Obligation Prismian 5.25% ( XS0500405005 ) en EUR

Société émettrice Prismian
Prix sur le marché 100 %  ▼ 
Pays  Italie
Code ISIN  XS0500405005 ( en EUR )
Coupon 5.25% par an ( paiement annuel )
Echéance 09/04/2015 - Obligation échue



Prospectus brochure de l'obligation Prysmian XS0500405005 en EUR 5.25%, échue


Montant Minimal 50 000 EUR
Montant de l'émission 400 000 000 EUR
Description détaillée Prysmian est un leader mondial dans le secteur des systèmes de câbles et de technologies pour l?énergie et les télécommunications.

L'Obligation émise par Prismian ( Italie ) , en EUR, avec le code ISIN XS0500405005, paye un coupon de 5.25% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 09/04/2015







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PRYSMIAN S.p.A.
(incorporated with limited liability in the Republic of Italy)
400,000,000 5.25 per cent. Guaranteed Notes due 2015
Issue price: 99.674 per cent.
The 400,000,000 5.25 per cent. Guaranteed Notes due 9 April 2015 (the Notes) are issued by Prysmian
S.p.A. (the Issuer) and are unconditionally and irrevocably guaranteed on a joint and several basis by
Prysmian Cavi e Sistemi Energia S.r.l. (incorporated with limited liability in the Republic of Italy), Prysmian
Cavi e Sistemi Italia S.r.l. (incorporated with limited liability in the Republic of Italy), Prysmian PowerLink
S.r.l. (incorporated with limited liability in the Republic of Italy), Prysmian Câbles et Systèmes France
S.A.S. (incorporated with limited liability in the Republic of France); Prysmian Cables & Systems Limited
(incorporated with limited liability in the United Kingdom), Prysmian Kabel und Systeme GmbH
(incorporated with limited liability in the Federal Republic of Germany), Prysmian Cables and Systems B.V.
(incorporated with limited liability in The Netherlands), Prysmian Power Cables & Systems Australia Pty
Ltd (incorporated with limited liability in the Commonwealth of Australia) (each an Original Guarantor
and, together with any Additional Guarantors appointed pursuant to the terms and conditions of the Notes,
the Guarantors, which term shall not include any Guarantor which ceases to guarantee the Notes pursuant
to Condition 4.3). The guarantees given by the Guarantors will be subject to contractual and legal limitations
(see Risk Factors ­ The Guarantees may be limited by applicable laws or subject to certain defences that
may limit their validity and enforceability).
The Issuer may, at its option, redeem all, but not some only, of the Notes at any time at par plus accrued
interest, in the event of certain tax changes as described under "Conditions of the Notes - Redemption and
Purchase". The Notes mature on 9 April 2015.
Application has been made to the Commission de Surveillance du Secteur Financier (the CSSF) in its
capacity as competent authority under the Luxembourg Act dated 10 July 2005 (the Luxembourg Act) on
prospectuses for securities to approve this document as a prospectus and to the Luxembourg Stock Exchange
for the listing of the Notes on the Official List of the Luxembourg Stock Exchange and admission to trading
on the Luxembourg Stock Exchange's regulated market. The Luxembourg Stock Exchange's regulated
market is a regulated market for the purposes of Directive 2004/39/EC (the Markets in Financial
Instruments Directive).
The Notes will initially be represented by a temporary global note (the Temporary Global Note), without
interest coupons, which will be deposited on or about 9 April 2010 (the Closing Date) with a common
depositary for Euroclear Bank SA/NV (Euroclear) and Clearstream Banking, société anonyme
(Clearstream, Luxembourg). Interests in the Temporary Global Note will be exchangeable for interests in
a permanent global note (the Permanent Global Note and, together with the Temporary Global Note, the
Global Notes), without interest coupons, on or after 19 May 2010 (the Exchange Date), upon certification
as to non-U.S. beneficial ownership. Interests in the Permanent Global Note will be exchangeable for
definitive Notes only in certain limited circumstances ­ see "Summary of Provisions relating to the Notes
while represented by the Global Notes".
An investment in Notes involves certain risks. Prospective investors should have regard to the factors
described under the heading "Risk Factors" on page 5.
