefunded to its satisfaction. No Noteholder,
Receiptholder or Couponholder shall be entitled to proceed directly against the Issuer or
the Guarantors unless the Trustee, having become bound so to proceed, fails to do so
within a reasonable time and such failure is continuing.
15. Prescription
Claims for principal in respect of Bearer Notes shall become void unless the relevant
Bearer Notes are presented for payment within ten years of the appropriate Relevant
Date. Claims for interest (whether in respect of Bearer Notes or Registered Notes) shall
become void unless the relevant Notes, Receipts, or Coupons are presented for payment
within, in the case of Bearer Notes, five years or, in the case of Registered Notes ten
years, of the appropriate Relevant Date.
16. Replacement of Notes and Coupons
If any Note, Receipt, Coupon or Talon is lost, stolen, mutilated, defaced or destroyed, it
may be replaced at the Specified Office of the Replacement Agent (in the case of Bearer
Notes, Receipts, Talons or Coupons) or the Registrar (in the case of Registered Notes)
- 56 -
(and, in each case, if the Notes are then admitted to listing, trading and/or quotation by
any competent authority, stock exchange and/or quotation system which requires the
appointment of a Paying Agent or Transfer Agent in any particular place, the Paying Agent
or Transfer Agent having its Specified Office in the place required by such competent
authority, stock exchange and/or quotation system), subject to all applicable laws and
competent authority, stock exchange and/or quotation system requirements, upon
payment by the claimant of the expenses incurred in connection with such replacement
and on such terms as to evidence, security, indemnity and otherwise as the Issuer may
reasonably require. Mutilated or defaced Notes, Receipts, Talons or Coupons must be
surrendered before replacements will be issued.
17. Trustee and Agents
Under the Trust Deed, the Trustee is entitled to be indemnified and relieved from
responsibility in certain circumstances and to be paid its costs and expenses in priority to
the claims of the Noteholders. In addition, the Trustee is entitled to enter into business
transactions with the Issuer, a Guarantor and any entity relating to the Issuer or a
Guarantor without accounting for any profit.
In the exercise of its powers and discretions under these Conditions and the Trust Deed,
the Trustee will have regard to the interests of the Noteholders as a class and will not be
responsible for any consequence for individual Holders of Notes as a result of such
Holders being connected in any way with a particular territory or taxing jurisdiction.
In acting under the Paying Agency Agreement and in connection with the Notes and the
Coupons, the Agents act solely as agents of the Issuer and the Guarantors and (to the
extent provided therein) the Trustee and do not assume any obligations towards or
relationship of agency or trust for or with any of the Noteholders or Couponholders.
The initial Paying Agents, Transfer Agents and Registrars and their initial Specified
Offices are listed below. The initial Calculation Agent (if differing from the Calculation
Agent appointed pursuant to clause 13 of the Paying Agency Agreement) is specified in
the relevant Pricing Supplement. The Issuer and the Guarantors (acting together) reserve
the right (with the prior approval of the Trustee) at any time to vary or terminate the
appointment of any Agent and to appoint a successor principal paying agent, other paying
agent, registrar or calculation agent and additional or successor paying agents or
registrars; provided, however, that:
(a) the Issuer and the Guarantors shall at all times maintain a principal paying agent
and a registrar;
(b) if a Calculation Agent is specified in the relevant Pricing Supplement, the Issuer
and the Guarantors shall at all times maintain a Calculation Agent; and
(c) if and for so long as the Notes are admitted to listing, trading and/or quotation by
any competent authority, stock exchange and/or quotation system which requires
the appointment of a Paying Agent (in the case of Bearer Notes) and a Transfer
Agent (in the case of Registered Notes) in any particular place, the Issuer and the
Guarantors shall maintain a Paying Agent and/or Transfer Agent having its
Specified Office in the place required by such competent authority, stock
exchange and/or quotation system.
Notice of any change in any of the Agents or in their Specified Offices shall promptly be
given to the Noteholders.
18. Meetings of Noteholders; Modification and Waiver
(a) Meetings of Noteholders: The Trust Deed contains provisions for convening meetings of
Noteholders to consider matters relating to the Notes, including the modification of any
provision of these Conditions. Any such modification may be made if sanctioned by an
- 57 -
Extraordinary Resolution. Such a meeting may be convened by the Issuer and the
Guarantors (acting together) or by the Trustee, and shall be convened by the Trustee
subject to its being indemnified and/or secured and/or pre-funded to its satisfaction upon
the request in writing of Noteholders holding not less than one-twentieth of the aggregate
principal amount of the outstanding Notes. The quorum at any Meeting convened to vote
on an Extraordinary Resolution will be two or more Voters holding or representing one
more than half of the aggregate principal amount of the outstanding Notes or, at any
adjourned meeting, two or more Voters being or representing Noteholders whatever the
principal amount of the Notes held or represented; provided, however, that Reserved
Matters may only be sanctioned by an Extraordinary Resolution passed at a meeting of
Noteholders at which two or more Persons holding or representing not less than two-thirds
or, at any adjourned meeting, one-third of the aggregate principal amount of the
outstanding Notes form a quorum. Any Extraordinary Resolution duly passed at any such
meeting shall be binding on all the Noteholders and Couponholders, whether present or
not.
The Trust Deed provides that (i) a written resolution signed by or on behalf of all holders
of Notes who for the time being are entitled to receive notice of a Meeting (a “Written
Resolution”) or (ii) where Notes are held by or on behalf of a clearing system or clearing
systems, approval of a resolution proposed by the Issuer, a Guarantor or the Trustee
given by way of electronic consents communicated through the electronic
communications systems of the relevant clearing system(s) in accordance with their
operating rules and procedures by or on behalf of all holders of Notes who for the time
being are entitled to receive notice of a Meeting (an “Electronic Consent”) shall, in each
case for all purposes, be as valid and effective as an Extraordinary Resolution passed at
a meeting of Noteholders duly convened and held.
A Written Resolution and/or Electronic Consent will be binding on all Noteholders whether
or not they participated in such Written Resolution and/or Electronic Consent, as the case
may be.
(b) Modification and waiver: The Trustee may, without the consent of the Noteholders,
Receiptholders or Couponholders, concur with the Issuer and the Guarantors in making
any modification of these Conditions, the Paying Agency Agreement, the Notes or the
Trust Deed (other than in respect of Reserved Matters or any provision of the Trust Deed
referred to in such specification) which is, in the opinion of the Trustee, proper to make if,
in the opinion of the Trustee, such modification will not be materially prejudicial to the
interests of Noteholders and to any modification of these Conditions, the Paying Agency
Agreement, the Notes or the Trust Deed which is of a formal, minor or technical nature or
is to correct a manifest error.
In addition, the Trustee may, without the consent of the Noteholders, Receiptholders or
Couponholders on such terms and conditions (if any) as shall seem expedient to it,
authorise or waive any proposed breach or breach of any of the covenants or provisions
contained in the Receipts, Coupons or Notes or the Trust Deed (other than a proposed
breach or breach relating to the subject of a Reserved Matter) or determine that any Event
of Default or Potential Event of Default shall not be treated as such for the purposes of
the Trust Deed if, in the opinion of the Trustee, the interests of the Noteholders will not be
materially prejudiced thereby.
If the Trustee so requires, the Issuer shall cause such authorisation, waiver or
determination to be notified to the Noteholders as soon as practicable thereafter.
(c) Substitution: The Trust Deed contains provisions under which the Trustee may, without
the consent of the Noteholders, the Receiptholders or the Couponholders, agree to the
substitution in place of the Issuer of a Guarantor or any other Subsidiary as principal
debtor under the Trust Deed and in relation to the Notes, Receipts or Coupons of any
Series provided that certain conditions specified in the Trust Deed are fulfilled.
- 58 -
No Noteholder or Couponholder shall, in connection with any substitution, be entitled to
claim any indemnification or payment in respect of any tax consequence thereof for such
Noteholder or Couponholder , except to the extent provided for in Condition 13 (Taxation)
(or any undertaking given in addition to or substitution for it pursuant to the provisions of
the Trust Deed).
19. Further Issues
The Issuer may from time to time, without the consent of the Noteholders and in
accordance with the Trust Deed, create and issue further notes having the same terms
and conditions as the Notes in all respects (or in all respects except for the first payment
of interest) so as to form a single series with the Notes. The Issuer may from time to time,
with the consent of the Trustee, create and issue other series of notes having the benefit
of the Trust Deed.
20. Notices
All notices regarding the Bearer Notes will be valid if published in a leading English
language daily newspaper of general circulation in London. It is expected that any such
newspaper publication will be made in the Financial Times in London. The Issuer shall
also ensure that notices are duly published in a manner which complies with the rules of
any Stock Exchange or other relevant authority on which the Bearer Notes are for the time
being listed or by which they have been admitted to trading. Any such notice will be
deemed to have been given on the date of the first publication or, where required to be
published in more than one newspaper, on the date of the first publication in all required
newspapers or where published in such newspapers. If publication as provided above is
not practicable, a notice will be given in such other manner, and will be deemed to have
been given on such date, as the Trustee shall approve.
All notices regarding Registered Notes will be deemed to be validly given if sent by first
class mail (or its equivalent) or (if posted to an address overseas) by airmail to the holders
(or the first named of joint holders) at their respective addresses recorded in the Register
and will be deemed to have been given on the fourth day after mailing and, in addition,
for so long as any Registered Notes are admitted to trading on a Stock Exchange and the
rules of that Stock Exchange (or any other relevant authority) so require, such notice will
be published in a daily newspaper of general circulation in the place or places required by
those rules.
Until such time as any Definitive Notes are issued, there may, so long as the notes are
represented in their entirety by any Global Note held on behalf of Euroclear or
Clearstream, Luxembourg, be substituted for such publication in such newspaper(s) or
such mailing the delivery of the relevant notice to Euroclear or Clearstream, Luxembourg
for communication by them to the Noteholders and, in addition, for so long as any Notes
are listed on a Stock Exchange or admitted to trading by any other relevant authority and
the rules of that Stock Exchange, or as the case may be, other relevant authority so
require, such notice or notices will be published in a daily newspaper of general circulation
in the place or places required by those rules. Any such notice shall be deemed to have
been given to the Noteholders on the day on which the said notice was given to Euroclear
or Clearstream, Luxembourg.
Notices to be given by any Noteholder shall be in writing and given by lodging the same,
together (in the case of any Note in definitive form) with the relative Note or Notes, with
the Agent (in the case of the Bearer Notes) or the Registrar (in the case of Registered
Notes). Whilst any of the Notes are represented by a Global Note, such notice may be
given by any holder of a Note to the relevant Principal Paying Agent or the Registrar
through Euroclear or Clearstream, Luxembourg as the case may be, in such manner as
the relevant Principal Paying Agent, the Registrar and Euroclear or Clearstream,
Luxembourg, as the case may be, may approve for this purpose.
- 59 -
21. Currency Indemnity
If any sum due from the Issuer in respect of the Notes or the Coupons or any order or
judgment given or made in relation thereto has to be converted from the currency (the
"first currency") in which the same is payable under these Conditions or such order or
judgment into another currency (the "second currency") for the purpose of (a) making or
filing a claim or proof against the Issuer, (b) obtaining an order or judgment in any court
or other tribunal or (c) enforcing any order or judgment given or made in relation to the
Notes, the Issuer shall indemnify each Noteholder, on the written demand of such
Noteholder addressed to the Issuer and delivered to the Issuer or to the Specified Office
of the Principal Paying Agent or Registrar (as applicable), against any loss suffered as a
result of any discrepancy between (i) the rate of exchange used for such purpose to
convert the sum in question from the first currency into the second currency and (ii) the
rate or rates of exchange at which such Noteholder may in the ordinary course of business
purchase the first currency with the second currency upon receipt of a sum paid to it in
satisfaction, in whole or in part, of any such order, judgment, claim or proof.
This indemnity constitutes a separate and independent obligation of the Issuer and shall
give rise to a separate and independent cause of action.
22. Rounding
For the purposes of any calculations referred to in these Conditions (unless otherwise
specified in these Conditions or the relevant Pricing Supplement), (a) all percentages
resulting from such calculations will be rounded, if necessary, to the nearest one hundred-
thousandth of a percentage point (with 0.000005 per cent being rounded up to 0.00001
per cent.), (b) all United States dollar amounts used in or resulting from such calculations
will be rounded to the nearest cent (with one half cent being rounded up), (c) all Japanese
Yen amounts used in or resulting from such calculations will be rounded downwards to
the next lower whole Japanese Yen amount, and (d) all amounts denominated in any
other currency used in or resulting from such calculations will be rounded to the nearest
two decimal places in such currency, with 0.005 being rounded upwards.
23. Governing Law and Jurisdiction
(a) Governing law: The Notes and the Trust Deed and all non-contractual obligations arising
out of or in connection with the Notes and the Trust Deed are governed by English law.
(b) English courts: Each of the Issuer and the Guarantors has in the Trust Deed agreed for
the benefit of the Trustee and the Noteholders that the courts of England shall have
exclusive jurisdiction to settle any dispute (a "Dispute") arising out of or in connection with
the Notes (including any non-contractual obligation arising out of or in connection with the
Notes).
(c) Appropriate forum: Each of the Issuer and the Guarantors agrees that the courts referred
to in Condition 23(b) (English courts) are the most appropriate and convenient courts to
settle any Dispute and, accordingly, that it will not argue that any other courts are more
appropriate or convenient.
(d) Rights of Noteholders to take proceedings outside England: Nothing in this Condition 23
(Governing Law and jurisdiction) or the Trust Deed prevents the Trustee or any
Noteholder from taking proceedings relating to a Dispute ("Proceedings") in any other
courts with jurisdiction. To the extent allowed by law, the Trustee or any Noteholders may
take concurrent Proceedings in any number of jurisdictions.
24. Contracts (Rights of Third Parties) Act 1999
No person shall have any right to enforce any term or condition of this Note under the
Contracts (Rights of Third Parties) Act 1999.
- 60 -
FORM OF PRICING SUPPLEMENT
The Pricing Supplement in respect of each Tranche of Notes will be substantially in the following
form, duly supplemented (if necessary), amended (if necessary) and completed to reflect the
particular terms of the relevant Notes and their issue. Text in this section appearing in italics does
not form part of the form of the Pricing Supplement but denotes directions for completing the
Pricing Supplement.
[MIFID II PRODUCT GOVERNANCE / PROFESSIONAL INVESTORS AND ECPS ONLY
TARGET MARKET – Solely for the purposes of [the/each] manufacturer’s product approval
process, the target market assessment in respect of the Notes has led to the conclusion that: (i)
the target market for the Notes is eligible counterparties and professional clients only, each as
defined in Directive 2014/65/EU (as amended, "MiFID II"); and (ii) all channels for distribution of
the Notes to eligible counterparties and professional clients are appropriate. Any person
subsequently offering, selling or recommending the Notes (a "distributor") should take into
consideration the manufacturer[’s/s’] target market assessment; however, a distributor subject to
MiFID II is responsible for undertaking its own target market assessment in respect of the Notes
(by either adopting or refining the manufacturer[’s/s’] target market assessment) and
determining appropriate distribution channels.]
1
PRIIPS REGULATION – PROHIBITION OF SALES TO EEA RETAIL INVESTORS – The Notes
are not intended to be offered, sold or otherwise made available to and should not be offered,
sold or otherwise made available to any retail investor in the European Economic Area ("EEA").
For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as
defined in point (11) of Article 4(1) of [Directive 2014/65/EU as amended ("MiFID II")][MiFID II];
or (ii) a customer within the meaning of Directive 2002/92/EC (as amended or superseded), where
that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of
MiFID II[; or (iii) not a qualified investor as defined in Directive 2003/71/EC (as amended or
superseded)]. Consequently no key information document required by Regulation (EU) No
1286/2014 as amended (the "PRIIPs Regulation") for offering or selling the Notes or otherwise
making them available to retail investors in the EEA has been prepared and therefore offering or
selling the Notes or otherwise making them available to any retail investor in the EEA may be
unlawful under the PRIIPS Regulation.
[In connection with Section 309B of the Securities and Futures Act (Chapter 289) of Singapore
(the "SFA") and the Securities and Futures (Capital Markets Products) Regulations 2018 of
Singapore (the "CMP Regulations 2018"), the Issuer has determined, and hereby notifies all
relevant persons (as defined in Section 309A(1) of the SFA), that the Notes [are] / [are not]
prescribed capital markets products (as defined in the CMP Regulations 2018) and [are]
[Excluded] / [Specified] Investment Products (as defined in MAS Notice SFA 04-N12: Notice on
the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendation on
Investment Products.]
2
Pricing Supplement dated [•]
Chorus Limited
Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes]
Guaranteed by Chorus New Zealand Limited
under the U.S.$2,000,000,000
Euro Medium Term Note Programme
1
To be included where any of the Managers are acting as MiFID II manufacturers.
2
For any Notes to be offered to Singapore investors, the Issuer to consider whether it needs to re-classify the Notes
pursuant to Section 309B of the SFA prior to the launch of the offer.
- 61 -
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the
"Conditions") set forth in the Information Memorandum dated 10 April 2019. This Pricing
Supplement contains the final terms of the Notes and must be read in conjunction with such
Information Memorandum [and the supplemental Information Memorandum dated [date]].
[The following alternative language applies if the first tranche of an issue which is being increased
was issued under an Information Memorandum with an earlier date.
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the
"Conditions") set forth in the Information Memorandum dated [original date]. This Pricing
Supplement contains the final terms of the Notes and must be read in conjunction with the
Information Memorandum dated [current date] [and the supplemental Information Memorandum
dated [●]], save in respect of the Conditions save in respect of the Conditions which are extracted
from the Offering Circular dated [original date] and are attached hereto.]
Full information on the Issuer, the Original Guarantor and the offer of the Notes described herein
is only available on the basis of the combination of this Pricing Supplement [and/,] the Information
Memorandum [and the supplement to the Information Memorandum dated [date of supplement]].
The Information Memorandum [and such supplement are] [is] available for viewing at Citibank,
N.A., London Branch, Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, United
Kingdom and copies may be obtained from the registered office of the Issuer being Level 10, 1
Willis Street, Wellington 6011, New Zealand. The Information Memorandum and, in the case of
Notes listed on the ASX, the applicable Pricing Supplement, will be made available through the
ASX.
