Obbligazione Northumbria Water 2.033% ( XS0230235474 ) in GBP

Emittente Northumbria Water
Prezzo di mercato refresh price now   100 GBP  ⇌ 
Paese  Regno Unito
Codice isin  XS0230235474 ( in GBP )
Tasso d'interesse 2.033% per anno ( pagato 2 volte l'anno)
Scadenza 14/07/2036



Prospetto opuscolo dell'obbligazione Northumbrian Water XS0230235474 en GBP 2.033%, scadenza 14/07/2036


Importo minimo 50 000 GBP
Importo totale 150 000 000 GBP
Coupon successivo 16/07/2026 ( In 121 giorni )
Descrizione dettagliata Northumbrian Water č una societą di gestione delle acque che serve la parte nord-est dell'Inghilterra, fornendo acqua potabile e servizi di gestione delle acque reflue a milioni di clienti.

The Obbligazione issued by Northumbria Water ( United Kingdom ) , in GBP, with the ISIN code XS0230235474, pays a coupon of 2.033% per year.
The coupons are paid 2 times per year and the Obbligazione maturity is 14/07/2036







Prospectus
___________________________________________________________________________________
DALI CAPITAL PLC
(Incorporated with limited liability in the Republic of Ireland)
___________________________________________________________________________________
£150,000,000 Guaranteed Asset Backed Floating Rate Notes due 2036 (the "Notes")
Series No: 17
Issue Price: 100 per cent.
Unconditionally and irrevocably guaranteed in relation to Scheduled Payments of principal of and
interest on the Notes by Financial Security Assurance (U.K.) Limited

___________________________________________________________________________________
Application has been made to the Irish Financial Services Regulatory Authority, as competent authority (the "Competent
Authority") under Directive 2003/71/EC (the "Prospectus Directive"), for this prospectus to be approved. Application has been made
to the Irish Stock Exchange (the "Irish Stock Exchange") for the Notes to be admitted to the Official List and trading on its regulated
market.
This document (including the information incorporated by reference herein) constitutes a prospectus for the purposes of
Article 5.1 of the Prospectus Directive.
The Notes will be unconditionally and irrevocably guaranteed in relation to the Scheduled Payments (as defined in the Notes
Financial Guarantee) of principal and interest pursuant to a financial guarantee (the "Notes Financial Guarantee") to be issued by
Financial Security Assurance (U.K.) Limited ("FSA") pursuant to the Notes Financial Guarantee and Indemnity Agreement (as defined
below) as set out in the section of this Prospectus entitled "Form of the Notes Financial Guarantee" below.
Dali Capital PLC (the "Issuer") will on the Issue Date (as defined below) acquire £150,000,000 in aggregate nominal amount
of the £150,000,000 2.033 per cent. Index-Linked Guaranteed Bonds due 2036 (ISIN: XS0230235474) issued by Northumbrian Water
Finance Plc and guaranteed by Northumbrian Water Limited, which shall constitute the Securities and part of the Mortgaged Property
initially (each as defined below).
Interest on the Notes will be payable semi-annually in arrear in Sterling on 15 January and 15 July in each year, commencing
15 January 2006 and ending on the Interest Payment Date (as defined below) falling on or nearest to 15 July 2036, subject to deferral
as described herein.
The Notes will mature on 15 July 2036, as may be adjusted and/or deferred in accordance with Condition 7(a) (Final
Redemption), unless previously redeemed pursuant to Condition 7(c) (Mandatory Redemption) (including redemption following the
exercise of the FSA Redemption Option), Condition 7(d) (Taxation and Redemption following Swap Termination), Condition 7(f)
(Noteholders' Option) or Condition 10 (Issuer Events of Default).
The Notes will be obligations of the Issuer only and will not be guaranteed by, or be the responsibility of, the Swap
Counterparty or any other person (other than FSA in respect of Scheduled Payments of principal and interest on the Notes).
Claims of the Noteholders, FSA and the Swap Counterparty against the Issuer will be limited in recourse to the Mortgaged
Property, except that Noteholders will also receive the benefit of the Notes Financial Guarantee (see "Risk Factors -- Risks
related to the Notes" on page 7).
The Notes are expected to be assigned on issue, a AAA rating by Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc. ("Standard & Poor's") and a Aaa rating by Moody's Investors Service, Inc. ("Moody's"). 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 Standard &
Poor's or Moody's. A suspension, reduction or withdrawal of the ratings assigned to the Notes may adversely affect the market price of
the Notes.
Prospective investors should be aware of the risks involved in investing in the Notes (see "Risk Factors" on pages 6-15).
___________________________________________________________________________________
Dealer
BARCLAYS CAPITAL
The date of this Prospectus is 27 September 2005




