Obligation Bertelsman 3% ( XS1222591023 ) en EUR

Bertelsman

100 % ▼

Allemagne

XS1222591023 ( en EUR )

3% par an ( paiement annuel )

22/04/2075

Prospectus brochure de l'obligation Bertelsmann XS1222591023 en EUR 3%, échéance 22/04/2075

100 000 EUR

650 000 000 EUR

23/04/2026 ( Dans 352 jours )

Bertelsmann est une multinationale allemande active dans les médias, l'éducation et les services.

L'obligation Bertelsmann (XS1222591023), émise en Allemagne pour un montant total de 650 000 000 EUR, avec un prix actuel de marché de 100%, offre un taux d'intérêt de 3% payable annuellement et arrive à échéance le 22 avril 2075, la taille minimale de l?achat étant de 100 000 EUR.

Prospectus
dated 22 April 2015

Bertelsmann SE & Co. KGaA
(Gütersloh, Federal Republic of Germany)
Subordinated Notes

Bertelsmann SE & Co. KGaA ("Bertelsmann" or the "Issuer") will issue Non-Call 8 Year Subordinated Notes (the "Non-Call 8 Year
Subordinated Notes") with an aggregate principal amount of EUR 650,000,000 (the "NC 8 Aggregate Principal Amount") on 23 April 2015
(the "Issue Date") at an issue price of 100 per cent. of the NC 8 Aggregate Principal Amount and Non-Cal 12 Year Subordinated Notes (the
"Non-Call 12 Year Subordinated Notes") with an aggregate principal amount of EUR 600,000,000 (the "NC 12 Aggregate Principal Amount",
and the NC 8 Aggregate Principal Amount and the NC 12 Aggregate Principal Amount each an "Aggregate Principal Amount") on the Issue
Date at an issue price of 100 per cent. of the NC 12 Aggregate Principal Amount (the Non-Cal 8 Year Subordinated Notes and the Non-Call 12
Year Subordinated Notes together the "Subordinated Notes" and each a "Tranche"). The Subordinated Notes will be issued in bearer form in
denominations of EUR 100,000 (the "Principal Amount").
The Non-Call 8 Year Subordinated Notes will bear interest (referred to in the Terms and Conditions of the Non-Call 8 Year Subordinated Notes
(the "NC 8 Terms and Conditions") as "Remuneration") from and including the Issue Date to (but excluding) 23 April 2023 (the "NC 8 First
Call Date") at a rate of 3 per cent. per annum, payable annually in arrear on 23 April in each year, commencing on 23 April 2016 and ending on
the NC 8 First Call Date. Thereafter, and unless previously redeemed, the Non-Call 8 Year Subordinated Notes, will bear Remuneration (i) from
and including the NC 8 First Cal Date to (but excluding) 23 April 2028 (the "First Increased Reset Remuneration Date") at the First Reset
Remuneration Rate (as defined in § 4(2)(a) of the NC 8 Terms and Conditions) payable annually in arrear on 23 April in each year, commencing
on 23 April 2024 and ending on the First Increased Reset Remuneration Date, (ii) from and including the First Increased Reset Remuneration
Date to but excluding 23 April 2043 (the "NC 8 Second Increased Reset Remuneration Date") at the respective First Increased Reset
Remuneration Rate (as defined in § 4(2)(b) of the NC 8 Terms and Conditions), payable annually in arrear on 23 April in each year, commencing
on 23 April 2029 and ending on the NC 8 Second Increased Reset Remuneration Date, (iii) from and including the NC 8 Second Increased
Reset Remuneration Date to but excluding 23 April 2075 (the "Final Maturity Date") at the respective Second Increased Reset Remuneration
Rate (as defined in § 4(2)(c) of the NC 8 Terms and Conditions), payable annually in arrear on 23 April in each year, commencing on 23 April
2044.
The Non-Call 12 Year Subordinated Notes will bear interest (referred to in the Terms and Conditions of the Non-Call 12 Year Subordinated
Notes (the "NC 12 Terms and Conditions") as "Remuneration") from and including the Issue Date to (but excluding) 20 April 2027 (the "NC 12
First Call Date") at a rate of 3.5 per cent. per annum, payable annually in arrear on 23 April in each year, commencing on 23 April 2016 and
ending on the NC 12 First Call Date. Thereafter, and unless previously redeemed, the Non-Call 12 Year Subordinated Notes, will bear
Remuneration (i) from and including the NC 12 First Cal Date to (but excluding) 23 April 2047 (the "NC 12 Second Increased Reset
Remuneration Date") at the First Increased Reset Remuneration Rate (as defined in § 4(2)(a) of the NC 12 Terms and Conditions) payable
annually in arrear on 23 April in each year, commencing on 23 April 2028 and ending on the NC 12 Second Increased Reset Remuneration
Date, (ii) from and including the NC 12 Second Increased Reset Remuneration Date to but excluding the Final Maturity Date at the respective
Second Increased Reset Remuneration Rate (as defined in § 4(2)(b) of the NC 12 Terms and Conditions), payable annually in arrear on 23 April
in each year, commencing on 23 April 2048.