[Include whichever of the following apply or specify as "Not Applicable" (N/A). Note that the
numbering should remain as set out below, even if "Not Applicable" is indicated for individual
paragraphs or sub-paragraphs. Italics denote guidance for completing the Pricing Supplement.]
- 62 -
1.
(i) Issuer: Chorus Limited
(ii) Guarantor: Chorus New Zealand Limited
2. [(i)] Series Number: [•]
[(ii) Tranche Number: [•]
(If fungible with an existing
Series, details of that Series,
including the date on which
the Notes become fungible).]
3. Specified Currency or
Currencies:
[•]
4. Aggregate Nominal Amount: [•]
[(i)] Series: [•]
[(ii) Tranche: [•]]
5. Issue Price: [•] per cent of the Aggregate Nominal Amount
[plus accrued interest from [insert date] (in the
case of fungible issues only, if applicable)]
6. (i) Specified
Denominations:
1
2
[ ]
(ii) Calculation Amount: [•]
7. (i) Issue Date: [•]
(ii) Interest
Commencement
Date:
[Specify/Issue Date/Not Applicable]
8. Maturity Date:
[Specify date or (for Floating Rate Notes)
Interest Payment Date falling in or nearest to the
relevant month and year]
[If the notes are Bearer Notes and the Maturity
Date is less than one year from the Issue Date
and either (a) the issue proceeds are received
by the Issuer in the United Kingdom, or (b) the
activity of issuing the Notes is carried on from an
establishment maintained by the Issuer in the
United Kingdom, (i) the Notes must have a
minimum redemption value of £100,000 (or its
equivalent in other currencies) and be sold only
to "professional investors" or (ii) another
1
Notes (including Notes denominated in sterling) in respect of which the issue proceeds are to be accepted by the Issuer
in the United Kingdom or whose issue otherwise would constitute a contravention of section 19 of the FSMA and which
have a maturity of less than one year, must have a minimum redemption value of £100,000 (or its equivalent in other
currencies).
2
If the specified denomination is expressed to be EUR100,000 or its equivalent and multiples of a lower principal amount
(for example EUR1,000), insert the additional wording as follows: EUR100,000 and integral multiples of [EUR1,000] in
excess thereof up to and including [EUR199,000]. No Notes in definitive form will be issued with a denomination above
[EUR199,000]. In relation to any issue of the Notes which are a "Global Note exchangeable for Definitive Notes" in
circumstances other than "in the limited circumstances specified in the Global Notes", such Notes may only be issued in
denominations equal to, or greater than, EUR100,000 (or equivalent) and multiples thereof.
- 63 -
applicable exemption from section 19 of the
FSMA must be available.]
9. Interest Basis: [[•] per cent Fixed Rate]
[[Specify reference rate] +/– [•] per cent Floating
Rate]
[Zero Coupon]
[Dual Currency]
(further particulars specified below)
10. Redemption/Payment Basis: [Redemption at par]
[Dual Currency]
[Partly Paid]
[Instalment]
11. Change of Interest or
Redemption/Payment Basis:
[Specify details of any provision for convertibility
of Notes into another interest or redemption/
payment basis]
12. Put/Call Options: [Investor Put]
[Issuer Call]
[(further particulars specified below)]
13. (i) Status of the Notes: Senior
(ii) Status of the
Guarantee:
Senior
[(iii)] [Date [Board]
approval for
issuance of Notes
[and Guarantee]
[respectively]]
obtained:
[•] [and [•], respectively
(N.B. Only relevant where Board (or similar)
authorisation is required for the particular
tranche of Notes or related Guarantee)]
14. Method of distribution: [Syndicated/Non-syndicated]
PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE
15.
Fixed Rate Note
Provisions
[Applicable/Not Applicable]
(If not applicable, delete the remaining sub-
paragraphs of this paragraph)
(i) Initial Rate[(s)] of
Interest:
[•] per cent per annum [payable [annually/
semi-annually/quarterly/monthly/other (specify)]
in arrear]
(ii) Interest Payment
Date(s):
[•] in each year commencing on [●] up to and
including the Maturity Date [adjusted in
accordance with [specify Business Day
Convention and any applicable Business
- 64 -
Centre(s) for the definition of "Business
Day"]/not adjusted]
(iii) Business Day
Convention:
[Following Business Day Convention/Modified
Following Business Day Convention/Preceding
Business Day Convention/[specify other, unless
no adjustment is required in which case specify
"No Adjustment". If nothing is specified there will
be no adjustment.]]
(iv) Additional Business
Centre(s):
[Not Applicable/give details]
(v) Fixed Coupon
Amount[(s)]:
[•] per Calculation Amount
(vi) Broken Amount(s): [•] per Calculation Amount, payable on the
Interest Payment Date falling [in/on] [•]
(vii) Day Count Fraction: [30/360 / Actual/Actual (ICMA/ISDA) / other]
(viii) Other terms relating
to the method of
calculating interest
for Fixed Rate Notes:
[Not Applicable/give details]
(ix) Ratings Downgrade
Coupon Step-Up
(Condition 7(e))
[Applicable/Not Applicable]
(x) Ratings Downgrade
Step-up Margin
[•]
(xi) Minimum Volume
Coupon Step-up
(Condition 7(f)
[Applicable/Not Applicable]
[Specify adjustment provisions if applicable]
16.
Floating Rate Note
Provisions
[Applicable/Not Applicable]
(If not applicable, delete the remaining sub-
paragraphs of this paragraph)
(i) Specified Period:
(N.B. only applicable if the Specified Period does
not correspond with the Interest Payment Date.)
(ii) First Interest
Payment Date:
[•]
(iii) Interest Payments
Dates:
[•] in each year up to and including the Maturity
Date
(v) Business Day
Convention:
[Floating Rate Convention/Following Business
Day Convention/ Modified Following Business
Day Convention/ Preceding Business Day
Convention/ other (give details)]
- 65 -
(vi) Additional Business
Centre(s):
[Not Applicable/give details]
(iv) Manner in which the
Rate(s) of Interest
is/are to be
determined:
[Screen Rate Determination/ISDA
Determination/other (give details)]
(v) Party responsible for
calculating the
Rate(s) of Interest
and/or Interest
Amount(s) (if not the
[Principal Paying
Agent]):
[[Name] shall be the Calculation Agent (no need
to specify if the Principal Paying Agent is to
perform this function)]
(vi) Screen Rate
Determination:
• Reference
Rate:
[For example, LIBOR or EURIBOR]
• Interest
Determinatio
n Date(s):
[•]
• Relevant
Screen
Page:
[For example, Reuters LIBOR 01/ EURIBOR 01]
• Relevant
Time:
[For example, 11.00 a.m. London time/Brussels
time]
• Relevant
Financial
Centre:
[For example, London/Euro-zone (where Euro-
zone means the region comprised of the
countries whose lawful currency is the euro]
(vii) ISDA Determination:
• Floating Rate
Option:
[•]
• Designated
Maturity:
[•]
• Reset Date: [•]
(viii) Margin(s): [+/-][•] per cent per annum
(ix) Minimum Rate of
Interest:
[•] per cent per annum
(x) Maximum Rate of
Interest:
[•] per cent per annum
(xi) Day Count Fraction: [•]
(xii) Fall back provisions,
rounding provisions,
denominator and any
other terms relating
to the method of
calculating interest
[•]
- 66 -
on Floating Rate
Notes, if different
from those set out in
the Conditions:
17.
Zero Coupon Note
Provisions
[Applicable/Not Applicable]
(If not applicable, delete the remaining sub-
paragraphs of this paragraph)
(i) Accrual Yield: [•] per cent per annum
(ii) Reference Price: [•]
(iii) Any other
formula/basis of
determining amount
payable:
[Consider whether it is necessary to specify a
Day Count Fraction for the purposes of
Condition [•]]
(v) Business Day
Convention:
[Floating Rate Convention/Following Business
Day Convention/ Modified Following Business
Day Convention/ Preceding Business Day
Convention/ FRN Convention/ Floating Rate
Convention/ Eurodollar Convention/ other (give
details)]
(vi) Additional Business
Centre(s):
[Not Applicable/give details]
18.
Variable-linked interest
Note Provisions
[Applicable/Not Applicable]
(If not applicable, delete the remaining sub-
paragraphs of this paragraph)
(i) Formula/other
variable:
[give or annex details]
(ii) Calculation Agent
responsible for
calculating the
interest due:
[•]
(iii) Provisions for
determining Coupon
where calculated by
reference to Index
and/or Formula
and/or other
variable:
[•]
(iv) Interest
Determination
Date(s):
[•]
(v) Provisions for
determining Coupon
where calculation by
reference to Index
and/or Formula
and/or other variable
is impossible or
[•]
- 67 -
impracticable or
otherwise disrupted:
(vi) Interest or
calculation period(s):
[•]
(vii) Specified Period: [•]
(ix) Business Day
Convention:
[Floating Rate Convention/ Following Business
Day Convention/Modified Following Business
Day Convention/Preceding Business Day
Convention/other (give details)]
(x) Additional Business
Centre(s):
[•]
(xi) Minimum
Rate/Amount of
Interest:
[•] per cent per annum
(xii) Maximum
Rate/Amount of
Interest:
[•] per cent per annum
(xiv) Day Count Fraction: [•]
19.
Dual Currency Note
Provisions
[Applicable/Not Applicable]
(If not applicable, delete the remaining sub-
paragraphs of this paragraph)
(i) Rate of
Exchange/method of
calculating Rate of
Exchange:
[give details]
(ii) Calculation Agent, if
any, responsible for
calculating the
principal and/or
interest due:
[•]
(iii) Provisions
applicable where
calculation by
reference to Rate of
Exchange
impossible or
impracticable:
[•]
(iv) Person at whose
option Specified
Currency(ies) is/are
payable:
[•]
(v) Additional Business
Centre(s):
[Not Applicable/give details]
- 68 -
PROVISIONS RELATING TO REDEMPTION
20. Call Option
[Applicable/Not Applicable]
(If not applicable, delete the remaining sub-
paragraphs of this paragraph)
(i) Optional
Redemption Date(s):
[•]
(ii) Optional
Redemption
Amount(s) of each
Note and method, if
any, of calculation of
such amount(s):
[•] per Calculation Amount
(iii) If redeemable in part:
(a) Minimum
Redemption
Amount:
[•] per Calculation Amount
(b) Maximum
Redemption
Amount
[•] per Calculation Amount
(iv) Notice period: [•]
21. Put Option [Applicable/Not Applicable]
(If not applicable, delete the remaining sub-
paragraphs of this paragraph)
(i) Optional
Redemption Date(s):
[•]
(ii) Optional
Redemption
Amount(s) of each
Note and method, if
any, of calculation of
such amount(s):
[•] per Calculation Amount
(iii) Notice period: [•]
22. Final Redemption Amount of
each Note
[•] per Calculation Amount
In cases where the Final
Redemption Amount is
variable-linked:
(i) Formula/variable:
[give or annex details]
(ii) Calculation Agent
responsible for
calculating the Final
Redemption
Amount:
[•]
(iii) Provisions for
determining Final
Redemption Amount
[•]
- 69 -
where calculated by
reference to Formula
and/or other
variable:
(iv) Date for determining
Final Redemption
Amount where
calculation by
reference to Index
and/or Formula
and/or other
variable:
[•]
(v) Provisions for
determining Final
Redemption Amount
where calculation by
reference to Formula
and/or other variable
is impossible or
impracticable or
otherwise disrupted:
[•]
(vi) [Payment Date]: [•]
(vii) Minimum Final
Redemption
Amount:
[•] per Calculation Amount
(viii) Maximum Final
Redemption
Amount:
[•] per Calculation Amount
23. Early Redemption Amount
Early Redemption
Amount(s) per Calculation
Amount payable on
redemption for taxation
reasons or on event of
default or other early
redemption and/or the
method of calculating the
same (if required or if
different from that set out in
the Conditions):
[Not Applicable
(If both the Early Redemption Amount (Tax) and
the Early Termination Amount are the principal
amount of the Notes/specify the Early
Redemption Amount (Tax) and/or the Early
Termination Amount if different from the principal
amount of the Notes)]
GENERAL PROVISIONS APPLICABLE TO THE NOTES
24. Form of Notes: Bearer Notes:
3
[Temporary Global Note exchangeable for a
Permanent Global Note which is exchangeable
for Definitive Notes on [•] days' notice/at any
time/in the limited circumstances specified in the
Permanent Global Note]
4
3
Bearer Notes issued in compliance with the D Rules must initially be represented by a Temporary Global Note.
4
If the Specified Denominations of the Notes in paragraph 6 includes language substantially to the following effect:
"EUR100,000 and integral multiples of [EUR1,000] in excess thereof up to and including [EUR199,000]", the Permanent
Global Note shall not be exchangeable on [●] days notice/at any time.
- 70 -
[Temporary Global Note exchangeable for
Definitive Notes on [•] days' notice]
5
[Registered Notes]
[Permanent Global Note exchangeable for
Definitive Notes on [•] days' notice/at any time/in
the limited circumstances specified in the
Permanent Global Note]
6
25. New Global Note [Yes/No]
26. Intended to be held in a
manner which would allow
Eurosystem eligibility
[No. Whilst the designation is specified as "no"
at the date of this Pricing Supplement, should
the Eurosystem eligibility criteria be amended in
the future such that the Notes are capable of
meeting them the Notes may then be deposited
with one of the ICSDs as common safekeeper
[(and registered in the name of a nominee of one
of the ICSDs acting as common
safekeeper,][include this text for registered
notes] . Note that this does not necessarily mean
that the Notes will then be recognised as eligible
collateral for Eurosystem monetary policy and
intra day credit operations by the Eurosystem at
any time during their life. Such recognition will
depend upon the ECB being satisfied that
Eurosystem eligibility criteria have been met.]]
27. Additional Financial
Centre(s) or other special
provisions relating to
payment dates:
[Not Applicable/give details.
Note that this paragraph relates to the date and
place of payment, and not interest period end
dates, to which sub paragraphs 15(ii), 16(vi) and
18(x) relate]
28. Talons for future Coupons or
Receipts to be attached to
Definitive Notes (and dates
on which such Talons
mature):
[Yes/No. If yes, give details]
29. Details relating to Partly Paid
Notes: amount of each
payment comprising the
Issue Price and date on
which each payment is to be
made [and consequences (if
any) of failure to pay,
including any right of the
Issuer to forfeit the Notes
and interest due on late
payment]:
[Not Applicable/give details]
5
If the Specified Denominations of the Notes in paragraph 6 includes language substantially to the following effect:
"EUR100,000 and integral multiples of [EUR1,000] in excess thereof up to and including [EUR199,000]", the Temporary
Global Note shall not be exchangeable on [●] days notice.
6
If the Specified Denominations of the Notes in paragraph 6 includes language substantially to the following effect:
"EUR100,000 and integral multiples of [EUR1,000] in excess thereof up to and including [EUR199,000]", the Permanent
Global Note shall not be exchangeable on [●] days notice/at any time.
- 71 -
30. Details relating to Instalment
Notes: amount of each
instalment, date on which
each payment is to be made:
[Not Applicable/give details]
31. Consolidation provisions:
[The provisions [in Conditions 20 (Further
Issues)] [annexed to this Pricing Supplement]
apply]
32. Other terms or special
conditions:
[Not applicable/ give details]
DISTRIBUTION
33. (i) If syndicated, names
and addresses of
Dealers and
underwriting
commitments:
[Not Applicable/give names, addresses and
underwriting commitments]
(Include names and addresses of entities
agreeing to underwrite the issue on a firm
commitment basis and names and addresses of
the entities agreeing to place the issue without a
firm commitment or on a "best efforts" basis if
such entities are not the same as the Dealers.)
(ii) Date of
[Subscription]
Agreement:
[•]
(iii) Stabilising
Manager(s) (if any):
[Not Applicable/give name]
34. If non-syndicated, name and
address of Dealer:
[Not Applicable/give name and address]
35. Total commission and
concession:
[•] per cent of the Aggregate Nominal Amount
36. U.S. Selling Restrictions: [Reg. S Compliance Category; TEFRA
C/TEFRA D/ TEFRA not applicable]
37. Additional selling
restrictions:
[Not Applicable/give details]
LISTING AND ADMISSION TO
TRADING
Australia/None
(i) Listing and admission to
trading
[Application [has been/is expected to be] made by
the Issuer (or on its behalf) for the Notes to be
admitted to listing on the Australian Securities
Exchange with effect from [•].]/[Not Applicable].
(ii) Estimate of total
expenses related to
admission to trading
[]
OPERATIONAL INFORMATION
38. ISIN Code: [•]
39. Common Code: [•]
40. Any clearing system(s) other
than Euroclear Bank SA/NV and
Clearstream Banking S.A. the
[Not Applicable/give name(s) and number(s)]
- 72 -
relevant identification
number(s):
41. Delivery: Delivery [against/free of] payment
42. Names and addresses of initial
Paying Agent(s):
[•]
43. Names and addresses of
additional Paying Agent(s) (if
any):
[•]
GENERAL
44. Private Bank
Rebate/Commission
[Applicable/Not Applicable]
45. The Aggregate principal amount
of the Notes issued has been
translated into United States
dollars at the rate of [●],
producing a sum of (for Notes
not denominated in United
States dollars):
46. Ratings: [The Notes to be issued [[have been]/[are
expected to be]] rated [insert details] by [insert
credit rating agency name(s)].]
[[Insert credit rating agency] is established in the
European Union and has applied for registration
under Regulation (EC) No. 1060/2009, although
notification of the corresponding registration
decision has not yet been provided by the relevant
competent authority.]
[[Insert credit rating agency] is established in the
European Union and is registered under
Regulation (EC) No. 1060/2009.]
[[Insert credit rating agency] is not established in
the European Union and is not registered in
accordance with Regulation (EC) No. 1060/2009.]
[[Insert credit rating agency] is not established in
the European Union and has not applied for
registration under Regulation (EC) No.