Except to the extent specified below the Issuer accepts responsibility for the information contained in this
Prospectus. To the best of the knowledge and belief of the Issuer (who has taken all reasonable care to
ensure that such is the case), the information contained in this Prospectus is in accordance with the facts
and does not omit anything likely to affect the import of such information.
The information contained herein relating to the issuer (the "Original Securities Issuer") of the Original
Securities (as defined below) has been accurately reproduced from information published by the Original
Securities Issuer. So far as the Issuer is aware and/or able to ascertain from information published by the
Original Securities Issuer no facts have been omitted which could render the reproduced information
misleading. The Issuer has not been responsible for, nor has it undertaken, any investigation or
verification of statements, including statements as to law, contained in such information.
FSA accepts responsibility for the information contained under "Description of Financial Security
Assurance (U.K.) Limited", under paragraphs (3), (5) and (6) of "General Information", under the financial
statements thereof referred to in paragraph (9)(j) of "General Information" and under the financial
information contained in the Appendix to this Prospectus (the "FSA Information"). To the best of the
knowledge and belief of FSA (which has taken all reasonable care to ensure that such is the case), the
FSA Information is in accordance with the facts and does not omit anything likely to affect the import of
the FSA Information. The Issuer has not been responsible for, nor has it undertaken, any investigation or
verification of statements, including statements as to foreign law, contained in such information. FSA
accepts no responsibility for any other information contained in this Prospectus and has not separately
verified any such other information. No representation, warranty or undertaking is made, and no
responsibility is accepted by, FSA as to the accuracy or completeness of any information contained in
this Prospectus other than the FSA Information or any other information supplied in relation to the Notes
or their distribution.
The Swap Counterparty accepts responsibility for the information contained under "Description of the
Swap Counterparty" (the "Swap Counterparty Information"). To the best of the knowledge and belief of
the Swap Counterparty (which has taken all reasonable care to ensure that such is the case), the Swap
Counterparty Information is in accordance with the facts and does not omit anything likely to affect the
import of the Swap Counterparty Information. The Issuer has not been responsible for, nor has it
undertaken, any investigation or verification of statements, including statements as to foreign law,
contained in such information. The Swap Counterparty accepts no responsibility for any other information
contained in this Prospectus and has not separately verified any such other information. No
representation, warranty or undertaking is made, and no responsibility is accepted by, the Swap
Counterparty as to the accuracy or completeness of any information contained in this Prospectus other
than the Swap Counterparty Information or any other information supplied in relation to the Notes or their
distribution.
No person has been authorised to give any information or to make any representation other than those
contained in this Prospectus in connection with the issue or sale of Notes and, if given or made, such
information or representation must not be relied upon as having been authorised by the Issuer or the
Dealer. Neither the delivery of this Prospectus nor any sale made in connection herewith shall, under any
circumstances, create any implication that there has been no change in the affairs of the Issuer since the
date hereof or that there has been no adverse change in the financial position of the Issuer since the
date hereof.
The delivery of this Prospectus does not at any time imply that the information contained herein
concerning the Issuer, the Swap Counterparty or FSA is correct at any time subsequent to the date
hereof or that any other information supplied in connection with the Notes is correct as of any time
subsequent to the date indicated in the document contained the same. The Issuer does not intend to
provide post issuance transaction information regarding the Notes or the Securities.