Joint Lead Managers and Bookrunners
Banca IMI
Citi
Crédit Agricole CIB
Goldman Sachs International
UniCredit Bank
The date of this Prospectus is 8 April 2010


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This Prospectus comprises a prospectus for the purposes of Article 5.3 of Directive 2003/71/EC (the
Prospectus Directive) and for the purposes of the Luxembourg Act.
The Issuer accepts responsibility for the information contained in this Prospectus and each of the Original
Guarantors accepts responsibility for the information relating to itself contained in this Prospectus. To the
best of the knowledge of the Issuer and, in respect of the information relating to itself only, each Original
Guarantor (each having 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 Issuer and, in respect of the information relating to itself only, each Original Guarantor, having made all
reasonable enquiries, confirm that this Prospectus contains all information which, according to the particular
nature of the Issuer, the Original Guarantors and of the Notes, is necessary to enable investors to make an
informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the
Issuer and the Original Guarantors and of the rights attaching to the Notes, that the information contained or
incorporated in this Prospectus is true, accurate and not misleading in all material respects, that the opinions
and intentions expressed in this Prospectus are honestly held and that there are no other facts the omission
of which would make this Prospectus or any of such information or the expression of any such opinions or
intentions misleading in any material respect. The Issuer and, in respect of the information relating to itself
only, each Original Guarantor accept responsibility accordingly.
This Prospectus is to be read in conjunction with all documents which are deemed to be incorporated herein
by reference (see "Documents Incorporated by Reference"). This Prospectus should be read and construed
on the basis that such documents are incorporated and form part of the Prospectus.
Neither the Managers (as described under "Subscription and Sale", below) nor the Trustee have
independently verified the information contained herein. Accordingly, no representation, warranty or
undertaking, express or implied, is made and no responsibility or liability is accepted by the Managers or the
Trustee as to the accuracy or completeness of the information contained or incorporated in this Prospectus
or any other information provided by the Issuer or any Original Guarantor in connection with the offering of
the Notes. No Manager or the Trustee accepts any liability in relation to the information contained or
incorporated by reference in this Prospectus or any other information provided by the Issuer or any Original
Guarantor in connection with the offering of the Notes or their distribution.
No person is or has been authorised by the Issuer, any Original Guarantor or the Trustee to give any
information or to make any representation not contained in or not consistent with this Prospectus or any other
information supplied in connection with the offering of the Notes and, if given or made, such information or
representation must not be relied upon as having been authorised by the Issuer, any Original Guarantor, any
of the Managers or the Trustee.
Neither this Prospectus nor any other information supplied in connection with the offering of the Notes (a)
is intended to provide the basis of any credit or other evaluation or (b) should be considered as a
recommendation by the Issuer, any Original Guarantor, any of the Managers or the Trustee that any recipient
of this Prospectus or any other information supplied in connection with the offering of the Notes should
purchase any Notes. Each investor contemplating purchasing any Notes should make its own independent
investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer
and the Original Guarantors. Neither this Prospectus nor any other information supplied in connection with
the offering of the Notes constitutes an offer or invitation by or on behalf of the Issuer or any Original
Guarantor, any of the Managers or the Trustee to any person to subscribe for or to purchase any Notes.
Neither the delivery of this Prospectus nor the offering, sale or delivery of the Notes shall in any
circumstances imply that the information contained herein concerning the Issuer and/or the Original
Guarantors is correct at any time subsequent to the date hereof or that any other information supplied in
connection with the offering of the Notes is correct as of any time subsequent to the date indicated in the
document containing the same. The Managers and the Trustee expressly do not undertake to review the
financial condition or affairs of the Issuer or the Guarantors during the life of the Notes or to advise any
investor in the Notes of any information coming to their attention. The Notes have not been and will not be
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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, the Notes may not be offered, sold or delivered
within the United States or to U.S. persons. For a further description of certain restrictions on the offering
and sale of the Notes and on distribution of this document, see "Subscription and Sale" below.
This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy the Notes in any
jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The
distribution of this Prospectus and the offer or sale of Notes may be restricted by law in certain jurisdictions.