Upon the occurrence of a Rating Downgrade fol owing a Change of Control (as defined in § 5(7) of the NC 8 Terms and Conditions and NC 12
Terms and Conditions (together the "Terms and Conditions")), the rate of remuneration payable on the Subordinated Notes may be increased
by 5.00 per cent. per annum above the otherwise Prevailing Remuneration Rate (as set out in § 4(4) of the Terms and Conditions).
The Issuer is entitled to defer payments of Remuneration on any Remuneration Payment Date (as defined in the Terms and
Conditions). The Issuer may pay such Deferred Remuneration Payments (in whole but not in part) at any time upon due notice (as set
out in § 4(6)(a) of the Terms and Conditions) and it shall pay such Deferred Remuneration Payments (in whole, but not in part) under
certain other circumstances (as set out in § 4(6)(b) of the Terms and Conditions). Such Deferred Remuneration Payments will not bear
interest themselves.
The Subordinated Notes are long-term securities and the Issuer is under no obligation to redeem the Subordinated Bonds at any time prior to the
Final Maturity Date. Each Tranche is redeemable in whole but not in part only at the option of the Issuer on the NC 8 First Cal Date or the NC 12
First Cal Date, as the case may be (each a "First Call Date") and on any Remuneration Payment Date thereafter (as set out in § 5(2) of the
Terms and Conditions) at the Principal Amount per Subordinated Note plus any Remuneration accrued and any Deferred Remuneration
Payments. The Issuer may also redeem each Tranche in whole but not in part at any time upon the occurrence of a Gross-up Event, a Tax
Event, a Rating Agency Event (each as defined in § 5(4) of the Terms and Conditions) or if fol owing a Change of Control a Rating Downgrade
has occurred (as defined in § 5(7) of the Terms and Conditions), (i) in the case of a Gross-up Event or a Change of Control at the Principal
Amount per Subordinated Note plus any Remuneration accrued to but excluding the Redemption Date (as defined in the Terms and Conditions)
and any Deferred Remuneration Payments (as set out in § 5(3) and § 5(7) of the Terms and Conditions), (ii) in the case of a Rating Agency
Event or a Tax Event (a) at 101 per cent. of the Principal Amount per Subordinated Note plus any Remuneration accrued to but excluding the
Redemption Date and any Deferred Remuneration Payments if such redemption occurs prior to the relevant First Cal Date, or (b) at the
Principal Amount per Subordinated Note plus any Remuneration accrued to but excluding the Redemption Date and any Deferred Remuneration
Payments if such redemption occurs on or after the relevant First Cal Date (as set out in § 5(3) of the Terms and Conditions). Each Tranche is
also subject to early redemption in the case of a Clean-up Cal (as set out in § 5(6) of the Terms and Conditions).
In the case of (i) the winding-up, dissolution or liquidation of the Issuer, the obligations of the Issuer under the Subordinated Notes, and (ii) the
insolvency of the Issuer or composition or other proceedings for the avoidance of insolvency of the Issuer, the rights of the Holders towards the
Issuer, shall be subordinated to the claims of all unsubordinated and subordinated creditors of the Issuer (as more ful y described in § 3 of the
Terms and Conditions).
Application has been made to the Commission de Surveillance du Secteur Financier (the "Commission"), which is the Luxembourg competent
authority for the purpose of Directive 2003/71/EC, as amended, (the "Prospectus Directive"), for its approval of this prospectus dated 22 April
2015 (the "Prospectus"). This Prospectus constitutes a prospectus within the meaning of Article 5.3 of the Prospectus Directive and will be
published together with all documents incorporated by reference in electronic form on the website of the Luxembourg Stock Exchange
(www.bourse.lu) and on the website of Bertelsmann Group (www.bertelsmann.com). Application has been made to list the Subordinated Notes
on the official list of the Luxembourg Stock Exchange and to admit them to trading on the regulated market "Bourse de Luxembourg", which is a
regulated market for the purposes of the Market in Financial Instruments Directive 2004/39/EC (the "Regulated Market"). By approving this
prospectus, the Commission does not give any undertaking as to the economical and financial soundness of the operation or the quality or
solvency of the Issuer in accordance with Article 7(7) of the Luxembourg Law of 10 July 2005 on prospectuses for securities.
The Non-Cal 8 Year Subordinated Notes have been assigned the fol owing securities codes: ISIN XS1222591023, Common Code 122259102,
WKN A14KAR. The Non-Cal 12 Year Subordinated Notes have been assigned the fol owing securities codes: ISIN XS1222594472, Common
Code 122259447, WKN A14KAQ.