2



The distribution of this Prospectus and the offering or sale of the Notes in certain jurisdictions may be
restricted by law. Persons into whose possession this Prospectus comes are required by the Issuer, FSA
and the Dealer to inform themselves about and to observe any such restriction. The Notes have not been
and will not be registered under the United States Securities Act of 1933, as amended (the "Securities
Act") and include Notes in bearer form that 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. For a
description of certain restrictions on offers and sales of Notes and on distribution of this Prospectus, see
"Subscription and Sale" contained in the Base Prospectus (as defined below).
This Prospectus does not constitute an offer of, or an invitation by or on behalf of the Issuer or the
Dealers to subscribe for, or purchase any Notes.
The Dealer has not separately verified the information contained in this Prospectus.
Purchasers of Notes should conduct such independent investigation and analysis regarding the
Issuer, the Securities Issuer, FSA, the security arrangements and the Notes as they deem
appropriate to evaluate the merits and risks of an investment in the Notes. Purchasers of Notes
should have sufficient knowledge and experience in financial and business matters, and access
to, and knowledge of, appropriate analytical resources, to evaluate the information contained in
this Prospectus (if any) and the merits and risks of investing in the Notes in the context of their
financial position and circumstances. The risk factors identified in this Prospectus are provided
as general information only and the Dealer disclaims any responsibility to advise purchasers of
Notes of the risks and investment considerations associated therewith as they may exist at the
date hereof or as they may from time to time alter.
The Issuer is not regulated by the Central Bank of Ireland. Neither the Notes nor the Transactions will
have the status of a bank deposit under Irish law and neither are within the scope of the Deposit
Protection Scheme operated by the Central Bank of Ireland.
In connection with the issue 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))
herein may over-allot Notes (provided that, the aggregate principal amount of Notes allotted does not
exceed 105 per cent. of the aggregate principal amount of the Notes) or effect transactions with a view to
supporting the market price of the Notes at a level higher than that which might otherwise prevail.
However, there is no assurance that the Stabilising Manager(s) (or persons acting on behalf of a
Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the
date on which adequate public disclosure of the terms of the offer for the Notes is made and, if begun,
may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the
Notes and 60 days after the date of the allotment of the Notes.
This Prospectus is to be read in conjunction with all documents which are incorporated by reference (see
"Documents Incorporated by Reference" below).
In this Prospectus, unless otherwise specified or the context otherwise requires, references to "Euro"
and "" are to the lawful currency of the member states of the European Union that adopt the single
currency in accordance with the Treaty establishing the European Community, as amended by the
Treaty on European Union and references to "Sterling" and "£" are to the lawful currency of the United
Kingdom.


3



DOCUMENTS INCORPORATED BY REFERENCE
This Prospectus should be read and construed in conjunction with the following documents which have
been previously published or are published simultaneously with the Prospectus and that have been
approved by the Competent Authority or filed with it and shall be deemed to be incorporated in, and form
part of, this Prospectus:
(1)
the base prospectus of the Issuer dated 4 August 2005 relating to the Issuer's Euro 5,000,000,000
Secured Transaction Programme (the "Base Prospectus"); and
(2)
the audited annual financial statements ended 30 March 2003 and 2004 (including any auditors
report thereon), of the Issuer;
save that any statement contained in any of the documents incorporated by reference in, and forming
part of, this Prospectus shall be deemed to be modified or superseded for the purpose of this Prospectus
to the extent that a statement contained herein modifies or supersedes such earlier statement (whether
expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of this Prospectus. This Prospectus must be read
in conjunction with the Base Prospectus and full information on the Issuer and the Notes is only available
on the basis of the combination of the provisions set out within this document and the Base Prospectus.
The Issuer will, at the specified offices of the Issuer and AIB International Financial Services Limited, free
of charge, upon the oral or written request therefor, make available a copy of this Prospectus (and any
documents incorporated by reference in this Prospectus). Written or oral requests for such documents
should be directed to the specified office of AIB International Financial Services Limited.
SUPPLEMENTS TO THE PROSPECTUS
If at any time any Issuer shall be required to prepare a supplemental prospectus pursuant to Articles 23
and 51 of S.I. No. 324, Prospectus (Directive 2003/71/EC) Regulations 2005, the Issuer will prepare and
make available an appropriate amendment or supplement to this Prospectus which shall constitute a
supplemental prospectus as required by the Competent Authority and 5.1 No. 324, Prospectus (Directive
2003/71/EC) Regulations 2005.