The Issuer, the Original Guarantors, the Managers and the Trustee do not represent that this Prospectus may
be lawfully distributed, or that the Notes may be lawfully offered, in compliance with any applicable
registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder,
or assume any responsibility for facilitating any such distribution or offering. In particular, no action has been
taken by the Issuer, the Original Guarantors, the Managers or the Trustee which is intended to permit a public
offering of the Notes or the distribution of this Prospectus in any jurisdiction where action for that purpose
is required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Prospectus
nor any advertisement or other offering material may be distributed or published in any jurisdiction, except
under circumstances that will result in compliance with any applicable laws and regulations. Persons into
whose possession this Prospectus or any Notes may come must inform themselves about, and observe, any
such restrictions on the distribution of this Prospectus and the offering and sale of Notes. In particular, there
are restrictions on the distribution of this Prospectus and the offer or sale of Notes in the United States, the
European Economic Area (including the United Kingdom, Italy, France, The Netherlands and Germany) and
Australia, see "Subscription and Sale".
IN CONNECTION WITH THE ISSUE OF THE NOTES, CITIGROUP GLOBAL MARKETS
LIMITED AS STABILISING MANAGER (THE STABILISING MANAGER) (OR PERSONS
ACTING ON BEHALF OF THE STABILISING MANAGER) MAY OVER ALLOT 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 (OR PERSONS
ACTING ON BEHALF OF
THE
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 OF
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. ANY STABILISATION
ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE STABILISING MANAGER
(OR PERSONS ACTING ON BEHALF OF THE STABILISING MANAGER) IN ACCORDANCE
WITH ALL APPLICABLE LAWS AND RULES.
All references in this document to euro and refer to the currency introduced at the start of the third stage
of European economic and monetary union pursuant to the Treaty establishing the European Community, as
amended. References to sterling and £ refer to pounds sterling and to AS$ and AUD refer to Australian
dollars.
Certain figures included in this Prospectus have been subject to rounding adjustments; accordingly, figures
shown for the same category presented in different tables may vary slightly and figures shown as totals in
certain tables, including percentages, may not be an arithmetic aggregation of the figures which precede
them.
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CONTENTS
Page
Risk Factors ..................................................................................................................................
5
Documents Incorporated by Reference ........................................................................................
16
Terms and Conditions of the Notes ..............................................................................................
20
Summary of Provisions relating to the Notes while represented by the Global Notes ................
39
Use of Proceeds ............................................................................................................................
42
Description of the Group ..............................................................................................................
43
Description of the Issuer ..............................................................................................................
61
Description of the Original Guarantors ........................................................................................
72
Taxation ........................................................................................................................................
84
Subscription and Sale....................................................................................................................
97
General Information......................................................................................................................
100
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RISK FACTORS
Each of the Issuer and the Original Guarantors believes that the following factors may affect its ability to
fulfil its obligations under the Notes. All of these factors are contingencies which may or may not occur and
neither the Issuer nor any Original Guarantor is in a position to express a view on the likelihood of any such
contingency occurring.
In addition, factors which are material for the purpose of assessing the market risks associated with the
Notes are described below.
Each of the Issuer and the Original Guarantors believes that the factors described below represent the
principal risks inherent in investing in the Notes, but the inability of the Issuer or any Original Guarantor to
pay interest, principal or other amounts on or in connection with the Notes may occur for other reasons
which may not be considered significant risks by the Issuer and the Original Guarantors based on
information currently available to them or which they may not currently be able to anticipate. Prospective
investors should also read the detailed information set out elsewhere in this Prospectus and reach their own
views prior to making any investment decision.
Words and expressions defined in "Terms and Conditions of the Notes" shall have the same meanings in
these risk factors.
Factors that may affect the ability of the Issuer or the Guarantors to fulfil their obligations under
the Notes or the Guarantees
Market conditions directly affect demand for products
Demand in certain of the markets in which the Group operates, in particular markets in which its Trade and
Installers business area operates, is subject to cyclical changes and affected by overall economic growth
trends. Notwithstanding that the diversification of the markets in which the Group operates and of its
products reduces its exposure to market downturns, such downturns could have a significant impact on the
Group's business and its financial condition and results of operations.
In particular, demand for products of the Energy Cables & Systems segment is influenced by projected
spending by companies in the utilities market segment, by overall energy consumption and by market trends
in the construction sector, while demand for products in the Group's Telecom Cables & Systems segment is
highly influenced by projected spending by telecom and other internet access operators.
The further weakening in demand in 2009 compared with 2008 has affected all business segments of the
Group, with the exception of the power transmission business and certain industrial applications serving the
oil and renewable energy sectors. A further significant deterioration of demand in the Trade and Installers
business area, the Power Distribution business line (which business line is partially affected by market
conditions in the construction sector) and the Industrial and Telecom business areas, combined with a
slowing down in the order intake in the high voltage cables business, could have a material adverse effect on
the financial condition and results of operations of the Group.