1060/2009. However, the application for
registration under Regulation (EC) No. 1060/2009
of [insert name of the relevant EU CRA affiliate
that applied for registration], which is established
in the European Union, disclosed the intention to
endorse credit ratings of [insert credit rating
agency].]
[[Insert credit rating agency] is not established in
the European Union and has not applied for
registration under Regulation (EC) No.
1060/2009. The ratings [[have been]/[are
expected to be]] endorsed by [insert the name of
the relevant EU-registered credit rating agency] in
accordance with Regulation (EC) No. 1060/2009.
[Insert the name of the relevant EU-registered
credit rating agency] is established in the
- 73 -
European union an registered under Regulation
(EC) No. 1060/2009.]
[[Insert credit rating agency] is not established in
the European Union and has not applied for
registration under Regulation (EC) No.
1060/2009, but it is certified in accordance with
such Regulation.]
(The above disclosure should reflect the rating
allocated to Notes of the type being issued under
the Programme generally or, where the issue has
been specifically rated, that rating.)
- 74 -
[USE OF PROCEEDS
Give details if different from the "Use of Proceeds" section in the Information Memorandum.]
[STABILISING
In connection with this issue, [insert name of Stabilising Manager] (the "Stabilising Manager") (or
persons acting on behalf of any Stabilising Manager) may over-allot Notes or effect transactions,
to the extent permitted by applicable laws, regulations and rules, and other than in the
circumstances where such action would reasonably be expected to affect the price of the Notes
traded within Australia or New Zealand or on a "financial market", as defined in the Australian
Corporations Act, operated within Australia and with a view to supporting the price of the Notes
at a level higher than that which might otherwise prevail for a limited period after the Issue Date.
However, there is no obligation on such Stabilising Manager (or persons acting on behalf of a
Stabilising Manager) to do this. Any stabilisation action may begin on or after the date on which
adequate public disclosure of the terms of the offer of the Notes is made. Such stabilising if
commenced, may be discontinued at any time, and must be brought to an end after a limited
period. Such stabilising shall be in compliance with all applicable laws, regulations and rules.]
RESPONSIBILITY
The Issuer and the Guarantor(s) accept responsibility for the information contained in these
Pricing Supplement. [(Relevant third party information) has been extracted from (specify source).
Each of the Issuer and the Guarantor(s) confirms that such information has been accurately
reproduced and that, so far as it is aware, and is able to ascertain from information published by
(specify source), no facts have been omitted which would render the reproduced information
inaccurate or misleading.]
Signed on behalf of [name of the Issuer]:
By: ............................................
Duly authorised
[Signed on behalf of the [name of the Guarantor]:
By: .............................................
Duly authorised]
- 75 -
SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM
Clearing System Accountholders
Global Notes may be in bearer form. Consequently, in relation to any Tranche of Bearer Notes
represented by a Bearer Global Note, references in the Terms and Conditions of the Notes to
"Noteholder" are references to the bearer of the relevant Bearer Global Note which, for so long
as the Global Note is held by a depositary or a common depositary, in the case of a CGN, or a
common safekeeper, in the case of an NGN for Euroclear and/or Clearstream, Luxembourg
and/or any other relevant clearing system, will be that depositary or common depositary or, as
the case may be, common safekeeper.
Each of the persons shown in the records of Euroclear and/or Clearstream, Luxembourg and/or
any other relevant clearing system as being entitled to an interest in a Bearer Global Note (each
an "Accountholder") must look solely to Euroclear and/or Clearstream, Luxembourg and/or such
other relevant clearing system (as the case may be) for such Accountholder's share of each
payment made by the Issuer or the Guarantor to the bearer of such Bearer Global Note and in
relation to all other rights arising under the Bearer Global Note. The extent to which, and the
manner in which, Accountholders may exercise any rights arising under the Global Note will be
determined by the respective rules and procedures of Euroclear and Clearstream, Luxembourg
and any other relevant clearing system from time to time. For so long as the relevant Notes are
represented by the Bearer Global Note, Accountholders shall have no claim directly against the
Issuer or the Guarantor in respect of payments due under the Bearer Notes and such obligations
of the Issuer and the Guarantor will be discharged by payment to the bearer of the Bearer Global
Note.
Conditions applicable to Global Notes
Each Global Note will contain provisions which modify the Terms and Conditions of the Notes as
they apply to the Global Note. The following is a summary of certain of those provisions:
Payments in relation to the Bearer Notes: All payments in respect of the Bearer Global Note will
be made against presentation and (in the case of payment of principal in full with all interest
accrued thereon) surrender of the Bearer Global Note to or to the order of any Paying Agent and
will be effective to satisfy and discharge the corresponding liabilities of the Issuer in respect of the
Notes. On each occasion on which a payment of principal or interest is made in respect of the
Bearer Global Note, the Issuer shall procure that in respect of a CGN the payment is noted in a
schedule thereto and in respect of an NGN the payment is entered pro rata in the records of
Euroclear and Clearstream, Luxembourg.
Payments in relation to Registered Notes: All payments in respect of a Registered Global Note
will be made against presentation and endorsement or (in the case of payment of principal in full
with all interest accrued thereon) presentation and surrender of the Registered Global Note to or
to the order of any Paying Agent and will be effective to satisfy and discharge the corresponding
liabilities of the Issuer in respect of the Notes. On each occasion on which a payment of principal
or interest is made in respect of the Registered Global Note, the Issuer shall procure that in
respect of a CGN the payment is noted in a schedule thereto and in respect of an NGN the
payment is entered pro rata in the records of Euroclear and Clearstream, Luxembourg.
Payment Business Day: In the case of a Global Note, shall be: if the currency of payment is
euro, any day which is a TARGET Settlement Day and any day on which commercial banks and
foreign exchange markets settle payments in any Additional Financial Centre (if any); or, if the
currency of payment is not euro, any day on which commercial banks and foreign exchange
markets settle payments in the principal financial centre for such currency.
Exercise of put option: In order to exercise the option contained in Condition 11(e) (Redemption
at the option of Noteholders) the holder of the Permanent Global Note must, within the period
specified in the Conditions for the deposit of the relevant Note and put notice, give written notice
of such exercise to the Principal Paying Agent or Transfer Agent (as applicable) specifying the
- 76 -
principal amount of Notes in respect of which such option is being exercised. Any such notice
will be irrevocable and may not be withdrawn.
Partial exercise of call option: In connection with an exercise of the option contained in Condition
11(c) (Redemption at the option of the Issuer) in relation to some only of the Notes, the Permanent
Global Note may be redeemed in part in the principal amount specified by the Issuer in
accordance with the Conditions and the Notes to be redeemed will not be selected as provided
in the Conditions but in accordance with the rules and procedures of Euroclear and Clearstream,
Luxembourg (to be reflected in the records of Euroclear and Clearstream, Luxembourg as either
a pool factor or a reduction in principal amount, at their discretion).
Notices: Notwithstanding Condition 20 (Notices), while all the Notes are represented by a
Permanent Global Note (or by a Permanent Global Note and/or a Temporary Global Note) and
the Permanent Global Note is (or the Permanent Global Note and/or the Temporary Global Note
are) deposited with a depositary or a common depositary for Euroclear and/or Clearstream,
Luxembourg and/or any other relevant clearing system or a common safekeeper, notices to
Noteholders may be given by delivery of the relevant notice to Euroclear and/or Clearstream,
Luxembourg and/or any other relevant clearing system and, in any case, such notices shall be
deemed to have been given to the Noteholders in accordance with Condition 20 (Notices) on the
date of delivery to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing
system.
- 77 -
USE OF PROCEEDS
The net proceeds from each issue of Notes will be used for financing capital expenditure,
refinancing existing debt obligations, and other general corporate purposes of the Chorus Group.
If, in respect of any particular issue, there is a particular identified use of proceeds, this will be
stated in the relevant Pricing Supplement.
- 78 -
DESCRIPTION OF THE ISSUER AND THE ORIGINAL GUARANTOR
The Issuer
General
The Issuer, Chorus Limited, was established and incorporated as a company under the
Companies Act 1993 of New Zealand on 1 July 2011, with company number 3454251. The
registered office of the Issuer is Level 10, 1 Willis Street, Wellington 6011, New Zealand.
Business activities
The Issuer is the holding company of the Chorus Group. The Chorus Group comprises the Issuer
and all of its wholly-owned subsidiaries, including the Original Guarantor. At the date of this
Information Memorandum, the Original Guarantor is the sole operating subsidiary of the Issuer.
The Original Guarantor does not hold ordinary shares in the Issuer.
Management
For information on the management of Issuer, see "Management of the Chorus Group" below.
Substantial shareholder
At the date of this Information Memorandum, the Issuer had 436,075,010 ordinary shares on
issue. The Issuer's ordinary shares are quoted on the NZX Main Board and on the ASX.
American Depositary Shares, each representing five ordinary shares and evidenced by American
Depositary Receipts, are not listed but are traded on the over-the-counter market in the United
States.
Some ownership restrictions apply to Chorus' shares, as described under the heading "Ownership
restrictions" below.
At the date of this Information Memorandum, the Issuer has received notice of the following
substantial product/security holders, each holding more than 5% of Chorus total listed voting
shares on issue:
Name of Holder Total Number of Shares
Held
Total percentage
L1 Capital Pty Limited 63,601,466 14.80%
The Vanguard Group Inc 23,418,083 5.370%
Commonwealth Bank of Australia 21,536,089 5.013%
The Original Guarantor
General
The Original Guarantor, Chorus New Zealand Limited, was established and incorporated as a
company under the Companies Act 1993 of New Zealand on 1 July 2011, with company number
3454256. The registered office of the Original Guarantor is Level 10, 1 Willis Street, Wellington
6011, New Zealand.
Business activities
The Original Guarantor is the operating company of the Chorus Group and as a result, the
business activities of the Original Guarantor are the business activities of the Chorus Group. A
- 79 -
further description of the business activities of the Chorus Group is set out under "Description of
the Chorus Group's Business" below.
Organisational structure
The Original Guarantor is a wholly-owned subsidiary of the Issuer.
Management
The Directors of the Original Guarantor are as follows:
Name Title Date of appointment
Patrick Strange
..........................................................................
Chair and Director (Independent) 25 August 2017
Jonathan Hartley
...........................................................................
Deputy Chair and Director
(Independent)
25 August 2017
Anne Urlwin
..........................................................................
Director (Independent) 25 August 2017
Kathryn McKenzie
..........................................................................
Managing Director (Non-
Independent)
20 February 2017
Jack Matthews
..........................................................................
Director (Independent) 25 August 2017
Andrew Mark Cross
..........................................................................
Director (Independent) 25 August 2017
Murray Jordan
..........................................................................
Director (Independent) 25 August 2017
Prudence Flacks
..........................................................................
Director (Independent) 25 August 2017
The business address for the Directors of the Original Guarantor is 1 Willis Street, Wellington
6011, New Zealand.
The Directors of the Original Guarantor have notified the Original Guarantor's Board of all their
directorships and other interests as required under the New Zealand Companies Act 1993.
- 80 -
DESCRIPTION OF THE CHORUS GROUP'S BUSINESS
Overview
The Chorus Group is New Zealand's largest fixed line communications infrastructure services
provider, operating and building a fixed communications network including copper and fibre optic
lines and related infrastructure and technologies connecting homes, schools, hospitals and
business throughout New Zealand.
The core of the Chorus Group's business is a nationwide network of fibre optic cables and copper
cables that connect New Zealand homes and businesses to each other across New Zealand.
The Chorus Group is restricted from selling telecommunications services direct to end-consumers.
Chorus provides open access wholesale services to approximately 100 RSPs at the date of this
Information Memorandum. RSPs use the Chorus Group's network to deliver phone and internet
services to New Zealanders and rely on the Chorus Group's copper and fibre network capability
and expertise to build and maintain their communications services.
For the years ended 30 June 2018 and 2017, the Chorus Group generated operating revenue of
NZ$990 million and NZ$1,040 million, respectively, and net profit after tax of NZ$85 million and
NZ$113 million, respectively.
For the half year ended 31 December 2017 and 2018, the Chorus Group generated operating
revenue of NZ$499 million and NZ$489 million, respectively, and net profit after tax of NZ$47
million and NZ$30 million.
The Chorus Group’s financial results for the year ended 30 June 2018 largely reflect the
annualised revenue impact of declining connections from the year ended 30 June 2017, the
adoption of three new accounting standards (NZ IFRS 9, 15 and 16) and costs incurred as part
of an organisational transformation programme. The continuation of declining lines connections
and an increase in finance expenses due to a new NZ$500 million New Zealand bond issue in
December 2018 resulted in a net earnings decrease for the half year ended 31 December 2018.
Chorus is listed on the NZX Main Board and on the ASX, with a market capitalisation at the date
of this Information Memorandum of approximately NZ$2.6 billion.
History
Chorus was initially established in March 2008 as a business unit within Telecom New Zealand
Limited. At that time, in accordance with undertakings finalised under the Telco Act, Telecom
Corporation of New Zealand Limited ("Telecom"), as it was then known, implemented the
operational separation of its business into three separate business units, comprising a fixed
network unit renamed "Chorus", a wholesale unit and a retail business.
In March 2009, the New Zealand Government released the first phase of its UFB network build.
The essence of the UFB network build is to create partnerships between the New Zealand
Government and private investors to deploy fibre network infrastructure. On 24 May 2011, the
New Zealand Government announced that it had reached agreement with Telecom for Chorus to
take a cornerstone role in the first stage of the UFB network build.
Chorus subsequently demerged from Telecom, becoming a standalone listed entity in late 2011.
Telecom is now known as Spark New Zealand Limited.
In January 2017, Chorus was contracted to build a substantial majority of the second phase of
the UFB network build (UFB2), amounting to approximately 168,240 premises. In August 2017,
Chorus was contracted to build an expansion to the second phase of the UFB network build),
amounting to an additional approximately 54,500 premises. The build is expected to be
completed by 2022.
- 81 -
Structure of the Chorus Group
At the date of this Information Memorandum, the Chorus Group's structure is as follows:
Chorus New Zealand Limited, the Original Guarantor, is the operating company of the Chorus
Group. Chorus LTI Trustee Limited is the trustee company for the Chorus Group's executive long
term incentive scheme.
Network assets
Overview
The Chorus Group's local access network consists of fibre optic and copper cables that connect
homes and businesses to each other across New Zealand. These cables typically connect back
to local exchanges owned by the Chorus Group. The Chorus Group's fibre also connects many
mobile phone towers owned by mobile service providers.
The New Zealand telecommunications network, including the Chorus Group's network assets, is
described further below under "- Overview of the New Zealand telecommunications industry".
The number of fixed line connections on the Chorus Group's network at 31 December 2018 was
approximately 1.486 million. This reflected a decrease of approximately 40,000 from 31
December 2017. The decline in total fixed line connections at 31 December 2017 was 43,000
from 31 December 2016. The slowdown in lost connections for 31 December 2018 was driven
by stronger growth in Chorus UFB areas, offsetting reductions in LFC areas and VDSL and
vectoring upgrades helping limit rural wireless effect.
UFB network
In May 2011, following the conclusion of a competitive process, Chorus (which at that time was a
business unit within Telecom) was selected as a cornerstone participant in the first phase of the
UFB network build ("UFB1") to develop, in partnership with the New Zealand Government, the
fibre network in 24 of the 33 UFB candidate areas within that first phase.
In January 2017, Chorus was again selected as a cornerstone participant in the second phase of
the UFB network build ("UFB2"), and was contracted to build a substantial majority of that second
phase, amounting to approximately 168,240 premises. In August 2017, Chorus was contracted
to build an expansion to the second phase of the UFB network build, amounting to approximately
54,500 additional premises. The build is expected to be completed by 2022.
Under this programme of work, the Chorus Group is deploying fibre to homes, businesses,
schools, hospitals and health service providers within the allocated UFB candidate areas, which
cover approximately three quarters of the footprint of the UFB network build. The New Zealand
Government's investment of up to approximately NZ$1.33 billion in the Chorus Group in
Chorus Limited
(Issuer)
Chorus LTI
Trustee Limited
Chorus New
Zealand Limited
(Original Guarantor)
- 82 -
connection with the UFB network build is made through CIP, at the election of Chorus, on a
progressive basis as the UFB rollout is completed.
The UFB1 build is expected to continue through to 2019 and the UFB2 build is expected to
continue through to 2022. At 31 December 2018, the Chorus Group was 70% through the UFB
rollout. Build work had been finished for approximately 738,000 premises across the Chorus
Group's UFB network (including approximately 15,000 UFB2 premises) at 31 December 2018,
with the result that approximately 981,000 end-consumers could connect to the Chorus Group's
UFB network. Fibre uptake was at 51% across the Chorus Group’s UFB network at 31 December
2018, up from 45% at 30 June 2018. Fibre rollout in Auckland and Wellington is expected to be
largely complete by 31 October 2019.
The UFB build comprises two components:
1. Communal network to deliver fibre past premises. The communal network deployed
by the Chorus Group must pass all premises in the UFB candidate area awarded to the
Chorus Group, built according to annual build milestones and to be completed by no later
than 31 December 2019 in respect of UFB1 and December 2022 in respect of UFB2.
2. Connection of fibre to premises. The connection of individual premises to the communal
infrastructure as dictated by demand, including installing equipment in the end-consumers'
premises to enable service delivery. Residential connections includes fibre from the
communal network to the optical network terminal located inside the end-consumers'
premises. The optical network terminal provides ethernet ports and phone jacks allowing
end-consumers to plug in most existing phones, personal computers and wireless routers
to receive service.
The Chorus Group's customer base
The Chorus Group customer base mainly comprises approximately 100 RSPs who buy both Layer
1 and Layer 2 services on a non-discriminatory or equivalence of inputs basis, as well as other
telecommunications services. Other customers of the Chorus Group include other access
network providers including LFCs.
Under the Telco Act, the Chorus Group is restricted from providing telecommunications services
to retail end-consumers, including small and medium sized entities ("SMEs") and corporates. The
Commerce Commission maintains a register of non end-consumers to whom the Chorus Group
can supply services. The New Zealand Commerce Commission assesses the eligibility of new
non end-consumers.