4



TABLE OF CONTENTS
Page
RISK FACTORS.......................................................................................................................................... 6
TERMS AND CONDITIONS OF THE NOTES.......................................................................................... 16
SCHEDULE TO THE TERMS AND CONDITIONS ­ SPECIFIC AMENDMENTS TO THE BASE
CONDITIONS.................................................................................................................................... 25
ANNEX TO THE TERMS AND CONDITIONS -- DESCRIPTION OF SWAP .......................................... 56
USE OF PROCEEDS................................................................................................................................ 60
DESCRIPTION OF THE SWAP COUNTERPARTY ................................................................................. 61
FORM OF FINANCIAL GUARANTEES .................................................................................................... 62
PART 1 ­ FORM OF NOTES FINANCIAL GUARANTEE ........................................................................ 63
PART 2 ­ FORM OF SWAP FINANCIAL GUARANTEE .......................................................................... 74
DESCRIPTION OF FINANCIAL SECURITY ASSURANCE (U.K.) LIMITED............................................ 86
GENERAL INFORMATION....................................................................................................................... 92
APPENDIX ­ FINANCIAL INFORMATION RELATING TO FINANCIAL SECURITY ASSURANCE (U.K.)
LIMITED ............................................................................................................................................ 94
INDEX .......................................................................................................................................................134



5



RISK FACTORS
This Prospectus does not describe all of the risks of an investment in the Notes. The Issuer and the
Dealer disclaim any responsibility to advise prospective investors of such risks as they exist at the date
of this Prospectus or as they change from time to time. Prospective investors should consult their own
financial and legal advisers as to the risks entailed by an investment in any Notes and the suitability of
investing in such Notes in the light of their particular circumstances. Prospective investors should
carefully consider, among other factors, all the information set forth in this Prospectus and in particular,
the matters described below.
Risks related to the Issuer
The Issuer is a special purpose vehicle
The Issuer's sole business is the raising of money by issuing notes and entering into other Transactions
for the purposes of purchasing assets and entering into related derivatives and other contracts. The
Issuer has covenanted not, as long as any of the Transactions remain outstanding, without the consent
of the Trustee and any Other Creditors and provided that it will not result in any rating assigned to the
Notes being adversely affected, as confirmed in writing by the relevant rating agency, to have any
subsidiaries or employees, purchase, own, lease or otherwise acquire any real property (including office
premises or like facilities), consolidate or merge with any other person or issue any shares (other than
such shares as were in issue on the date of its incorporation). As such, the Issuer has, and will have, no
assets other than its issued and paid-up share capital, such fees (as agreed) payable to it in connection
with the issue of Notes or entry into other obligations from time to time and any Mortgaged Property and
any other assets on which Notes or other obligations are secured. There is no day to day management of
the business of the Issuer.
Regulation of the Issuer by any regulatory authority
The Issuer is not required to be licensed, registered or authorised under any current securities,
commodities or banking laws of its jurisdiction of incorporation and will operate without supervision by
any authority in any jurisdiction. There is no assurance, however, that regulatory authorities in one or
more jurisdictions would not take a contrary view regarding the applicability of any such laws to the
Issuer. The taking of a contrary view by such regulatory authority could have an adverse impact on the
Issuer or the holders of the Notes.
Any investment in the Notes does not have the status of a bank deposit and is not within the scope of
any deposit protection scheme.
Preferred creditors under Irish law
Under Irish law, upon an insolvency of an Irish company such as the Issuer, when applying the proceeds
of assets subject to fixed security which may have been realised in the course of a liquidation or
receivership, the claims of a limited category of preferential creditors will take priority over the claims of
creditors holding the relevant fixed security. These preferred claims include the remuneration, costs and
expenses properly incurred by any examiner of the company (which may include any borrowings made
by an examiner to fund the company's requirements for the duration of his appointment) which have
been approved by the Irish courts (see "Examinership" below).
In relation to the disposal of assets of any Irish tax resident company which are subject to security, a
person entitled to the benefit of the security may be liable for tax in relation to any capital gains made by
the company on a disposal of those assets on exercise of the security.