The Group faces competition and pricing pressures in certain of its leading businesses
Certain of the Group's business areas and business lines, principally its Trade & Installers business area and,
to a lesser extent, its Power Distribution business line, operate in markets in which intense competitive
pressure, also owing to the fall in demand, may increase pressure on the pricing of its products. Most of the
products sold in these business areas and business lines are based on industry standards and are essentially
interchangeable with similar products made by the Group's principal competitors. In such cases, pricing is a
decisive factor in the competitiveness of products. The Group's competitors consist of both an increasing
number of large operators that compete on a global scale and smaller operators that, while not competing
across all market segments in which the Group operates, may have a significant competitive presence in a
specific country, geographic area or market segment. In addition, the prices of certain of the Group's
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products, in particular fibre-optic cables, have experienced downward pressure as a result of production
overcapacity in the fibre-optic market segment.
The Group may not be able to reduce its costs in a manner sufficient to offset reduced demand and downward
pricing pressure, which could have a material adverse effect on its results of operations and financial
condition.
The Group is exposed to fluctuations in the price and supply of raw materials
The primary raw material the Group uses in the manufacture of its products is copper. The Group also uses
aluminium, lead and steel as well as plastic components and resins.
Historically the Group has been able to obtain a sufficient supply of copper to meet its production
requirements and the Group does not rely on any supplier in particular. Where possible, the Group diversifies
the source of its supplies. The Group purchases the majority of its resins and plastic components
requirements from major international suppliers pursuant to (generally) annual agreements providing for
monthly supplies, with the rest of its resins and plastic components requirements self-produced at its
production facilities.
Although the Group has sufficient capacity to produce all the optical fibres it needs for its activities, for
commercial and strategic reasons it purchases a part of its optional fibre requirements from third party
manufacturers.
All raw materials, especially oil derivatives, have experienced particularly significant price fluctuation in
2009, which is expected to continue in the future. The Group neutralises the impact of possible rises in the
price of copper and other principal raw materials through automatic sale price adjustment mechanisms or
through hedging activities; the exception is oil derivative products (polyethylene, plastifying PVC, rubber
and other chemical products), the risk of which cannot be efficiently offset through hedging.
The hedging of certain products (mainly in the Trade & Installers business) takes place, as part of established
commercial practice and/or the structural characteristics of the markets concerned, by periodically updating
price lists (since it is not possible to use automatic sale price adjustment mechanisms). In this case, it is
possible that, in the current market context, the Group will be unable to quickly pass on the impact of
fluctuations in raw material prices to sale prices. In particular, as regards oil derivatives, by contract changes
in their purchase price systematically occur with a time lag relative to changes in the oil price.
More in general, depending on the size and speed of the fluctuations in the copper price, such fluctuations
may have a significant impact on customers' buying decisions, particularly in the Trade & Installers and
Power Distribution businesses and certain businesses in the Industrial segment more exposed to cyclical
trends in demand, and on the Group's margins and working capital.
In particular, (i) significant, rapid increases and decreases in the copper price may cause absolute increases
and decreases respectively in the Group's profit margins due to the nature of the commercial relationships
and mechanisms for determining end product prices and (ii) increases and decreases in the copper price may
cause increases and decreases respectively in working capital (with the consequent effect of increasing or
reducing the Group's net debt).
Results of operations may be affected by exchange rate fluctuations
The Group is exposed to exchange rate fluctuations in those currencies other than the euro in which it
operates (primarily, the United States dollar, British pound, Brazilian Real and Australian dollar). The
exchange rate risk arises to the extent that future transactions or assets and liabilities that are already
recorded on the balance sheet are operated in a currency different from the reporting currency of the
company that has put in place such transaction. This exchange rate risk is centrally co-ordinated and
monitored by the Group's Finance Department, with Group companies entering into forward currency
contracts in order to manage this risk.
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The Issuer's consolidated financial statements are expressed in euro and are therefore subject to movements
in exchange rates on the translation of the financial information of its subsidiaries with a different reporting
currency. These fluctuations could significantly affect reported results and financial condition from year to
year.
The Group faces interest rate risk in relation to its long-term indebtedness
The Issuer pays fixed and floating interest rates on the Group's long-term indebtedness.