The Chorus Group's products and services
Broadly, the Chorus Group offers customers point to point Layer 1 (physical) copper and fibre
services to the local exchange as well as copper and fibre based Layer 2 (bitstream) services to
the relevant point of interconnect.
Under the Open Systems Interconnection model ("OSI model"), 'layers' subdivide the
telecommunications system from the physical assets in the ground right through to the application
on a computer being used by an end-consumer. The model is composed of seven individual
layers and each layer builds on the next to enable the transfer of data and information between
two or more points in a network. Within the New Zealand telecommunications industry the
concept of OSI model layers are used as a basis on which services and products are regulated
by the New Zealand Commerce Commission.
Under the current regulatory framework, the Chorus Group provides Layer 1 and Layer 2 copper
and fibre products. In the residential and business market Layer 2 fibre Gigabit Passive Optical
Network (“GPON”) services and are available prior to 2020. From January 2020, Chorus will also
offer Layer 1 point to multipoint services which will cater for both residential and business
customers. In the corporate market, Layer 1 GPON fibre services are also available.
- 83 -
1. Layer 1 within the OSI model is classified as the physical layer and within a
telecommunications fixed access network this can be considered to comprise copper and
fibre cables and co-location space inside exchanges or cabinets. At the physical layer,
data is transmitted using electric voltages through copper and pulses of infrared or ordinary
light through optic fibre. In the situation where an RSP purchases access to physical assets,
for example UCLL co-location or direct fibre access, this is referred to as a Layer 1 product
within the OSI model.
2. Layer 2 within the OSI model is classified as the data link layer and provides the functional
and procedural means to transfer data between network entities. Within the
telecommunications fixed access network this can be considered to comprise of the
bitstream equipment and services which transmits basic data from one point in the network
to another over the Layer 1 physical assets. In the situation where an RSP purchases data
transfer products, for example copper UBA services and fibre Bitstream products, this is
referred to as a Layer 2 product.
The below table shows the proportion of revenues provided by each of the Chorus Group's
product categories for the half-year ended 31 December 2018:
Half Year ended
31 December 2018
NZ$ (mil) %
Fibre broadband (GPON) ................................................................................. 136 28
Fibre premium (P2P) ............................................................................................... 37 8
Copper based voice ................................................................................................. 56 11
Copper based broadband ........................................................................................ 181 37
Data services over copper ....................................................................................... 10 2
Value added network services ................................................................................. 16 3
Infrastructure ........................................................................................................... 12 2
Field services ........................................................................................................... 39 8
Other ........................................................................................................................ 2 1
Total revenue .........................................................................................................
489
100
Fibre
Fibre revenues are earned from Chorus' Point to Point fibre products, such as HSNS Premium
and NGA Business Premium, and GPON residential and business fibre services, NGA Evolve
and NGA Business. This category also captures Chorus’ backhaul and Direct Fibre Access
Service, which provide transport and dark fibre point to point solutions and can be used to deliver
backhaul connections to mobile sites.
NGA Evolve and NGA Business are high speed bitstream access services delivered over GPON
point to multipoint fibre.
HSNS Premium and NGA Business Premium are high speed bitstream services with dedicated
bandwidth on point to point fibre.
Backhaul services are offered to support RSPs with the aggregation and transportation of their
customer access traffic from the Point of Interconnect (bitstream handover point), exchange or
cabinet back to their nearest point of presence to interconnect with the RSP’s network.
- 84 -
The Direct Fibre Access Service is a dark fibre access service suitable for the delivery of complex
business grade applications requiring point-to-point fibre access, such as delivering backhaul
connections to Mobile sites.
Enhanced copper
Enhanced copper includes copper based next generation regulated and commercial products that
deliver higher speed capability and a better end-consumer experience, and can assist the
transition to fibre. It includes Basic and Enhanced UBA, VDSL, Baseband IP voice input service
and HSNS Lite for business data on copper.
These services allow RSPs direct access to the high speed access links between the exchange
and an end-consumer premises that have been installed by the Chorus Group. RSPs are then
able to install their own equipment at designated Points of Interconnect, to deliver high speed
broadband services, rather than having to utilise the Chorus Group's equipment.
Basic UBA provides a "best efforts" bitstream service suitable for internet access. Enhanced UBA
provides two classes of service enabling both time delay sensitive applications such as voice and
best efforts applications such as internet access to be supported concurrently.
VDSL (or Very High Speed Digital Subscriber Line) is the fastest of the Chorus Group's copper
broadband products. During the year ended 30 June 2018, a change to VDSL broadband saw
average peak speeds on VDSL rise from 35Mbps to 50Mbps, and enabled the Chorus Group to
increase its VDSL footprint by an estimated 175,000 customers. The combination of UFB, RBI
and VDSL upgrades means that the Chorus Group now has high-speed broadband available via
fibre or copper-based VDSL technology across 85% of its broadband capable lines.
The Baseband IP service enables RSPs to deliver a VoIP service over copper as either a
standalone service, or in conjunction with broadband. At the date of this Information
Memorandum, Baseband IP is available across about 85% of the Chorus Group's lines.
HSNS Lite is a high performing bitstream service with dedicated bandwidth on copper lines,
designed for business and priority use.
Basic copper
Basic copper incorporates core regulated products that, while an important part of the Chorus
Group's portfolio, are founded on earlier technology and product variants that are being
superseded by enhanced copper and fibre services. Basic copper includes the copper voice input
UCLFS, Unbundled Copper Local Loop ("UCLL"), SLU, SLES. At the date of this Information
Memorandum, basic copper revenues are declining as customers migrate from these alternative
product types.
UCLFS is a technology neutral voice input service offered over the copper access network. It is
a service that enables access to, and interconnection with, the low frequency band (being the
frequency between 300 and 3400 Herz) in the Chorus Group's copper network. UCFLS is a
subset of a technology neutral voice input service, baseband, which the Chorus Group has made
available on a commercial basis to meet TSO requirements.
UCLL services are a group of services that enable RSPs to directly access a copper access line
to deliver phone and internet services via their own equipment. This includes the UCLL access
(a service that enables RSPs access to, and interconnection with, the copper local loop network,
including any relevant end-consumer line in the exchange) and UCLL co-location services (which
allow RSPs to rent space in or on premises owned by the Chorus Group).
SLU services allow RSPs to connect directly to the roadside cabinet (as opposed to the exchange
in UCLL co-location) owned by the Chorus Group to connect and utilise the final local access
connection to an end-consumer premises.
- 85 -
SLES allows RSPs to connect a sub-loop UCLL line from a cabinet to the telephone exchange to
enable them to continue to offer phone and broadband service from the exchange in areas that
have been cabinetised.
Value added network services
The main revenue driver for this category is national data transport services, which provide
network connectivity across backhaul links. The nature of these services means volumes and
revenues in this category are relatively static.
Infrastructure
Infrastructure revenue relates to services that provide access to the Chorus Group's network
assets. The Chorus Group provides commercial access to its exchanges, poles and other
infrastructure. Co-location revenue derives from RSPs and other network operators installing
their equipment in Chorus Group exchanges, as well as leased commercial space in exchange
buildings.
Field services
This category includes work performed by the Chorus Group's service company technicians
providing new services, chargeable cable location services, maintaining RSP networks and
relocating or extending the Chorus Group's network on request. As the Chorus Group utilises
service companies to perform field services work, there is a direct cost associated with all field
services revenues.
Other
Other income largely consists of revenue generated from the provision of billing and network
management services to Spark, dividends received from electricity trusts that supply the Chorus
Group with electricity and any other minor income.
Liquidity and capital resources
The Chorus Group incurs significant amounts of capital expenditure to build and operate the new
fibre network in its UFB candidate areas and to operate and maintain the existing national fixed
line copper network.
The Chorus Group's principal sources of liquidity are operating cash flows, external borrowing
from established debt programmes (including the Programme and bonds issued in the New
Zealand domestic market) and bank facilities and Crown funding for the UFB build as UFB
milestones are completed. See "- Crown funding" below.
At 31 December 2018, the aggregate amount of the Chorus Group's interest bearing debt was
approximately NZ$2,362 million. At the date of this Information Memorandum, none of the Chorus
Group's debt has been secured against its assets.
At 31 December 2018, the Chorus Group had in place NZ$350 million committed syndicated
revolving bank facilities on terms and conditions that Chorus believes to be market standard, the
facility was undrawn. On 29 March 2019, these facilities were updated and extended from
NZ$350 million to NZ$550 million. At the date of this Information Memorandum the facility
remains undrawn.
On 6 December 2018 Chorus issued NZ$500 million in principal amount of bonds in the New
Zealand market. The net proceeds of this bond issue were used primarily for general corporate
purposes, including paying down Chorus’ bank facility referred to above and partially pre-funding
repayment of its 2020 GBP bond.
- 86 -
Crown funding
Chorus receives funding from the Crown to finance construction costs associated with the
development of the UFB network. For UFB1 Chorus receives funding at a rate of NZ$1,118 for
every premises passed (as certified by CIP), in return Chorus issues CIP equity securities, CIP
debt securities and CIP warrants.
The equity and debt securities issued by Chorus have an issue price of NZ$1 and are issued on
a 50:50 basis. For each premises passed, NZ$559 of equity securities and NZ$559 of debt
securities are issued by Chorus for which Chorus receives NZ$1,118 funding in return. CIP
warrants are issued for nil value. At the date of this Information Memorandum, Chorus expects
the total committed funding available for Chorus over the period of UFB1 network construction to
be NZ$929 million (subject to the terms of the UFB1 Agreement).
For UFB2 there are five different funding rates applied, at an average rate of NZ$1,828 for every
premises passed (as certified by CIP). In return for the CIP funding, CIP equity securities and
CIP debt securities are issued on very similar terms to the UFB1 equity securities and debt
securities. Chorus can elect the mix of securities to be issued (up to a maximum of NZ$302
million equity securities for UFB2). There are no CIP warrants in relation to UFB2 and UFB2+
funding. At the date of this Information Memorandum, the total committed funding available for
Chorus for UFB2 and UFB2+ is expected to be NZ$407 million (subject to the terms of the UFB2
Agreement).
CIP equity securities
CIP equity securities are a class of unique security that carry no right to vote at meetings of
holders of Chorus ordinary shares, but entitle the holder to a preferential right to repayment on
liquidation and additional rights that relate to Chorus' performance under its construction contract
with CIP.
Dividends will become payable on a portion of the CIP equity securities from 2025 onwards for
UFB1 and 2030 for UFB2, with the portion of CIP equity securities that attract dividends increasing
over time. CIP equity securities can be redeemed by Chorus at any time by payment of the issue
price or issue of new Chorus ordinary shares (at a 5% discount to the 20-day volume weighted
average price). In limited circumstances CIP equity securities may be converted by the holder
into voting preference shares or ordinary shares.
Chorus is not obliged to declare any dividend on CIP equity securities in respect of any period,
but if it does not make a scheduled dividend on the CIP equity securities, it may not pay dividends
on the Chorus shares until a subsequent dividend on the CIP securities is paid in full. The
dividends payable on the CIP equity securities are non-cumulative, which means that if Chorus
does not make a scheduled dividend payment, the unpaid dividend falls away and does not
become a debt due to the holder of the CIP equity securities.
CIP debt securities
CIP debt securities are unsecured, non-interest bearing and carry no voting rights at meetings of
holders of Chorus ordinary shares. Chorus is required to redeem the CIP UFB1 debt securities
in tranches from 2025, and CIP UFB2 debt securities from 2030, to 2036 by repaying the face
value to the holder.
The principal amount of CIP debt securities consists of a senior portion and a subordinated portion,
the ratio of which changes over time as described below. The senior portion ranks equally with
all other unsecured, unsubordinated creditors of Chorus, and has the benefit of any negative
pledge covenant that may be contained in any of Chorus’ debt arrangements.
The subordinated portion ranks below all other indebtedness of Chorus, and above ordinary
shares of Chorus.
- 87 -
The initial value of the senior portion is the present value (using a discount rate of 8.5%) of the
sum repayable on the CIP debt securities, and the initial subordinated portion is the difference
between the issue price of the CIP debt security and the value of the senior portion.
CIP warrants
Chorus issues CIP warrants to CIP for nil consideration along with each tranche of CIP equity
securities in relation to UFB1 funding. There are no CIP warrants in relation to UFB2 funding.
The CIP Warrants are intended to allow CIP (or the holder if they are transferred) to participate in
the upside if the ordinary shares of Chorus perform in excess of a total shareholder return of 16%
per annum over the period December 2011 to June 2036.
Each CIP warrant gives CIP the right, on a specified exercise date, to purchase at a set strike
price an ordinary share to be issued by Chorus. A CIP warrant will therefore be 'in the money' to
the extent that the price that CIP can realise for the Chorus share exceeds the price paid to
exercise the CIP warrant. The strike price for a CIP warrant is based on a total shareholder return
of 16% per annum on Chorus shares. Therefore, a holder of a CIP warrant is only likely to
exercise the CIP warrant if total shareholder return on Chorus shares has exceeded 16% per
annum to the exercise date of the CIP warrant.
Overview of the New Zealand telecommunications industry
Introduction
Chorus' demerger from Telecom (now Spark) in late 2011 followed fundamental changes in the
regulation of the New Zealand telecommunications industry. Chorus, previously the fixed network
unit of Telecom, became a standalone listed entity. Telecom's wholesale unit and retail business
remained with Spark.
The Chorus Group is a participant in the New Zealand telecommunications and information
technology industries. Broadly, the telecommunications industry can be defined as fixed and
mobile calling, messaging and managed and unmanaged data services. These products are
delivered across a variety of platforms. Owing to the changing nature of the underlying
technologies involved, the telecommunications industry is developing significant overlaps with
other previously distinct industries, such as IT services, entertainment, and information services
(for example search, classifieds, online trading and display).
As described above, the Chorus Group provides open access wholesale services to
approximately 100 RSPs. The Chorus Group is prohibited from selling services directly to end-
consumers.
The diagram below illustrates the high level structure of the Chorus Group's nationwide network
infrastructure at the date of this Information Memorandum, and how that network transfers
- 88 -
information from a local premises (for example, an internet browser or email in a home) to local
exchanges and cell towers.
The Chorus Group's cables typically connect to local rural or urban exchanges, of which it has
approximately 600 nationwide at the date of this Information Memorandum. The methods of
connection from a premises to a local exchange are discussed further below.
Local exchanges are the link between the Chorus Group's network and major exchanges, and
regional and national backhaul services, provided by the wholesale unit of Spark ("Spark
Wholesale"). Spark Wholesale also provides access to international markets via the Southern
Cross undersea cable.
The Chorus Group's fibre also connects many cell towers owned by mobile service providers,
with mobile phone calls in New Zealand typically connecting via the Chorus Group's network at
some point.
The overall telecommunications network described above is frequently referred to as the Public
Switched Telephone Network ("PSTN") and broadly includes the network infrastructure and
equipment to deliver communications services both within New Zealand and to the outside world,
allowing fixed and mobile phones and data devices such as computers to communicate with other
devices.
The original New Zealand telecommunications network was based entirely on copper cables that
carried the voice and data traffic and, whilst progressively being replaced by fibre, use of copper
is still predominant as it is still heavily utilised in the local access part of the network.
In more recent times, the use of fibre optic cables has been increasing throughout the core
network, regional backhaul and the access network. This technology allows data and information
to be sent down a very thin strand of glass via light waves rather than electrical signals. Light
transmission allows for higher data rates than conventional copper wire, coaxial cable and many
forms of radio transmission and as a result more information can be transferred quicker from one
point in the network to another when compared to the older network technologies.
Connecting from a premises to a local exchange
Across the fixed local access network there are three main methods of connection of a premises
to the local exchange:
- 89 -
1. Directly connecting to the exchange through copper. At the date of this Information
Memorandum, the copper access network (often referred to as the local loop) remains the
most common form of local fixed access network connection in New Zealand and utilises
copper for the connection between a premises and a roadside cabinet or local exchange.
2. Connecting to a cabinet by copper and then from the cabinet to the exchange on
fibre. The Chorus Group maintains a substantial fibre-to-the-node ("FTTN") network.
FTTN refers to local access network architecture with fibre from the local exchange to the
roadside cabinet and a copper connection from the roadside cabinet to the end-consumer
premises. This is designed to boost broadband speeds by shortening the copper access
or local loop distance between an end-consumer's premises and the point in the network
where fibre was available to carry the traffic further. As a result of the FTTN network and
the shorter copper local loop lengths, end-consumers are able to access higher speed
broadband services and also can take advantage of newer DSL technologies like VDSL2.
3. Directly connecting via fibre. The objective of the first stage of the New Zealand
Government's UFB network build was to deploy a fibre to the premises (FTTP) local access
network infrastructure to 75% of New Zealanders. Subsequent agreements (UFB2 and
UFB2+) have extended the coverage goal to 87% of population by the end of 2022. This
network utilises fibre cables from the exchange to roadside cabinets as well as over the
final connection between the roadside cabinets and the end-consumer premises. Typically
the FTTP local access network architecture allows for the highest data speeds and capacity
which enable high bandwidth end-consumer services such as Internet Protocol Television
("IPTV") (whereby television is delivered via the internet or another access network) and
high definition video conferencing, which are less effectively delivered over existing copper
access networks.
Competition
As expected since the start of the UFB and RBI rollouts, the Chorus Group has seen some line
loss in recent years to other fibre and wireless networks.
The Chorus Group also competes with Vodafone's cable network in the Wellington area where
the Chorus Group is building the UFB network and in Christchurch where the Chorus Group has
its existing network.
Spark has announced an intention to reduce its Chorus network costs and increase margins by
encouraging its copper broadband customers to move to fixed wireless. The technical constraints
of fixed wireless networks means these services have datacap limits, while unlimited data plans
are now typically promoted by retailers for fixed line services.
This is reflected in the reduction in the Chorus Group's total fixed line count from approximately
1,526,000 to approximately 1,486,000 during the year ended 31 December 2018. This was
largely a consequence of copper-based voice and broadband customers migrating to alternative
fibre and wireless networks.
Summary of key market trends
The Chorus Group’s market drivers What the Chorus Group is doing about
these drivers
Strong population and premises growth,
particularly in Auckland.