The Subordinated Notes are assigned a rating of BBB- by Standard & Poor's Ratings Services and Baa3 of Moody's Investors Services Limited.
Structuring Advisors to the Issuer/Joint Bookrunners
Barclays
J.P.
Morgan

Joint Bookrunners

BNP PARIBAS
Goldman Sachs International
The Royal Bank of Scotland
Commerzbank HSBC
Société
Générale
2

RESPONSIBILITY STATEMENT
Bertelsmann SE & Co. KGaA ("Bertelsmann" or the "Issuer" together with its consolidated group
companies, the "Bertelsmann Group") with its registered office in Gütersloh, Germany accepts
responsibility for the information given in this Prospectus including the documents incorporated by
reference herein.
The Issuer hereby declares that, having taken all reasonable care to ensure that such is the case, the
information contained in this Prospectus for which it is responsible is, to the best of its knowledge and
belief, in accordance with the facts and contains no omission likely to affect its import.
NOTICE
This Prospectus should be read and understood in conjunction with any supplement hereto and with any
other documents incorporated herein by reference.
No person is authorised to give any information or to make any representations other than those contained
in this Prospectus and, if given or made, such information or representations must not be relied upon as
having been authorised by or on behalf of the Issuer or the Joint Bookrunners set forth on the cover page
(each a "Manager" and together, the "Managers"). None of the Managers have independently verified the
Prospectus and none of them assumes any responsibility for the accuracy of the information and
statements contained in this Prospectus and no representations express or implied are made by the
Managers or their affiliates as to the accuracy and completeness of the information and statements herein.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the financial situation of the Issuer or Bertelsmann
Group since the date of this Prospectus, or, as the case may be, the date on which this Prospectus has
been most recently supplemented, or that the information herein is correct at any time since the date of
this Prospectus or, as the case may be, the date on which this Prospectus has been most recently
supplemented.
Neither the Managers nor any other person mentioned in this Prospectus, except for the Issuer, is
responsible for the information contained in this Prospectus or any other document incorporated herein by
reference, and accordingly, and to the extent permitted by the laws of any relevant jurisdiction, none of
these persons makes any representation or warranty or accepts any responsibility as to the accuracy and
completeness of the information contained in any of these documents. The Managers have not
independently verified any such information and accept no responsibility for the accuracy thereof.
To the extent permitted by law, the Managers in their role as Structuring Advisors do not accept any
responsibility for the contents of the Prospectus or for any other statements made or purported to be made
by the Managers or on their behalf in connection with the Issuer or the Subordinated Notes. The Managers
accordingly disclaim all and any liability whether arising in tort or contract or otherwise which they might
otherwise have in respect of this Prospectus or any such statement.
The distribution of this Prospectus and the offering, sale and delivery of Subordinated Notes in certain
jurisdictions may be restricted by law. Persons into whose possession this Prospectus comes are required
to inform themselves about and observe any such restrictions. For a description of the restrictions
applicable in the European Economic Area in general, the United States of America and the United
Kingdom see "Selling Restrictions". In particular, the Subordinated Notes have not been and will not be
registered under the United States Securities Act of 1933, as amended, and are subject to tax law
requirements of the United States of America; subject to certain exceptions, Subordinated Notes may not
be offered, sold or delivered within the United States of America or to U.S. persons.
The language of the Prospectus is English. For the purpose of issuing the Subordinated Notes under
German law the German language version of the Terms and Conditions shall be controlling and legally
binding.
The securities described herein are complex financial instruments and are not a suitable or appropriate
investment for all investors and should not be promoted, offered, distributed and/or sold to investors for
whom they are not appropriate. Any person who might promote, offer, distribute or sell the securities
described herein is hereby notified by the Issuer and each of the Managers that it shall comply at all times
with all applicable laws, regulations and regulatory guidance (whether inside or outside the European
Economic Area) relating to the promotion, offering, distribution and/or sale of the securities described
herein (including without limitation the Directive 2004/39/EC (as amended) as implemented in each
Member State of the European Economic Area) and any other applicable laws, regulations and regulatory
3