While management believes that fixed rate loans do not present significant risks, it seeks to hedge the interest
rate risk associated with floating rate borrowings through interest rate swaps (IRS). By using IRS contracts,
the Group swaps with counterparties for specified periods the difference between agreed fixed rates and the
variable rate calculated with reference to the notional value of the relevant indebtedness. In light of the
falling interest rates in the course of 2009, the Group entered into a series of interest rate swaps which have
the effect of limiting its exposure to interest rate fluctuations through to the end of 2014. The protection
offered by the interest rate swaps is limited in amount and in time and, as a result, future interest rate
fluctuations may have a material negative impact on the financial conditions and results of operations of the
Group.
The Group is subject to changes in industry standards and the regulatory environment
As a manufacturer and distributor of cable products, the Group is subject to a number of laws, regulations
and manufacturing standards at the local, national and international levels that apply to companies operating
in its industry and to products manufactured and distributed by it. In particular, the Group is subject to
numerous environmental laws and regulations. Notwithstanding the Group's efforts to reduce its exposure to
environmental risks and stipulation of insurance policies to cover costs that result from environmental
damage to third parties, there can be no assurance that all relevant environmental risks have been identified
or that insurance coverage obtained is adequate.
Changes in existing laws, regulations or manufacturing standards, the introduction of new laws and
regulations that apply to the businesses or the development or discovery of new facts or conditions could
require the Group to incur significant costs and liabilities (whether for adapting its production facilities or
the characteristics of its products or otherwise), which could have a material adverse effect on its financial
condition and results of operations.
The Group may experience difficulties in executing its business strategy
The Group's ability to increase sales of goods and services and improve profitability depends on, among
other things, success in executing the Group's business strategy, which includes improving its overall
profitability by increasing the proportion of its total sales of goods and services from high value-added
products, the development of an industrial structure in support of such strategy, continuing to improve its
variable costs structure, improving its logistics and customers assistance service and a continuing focus on
research and development of new products and manufacturing processes. The Group may not succeed in
implementing its current business strategy in full or part, or within the envisaged times. Although the Group
aims to fund the implementation of its business strategy mostly through its own cash flow without recourse
to significant external financing, the execution of its business strategy may still impose significant strains on
its management and operating systems.
Disruptions in markets where the Group operates will affect its business
The Group operates production facilities, runs businesses, engages in sales and marketing activities and is
present through subsidiaries in Asian and central and south American countries. The Group's operations in
these countries are exposed to a number of risks relating to their legal systems, judicial procedures, tariffs,
duties and other trade barriers, political and economic instability and foreign currency risk.
Significant changes in the macroeconomic, political, fiscal or legislative framework of these countries could
harm international operations and negatively affect the Group's financial condition and results of operations.
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The Issuer faces risks associated with sources of financing
In January 2010, the Issuer and certain other Group companies entered into the Euro 1,070,000,000 Forward
Start Multi-currency Term and Revolving Credit Facilities (the FSF) to replace the term loan and revolving
credit commitments under the Euro 1,700,000,000 facility agreement entered into by the Issuer in April 2007
(the Existing Facilities Agreement) upon the scheduled maturity on 3 May 2012. The FSF has a maturity
date of December 2014. Under the FSF, a loyalty fee is payable on the existing commitments rolled over into
the FSF as well as on any additional commitments.
The Issuer believes that the Existing Facilities Agreement and the FSF should provide the Group with
sufficient financing through to 2014 without the need to procure additional external indebtedness. The Issuer
is however subject to two financial covenants on a consolidated level under both the Existing Facilities
Agreement and the FSF that require it to maintain certain financial ratios. These two covenants limit its
ability to borrow additional funds and should the Issuer breach any one of them, this would result in a default
and, if such default is not cured in accordance with the terms of the Existing Facilities Agreement and the
FSF, any amounts drawn down and outstanding may be accelerated and, in such case, would become due
immediately. As at 31 December 2009 the ratio between consolidated adjusted EBITDA (as such term is
defined in the Existing Facilities Agreement and the FSF) and consolidated net finance costs was 10.71x
against a covenant of 5.00x and the ratio between net financial position and consolidated adjusted EBITDA
(as such term is defined in the Existing Facilities Agreement and FSF) was 1.13x against a covenant of 2.75x.