The Chorus Group has increased its
subdivision capability and is focused on
installing fibre so it is available when end
users move into their new homes.
Local fibre companies (Enable, Ultra-Fast
Fibre, Northpower) are overbuilding our
The Chorus Group has invested in the
deployment of VDSL vectoring capability to
improve the performance of its copper
- 90 -
existing copper network with fibre as part of
the Government’s UFB programme.
broadband network and it continues to provide
services on its pre-existing fibre network in
these areas.
Large vertically integrated retailers are
encouraging some of their customers to use
their own fixed wireless, cable and legacy fibre
networks to reduce their wholesale network
costs.
The Chorus Group has become an active
wholesaler, promoting awareness of the fibre
and VDSL options already available to many
New Zealanders through advertising,
collaborative campaigns with retailers and its
own door knocking initiatives.
Traditional voice only connections are
declining as demographics and service
options evolve, while legacy business
connections are migrating to new lower cost
inputs on the Chorus Group or alternative
provider networks.
The Chorus Group has an innovation
programme underway to identify potential new
uses for its network infrastructure, including
broadcasting capability, data centres and
Internet of Things connectivity.
Communications technology is evolving,
potentially increasing the capability of
mobile/wireless technologies as a fixed line
alternative for some customers.
The Chorus Group is taking fibre to about
three-quarters of the 87% New Zealanders to
be covered by the UFB programme by the end
of 2022 and it is extending its VDSL footprint.
The Chorus Group network provides
dedicated capacity for customers at times of
peak data consumptions
Regulation of the Chorus Group
The Telco Act
The telecommunications sector in New Zealand is currently principally governed by the Telco Act,
which provides for certain telecommunications services to be regulated by the Commerce
Commission. The Telecommunications (New Regulatory Framework) Amendment Act (“the
Amendment Act”) was passed into law in November 2018. The Amendment Act reforms the
regulatory framework that applies to the Chorus Group’s fibre and copper assets. The regulatory
framework to apply to the Chorus Group’s fibre assets will come into effect on 1 January 2022.
Until then, copper services the Chorus Group provides will be regulated under the Telco Act on
price and non-price terms, subject to any deregulation of our copper services that may occur from
1 January 2020. Recent regulated pricing determinations are described under "- Regulatory
Reviews and Litigation" below. Price and non-price terms of fibre services will continue to be
constrained principally by Chorus’ UFB contracts (pursuant to transitional provisions in the Telco
Act).
Amongst other things, the Telco Act:
provides for the open access undertakings for the Chorus Group with respect to its copper
and fibre networks and Rural Broadband Initiative products, as described below;
includes "line of business" restrictions on the Chorus Group, restricting the Chorus
Group’s ability to provide services to end-consumers, from selling services linking two or
more end-consumer sites and from participating in services above Layer 2 (see "- The
Chorus Group's customer base" above). The Amendment Act introduces an exemption
power for the Commerce Commission from the last two line of business restrictions in
certain circumstances. The exemption power comes into force after the implementation
date of the new fibre regime;
includes oversight of the transitional and long term commercial arrangements between
Spark and the Chorus Group to ensure that these arrangements are on arm's length
- 91 -
terms, unlikely to harm competition in telecommunications markets, and ensure the
protection of confidential commercial and customer information;
provides the framework and the legislative vehicle for implementing the UFB programme
and the RBI; and
implements the TSO, as described below.
The new regulatory framework provided for in the Amendment Act also provides for:
regulation of the maximum revenues that Chorus can recover from its fibre assets;
regulation requiring Chorus to provide certain fibre services;
quality standards that Chorus must meet in the provision of fibre services;
regulation of the price and non-price terms on which Chorus provides certain fibre
services; and
information disclosure regulation requiring Chorus to publicly disclose certain information
about its network.
The UFB1 Agreement includes a mechanism for the Chorus Group to seek compensation from
CIP if regulatory determinations have an adverse impact before 2020. This compensation
mechanism is limited to NZ$350 million of economic compensation from adjusting arrangements
under the existing contracts and will not involve CIP paying the Chorus Group any amounts above
the agreed approximately NZ$929 million investment. There is no such compensation
mechanism in the UFB2 Agreement.
When setting the maximum revenue Chorus is able to recover, the Amendment Act requires the
Commerce Commission to take into account the costs and financial losses the Chorus Group has
incurred in providing UFB fibre services in the period before the new regulatory framework is
implemented. In particular, the Commerce Commission must calculate the financial losses
incurred during the initial period of operation of the UFB network from 1 December 2011 up to the
implementation date, which are treated as an asset. This provides some comfort that the revenue
cap will be sufficient to cover Chorus’ losses, although the purpose of the cap is not to guarantee
Chorus’ recovery of those losses.
The detail of the regulation applying to Chorus from 2022 will depend on determinations made
and reviews carried out by the Commerce Commission that have not been commenced as at the
date of this Information Memorandum.
There will be potentially significant consequences if Chorus Group breaches any requirements
under the Amendment Act. Chorus could be liable to pecuniary penalties of up to NZ$5 million
for breaches of information disclosure requirements or price and quality requirements.
Chorus Open Access Deeds of Undertaking
Chorus is bound by four open access deeds of undertaking. The Copper Undertakings, Fibre
Undertakings for UFB1 and UFB2 and RBI Undertakings represent a series of legally binding
obligations focused around the provision of services on a non-discriminatory or equivalent basis.
1. Copper Undertakings: Under the Copper Undertakings, the Chorus Group is obliged to
supply UCLL services using the legacy copper access network on an equivalence of inputs
basis. The Chorus Group is obliged to supply UBA services in a bundle with local access
and calling. If the Chorus Group supplies certain services (including UBA Backhaul
services, wholesale telecommunications services that are supplied using (or provide
access to) the unbundled elements of the legacy access network, and UCLFS) it must do
so on a "non-discriminatory" basis. That is, in the supply of the relevant service the Chorus
- 92 -
Group must not treat access seekers, including itself, differently unless those differences
are objectively justifiable and do not harm, or are unlikely to harm, competition.
The Copper Undertakings also include, amongst other things, provision for reporting
breaches, certification of compliance, treatment of commercial information and customer
confidential information, and internal audit processes. There is also a requirement on the
Chorus Group to commit to a reasonable plan containing timeframes for the transition to
end sharing arrangements.
Under the Amendment Act, Chorus will be able to begin to withdraw copper services from
areas where fibre services are available and as determined by the Commission, provided
that it meets certain conditions.
2. Fibre Undertakings: Under the Fibre Undertakings for UFB1 and UFB2, Chorus must
achieve non-discrimination in relation to the supply of wholesale services that are provided
using, or that provide access to, unbundled elements of the fibre network. The Chorus
Group is obliged to ensure that it designs and builds the UFB network in a way that enables,
and achieves, equivalence in relation to the supply of unbundled Layer 1 services from
1 January 2020 for UFB1 and 1 January 2026 for UFB2. Under the Amendment Act, after
the implementation date of the new fibre regime, if the maximum price of a service is
regulated, and it is not a cost-based price, Chorus will not be required to achieve price
equivalence in relation to a Layer 1 service to the extent to which it is an input to that service.
The Fibre Undertakings also include, amongst other things, provision for reporting
breaches, certification of compliance, treatment of commercial information and customer
confidential information, and internal audit processes.
3. RBI Undertakings: The RBI Undertakings require the Chorus Group to achieve non-
discrimination in relation to the supply of RBI services, which use the network constructed
with Crown funding under the RBI contract. If the RBI service is a service required to be
provided on an equivalence of inputs basis under the Copper Undertakings or Fibre
Undertakings when it is delivered over a network regulated by either of those undertakings,
then the RBI service must also be delivered on an equivalence of inputs basis. The RBI
Undertakings also include, amongst other things, provision for reporting breaches.
Telecommunications Services Obligations and Levies
The Telecommunications Services Obligations ("TSO") are the regulatory mechanism by which
basic telecommunications services are made available and affordable. Under the TSO, Spark is
required to make available certain residential local telephone services and Chorus is required to
provide the input services to Spark. The Amendment Act provides for a process that, from 1
January 2020, can lead to Chorus’ TSO obligations ceasing to apply in areas where fibre services
are available as determined by the Commission. Chorus’ TSO obligations will continue in areas
where fibre networks are unavailable.
The Telecommunications Development Levy (“TDL”) was established by legislation in June 2011.
The TDL is set at NZ$50 million per year until 2019, reducing to NZ$10 million each year
thereafter, under current policy settings. These settings can be subject to change by government.
The government uses the TDL to pay for telecommunications infrastructure, including the relay
service for the deaf and hearing impaired, broadband for rural areas, and improvements to the
New Zealand emergency service.
The levy is paid by companies (including the Chorus Group), earning more than NZ$10 million
per year from operating a component of a public telecommunications network (fixed or wireless).
Each year, the Commerce Commission determines how the TDL is split between liable persons
based on the proportion of their qualifying revenue. The Commerce Commission’s determination
for the year ended 30 June 2018, is that Chorus is liable for approximately NZ$11 million of the
TDL (2017: NZ$11.3 million).
- 93 -
Chorus is also required to contribute towards the Commerce Commission's costs through a
Telecommunications Regulatory Levy ("TRL"). For the year ended 30 June 2018, Chorus was
determined to be liable for NZ$1.4 million of the TRL (2017: NZ$1.1 million).
Under the new regulatory regime, Chorus will also be required to contribute to a further specific
levy for the appropriation period beginning on 1 July 2018 for the costs of performing the
Commission’s powers and functions in relation to the establishment of the new regulatory regime.
UFB Agreements
Chorus has entered into contracts relating to the Chorus Group's participation in the New Zealand
Government's UFB programme (together, the "UFB Agreements") including:
in respect of UFB1:
o the Network Infrastructure Project Agreement ("NIPA1") dated May 2011 (as
amended and/or restated from time to time) with CIP. This agreement governs
the contractual arrangement between Chorus and CIP relating, in general, to the
first stage of the design, build, delivery and operation of the UFB network;
o the CIP Subscription Agreement dated May 2011 (as amended and/or restated
from time to time) with CIP, which provides for the issue of CIP equity securities,
CIP debt securities and CIP warrants as described under "Description of the
Chorus Group's Business – Crown funding" above,
together, the "UFB1 Agreement";
in respect of UFB2:
o the Network Infrastructure Project Agreement ("NIPA2") dated 26 January 2017
(as amended and/or restated from time to time) with CIP. This agreement
governs the contractual arrangement between Chorus and CIP relating, in
general, to the second stage of the design, build, delivery of the UFB network;
o the CIP Subscription Agreement dated 26 January 2017 (as amended and/or
restated from time to time) with CIP, which provides for the issue of CIP equity
securities and CIP debt securities as described under "Description of the Chorus
Group's Business – Crown funding" above;
o in respect of UFB2+, a Deed of Amendment and Acknowledgment dated 30
August 2017 with CIP in respect of UFB2+ and the UFB1 Agreement and UFB2
Agreement,
together, the "UFB2 Agreement";
in respect of UFB1 and UFB2, a Deed of Operational and Governance Undertakings
("Deed of Operational and Governance Undertakings") dated 11 November 2011 in
favour of the Crown, which imposes certain operational and governance undertakings on
Chorus as described below.
Subject to the transitional mechanism described below, each of NIPA1 and NIPA2 (the “NIPAs”)
will continue until the later of: (i) the completion by the Chorus Group of the design and build
obligations imposed by the respective UFB Agreement; or (ii) 31 December 2019 (in respect of
NIPA1) and 31 December 2025 (in respect of NIPA2). The NIPA covers the following matters:
the design, build and operation of a fibre fixed line network in the relevant UFB candidate
areas awarded to Chorus by CIP;
- 94 -
governance of the Chorus Group fibre network business (including CIP's role in the
governance of the fibre network business);
the delivery of specified Layer 1 and Layer 2 services and products on the UFB network
at specified prices; and
commitments to prioritising the fibre network (including obligations to promote fibre and
support fibre uptake and restrictions on copper services and products).
Under the transitional mechanism for the new fibre regulatory framework set out in the
Amendment Act, the parts of the NIPAs relating to services Chorus has agreed and CIP have
agreed would be offered to RSPs (including prices and non-price terms) will continue in force until
implementation of the new fibre framework on 1 January 2022 with price caps subject to annual
CPI adjustment.
Under each NIPA, the Chorus Group designs, builds, owns and operates the UFB network, which
comprises both new infrastructure deployed under the NIPA and the Chorus Group's fibre
infrastructure that existed at the time of Chorus' demerger.
The design and build of the UFB network comprises two components:
communal infrastructure (which will deliver fibre past premises); and
the connection of premises to the communal infrastructure as dictated by demand, with
the Chorus Group meeting the cost of standard residential connections (including the
network equipment in the end-consumer's home and in the exchange to enable service
delivery).
There are potentially significant consequences (including financial) for Chorus under each NIPA
if it breaches its UFB design, build, delivery or operation obligations, including:
potentially significant default payments if Chorus fails to meet performance milestones or
service levels;
potentially significant damages claims or specific performance for other breaches;
for prolonged or significant performance failure, CIP may be able to exercise
management step-in rights (in respect of UFB1 only), require payment of liquidated
damages and/or terminate the relevant NIPA. CIP and Chorus have agreed, for the
benefit of the Chorus Group's senior financiers, the obligation to pay these liquidated
damages will be subordinated to senior indebtedness of the Issuer.
Each NIPA allocates various decision-making rights over the term of the agreement between
Chorus and CIP through the creation of certain governance committees and roles. In addition:
CIP is entitled to nominate one person to be an independent director of Chorus. Chorus
must consider this nominee in good faith, but the appointment and removal of any such
nominee as a director of Chorus will be made in accordance with law and Chorus' ordinary
process for director appointments and removals.
Chorus must consult with CIP on the appointment of the senior executive responsible for
fibre business, and gain CIP’s consent for the replacement of certain key personnel.
Under the Deed of Operational and Governance Undertakings, no person may be appointed or
hold office as a director of Chorus who is an associated person of a provider of
telecommunications services in New Zealand. Further, under that deed, Chorus has committed
to the New Zealand Government that:
- 95 -
Chorus, its directors and its employees will comply with the ownership restrictions
described under "- Ownership restrictions" below;
Chorus will ensure that the New Zealand Government's approval is obtained in
accordance with those ownership restrictions; and
Chorus will not take any step to remove or change the effect of the constitutional
provisions giving effect to those ownership restrictions.
Ownership restrictions
Chorus' constitution includes ownership restrictions, under which the New Zealand Government's
prior written approval is required for (a) any person to have a relevant interest in 10% or more of
the shares in Chorus, or (b) any person other than a New Zealand national to have a relevant
interest in more than 49.9% of shares in Chorus.
A special resolution to change any of these constitutional provisions must be approved by 100%
of the votes cast on the resolution (not 75%, as is required in other cases).
Other legislation
The Chorus Group is subject to other legislative requirements such as the requirements of the
Commerce Act 1986, Fair Trading Act 1986, as well as telecommunications codes.
The Chorus Group is also subject to the Telecommunications (Interception Capability and
Security) Act 2013 ("TICSA"), which replaces the Telecommunications (Interception Capability)
Act 2004. The TICSA has reduced the Chorus Group's obligations to provide lawful interception
capability as the Chorus Group is no longer required to pre-invest in lawful interception solutions
for wholesale network services and infrastructure level services.
However, the TICSA introduced new obligations on network operators to prevent, sufficiently
mitigate or remove network security risks arising from public telecommunications networks. The
Chorus Group, like other network operators, is obliged to engage with the New Zealand
Government Communications Security Bureau where it might affect New Zealand's national
security and this has the potential to drive significant compliance costs.
Regulatory reviews and litigation
New regulatory framework reviews
Chorus Group will be subject to new detailed regulatory requirements for fibre services from
1 January 2022 relating to the revenue it may earn; the services it must provide; and the
conditions of supply and the prices it may charge for certain services; and the information it must
disclose to the Commission. Those requirements will only be known following detailed processes
undertaken by the Commission. The Commission processes required to implement the new
regulatory framework will lead to decisions on:
The maximum revenues Chorus Group is allowed to generate from its fibre network;
The fibre services Chorus Group must provide;
Any quality standards that Chorus is required to meet in the provision of fibre services;
The price and non-price terms on which certain fibre services must be provided; and
The information Chorus Group is required to disclose to the Commerce Commission to
facilitate the Commission’s compliance monitoring.
The outcome of those decisions is not yet known.
- 96 -
In addition, following the first regulation period of 3 years, the Commission may undertake further
reviews of the regulatory framework. These reviews will lead to decisions on:
Whether Chorus should continue to be subject to revenue cap price-quality regulation, or
should instead be subject to price cap price-quality regulation;
Whether the maximum price for certain fibre services Chorus Group must provide should
be cost based;
Whether Chorus Group should be required to supply the unbundled fibre service at a cost
based maximum price.
Litigation
The Chorus Group may have ongoing claims, investigations and inquiries, at any given time. At
the date of this Information Memorandum there are none which are currently expected to have
significant effect on the financial position or profitability of the Chorus Group.
Chorus cannot reasonably estimate the adverse effect, if any, on the Chorus Group if any of the
outstanding claims or inquiries are ultimately resolved against Chorus' interest. There can be no
assurance that such cases will not have a significant effect on Chorus' business, financial position,
and results of operations or profitability.
Insurance
The Chorus Group has put in place insurance arrangements for damage to assets (and resultant
business interruption) and liabilities relating to claims that might arise from the Chorus Group's
activities. The Chorus Group does not have its own captive insurance company. The Chorus
Group's insurance policies are placed with insurers of acceptable security and the levels of
retained risk and coverage purchased the Chorus believes are appropriate to its business
activities, subject to insurance being available on commercially reasonable terms.
- 97 -
MANAGEMENT OF THE CHORUS GROUP
Chorus directors
The board of directors of Chorus (the "Board") seeks to ensure that through its skills mix and
composition it is positioned to add value to Chorus. At the date of this Information Memorandum,
the Board has eight directors (seven independent directors and a managing director) with a
broad range of managerial, financial, accounting and industry experience.