6



Examinership
Examinership is a court procedure available under the Irish Companies (Amendment) Act 1990, as
amended to facilitate the survival of Irish companies in financial difficulties.
The Issuer, the directors of the Issuer, a contingent, prospective or actual creditor of the Issuer, or
shareholders of the Issuer holding, at the date of presentation of the petition, not less than one-tenth of
the voting share capital of the Issuer are each entitled to petition the court for the appointment of an
examiner. The examiner, once appointed, has the power to set aside contracts and arrangements
entered into by the company after his appointment and, in certain circumstances, can avoid a negative
pledge given by the company prior to his appointment. Furthermore, he may sell assets the subject of a
fixed charge. However, if such power is exercised he must account to the holders of the fixed charge for
the amount realised and discharge the amount due to them out of the proceeds of sale.
During the period of protection, the examiner will compile proposals for a compromise or scheme of
arrangement to assist the survival of the company or the whole or any part of its undertaking as a going
concern. A scheme of arrangement may be approved by the Irish High Court when at least one class of
creditors has voted in favour of the proposals and the Irish High Court is satisfied that such proposals are
fair and equitable in relation to any class of members or creditors who have not accepted the proposals
and whose interests would be impaired by implementation of the scheme of arrangement.
In considering proposals by the examiner, it is likely that secured and unsecured creditors would form
separate classes of creditors. In the case of the Issuer, if the Trustee represented the majority in number
and value of claims within the secured creditor class (which would be likely given the restrictions agreed
to by the Issuer in the Conditions), the Trustee would be in a position to reject any proposal not in favour
of the Noteholders. The Trustee would also be entitled to argue at the Irish High Court hearing at which
the proposed scheme of arrangement is considered that the proposals are unfair and inequitable in
relation to the Noteholders, especially if such proposals included a writing down of the value of amounts
due by the Issuer to the Noteholders. The primary risks to the holders of Notes if an examiner were to be
appointed to the Issuer are as follows:
(i)
the potential for a scheme of arrangement to be approved involving the writing down of the debt
owed by the Issuer to the Noteholders as secured by the Trust Deed;
(ii)
the potential for the examiner to seek to set aside any negative pledge in the Notes prohibiting the
creation of security or the incurring of borrowings by the Issuer to enable the examiner to borrow
to fund the Issuer during the protection period; and
(iii)
in the event that a scheme of arrangement is not approved and the Issuer subsequently goes into
liquidation, the examiner's remuneration and expenses (including certain borrowings incurred by
the examiner on behalf of the Issuer and approved by the Irish High Court) will take priority over
the monies and liabilities which from time to time are or may become due, owing or payable by the
Issuer to the Noteholders.
Risks related to the Notes
Liability under the Notes
The Notes will be solely the obligations of the Issuer and will not be obligations or responsibilities of, or
guaranteed by, any other entity (other than FSA in relation to amounts in respect of Scheduled Payments
under the Notes Financial Guarantee). In particular, the Notes will not be obligations or responsibilities
of, and will not be guaranteed by, the Trustee, the Swap Counterparty or FSA (other than in relation to
amounts in respect of Scheduled Payments on the Notes under the Notes Financial Guarantee).
Furthermore, no such person other than the Issuer will accept any liability whatsoever to Noteholders in