These agreements also place certain customary restrictions on the Group's ability to dispose of assets, issue
guarantees in the interest of third parties, create liens, make acquisitions and distribute dividends. Although
these restrictions are subject to materiality exceptions and qualifications, breach of any of the covenants
could result in a default under the Existing Facilities Agreement or, as the case may be, the FSF. If the
indebtedness under the Existing Facilities Agreement or, upon its drawdown, the FSF were to be accelerated,
the Group can offer no assurances that its assets would be sufficient to repay that indebtedness in full.
Working capital is subject to seasonal variations
The Group's working capital needs generally increase during the first half of each year as relevant Group
companies build up their product inventory in response to and in anticipation of customer orders that have
historically been concentrated in the first half of each year, whereas they tend to decrease during the fourth
quarter of each year. The increase in working capital needs in the first half of each year typically leads to
temporary increases in its net financial position (i.e. higher indebtedness) during this period. The Group
seeks to manage its working capital requirements by maintaining an adequate level of liquid assets, short
term investments and committed credit lines but there can be no assurance that such measures will be
sufficient.
Many of the Group's products expose it to product liability risks
Many of the Group's products expose it to product liability risks or allegations that such products could cause
harm to persons and property, with potential civil and criminal liabilities to clients and third parties in the
countries where the Group operates. The Group's current policy is to maintain product liability insurance at
a level that it believes is consistent with current industry practice. However, there is no guarantee that current
insurance coverage is sufficient to meet claims that may be filed against the Group, or that the Group will be
able to obtain or maintain insurance on acceptable terms or at appropriate levels in the future. A successful
product liability claim against the Issuer or a Group company could have a material adverse effect on the
Group's business, financial condition and results of operations. Moreover, a judgment against a Group
company in such a liability claim could result in a loss of reputation and marketability for the Group.
The Group may experience difficulties in enforcing its intellectual property rights
Although the Group holds a wide portfolio of patent families, these patents may not provide it with sufficient
protection against its competitors. The Group may encounter difficulties in obtaining rights to additional
intellectual property necessary to continue or expand its business as a result of third party patent rights on
technologies used in its industries. As a result the Group may have to become involved in litigation or other
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legal proceedings to enforce its intellectual property rights. The outcome of litigation and other legal
proceedings can often be unpredictable. The Group may also become subject to claims of intellectual
property infringement or misappropriation that may result in loss of revenue, require it to incur substantial
costs or lead to monetary damages or injunctive relief against it, which may negatively affect its business.
In particular, the Group benefits from a licence granted by Corning Incorporated to its subsidiary Fibre
Ottiche Sud S.r.l. (FOS) for the manufacture of optical fibre using OVD technology. This licence expires in
2010 and the parties are in the process of negotiating an extension of this licence. Should the negotiations
not be concluded successfully in time, FOS will be able to continue its manufacture of optical fibre using
current OVD technology if it continues to comply with the terms of the licence also after its expiry, but will
not have the benefit of any subsequent OVD technology innovations. Although this is not expected to have
a material adverse effect on FOS's operations in the short term, the Group's financial condition and results
of operations may be adversely affected in the longer term if the licence is not renewed in time and the Group
is unable to use alternative technology.
The Group is exposed to various legal proceedings
In connection with its operations, the Issuer and certain of its consolidated subsidiaries are currently involved
in various legal proceedings, including civil, criminal and administrative proceedings, in respect of some of
which the Issuer or, as the case may be, the relevant subsidiary, is not able to quantify the risk of damages
or penalties. The reserves that the Issuer or, as the case may be, the relevant subsidiary, has allocated to cover
damages and penalties in relation to certain proceedings may not be sufficient and damages or penalties may
result from proceedings for which no reserves have been allocated. This could have a material adverse effect
on the Group's financial condition and results of operations.
Anti-trust investigations have been recently commenced
Towards the end of January 2009, the European Commission, the US Department of Justice and the Japanese
antitrust authority started an investigation against several European and Asian electrical cable manufacturers
to verify the existence of alleged anti-competitive agreements in the Ground and Submarine High Voltage
Cable business areas. More recently the Australian Competition and Consumers Commission (ACCC) and
the New Zealand Commerce Commission have started similar investigations.
The Japanese investigation has been closed without any charge against the Group. The other investigations
are still at a preliminary stage and the Group is fully collaborating with the relevant authorities.