The members of the Board at the date of this Information Memorandum are as follows:
Name Title Date of appointment
Patrick Strange
..........................................................................
Chair and Director
(Independent)
6 April 2015
Jonathan Hartley
..........................................................................
Deputy Chair and
Director (Independent)
1 December 2011
Anne Urlwin
..........................................................................
Director (Independent) 1 December 2011
Kathryn McKenzie
..........................................................................
Managing Director
(Non-Independent)
20 February 2017
Jack Matthews
..........................................................................
Director (Independent) 1 July 2017
Andrew Mark Cross
..........................................................................
Director (Independent) 1 November 2016
Murray Jordan
..........................................................................
Director (Independent) 1 September 2015
Prudence Flacks
..........................................................................
Director (Independent) 1 December 2011
The business address for the Directors of Chorus is 1 Willis Street, Wellington 6011, New
Zealand.
The Directors of the Issuer have notified the Issuer's Board of all their directorships and other
interests as required under the New Zealand Companies Act 1993.
The biographies of the directors of Chorus as at the date of this Information Memorandum are as
follows:
Patrick Strange, BE (Hons), PhD
Patrick has spent 30 years working as a senior executive and director in both private and listed
companies, including for more than six years as Chief Executive of Transpower where he oversaw
Transpower's NZ$3.8 billion of essential investment in the National Grid. Patrick is currently the
chair of Auckland International Airport, and a director of Mercury NZ, and is on the board of
Essential Energy, Australia. Patrick is chair of Chorus' Nominations and Corporate Governance
Committee and a member of its Audit and Risk Management Committee.
Jonathan Hartley, BA Econ Accounting (Hons), Fellow ICA (England & Wales), Associate ICA
(Australia), Fellow AICD
- 98 -
Jon is a Chartered Accountant and Fellow of the Australian Institute of Company Directors. He
has held senior roles across a diverse range of commercial and not for profit organisations in
several countries, including as chair of SkyCity, deputy chair of ASB Bank, director of Mighty River
Power, CEO of Brierley New Zealand and Solid Energy, CFO of Lend Lease in Australia. Jon is
currently deputy chairman of Sovereign Assurance Company, chairman of VisionFund
International and the Wellington City Mission and a trustee of World Vision New Zealand. Jon is
a member of Chorus' Audit and Risk Management Committee and its Nominations and Corporate
Governance Committee.
Anne Urlwin, BCom, CA, CF InstD, FNZIM, MAICD, ACIS
Anne is chair of construction group Naylor Love Enterprises and a director of Southern Response
Earthquake Services, Steel & Tube Holdings, OnePath Life (NZ), Summerset Group and City Rail
Link. Anne is also the independent chairman of the Ngai Tahu Te Runanga Audit and Risk
Committee. Her previous directorship experience encompasses many sectors, including energy,
health, construction, regulatory services, internet infrastructure, research, banking, forestry and the
primary sector, as well as education, sports administration and the arts. She is the former chair of
Lakes Environmental, the New Zealand Blood Service, internet and domain name registry operator
NZRS and a former director of Meridian Energy and Airways Corporation. Anne is chair of Chorus'
Audit and Risk Management Committee.
Kathryn McKenzie, BA, LLB
Kate has an extensive communications infrastructure background, most recently as Telstra
Australia’s Chief Operations Officer, responsible for Telstra’s field services, IT and network
architecture and operations. Prior to that, Kate also held other senior positions at Telstra including
Group Managing Director, Innovation, Products and Marketing, Group Managing Director,
Wholesale, and Group Managing Director, Regulatory, Public Policy and Communications.
Prior to joining Telstra, Kate was a CEO in the NSW Government of the Departments of Commerce,
Industrial Relations and the Workcover Authority. Kate is currently on the board of Allianz, having
previously been on the boards of Foxtel, Sydney Water, Reach, CSL and Workcover. She is also
is a member of Chief Executive Women and has had a long history of involvement in promoting
the interests of indigenous communities.
Jack Matthews, BA Philosophy
Jack is an experienced Director who has held a number of senior leadership positions within the
media, telecommunications and technology industries in Australia and New Zealand. Most
recently, Jack was CEO of Fairfax Media’s Metro Division where he was responsible for managing
and integrating the print, online and mobile assets of The Sydney Morning Herald, The Age and
The Canberra Times. Prior to that, Jack was CEO of Fairfax Digital, Chief Operating Officer of
Jupiter TV (Japan) and CEO of TelstraSaturn based in Wellington. Jack is currently the chair of
MediaWorks and APN Outdoor Group. Jack is a former director of The Network for Learning,
Trilogy International and Crown Infrastructure Partners Limited.
Andrew Mark Cross, BBS, CA
Mark has extensive corporate finance experience, both as a professional director and consultant,
and during his earlier investment banking career. Mark has held senior positions with Deutsche
Bank in London and Australia, and prior to that at Lloyds Corporate Finance/Southpac Corporation
in Australia and New Zealand. Mark is currently chair of Milford Asset Management, MFL Mutual
Fund and Superannuation Investments, and a director of Z Energy. He is also a board member of
Triathlon NZ. Mark is a member of Chartered Accountants Australia and New Zealand and the
New Zealand Institute of Directors.
Murray Jordan, MProp
Murray has extensive experience in the management of highly customer focused organisations
and in navigating extremely complex stakeholder environments, including, until recently, as
Managing Director of Foodstuffs North Island, one of New Zealand largest companies. Murray has
also previously held various general manager positions at Foodstuffs and management roles in
the property investment and development sectors. He is a director of Stevenson Group and
Metcash Limited, an ASX listed company and a Board Trustee of Starship Foundation. Murray is
a member of Chorus' People, Performance & Culture Committee.
- 99 -
Prudence Flacks, LLB, LLM
Prue is a director of Bank of New Zealand and Mercury NZ. She is a barrister and solicitor with
extensive experience in commercial law and, in particular, banking, finance and securities law. Her
areas of expertise include corporate and regulatory matters, corporate finance, capital markets,
securitisation and business restructuring. Prue is a consultant to Russell McVeagh, where she
was previously a partner for 20 years. Prue is chairman of Chorus' People, Performance & Culture
Committee and a member of its Nominations and Corporate Governance Committee.
Executive team
The biographies of the executive team of Chorus as at the date of this Information Memorandum
are as follows:
Kathryn McKenzie, BA, LLB
Chief Executive Officer
Kate is the managing director of Chorus. Kate’s biography is set out above under "Chorus
directors".
David Collins, BCom, MBA
Chief Financial Officer
David has over 20 years’ experience in finance and commercial roles covering businesses in
Australia, the UK, Germany and the Middle East. He joined Chorus from Aurizon, Australia’s
largest rail freight operator, where he had been since 2010. David was the Head of Finance &
Regulation – Network for Aurizon. Prior to this, David was the Vice President Finance & Group
Treasurer and Group Financial Controller. After completing a Bachelor of Commerce and
qualifying as a Chartered Accountant with Deloitte, David gained experience across a number of
sectors including mining (BHP Billiton), construction, property development and property asset
management (Brookfield Multiplex).
Andrew Carroll, MCA (Hons)
General Manager Network and Field Management
Andrew moved to the General Manger Network and Field Management role after 6 years as
Chorus CFO, holding both roles simultaneously for approximately 6 months. Andrew joined
Chorus after nine years with Telecom where he was involved in a range of corporate finance and
M&A activity, including Manager Financial Strategy and Head of Mergers & Acquisitions, where
he was involved in the Gen-i acquisition and the sale of Yellow Pages. He also worked on the
UFB negotiations with CIP and the demerger process. Prior to joining Telecom, Andrew was a
director of Investment Banking at Credit Suisse First Boston New Zealand.
Edward Hyde, BSc
General Manager, Chief Customer Officer
Ed is currently CCO of Chorus. Prior positions include CEO Spark Ventures, CEO Qrious, GM of
Mobile Products for Telecom NZ Ltd and Commercial Director for Yes Telecom in the UK. He
holds a number of Board roles and has experience across a range of small and large enterprises
involving strategic, operational and development responsibilities.
Elaine Campbell, LLB (Hons)
General Counsel and Company Secretary
Elaine was appointed as General Counsel & Company Secretary in August 2018. She brings 20
years of legal experience to Chorus, together with extensive leadership experience in regulatory
change environments. Elaine commenced her career as a solicitor for Kensington Swan before
gaining legal experience in both the UK and USA. She was a senior solicitor at Russell McVeagh
before joining the NZX Limited executive team where she led a significant change programme.
Elaine was the Director of Compliance of the Financial Markets Authority, introducing significant
regulatory reforms to the financial services sector. Immediately prior to joining Chorus, Elaine
- 100 -
was the General Counsel for AMP Financial Services and an executive director of the group’s
operating companies.
Ewen Powell, BE
Chief Technology Officer
Ewen has over 20 years' experience in managing the technology, services and partnerships that
operate a national communications network. He has spent time in both the supplier and operator
communities with much of his career spent at Telecom. Ewen's focus is on deploying core
enterprise systems to run the business and develop technology capabilities to provision and
manage the new fibre network.
Ian Bonnar, (Diploma in Journalism)
General Manager, Corporate Relations
Ian was appointed General Manager Corporate Relations in October 2014 with overall
responsibility for protecting and enhancing the reputation of Chorus with its stakeholders. Before
joining Chorus in 2013 he held a range of positions at Telecom, including Head of
Communications, and was communications lead on the UFB negotiations and the Chorus
demerger. Prior to that he held senior positions at Air New Zealand and Westpac Bank.
Joanna Crawford, MS
General Manager, Customer Care
Joanna joined Chorus in 2012 and is currently GM Customer Care. Prior to joining Chorus,
Joanna worked in multiple industries including but not limited to Telecommunications, Dairy,
Agricultural Services & Manufacturing where she has seamlessly transitioned across various
leadership roles in Customer Operations, Information Technology and Human Resource
Management. In addition to Joanna’s Master of Science in Applied Psychology, she also has a
Post Graduate Diploma in Industrial and Organisational Psychology from the University of
Canterbury.
Shaun Philp, BCom
General Manager, People & Culture
Shaun was appointed GM HR in September 2017, bringing over 20 years human resources
experience, including expertise in supporting leadership and culture, innovation and business
execution strategies.
Vanessa Oakley, LLB (Hons)
General Manager, Strategy & Business Operations
Vanessa was the General Counsel & Company Secretary at Chorus between 2011 and 2018
leading a range of functions and programmes including the turnaround in 2015 of the regulatory
decisions that implied a billion dollar funding gap, prior to taking on the General Manager of SBO
role in late 2018. Vanessa has held various roles in governance and organisational change during
her nearly 20 year career in the public and private sectors.
Corporate Governance
Corporate governance framework
Chorus is incorporated in New Zealand and has its shares quoted on the New Zealand and
Australian stock exchanges.
Chorus' governance practices and policies reflect, and are consistent with the NZX Main Board
Listing Rules and we have adopted and fully followed the recommendations set out in the NZX
Corporate Governance Code following its implementation. The Board regularly reviews and
assesses Chorus' governance policies, processes and practices to identify opportunities for
enhancement and to ensure they reflect Chorus' operations and culture.
Chorus has adopted a formal Charter which sets out how the Board will exercise and discharge
its powers and responsibilities in relation to the business and affairs of Chorus.
- 101 -
Board Committees
At the date of this Information Memorandum, the Board has established three standing Board
Committees to assist it in carrying out its responsibilities. The Board has delegated some of its
responsibilities, powers and authorities to those Committees.
Audit and Risk Management Committee ("ARMC"). The ARMC assists the Board in
ensuring oversight of all matters relating to risk management, financial management and
controls and the financial accounting, audit and reporting of Chorus. At the date of this
Information Memorandum, its members are Anne Urlwin (chair), Mark Cross and Jon
Hartley.
People, Performance & Culture Committee ("PPCC"). The PPCC assists the Board
in overseeing people policies and strategies, including Chorus' remuneration frameworks,
and reviewing candidates for, and the performance and remuneration of, the CEO. At
the date of this Information Memorandum, its members are Prudence Flacks (chair), Jack
Matthews and Murray Jordan.
Nominations and Corporate Governance Committee ("NCGC"). The NCGC assists
the Board in promoting and overseeing continuous improvement of good corporate
governance. The NCGC's role includes identifying and recommending suitable
candidates for nomination to be members of the Board and Board Committees, and
establishing, developing and overseeing a process for the Board to annually review and
evaluate the performance of the Board, its Committees and individual directors. At the
date of this Information Memorandum, its members are Patrick Strange (chair), Jonathan
Hartley and Prudence Flacks.
The Board may also establish other ad-hoc Board sub-committees or standing Board committees
and delegate specific responsibilities, powers and authorities to those committees and to
particular directors.
Each standing Board Committee has a Board approved Charter and chairman, and assists the
Board by focusing on specific responsibilities in greater detail than is possible for the Board as a
whole. All standing Board Committee members are independent directors.
UFB Agreements
The UFB Agreements also contain provisions relevant to Chorus' governance as described under
"Description of the Chorus Group's Business - Regulation of the Chorus Group" in this Information
Memorandum.
- 102 -
TAXATION
References in this section to the terms "associated", "fixed establishment", "registered bank",
and "resident in New Zealand" shall have the same meaning given to that term in the Income
Tax Act 2007 of New Zealand, unless the context requires otherwise.
The following is a general description of certain tax considerations relating to the Notes. It does
not purport to be a complete analysis of all tax considerations relating to the Notes, whether in
the countries described below or elsewhere. Prospective purchasers of Notes should consult
their own tax advisers as to which countries' tax laws could be relevant to acquiring, holding and
disposing of Notes and receiving payments of interest, principal and/or other amounts under the
Notes and the consequences of such actions under the tax laws of those countries. This summary
is based upon the law as in effect on the date of this Information Memorandum and is subject to
any change in law that may take effect after such date.
New Zealand
Where used in this section, "interest" means interest as defined under New Zealand tax legislation
for withholding tax purposes, which under current legislation includes the excess of the
redemption amount over the issue price of any Note.
Non-Resident Withholding Tax
Although New Zealand law requires a deduction on account of non-resident withholding tax to be
made from the payment of interest to any holder of a Note who is not a New Zealand Holder (as
defined below), the Issuer and the Guarantors (as applicable) intend (for so long as it does not
incur any increased cost or detriment from so doing) to reduce the applicable rate of non-resident
withholding tax to zero per cent (in the case of holders of Notes who are not New Zealand Holders
and are not associated with the Issuer or the Guarantors (as applicable)) by registering the
Programme with the New Zealand Inland Revenue Department and paying, on its own account,
a levy (known as Approved Issuer Levy) equal to two per cent of the relevant interest payment.
Resident Withholding Tax
The Issuer or the Guarantors (as applicable) are required by law to deduct New Zealand resident
withholding tax from the payment of interest to the holder of any Note on any Interest Payment
Date or the Maturity Date, if:
(a) the holder is a resident of New Zealand for income tax purposes or otherwise receives
payments of principal or interest from the Issuer or a Guarantor subject to the New
Zealand resident withholding tax rules, which at the date of this Information Memorandum
includes a holder that is engaged in business in New Zealand through a fixed
establishment in New Zealand and either holds Notes for the purposes of that business
or is a registered bank in New Zealand (a "New Zealand Holder"); and
(b) at the time of such payment the New Zealand Holder does not hold a valid certificate of
exemption for New Zealand resident withholding tax purposes.
Where a person who is a non-New Zealand Holder, derives interest under a Note or Coupon
jointly with one or more persons, and one or more of those persons is a resident of New Zealand
for income tax purposes, the approved issuer levy regime referred to in paragraph (a) above will
not apply to the non-New Zealand Holder and (subject to any applicable double tax treaty) the
New Zealand non-resident withholding tax imposed will equate to the applicable rate of New
Zealand resident withholding tax.
Prior to any Interest Payment Date or Maturity Date any New Zealand Holder:
(a) must notify the Issuer or the Guarantors (as applicable) or a Paying Agent or Registrar
(as applicable) that the New Zealand Holder is the holder of a Note; and
- 103 -
(b) must notify the Issuer or the Guarantors (as applicable) or a Paying Agent or Registrar
(as applicable) of any circumstances, and provide the Issuer or the Guarantors (as
applicable) or the relevant Paying Agent or Registrar (as applicable) with any information,
that may enable the Issuer or the Guarantors (as applicable) to make the payment of
Interest to the New Zealand Holder without deduction on account of New Zealand resident
withholding tax.
A New Zealand Holder must notify the Issuer and the Guarantors (as applicable), prior to any
Interest Payment Date or the Maturity Date, of any change in the New Zealand Holder's
circumstances from those previously notified that could affect the Issuer's or the Guarantor's
payment or withholding obligations in respect of any Note. By accepting payment of the full face
amount of a Note or any interest thereon on any Interest Payment Date or Maturity Date, a New
Zealand Holder will be deemed to have indemnified the Issuer or the Guarantors (as applicable)
for all purposes in respect of any liability which the Issuer or the Guarantors (as applicable) may
incur for not deducting any amount from such payment on account of New Zealand resident
withholding tax.
The Proposed Financial Transaction Tax (FTT)
On 14 February 2013, the European Commission published a proposal (the "Commission's
Proposal") for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain,
France, Italy, Austria, Portugal, Slovenia and Slovakia (the "participating Member States").
However Estonia has ceased to participate.
The Commission's Proposal has very broad scope and could, if introduced in the form proposed
by the European Commission, apply to certain dealings in Notes (including secondary market
transactions) in certain circumstances. The issuance and subscription of Notes should, however,
be exempt.
Under the Commission's Proposal, the FTT could apply in certain circumstances to persons both
within and outside of the participating Member States. Generally, it would apply to certain
dealings in the Notes where at least one party is a financial institution, and at least one party is
established in a participating Member State. A financial institution may be, or be deemed to be,
"established" in a participating Member State in a broad range of circumstances, including (i) by
transacting with a person established in a participating Member State or (ii) where the financial
instrument which is subject to the dealings is issued in a participating Member State.
However, the FTT remains subject to negotiation between the participating Member States. It
may therefore be altered prior to any implementation, the timing of which remains unclear.