7



respect of any failure by the Issuer to pay any amount due under the Notes (other than FSA in relation to
amounts in respect of Scheduled Payments on the Notes under the Notes Financial Guarantee).
Limited recourse obligations
The Notes are direct, secured, limited recourse obligations of the Issuer payable solely out of the assets
charged by the Issuer in favour of the Trustee on behalf of the Noteholders and other secured parties.
The Issuer will have no other assets or sources of revenue available for payment of any of its obligations
under the Notes and claims against the Issuer by the Trustee, the Noteholders and the Swap
Counterparty will be limited. The Noteholders do however have the benefit of the Note Financial
Guarantee issued by FSA ­ See "Risks related to the counterparties" below. The Noteholders will have
no right to proceed directly against the Issuer or take title to, or possession of, the charged assets unless
the Trustee, having become bound to do so, fails to take relevant action within a reasonable time. No
assurance can be made that the proceeds available for and allocated to the repayment of the Notes at
any particular time will be sufficient to cover all amounts that would otherwise be due and payable in
respect of the Notes. If the proceeds of the realisation of the Security received by the Trustee for the
benefit of the Noteholders prove insufficient to make payments on the Notes, no other assets will be
available for payment of the deficiency. Any deficiency will be borne by the Trustee, the Agents, the
Swap Counterparty, FSA, the Noteholders, the Couponholders and the Counterparty in accordance with
the order of priority specified in Condition 4 and following distribution of the proceeds of such realisation,
the Issuer will have no further obligation to pay any amounts in respect of any such deficiency.
Further, none of the Trustee, the Agents, the Swap Counterparty, FSA, the Counterparty, the
Noteholders and the Couponholders will be entitled at any time to petition or take any other step for the
winding-up of or the appointment of an examiner to, the Issuer provided that the Trustee may prove or
lodge a claim in the liquidation of the Issuer initiated by another party and provided further that the
Trustee may take proceedings to obtain a declaration or similar judgment or order as to the obligations
and liabilities of the Issuer. No person other than the Issuer will be obliged to make payments on the
Notes.
Priority of Claims
During the term of the transaction and on an enforcement of the security granted by the Issuer in favour
of the Trustee, the rights of the Noteholders to be paid amounts due under the Notes will be
subordinated to, inter alia, claims of the Trustee, the Agents, the Swap Counterparty (other than where
the Swap is terminated as a consequence of a Swap Counterparty Event of Default) and FSA (in respect
of unpaid fees and (only in the circumstance where the Notes are redeemed pursuant to Condition
7(c)(ii)(A) (Mandatory Redemption Following an Original Securities Issuer Call) or at the direction of an
Extraordinary Resolution where FSA has issued an Original Securities Financial Guarantee or an Eligible
Securities Financial Guarantee in accordance with Condition 7(d) (Taxation and Redemption following
Swap Termination) or pursuant to Condition 7(f) (Noteholders' Option)) the FSA Make Whole Amount (as
defined below)).
No gross-up
In the event that any withholding or deduction for tax is imposed (i) on payments of interest on the Notes,
(ii) in respect of any payments under the Swap or (iii) in respect of the amounts receivable by the Issuer
in respect of Eligible Securities (where the relevant issuer of such Securities would not be obliged to pay
additional amounts to gross up such amounts), the Issuer will only be required to make payments to
Noteholders net of such withholding or deduction and FSA would have no obligation under the Notes
Financial Guarantee or the Swap Financial Guarantee to make up such shortfall. In such circumstances,
the Issuer shall use all reasonable endeavours to (a) arrange the substitution of a company incorporated
in another jurisdiction approved beforehand in writing by the Trustee and the Substitution Instructing
Creditor (provided that such substitution will not at the time of substitution result in any rating assigned to
the Notes being adversely affected, as confirmed in writing by Moody's and Standard & Poor's) as the


8



principal obligor, (b) change (to the satisfaction of the Trustee and the Substitution Instructing Creditor
and provided that such change will not at the time of such change result in any rating assigned to the
Notes being adversely affected, as confirmed in writing by Moody's and Standard & Poor's) its residence
for taxation purposes to another jurisdiction approved beforehand in writing by the Trustee and the Other
Creditors, (c) consult with the Noteholders with a view to obtaining a direction by way of Extraordinary
Resolution, with the approval of the Swap Counterparty and FSA (such approval not to be unreasonably
withheld or delayed), to restructure the Notes to avoid the requirement to make such withholding or
deduction or (d) consult with the Noteholders with a view to obtaining a direction by way of Extraordinary
Resolution with the approval of the Swap Counterparty and FSA (such approval not to be unreasonably
withheld or delayed), to redeem the Notes (in whole but not in part) on an agreed date by way of Cash
Settlement or Physical Settlement as directed by such Extraordinary Resolution as more particularly
described in Condition 7(d) (Taxation and Redemption Following Swap Termination).
For so long as the Issuer is unable to achieve any of the alternatives described in (a) to (d) above, the
Issuer shall deduct such taxes from amounts payable and Noteholders will not be entitled to receive
grossed-up amounts to compensate for such withholding or deduction for tax. No event of default shall
occur as a result of any such withholding or deduction under the Notes or the Swap or the Securities.
The Issuer is not obliged to redeem the Notes in the event of any such withholding or deduction for tax
being imposed on payments of interest thereunder unless directed to do so by way of an Extraordinary
Resolution in accordance with (d) above. Subject to the above, in the event that payments due from the
Issuer to the Swap Counterparty under the Swap are subject to withholding or deduction on account of
any tax or in the event that any payments by the Issuer to the Swap Counterparty under the Swap are
reduced as a consequence of the amounts receivable by the Issuer under the Original Securities or any
Eligible Securities being subject to any such withholding or deduction (where the relevant issuer of such
Securities would not be obliged to pay additional amounts to gross up such amounts), then the
corresponding amounts paid by the Swap Counterparty to the Issuer shall be reduced by the same
amount (on a pound for pound basis) excluding any reduction as a consequence of amounts receivable
by the Issuer under the Original Securities being subject to a withholding or deduction where there is no
obligation on the Original Securities Issuer to Gross Up (as defined in Condition 4(h)(ii)(A) (Original
Securities Taxation)). In such event the amount payable by the Issuer under the Notes would also be
reduced by such amount (again, on a pound for pound basis) excluding any reduction as a consequence
of amounts receivable by the Issuer under the Original Securities being subject to a withholding or
deduction where there is no obligation on the Original Securities Issuer to Gross Up (as defined in
Condition 4(h)(ii)(A) (Original Securities Taxation)).
Subject to the above, in the event that the amount to be deducted from any payments to be made by the
Swap Counterparty to the Issuer exceeds the payment to be made by the Swap Counterparty, then the
Swap Counterparty will not be obliged to make any payment on the relevant payment dates under the
Swap to the Issuer and any shortfall, together with interest at the outstanding London interbank offered
rate, will be applied in reducing the amounts payable by the Swap Counterparty to the Issuer on the next
succeeding Swap Counterparty payment date under the Swap (on a pound for pound basis) and, to the
extent that such shortfall is not extinguished by such reduction, in reducing subsequent payments to be
made by the Swap Counterparty to the Issuer until such shortfall is extinguished. Such reductions may
significantly reduce the amounts of interest and, if any such amounts remain outstanding upon any
redemption of the Notes, principal payable to Noteholders.
Modification, waivers and substitution
The conditions of the Notes 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 Noteholders who voted in
a manner contrary to the majority. Provided that an FSA Event of Default has not occurred and is not
continuing (unless it has been waived or cured to the satisfaction of the Trustee), FSA shall have the