In Australia, the ACCC has filed a case before the Federal Court arguing that Prysmian Cavi e Sistemi
Energia S.r.l. and two other companies have violated antitrust rules in connection with an underground high
voltage cable project which was awarded in 2003. However, Prysmian Cavi e Sistemi Energia S.r.l. has not
yet been officially served with a claim.
In the event of a proven breach of applicable legislation, the financial penalties imposed by the competent
authorities could be significant in relation to the economic and financial situation of the Group. Among other
things, the sanction system under European law provides for financial penalties that could reach a maximum
of 10 per cent. of the Group's turnover.
The Group may be subject to claims under certain of its contracts with customers
Some of the Group's contracts with customers for the production and/or installation of products contain
penalty clauses that are triggered in the event the relevant Group company is unable to meet agreed delivery
times or quality commitments. Any such penalty payments, compensation for damages and the impact that
delays will have on the final delivery could adversely affect its operations and the financial condition and
results of operations of the Group.
Although none of the Group companies has been forced to pay significant penalties for delays in product
delivery or for not meeting quality commitments over the last three years, there is no guarantee that all Group
companies will always be able to meet its time and quality commitments in the future. Any significant
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Level: 4 ­ From: 4 ­ Tuesday, April 6, 2010 ­ 16:03 ­ eprint6 ­ 4205 Section 01
penalty payments or compensation for damages could adversely affect the Group's financial condition and
results of operations.
An unanticipated or prolonged interruption of operations at production facilities would have a material
adverse effect on the Group's financial condition and results of operations
The Group's business is dependent on the continued and uninterrupted performance of its production
facilities. However, these facilities are subject to operating risks, including equipment failures, failures to
comply with applicable regulations, revocation of licences and permits, increases in transportation costs,
interruption in the supply of energy and raw materials, natural disasters and acts of sabotage or terrorist
attacks. Operations may also be disputed by work force-related interruptions due to labour shortages, strikes
or other labour issues.
Save for a prolonged interruption of the Canadian plant of St. Jean in 2009 due to a strike of the work force,
there has been no interruptions at any of the Group's production facilities of such a nature over the last three
years so as to cause a material adverse effect on its operations. However, there is no guarantee that no
significant interruptions will occur in the future, or that the relevant insurance coverage (where available)
would be adequate.
The Group's risk management identifies and quantifies the operating risks of all Group companies, and
establishes and manages the Group's strategies for handling these risks. In particular, there is a periodic
review of the risk coverage, insurance premia, loss incurred and compensation received, and a prevention
plan is developed for each Group company setting forth controlling activities that need to be undertaken as
a priority. A "Loss Prevention" programme has also been implemented which provides for periodical
inspection of each facility to identify and prevent potential risks, attributing a risk category to each facility
and effecting an estimate of the investments needed in order to reduce its risk level. As of 31 December 2009,
approximately 98 per cent. of its production facilities were classified as "Excellent HPR or Highly Protected
Risk" (being facilities that are deemed to have risks under control), "Good HPR" (being facilities with a low
risk level) or "Good non HPR" (being facilities with a medium-low risk level); only one production facility
was classified as "Fair" (being facilities with a medium risk level) and none was classified as "Poor" (or
facilities with a high risk level). The programme's objective is to achieve "Excellent HPR" grade for all the
production facilities of the Group.
Despite such prevention measures, the Group's production facilities may experience interruptions or delays
in its production process due to the above circumstances beyond its control, which could have material
adverse effects on its financial condition and results of operations.
Dependency of the Submarine Power Systems business line on specific assets
The operation of the Submarine Power Systems business line is largely dependant on the Arco Felice Plant
and the cable-laying vessel Giulio Verne owned by Prysmian PowerLink S.r.l. (being an Original Guarantor).
Any material unanticipated or prolonged interruption of operations of such assets would have a material
adverse effect on Prysmian PowerLink S.r.l. and on the financial condition and results of operations of the
Group as a whole.
The Issuer has recently renewed its information technology system
The Issuer has launched an information technology renewal programme to upgrade and substitute an
important part of the Group's current information technology systems. It is expected that the new systems
will become fully operative by 2013. Until such time, inaccuracies in data handling and other inconveniences
may occur, which management seeks to mitigate through active testing, staff training and commercial
arrangements with suppliers of substitute technologies.
Risks in relation to acquisitions
The Group has recently concluded strategic acquisitions in Russia and India. The integration of these
acquisitions has involved and will involve integration challenges, particularly where management
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