guidance relating to determining the appropriateness and/or suitability of an investment in the securities
described herein by investors in any relevant jurisdiction.
This Prospectus may only be used for the purpose for which it has been published.
This Prospectus may not be used for the purpose of an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is
unlawful to make such an offer or solicitation.
This Prospectus does not constitute an offer or an invitation to subscribe for or purchase any
Subordinated Notes and should not be considered as a recommendation by the Issuer, the
Managers or any of them that any recipient of the Prospectus should subscribe or purchase any
Subordinated Notes. Each recipient of the Prospectus shall be taken to have made its own
investigation and appraisal of the condition (financial and otherwise) of the Issuer.
In connection with the issue of the Subordinated Notes, Barclays as the stabilising manager (the
"Stabilising Manager") (or persons acting on behalf of the Stabilising Manager) may over-allot
Subordinated Notes or effect transactions with a view to supporting the price of the Subordinated
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 at any time after the adequate public
disclosure of the terms of the offer of the Subordinated Notes 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 Subordinated
Notes and 60 days after the date of the allotment of the Subordinated Notes. Any stabilisation
action or over-allotment must be conducted by the Stabilising Manager (or person(s) acting on
behalf of the Stabilising Manager) in accordance with all applicable laws and rules.
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements. A forward-looking statement is a statement
that does not relate to historical facts and events. They are based on analyses or forecasts of future
results and estimates of amounts not yet determinable or foreseeable. These forward-looking statements
are identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect",
"intend", "may", "plan", "predict", "project", "wil " and similar terms and phrases, including references and
assumptions. This applies, in particular, to statements in this Prospectus containing information on future
earning capacity, plans and expectations regarding Bertelsmann Group's business and management, its
growth and profitability, and general economic and regulatory conditions and other factors that affect it.
Forward-looking statements in this Prospectus are based on current estimates and assumptions that the
Issuer makes to the best of its present knowledge. These forward-looking statements are subject to risks,
uncertainties and other factors which could cause actual results, including Bertelsmann Group's financial
condition and results of operations, to differ materially from and be worse than results that have expressly
or implicitly been assumed or described in these forward-looking statements. Bertelsmann Group's
business is also subject to a number of risks and uncertainties that could cause a forward-looking
statement, estimate or prediction in this Prospectus to become inaccurate. Accordingly, investors are
strongly advised to read the following sections of this Prospectus: "Risk Factors" and "General Information
about Bertelsmann SE & Co. KGaA and Bertelsmann Group". These sections include more detailed
descriptions of factors that might have an impact on Bertelsmann Group's business and the markets in
which it operates.
In light of these risks, uncertainties and assumptions, future events described in this Prospectus may not
occur. In addition, neither the Issuer nor the Managers assume any obligation, except as required by law,
to update any forward-looking statement or to conform these forward-looking statements to actual events
or developments.