9



right to give requests or directions to the Trustee and to vote at meetings of the Noteholders (except in
respect of certain entrenched rights or reserved matters specified within the conditions of the Notes), as
more particularly described in "Entitlement of FSA" below. In so doing, FSA shall not be required to
attend such meetings, but may instead deliver written instructions. In such circumstances, FSA would
constitute the defined majority to bind all Noteholders.
The conditions of the Notes also provide that the Trustee may, without the consent of Noteholders, agree
to (i) any modification of, any of the provisions of Notes that is, in its opinion, of a formal, minor or
technical nature or is made to correct a manifest error or (ii) the substitution of another company as
principal debtor under any Notes in place of the Issuer.
Entitlement of FSA
The conditions of the Notes also provide that irrespective of whether an FSA Event of Default has
occurred, FSA shall be required to consent to a proposed modification or amendment of certain
entrenched rights relating to FSA.
In addition, unless an FSA Event of Default has occurred and is continuing (unless it has been waived or
cured to the satisfaction of the Trustee), FSA has the right (except in relation to certain matters as set out
in Condition 12(e) (Entitlement of FSA)) to give requests or directions to the Trustee and to vote at
meetings of the Noteholders as if it were the holder of 100 per cent of the then aggregate outstanding
nominal amount of the Notes to the exclusion of any right which the Noteholders would otherwise have to
vote or to direct the Trustee.
FSA Optional Redemption
If FSA exercises the FSA Redemption Option the Issuer shall, as soon as reasonably practicable
following notice of such exercise, redeem the Notes (in whole or in part) in accordance with the
Conditions. This feature may limit their market value. During the period when FSA may elect to exercise
such option, the market value of those Notes generally will not rise substantially above the price at which
they can be redeemed. This may also be true prior to the commencement of any redemption period. A
Noteholder may 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.
Prospective investors should consider reinvestment risk in light of other investments available at that
time.
Risks related to the assets
No investigations
No investigations, searches or other enquiries have been made by or on behalf of the Issuer or the
Trustee in respect of the Securities. No representations or warranties, express or implied, have been
given by the Issuer, the Dealer, the Trustee or any other person on their behalf in respect of the
Securities.
Securities
The terms of the Original Securities are set out in the Original Securities Prospectus and investors are
advised to read and understand such terms prior to the purchase of Notes. The Original Securities
Prospectus will be available for inspection as described in the "General Information" section below.
Investors should be clear, however, that an investment in the Notes is not the same as an investment in
the Original Securities.
In the event that the Original Securities are redeemed as a result of (a) an Original Securities Issuer Call,
in circumstances that the redemption proceeds thereof are insufficient to pay all Secured Parties
pursuant to items (i) to (vii) (both inclusive) of Condition 4(b)(I) (Pre-enforcement Order of Priority) and
neither the Noteholders nor FSA elect that the Notes be redeemed, (b) an Original Securities Bondholder


10


Document Outline