Additional Members States may decide to participate. Prospective holders of the Notes are
advised to seek their own professional advice in relation to the FTT.
- 104 -
SUBSCRIPTION AND SALE
The Dealers have, in an amended and restated programme agreement (the "Programme
Agreement") dated 10 April 2019, agreed with the Issuer a basis upon which they or any of them
may from time to time agree to subscribe the Notes. Any such agreement will extend to those
matters stated under "Forms of the Notes" and "Terms and Conditions of the Notes". The Issuer
will pay each relevant Dealer a commission as agreed between them in respect of the Notes
subscribed by it. Where the Issuer agrees to sell to the Dealer(s), who agree to subscribe and
pay for, or to procure subscribers to subscribe and pay for, the Notes at an issue price (the "Issue
Price"), any subsequent offering of those Notes to investors may be at a price different from such
Issue Price. The Issuer has agreed to be responsible for certain of the Arrangers' expenses
incurred in connection with the establishment, and any future update, of the Programme and
reimburse the Dealers certain of their activities in connection with the Programme. The
commissions in respect of an issue of the Notes on a syndicated basis may be stated in the
relevant Pricing Supplement.
The Issuer has agreed to indemnify the Dealers against certain liabilities in connection with the
offer and sale of the Notes. The Programme Agreement entitles the Dealers to terminate any
agreement that they make to subscribe Notes in certain circumstances prior to payment for such
Notes being made to the Issuer.
In connection with the issue of any Tranche of the Notes, the Dealer or Dealers (if any) named as
the stabilising manager(s) (the "Stabilising Manager(s)") (or persons acting on behalf of any
Stabilising Manager(s)) in the applicable Pricing Supplement may over-allot Notes or effect
transactions, to the extent permitted by applicable laws, regulations and rules, and other than in
the circumstances where such action would reasonably be expected to affect the price of the
Notes traded within Australia or New Zealand or on a “financial market”, as defined in the
Australian Corporations Act, operated within Australia with a view to supporting the price of the
Notes at a level higher than that which might otherwise prevail for a limited period after the Issue
Date. However, there is no obligation on such Stabilising Manager(s) to do this. Any stabilisation
action may begin on or after the date on which adequate public disclosure of the terms of the offer
of the relevant Tranche of the Notes is made. Such stablishing, if commenced, may be
discontinued at any time, and must be brought to an end after a limited period. Such stabilising
shall be in compliance with all applicable laws, regulations and rules.
In connection with each Series of the Notes issued under the Programme, the Dealers or certain
of their affiliates may subscribe or purchase Notes and be allocated Notes for asset management
and/or proprietary purposes but not with a view to distribution. Further, the Dealers or their
respective affiliates may purchase Notes for its or their own account and enter into transactions,
including credit derivatives, such as asset swaps, repackaging and credit default swaps relating
to such Notes and/or other securities of the Issuer, the Guarantor or their respective subsidiaries
or affiliates at the same time as the offer and sale of each Series of the Notes or in secondary
market transactions. Such transactions would be carried out as bilateral trades with selected
counterparties and separately from any existing sale or resale of the Series of the Notes to which
a particular Pricing Supplement relates (notwithstanding that such selected counterparties may
also be purchasers of such Series of the Notes).
The Dealers and their affiliates are full service financial institutions engaged in various activities
which may include securities trading, commercial and investment banking, financial advice,
investment management, principal investment, hedging, financing and brokerage activities. Each
of the Dealers may have engaged in, and may in the future engage in, investment banking and
other commercial dealings in the ordinary course of business with the Issuer, the Original
Guarantor or their respective subsidiaries, jointly controlled entities or associated companies from
time to time. In the ordinary course of their various business activities, the Dealers and their
affiliates may make or hold (on their own account, on behalf of clients or in their capacity of
investment advisers) a broad array of investments and actively trade debt and equity securities
(or related derivative securities) and financial instruments (including bank loans) for their own
account and for the accounts of their customers and may at any time hold long and short positions
in such securities and instruments and enter into other transactions, including credit derivatives
(such as asset swaps, repackaging and credit default swaps) in relation thereto. Such
- 105 -
transactions, investments and securities activities may involve securities and instruments of the
Issuer, the Original Guarantor or their respective subsidiaries, jointly controlled entities or
associated companies, including Notes issued under the Programme, may be entered into at the
same time or proximate to offers and sales of the Notes or at other times in the secondary market
and be carried out with counterparties that are also purchasers, holders or sellers of the Notes.
If a jurisdiction requires that the offering be made by a licensed broker or dealer and a Dealer or
any affiliate of that Dealer is a licensed broker or dealer in that jurisdiction, the offering shall be
deemed to be made by that Dealer or such affiliate on behalf of the Issuer in such jurisdiction.
In connection with an issue of the Notes under the Programme, the Issuer may, pursuant to the
subscription agreement relating to such issue, agree to pay, through the Dealers, a commission
to certain private banks based on the principal amount of the Notes purchased by the clients of
such private banks. If such commission is payable, it shall be specified in the Pricing Supplement
relating to such issue of the Notes.
Selling Restrictions
United States of America: Regulation S Category 2; TEFRA D or TEFRA C as specified in the
relevant Pricing Supplement or neither if TEFRA is specified as not applicable in the relevant
Pricing Supplement.
The Notes are being offered and sold outside the United States of America to persons that are
non-U.S. persons and in reliance on Regulation S under the Securities Act. The Notes and the
guarantees thereof have not been and will not be registered under the Securities Act and may not
be offered or sold within the United States or to, or for the account or benefit of, U.S. persons
except in certain transactions exempt from the registration requirements of the Securities Act.
Terms used in this paragraph have the meanings given to them by Regulation S.
Notes in bearer form are subject to U.S. tax law requirements and may not be offered, sold or
delivered within the United States or its possessions or to, or for the benefit of, a United States
person, except in certain transactions permitted by U.S. tax regulations. Terms used in this
paragraph have the meanings given to them by the United States Internal Revenue Code, as
amended, and regulations thereunder.
Each Dealer has agreed, and each further Dealer appointed under the Programme will be
required to agree, that, except as permitted by the Programme Agreement, it will not offer, sell or
deliver Notes, (i) as part of their distribution at any time or (ii) otherwise until 40 days after
completion of the distribution of all Notes of the Tranche of which such Notes are a part, as
determined and certified by the relevant Dealer or, in the case of an issue of Notes on a syndicated
basis, the relevant lead manager, within the United States or to, or for the account or benefit of,
U.S. persons, and it will have sent to each dealer to which it sells any Notes during the distribution
compliance period, as defined in Regulation S under the Securities Act, a confirmation or other
notice setting forth the restrictions on offers and sales of the Notes within the United States or to,
or for the account or benefit of, U.S. persons.
In addition, until 40 days after the commencement of the offering of Notes comprising any
Tranche, any offer or sale of Notes within the United States by any dealer (whether or not
participating in the offering) may violate the registration requirements of the Securities Act.
European Economic Area
Each Dealer represents and agrees that it has not offered, sold or otherwise made available and
will not offer, sell or otherwise make available any Notes which are the subject of the offering
contemplated by the Offering Circular as completed by Pricing Supplement in relation thereto to
any retail investor in the European Economic Area. For the purposes of this provision:
(a) the expression "retail investor" means a person who is one (or more) of the following:
- 106 -
(i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as
amended, "MiFID II"); or
(ii) a customer within the meaning of Directive 2002/92/EC (as amended or
superseded, the "Insurance Mediation Directive"), where that customer would
not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID
II; or
(iii) not a qualified investor as defined in Directive 2003/71/EC (as amended or
superseded); and
(b) the expression an "offer" includes the communication in any form and by any means of
sufficient information on the terms of the offer and the Notes to be offered so as to enable
an investor to decide to purchase or subscribe the Notes.
United Kingdom
Each Dealer has represented, warranted and agreed, and each further Dealer appointed under
the Programme will be required to represent, warrant and agree that:
(a) No deposit-taking: in relation to any Notes having a maturity of less than one year:
(i) it 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) it has not offered or sold and will not offer or sell any Notes other than to persons:
(A) whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses; or
(B) 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 Notes would otherwise constitute a contravention of Section
19 of the FSMA by the Issuer;
(b) Financial promotion: it has only communicated or caused to be communicated and will
only communicate or cause to be communicated any invitation or inducement to engage
in investment activity (within the meaning of section 21 of the FSMA) received by it in
connection with the issue or sale of any Notes in circumstances in which section 21(1) of
the FSMA does not apply to the Issuer or the Guarantor , and
(c) General compliance: it has complied and will comply with all applicable provisions of the
FSMA with respect to anything done by it in relation to any Notes in, from or otherwise
involving the United Kingdom.
Hong Kong
Each Dealer represents, warrants and agrees:
(a) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document,
any Notes, except for Notes which are a "structured product" as defined in the Securities
and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the "SFO"), other than (i)
to "professional investors" as defined in the SFO and any rules made under the SFO; or
(ii) in other circumstances which do not result in the document being a "prospectus" as
defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.
- 107 -
32) of Hong Kong (the "C(WUMP)O") or which do not constitute an offer to the public
within the meaning of the C(WUMP)O; and
(b) it has not issued or had in its possession for the purposes of issue, and will not issue or
have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any
advertisement, invitation or document relating to the Notes, which is directed at, or the
contents of which are likely to be accessed or read by, the public of Hong Kong (except if
permitted to do so under the securities laws of Hong Kong) other than with respect to
Notes which are or are intended to be disposed of only to persons outside Hong Kong or
only to "professional investors" as defined in the SFO and any rules made under the SFO.
Singapore
Each Dealer has acknowledged that this Information Memorandum has not been registered as a
prospectus with the Monetary Authority of Singapore. Accordingly, each Dealer has represented,
warranted and agreed and each further Dealer appointed under the Programme will be required
to represent, warrant and agree that it has not offered or sold any Notes or caused the Notes to
be made the subject of an invitation for subscription or purchase and will not offer or sell such
Notes or cause such Notes to be made the subject of an invitation for subscription or purchase,
and has not circulated or distributed, nor will it circulate or distribute, this Information
Memorandum or any other document or material in connection with the offer or sale, or invitation
for subscription or purchase, of the Notes, whether directly or indirectly, to persons in Singapore
other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures
Act (Chapter 289) of Singapore, as modified from time to time (the “SFA”) pursuant to section 274
of the SFA) (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section
275(1) of the SFA, or any person pursuant to Section 275(1A), and in accordance with the
conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance
with the conditions of, any other applicable provision of the SFA.
Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person
which is:
(x) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA))
the sole business of which is to hold investments and the entire share capital of which is
owned by one or more individuals, each of whom is an accredited investor; or
(y) a trust (where the trustee of which is not an accredited investor) whose sole purpose is to
hold investments and each beneficiary of which is an individual who is an accredited
investor,
securities or securities-based derivative contracts (each term as defined in Section 2(1) of the
SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that
trust shall not be transferred within six months after that corporation or that trust has acquired the
Notes pursuant to an offer made under Section 275 of the SFA except:
(i) to an institutional investor or to a relevant person, or to any person arising from an offer
referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
(ii) where no consideration is or will be given for the transfer;
(iii) where the transfer is by operation of law;
(iv) as specified in Section 276(7) of the SFA; or
(v) as specified in Regulation 37A of the Securities and Futures (Offers of Investments)
(Securities and Securities-based Derivatives Contracts) Regulations 2018.
- 108 -
Japan
The Notes have not been, and will not be, registered under the Financial Instruments and
Exchange Act of Japan (Act No. 25 of 1948, as amended, the "FIEA"). Each Dealer has
represented and agreed, and each further Dealer appointed under the Programme will be required
to represent and agree, that it has not offered or sold and will not offer or sell any Notes, directly
or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein
means any person resident in Japan, including any corporation or other entity organised under
the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to, or for
the benefit of, a resident of Japan except pursuant to an exemption from the registration
requirements of, and otherwise in compliance with, the FIEA and any other applicable laws,
regulations and ministerial guidelines of Japan.
Australia
No prospectus or other disclosure document (as defined in the Australian Corporations Act) in
relation to the Programme or the Notes has been or will be lodged with the Australian Securities
and Investments Commission ("ASIC"). Each Dealer has represented and agreed, and each
further Dealer appointed under the Programme will be required to represent and agree, that it:
(a) has not made or invited, and will not make or invite, an offer of the Notes for the issue,
sale or purchase of the Notes in Australia (including an offer or invitation which is received
by a person in Australia); and
(b) has not distributed or published, and will not distribute or publish, the Information
Memorandum or any other offering material or advertisement relating to the Notes in
Australia,
unless:
(i) the minimum aggregate consideration payable by each offeree is at least
A$500,000 (or its equivalent in other currencies) (disregarding moneys lent by the
offeror or its associates) or the offer or invitation does not otherwise require
disclosure to investors in accordance with Part 6D.2 or Part 7.9 of the Australian
Corporations Act;
(ii) the offer or invitation does not constitute an offer to a "retail client" as defined for
the purposes of sections 761G and 761GA of the Australian Corporations Act;
(iii) such action complies with all applicable laws, regulations and directives; and
(iv) such action does not require any document to be lodged with ASIC.
New Zealand
This programme is a wholesale programme. No action has been taken to permit Notes to be
offered or sold to any retail investor, or otherwise under any regulated offer, in terms of the
Financial Markets Conduct Act 2013 of New Zealand ("FMCA"). In particular, no product
disclosure statement under the FMCA has been prepared or lodged in New Zealand in relation to
the Notes.
Each Dealer has represented, warranted and agreed that it will not offer or sell any Notes in New
Zealand, or distribute or publish in New Zealand any offering material or advertisement in relation
to any offer of Notes, other than to wholesale investors within the meaning of clause 3(2)(a), (c)
or (d) of Schedule 1 to the FMCA, which includes a person who is:
(a) an "investment business";
(b) "large"; or
- 109 -
(c) a "government agency",
in each case as defined in Schedule 1 to the FMCA, provided (for the avoidance of doubt) that
Notes may not be offered or sold to any "eligible investor" (as defined in clause 41 of Schedule 1
to the FMCA) or to any person who, under clause 3(2)(b) of Schedule 1 to the FMCA, meets the
investment activity criteria specified in clause 38 of that Schedule.
General
Each Dealer has represented, warranted and agreed that it has complied and will comply with all
applicable laws and regulations in each country or jurisdiction in or from which it purchases, offers,
sells or delivers Notes or possesses, distributes or publishes this Information Memorandum or
any Pricing Supplement or any related offering material, in all cases at its own expense. Other
persons into whose hands this Information Memorandum or any Pricing Supplement comes are
required by the Issuer, the Guarantors and the Dealers to comply with all applicable laws and
regulations in each country or jurisdiction in or from which they purchase, offer, sell or deliver
Notes or possess, distribute or publish this Information Memorandum or any Pricing Supplement
or any related offering material, in all cases at their own expense.
The Programme Agreement provides that the Dealers shall not be bound by any of the restrictions
relating to any specific jurisdiction (set out above) to the extent that such restrictions shall, as a
result of change(s) or change(s) in official interpretation, after the date hereof, of applicable laws
and regulations, no longer be applicable but without prejudice to the obligations of the Dealers
described in the paragraph headed "General" above.
Selling restrictions may be supplemented or modified with the agreement of the Issuer. Any such
supplement or modification may be set out in the relevant Pricing Supplement (in the case of a
supplement or modification relevant only to a particular Tranche of Notes) or in a supplement to
this Information Memorandum.
- 110 -
GENERAL INFORMATION
Authorisation
The update of the Programme was authorised by resolution of the Issuer passed on 3
April 2019 and by resolution of the Original Guarantor passed on 3 April 2019. Each of
the Issuer and the Original Guarantor has obtained or will obtain from time to time all
necessary consents, approvals and authorisations in connection with the issue and
performance of the Notes and the giving of the Guarantee.
Listing of the Notes
For the listing of any Notes which are agreed at the time of issue thereof to be listed on
the ASX, application will be made by the Issuer to ASX Limited. Notes which are listed
on the ASX will not be transferred through, or registered on, the Clearing House
Electronic Subregister System operated by ASX Settlement Pty Limited (ABN 49 008 504
532) and will not be "Approved Financial Products" for the purposes of that system.
Legal and Arbitration Proceedings
There are no governmental, legal or arbitration proceedings, (including any such
proceedings which are pending or threatened, of which the Issuer or the Original
Guarantor is aware), which may have, or have had during the 12 months prior to the date
of this Information Memorandum, a significant effect on the financial position or
profitability of the Issuer, the Original Guarantor or the Chorus Group (taken as a whole).
Significant/Material Change
There has been no material adverse change in the prospects of the Issuer, the Original
Guarantor or the Chorus Group (taken as a whole) since 30 June 2018.
There has been no significant change in the financial or trading position of the Issuer, the
Original Guarantor or the Chorus Group (taken as a whole) since 30 June 2018.
Auditors
The auditors of the Issuer and the Original Guarantor are KPMG, a New Zealand
partnership. KPMG have audited the consolidated financial statements of the Issuer
without qualification, in accordance with International Standards on Auditing (New
Zealand) and International Standards on Auditing, for the years ended 30 June 2018 and
30 June 2017.
KPMG's address is 10 Customhouse Quay, Wellington, New Zealand.
KPMG partners are members of the New Zealand Institute of Chartered Accountants.
Documents on Display
Copies of the following documents may be inspected during normal business hours at
the offices of the Principal Paying Agent at Citigroup Centre, Canada Square, Canary
Wharf, London E14 5LB, United Kingdom for 12 months from the date of this Information
Memorandum:
a. the constitution of the Issuer;
b. the constitution of the Original Guarantor;
c. the Trust Deed;
- 111 -
d. the Agency Agreement; and
e. the Programme Agreement.
Clearing of the Notes
The Notes have been accepted for clearance through Euroclear and Clearstream,
Luxembourg. The appropriate common code and the International Securities
Identification Number in relation to the Notes of each Tranche will be specified in the
relevant Pricing Supplement. The relevant Pricing Supplement shall specify any other
clearing system as shall have accepted the relevant Notes for clearance together with
any further appropriate information.