4

TABLE OF CONTENTS
Page

Risk Factors .............................................................................................................................................. 6
Risk Factors regarding the Subordinated Notes ...................................................................................... 6
Risk Factors regarding Bertelsmann SE & Co. KGaA and Bertelsmann Group ....................................13
Terms and Conditions ............................................................................................................................19
Terms and Conditions of the Non-Call 8 Year Subordinated Notes ......................................................19
Terms and Conditions of the Non-Call 12 Year Subordinated Notes ....................................................52
General Information about Bertelsmann SE & Co. KGaA and Bertelsmann Group ..............................84
1. Introduction .....................................................................................................................................84
2. Selected Financial Information .......................................................................................................84
3. Capitalisation of Bertelsmann Group ..............................................................................................85
4. History and Development of Bertelsmann SE & Co. KGaA ...........................................................85
5. Investments .....................................................................................................................................85
6. Business Overview and Principal Markets .....................................................................................86
7. Organisational Structure .................................................................................................................87
8. Trend Information ...........................................................................................................................87
9. Administrative, Supervisory Boards and Management ..................................................................87
10. Declaration on the German Corporate Governance Code for 2014 ...............................................91
11. Historical Financial Information .......................................................................................................91
12. Auditing of Historical Annual Financial Information ........................................................................91
13. Statutory Auditors ...........................................................................................................................92
14. Legal and Arbitration Proceedings .................................................................................................92
15. Share Capital ..................................................................................................................................92
16. Material Contracts ...........................................................................................................................92
17 Recent Events.................................................................................................................................92
18. Significant Change in Bertelsmann's financial or trading position ..................................................92
19. Rating ..............................................................................................................................................93
Taxation ..................................................................................................................................................94
Subscription and Sale of the Subordinated Notes .................................................................................99
Selling Restrictions .................................................................................................................................99
General Information ..............................................................................................................................102
Use of Proceeds ...................................................................................................................................102
Credit Rating .........................................................................................................................................102
Documents Incorporated by Reference ................................................................................................104
Comparative Table of Documents incorporated by Reference ............................................................104
Availability of Incorporated Documents ................................................................................................104
Names and Addresses .........................................................................................................................105

5

RISK FACTORS
The following is a disclosure of risk factors that may affect the ability of Bertelsmann to fulfil its
respective obligations under the Subordinated Notes and that are material to the Subordinated
Notes in order to assess the market risk associated with these Subordinated Notes. Prospective
investors should consider these risk factors before deciding to purchase the Subordinated Notes.
Prospective investors should consider all information provided in this Prospectus and consult
with their own professional advisers (including their financial, accounting, legal and tax advisers)
if they consider it necessary. In addition, investors should be aware that the risks described may
combine and thus intensify one another.
Words and expressions defined in "Terms and Conditions" of the Subordinated Notes below shall
have the same meanings in this section.
RISK FACTORS REGARDING THE SUBORDINATED NOTES
Subordinated Notes may not be a suitable Investment for all Investors
Each potential investor in the Subordinated Notes must determine the suitability of that investment with
particular reference to its own investment objectives and experience, and any other factors which may be
relevant to it, in connection with such investment, either alone or with the help of a financial adviser. In
particular, each potential investor should:

(i) have sufficient knowledge and experience in financial and business matters to make a meaningful
evaluation of the Subordinated Notes, the merits and risks of investing in the Subordinated Notes
and the information contained or incorporated by reference in this Prospectus or any applicable
supplement;

(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its
particular financial situation and the investment(s) it is considering, an investment in the
Subordinated Notes and the impact the Subordinated Notes will have on its overall investment
portfolio;

(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the
Subordinated Notes, including where the currency for principal or interest payments is different from
the potential investor's currency;

(iv) understand thoroughly the terms of the Subordinated Notes and be familiar with the behaviour of
any relevant indices and financial markets;

(v) know, that it may not be possible to dispose of the Subordinated Notes for a substantial period of
time, if at all;