Legal Entity Identifier
Chorus’ Legal Entity Identifier is R7NJHU48LTCIOB9BVU57.
- 112 -
DEFINED TERMS
NZ$ or New Zealand
dollars
the lawful currency of New Zealand from time to time
U.S.$ or U.S. dollars
the lawful currency of the United States of America from time to time
EUR or euro
the lawful currency for the time being of the member states of the European
Union that adopt the single currency introduced at the start of the third stage
of European Economic Monetary Union pursuant to the Treaty of Rome of 25
March 1957 establishing the European Community as amended from time to
time
£ or GBP
the lawful currency of the United Kingdom from time to time
2010 PD Amending
Directive
Directive 2010/73/EU
Accountholders
a person shown in the records of a Clearing System as being entitled to an
interest in a Bearer Global Note
Additional Financial
Centre
in respect of a Tranche of Notes, an Additional Financial Centre as specified
in the applicable Pricing Supplement
Agents
means the Principal Paying Agent, the Paying Agents, Transfer Agents,
Calculation Agents, Replacement Agents and the Registrar
Amendment Act
The Telecommunications (New Regulatory Framework) Amendment Act
2018
Arranger
Citigroup Global Markets Limited
ASX
the Australian Securities Exchange operated by ASX Limited (ABN 98 008
624 691)
Australian
Corporations Act
the Corporations Act 2001 (Cth) of Australia
Baseband
the Chorus Group's baseband product. The baseband product is a
technology neutral voice input service that is bundled with a broadband
product but can be provided on a standalone basis should a customer not
require a broadband connection
Bearer Global Notes the Temporary Global Note and the Permanent Global Note and the Bearer
Global Note means either one of them
Bearer Notes
Notes in bearer form
Bitstream
a stream of data in binary form
Board
the board of directors of Chorus
Business Day
a day (other than a Saturday or a Sunday) on which registered banks are
generally open for business in Auckland and Wellington
CEO
chief executive officer
CFO
chief financial officer
CHESS
the Clearing House Electronic Sub-Register System operated by ASX
Settlement Pty Limited (ABN 49 008 504 532)
- 113 -
Chorus
Chorus Limited
Chorus Group
Chorus and all of its wholly owned subsidiaries
CIP
Crown Infrastructure Partners Limited, previously known as Crown Fibre
Holdings Limited, incorporated in New Zealand on 29 October 2009 with
company number 2346751
Classic Global Note
a Global Note not issued in New Global Note form
Clearing System
Euroclear, Clearstream, Luxembourg or any other clearing system as may be
specified in the relevant Pricing Supplement
Clearstream,
Luxembourg
Clearstream Banking S.A.
Conditions
the terms and conditions to be endorsed on, or incorporated by reference in,
the Notes of any Series, in the form set out herein or in such other form,
having regard to the terms of the Notes of the relevant Series, as may be
agreed between the Issuer, the Guaranteeing Subsidiaries, the Principal
Paying Agent, the Trustee and the relevant Dealer(s) as modified and
supplemented by the Pricing Supplement applicable to such Series, as any
of the same may from time to time be modified in accordance with the Trust
Deed
Coupons
in relation to a Bearer Definitive Note, an interest coupon
Copper Undertakings
undertakings which the Issuer has entered into pursuant to the Telco Act
relating to the provision of copper products within the New Zealand
telecommunications market
CRA Regulation
Regulation (EU) No 1060/2009 of the European Parliament, as amended and
of the Council of 16 September 2009 on credit rating agencies
Crown
Her Majesty the Queen acting in right of New Zealand
Dealers
any person appointed as a Dealer by the Programme Agreement and any
other person which the Issuer may appoint as a Dealer and notice of whose
appointment has been given to the Principal Paying Agent and the Trustee
by the Issuer in accordance with the provisions of the Programme Agreement
but excluding any entity whose appointment has been terminated in
accordance with the terms of the Programme Agreement and notice of whose
termination has been given to the Principal Paying Agent and the Trustee by
the Issuer in accordance with the provisions of the Programme Agreement
and references to the "relevant Dealer(s)" mean, in relation to any Note, the
Dealer(s) with whom the Issuer has agreed the issue and purchase of such
Note
Deed of Amendment
and Acknowledgment
the Deed of Amendment and Acknowledgment dated 30 August 2017
between CIP and Chorus.
Deed of Operational
and Governance
Undertakings
the deed of operational and governance undertakings dated 11 November
2011 in favour of the Crown, which imposes certain operational and
governance undertakings on Chorus
Definitive Notes
bearer Notes in definitive form
DSL
Digital Subscriber Line, a family of communications technologies allowing
high-speed data over existing copper-based access networks in the local
loop. Globally, DSL copper based access networks are being replaced by
ultra-fast fibre based access networks in the form of FTTN and FTTP
ECB
the European Central Bank
- 114 -
EMTN
Euro medium term note
Euroclear
Euroclear Bank SA/NV
Eurosystem
the central banking system for the euro
Event of Default
has the meaning given to it in the Conditions
Fibre Undertakings
undertakings which Chorus has entered into pursuant to the Telco Act,
relating to the provision of fibre products within the New Zealand
telecommunications market
Fixed Rate Notes
has the meaning given to it in the Conditions
Floating Rate Notes
has the meaning given to it in the Conditions
FSMA
the Financial Services and Markets Act 2000, as amended
FTT
the proposed financial transaction tax proposed by the European
Commission
FTTN
fibre-to-the-node, a local access network architecture with fibre from the local
exchange to the roadside cabinet and a copper connection from the roadside
cabinet to the end-consumer premises. Typically the FTTN local access
network architecture allows for higher data speeds and capacity than if the
end-consumer premises is served with copper from the local exchange, but
lower speeds and capacity than a FTTP local access network
FTTP
fibre-to-the-premises, an all-fibre local access network architecture with fibre
from the local exchange to the end-consumer premises. Typically the FTTP
local access network architecture allows for the highest data speeds and
capacity which enables high bandwidth end-consumer services such as
IPTV. The objective of the first stage of the New Zealand Government led
UFB programme is to deploy ultrafast broadband via a FTTP network to 75%
of New Zealanders by 2019
GB
gigabytes
Global Note
any Temporary Global Note, Permanent Global Note or Registered Global
Note
GPON
Gigabit Passive Optical Network
Guarantee
a guarantee and indemnity provided pursuant to clause 5 of the Trust Deed
Guaranteeing
Subsidiaries
at any time, the Original Guarantor and any other Subsidiary of the Issuer
which, pursuant to the Clause 5.10 of the Trust Deed becomes a
Guaranteeing Subsidiary but excluding any Subsidiary which has been
released from its guarantee and indemnity pursuant to Clause 5.11 of the
Trust Deed
HSNS
High-Speed Network Service
Inverse Floating Rate
Notes
means a Note with an interest rate equal to a fixed rate minus a rate based
upon a reference rate
Investor's Currency
a currency, other than the Specified Currency, in which an investor's financial
activities are principally denominated
ICSDs
Euroclear and Clearstream, Luxembourg
Information
Memorandum
the Information Memorandum dated 10 April 2019, of which this glossary
forms a part
- 115 -
IP
internet protocol, a communications protocol suite used for carrying data on
the internet. Within telecommunications networks globally traditional
analogue networks based on copper cables are being replaced with IP based
networks based on fibre
IPTV
Internet Protocol Television, a service whereby television is delivered via the
internet or another access network
IRD
the New Zealand Inland Revenue Department
Issue Date
in respect of a series of Notes, the date on which such notes are issued
Issuer
Chorus Limited
IT
Information Technology, a generic term for any technology relating to
information processing or information transport
Layer 1
Layer 1 within the OSI model is classified as the physical layer and within a
telecommunications fixed access network this can be considered to comprise
copper and fibre cables and co-location space inside exchanges or cabinets
Layer 2
Layer 2 within the OSI model is classified as the data link layer and provides
the functional and procedural means to transfer data between network
entities. Within the telecommunications fixed access network this can be
considered to comprise the Bitstream equipment and services which transmit
basic data from one point in the network to another over the Layer 1 physical
assets
LFC
a local fibre company, being an entity in which CIP, the New Zealand
Government and a partner hold shares, and through which the investment of
CIP and the partner in relation to the UFB programme is effected
Material Subsidiaries
has the meaning given to it in the Trust Deed
Mbps
megabits per second
Member State
a member state of the European Economic Area
Minister
Minister of Broadcasting, Communications and Digital Media
Moody's
Moody's Investors Service Pty Limited
Negative Pledge
the negative pledge described in Condition 6
Commerce
Commission
the New Zealand competition regulator established pursuant to the
Commerce Act 1986
New Global Note
a Global Note which is intended to be issued in new global note form
New Zealand
Government
the elected government of New Zealand
NIPA
means NIPA1 and/or NIPA2
NIPA1
the Network Infrastructure Project Agreement dated 24 May 2011 as
amended by letter dated 26 January 2017 between Chorus and CIP, a public
private partnership contract
NIPA2
the Network Infrastructure Project Agreement dated 26 January 2017
between the Issuer and CIP, a public private partnership contract
Notes
bearer, registered or other notes issued under the Programme
NZ Post
New Zealand Post Limited
- 116 -
NZX
NZX Limited, or the financial market operated by NZX, as the context requires
NZX Listing Rules the listing rules of the NZX and NZX Listing Rule means a rule contained in
the NZX Listing Rules
Original Guarantor
Chorus New Zealand Limited, incorporated in New Zealand on 1 July 2011
with company number 3454256
OSI model
the Open Systems Interconnection model, under which 'layers' subdivide the
telecommunications system from the physical assets in the ground right
through to the application on a computer being used by an end-consumer
Permanent Global Note
has the meaning given to it in the Conditions
Potential Event of
Default
has the meaning given to it in the Trust Deed
Premises
a single building or structure located on a defined geographical site (such as
may be evidenced by a certificate of title), which has a unique physical
address recognised by NZ Post, and is occupied by or could readily be
occupied by a potential end-consumer
Pricing Supplement
the final terms prepared in relation to a Tranche of Notes issued under the
Programme (substantially in the form set out in the Information
Memorandum) and giving details of that Tranche
Principal Paying Agent
Citibank, N.A., London Branch or such other person specified in the relevant
Pricing Supplement as the party responsible for calculating the Rate(s) of
Interest and Interest Amount(s) and/or such other amount(s) as may be
specified in the Relevant Pricing Supplement
Programme
the Euro Medium Term Note programme described in the Information
Memorandum of which this glossary forms a part
Programme Agreement
the amended and restated programme agreement dated 10 April 2019
between the Issuer, the Original Guarantor, and Citigroup Global Markets
Limited
PSTN
the Public Switched Telephone Network, a nationwide dial-up telephone
network used, or intended for use, in whole or in part, by the public for the
purposes of providing telecommunications between telephone devices
Registered Global Note
a registered global note in the form or substantially in the form set out in Part
C of Schedule 2 of the Trust Deed with such modifications (if any) as may be
agreed between the Issuer, the Principal Paying Agent, the Trustee and the
relevant Dealer(s), together with the copy of the applicable Pricing
Supplement annexed thereto, comprising some or all of the Registered Notes
of the same Series, issued by the Issuer pursuant to the Programme
Agreement or any other agreement between the Issuer and the relevant
Dealer(s) and the Trust Deed
Registered Notes
Notes which are issued in registered form
Registrar
in relation to all or any Series of the Registered Notes, Citibank, N.A., London
Branch at its office at Citigroup Centre, Canada Square, Canary Wharf,
London E14 5LB, United Kingdom or, if applicable, any successor registrar
Responsible Persons
Chorus Limited and Chorus New Zealand Limited
RSP
Retail Service Provider
S&P Global
S&P Global Ratings Australia Pty Ltd
- 117 -
Securities Act
the United States Securities Act of 1933, as amended
SLES
sub loop extension service, which allows RSPs to connect a sub-loop UCLL
line from a cabinet to the telephone exchange to enable them to continue to
offer phone and broadband service from the exchange in areas that have
been cabinetised
SLU
sub loop unbundling. SLU services allow RSPs to connect directly to the
roadside cabinet (as opposed to the exchange in UCLL co-location) owned
by the Chorus Group to connect and utilise the final local access connection
to an end-consumer premises
SME
small and medium-sized enterprises
Spark
Spark New Zealand Limited
Spark Wholesale
the wholesale unit of Spark
Specified Currency
in relation to a series of Notes, has the meaning given to it in the relevant
Pricing Supplement
Specified
Denomination
in relation to a series of Notes, has the meaning given to it in the relevant
Pricing Supplement
Subsidiary means, in respect of any person (the "first person") at any particular time,
any other person (the "second person"):
(a) Control: whose affairs and policies the first person controls or has
the power to control (directly or indirectly), whether by ownership of
share capital, contract, the power to appoint or remove members of
the governing body of the second person or otherwise; or
(b) Consolidation: whose financial statements are, in accordance with
applicable law and generally accepted accounting principles,
consolidated with those of the first person;
Talon
if indicated in the applicable Pricing Supplement, talons for further coupons
on interest bearing Bearer Notes
Target Settlement Day
has the meaning given to it in the Conditions
TDL
the Telecommunications Development Levy imposed under the Telco Act
TEFRA C Rules
United States Treasury Regulation §1.163-5(c)(2)(i)(C)
TEFRA D Rules
United States Treasury Regulation §1.163-5(c)(2)(i)(D)
Telco Act
the Telecommunications Act 2001 of New Zealand
Telecom
Telecom Corporation of New Zealand Limited (now Spark) prior to the
demerger with Chorus
Temporary Global Note
has the meaning given to it in the Conditions
TICSA
the Telecommunications (Interception Capability and Security) Act 2013 of
New Zealand
Tranche
Notes subject to identical terms in all respects save that a Tranche may
comprise Notes of different denominations
Trust Deed
the amended and restated trust deed dated 28 September 2016 between
Chorus Limited, Chorus New Zealand Limited and the Law Debenture Trust
Corporation p.l.c.
- 118 -
Trustee
The Law Debenture Trust Corporation p.l.c.
TRL
the Telecommunications Regulatory Levy
TSLRIC
Total Service Long Run Incremental Cost
TSO
the Telecommunications Service Obligation recorded in the
Telecommunications Service Obligation deed
UBA
unbundled bitstream access. UBA services allow RSPs direct access to the
high speed access links between the exchange and an end-consumer
premises that has been installed by the Chorus Group. RSPs are then able
to install their own equipment in the local access network to deliver high
speed broadband services, rather than having to utilise the Chorus Group's
equipment
UBA Backhaul
unbundled bitstream access (UBA) backhaul and allows RSPs to access the
regional backhaul network to enable them to build a nationwide presence
incrementally, without having to invest in their own dedicated backhaul.
Within New Zealand UBA backhaul services are a regulated set of services
and products offered by the Chorus Group
UBA STD
UBA Standard Terms Determination
UCLFS
the unbundled copper low frequency service, a technology neutral voice input
service offered over the copper access network
UCLL
unbundled copper local loop. UCLL services enable RSPs to directly access
a copper access line to deliver phone and internet services via their own
equipment
UFB
ultrafast broadband
UFB Agreement
means the UFB1 Agreement and/or the UFB2 Agreement
UFB network
the fibre-to-the-premises network constructed pursuant to the UFB network
build
UFB services
fibre services with terms set under the UFB1 Agreement until the end of 2019
and set under the UFB2 Agreement until the end of 2025
UFB1
the first phase of the UFB programme announced by the New Zealand
Government
UFB2
the second phase of the UFB programme announced by the New Zealand
Government, including UFB2+
UFB2+
means the extension of UFB2 pursuant to the Deed of Amendment and
Acknowledgment
UFB1 Agreement
means the contracts entered into by Chorus relating to the Chorus Group's
participation in the first stage of the New Zealand Government's UFB
programme
UFB2 Agreement
means the contracts entered into by Chorus relating to the Chorus Group's
participation in the second stage of the New Zealand Government's UFB
programme
United States
the United States of America, its territories and possessions, any state of the
United States of America and the District of Columbia
VDSL
very high bit rate digital subscriber line, a high speed variant of the DSL family
of products
- 119 -
VDSL2
very high bit rate digital subscriber line, the highest speed variant of the DSL
family of products
Vodafone
Vodafone New Zealand Limited
VoIP
Voice over Internet Protocol, a term used in IP telephony for managing the
delivery of voice information using the IP
Voters
Holders of Notes voting (either in person or by proxy) at a meeting of
noteholders
- 120 -
REGISTERED OFFICE OF THE ISSUER
Level 10, 1 Willis Street, Wellington 6011, New Zealand
REGISTERED OFFICE OF THE ORIGINAL GUARANTOR
Level 10, 1 Willis Street, Wellington 6011, New Zealand
ARRANGER
Citigroup Global Markets Limited
Citigroup Centre, Canada Square
Canary Wharf
London E14 5LB
United Kingdom
DEALERS
Citigroup Global Markets Limited
Citigroup Centre, Canada Square
Canary Wharf
London E14 5LB
United Kingdom
The Hongkong and Shanghai Banking
Corporation Limited (incorporated in
the Hong Kong SAR, acting through
its New Zealand branch)
HSBC House
Level 9, One Queen Street
Auckland
New Zealand
MUFG Securities Asia Limited
11/F, AIA Central
1 Connaught Road Central
Hong Kong
TRUSTEE
The Law Debenture Trust Corporation p.l.c.
Fifth Floor
100 Wood Street
London EC2V 7EX
United Kingdom
PRINCIPAL PAYING AGENT
Citibank, N.A., London Branch
Ground Floor
1 North Wall
Dublin 1
Ireland
LEGAL ADVISERS
To the Issuer and the Original Guarantor
as to English law:
To the Issuer and the Original Guarantor
as to New Zealand law:
Freshfields Bruckhaus Deringer LLP
65 Fleet Street
London EC4Y 1HS
United Kingdom
Chapman Tripp
10 Customhouse Quay
Wellington 6140
New Zealand
To the Arranger and the Dealers
as to English law:
Clifford Chance
27
th
Floor, Jardine House
One Connaught Place
Central
Hong Kong
AUDITORS TO THE ISSUER
KPMG
10 Customhouse Quay
Wellington
New Zealand
- 121 -
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.