(vi) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for
economic, interest rate and other factors that may affect its investment and its ability to bear the
applicable risks; and

prospective purchasers should also consult their own tax advisors as to the tax consequences of the
purchase, ownership and disposition of Subordinated Notes.
Payments of Remuneration under the Subordinated Notes may be deferred at the election of the
Issuer.
The Issuer has the option to defer any payment of Remuneration on the Subordinated Notes by giving not
less than ten Business Days prior notice to the Holders as set out in § 4(5) of the Terms and Conditions. If
the Issuer, who may do so at its own discretion, decides to defer a payment of Remuneration on the
Subordinated Notes, payment of Remuneration so deferred must be made no later than when the specific
events set out in § 4(6)(b) of the Terms and Conditions occur. Holders will not receive any additional
interest or compensation for the deferral of payment, in particular, any Remuneration deferred in such
6

manner will not itself accrue interest. While the deferral of Remuneration payments continues, the Issuer is
not prohibited from making payments on any instrument ranking senior to the Subordinated Notes. In such
event the Holders of Subordinated Notes are not entitled to claim immediate payment of Remuneration so
deferred. Failure to pay remuneration as a result of a deferral will not constitute a default of the Issuer or a
breach of any other obligations under the Subordinated Notes or for any other purpose.
Any deferral of remuneration payments will likely have an adverse effect on the market price of the
Subordinated Notes. In addition, as a result of the remuneration deferral provision of the Subordinated
Notes, the market price of the Subordinated Notes may be more volatile than the market prices of other
debt securities on which interest accrues that are not subject to such deferrals and may be more sensitive
generally to adverse changes in the Issuer's financial condition.
The Holders have no voting rights.
The Subordinated Notes are non-voting with respect to general meetings of the Issuer. Consequently, the
Holders cannot influence any decisions by the Issuer to defer interest payments or to optionally settle such
Deferred Remuneration Payments or any other decisions concerning the capital structure or any other
matters relating to the Issuer.
The Subordinated Notes are long-term securities. Holders have no right to call the Subordinated
Notes for their redemption.
The Subordinated Notes will be redeemed on 23 April 2075, unless they have been previously redeemed
or repurchased and cancelled. The Issuer is under no obligation to redeem the Subordinated Notes at any
time prior to such date. Holders have no right to call the Subordinated Notes for their redemption. Certain
market expectations may exist among investors in the Subordinated Notes with regard to the Issuer
making use of a right to call the Subordinated Notes for redemption prior to their scheduled maturity.
Should the Issuer's actions diverge from such expectations, the market value of the Subordinated Notes
and the development of an active public market could be adversely affected.
Prospective investors should be aware that they may be required to bear the financial risks of an
investment in the Subordinated Notes for a long period and may not recover their investment before the
end of this period.
Holders are subject to the risk of a partial or total failure of the Issuer to make interest and/or
redemption payments.
Any person who purchases the Subordinated Notes is relying on the creditworthiness of the Issuer and
has no rights against any other person. Holders are subject to the risk of a partial or total failure of the
Issuer to make interest and/or redemption payments that the Issuer is obliged to make under the
Subordinated Notes. The worse the creditworthiness of the Issuer, the higher the risk of loss. A
materialisation of the credit risk may result in partial or total failure of the Issuer to make interest and/or
redemption payments under the Subordinated Notes.
In addition, even if the likelihood that the Issuer will be in a position to ful y perform all obligations under
the Subordinated Notes, when they fall due, actually has not decreased, market participants could
nevertheless be of that opinion. Market participants may in particular be of such opinion, if market
participants' assessment of the creditworthiness of corporate debtors in general or debtors operating in the
industries sector adversely change. If any of these risks occur, third parties would only be willing to
purchase the Subordinated Notes for a lower price than before the materialisation of said risk. The market
value of the Subordinated Notes may therefore decrease.
The Subordinated Notes are subject to certain redemption risks.
Holders should be aware that each Tranche of Subordinated Notes may be redeemed at the option of the
Issuer (in whole but not in part) at its Aggregate Principal Amount plus any Remuneration accrued to but
excluding the Redemption Date and any Deferred Remuneration Payments (i) on the relevant First Call
Date and on any Remuneration Payment Date thereafter and (ii) at any time upon the occurrence of a
Gross-up Event (as defined in § 5(3) of the Terms and Conditions) or a Change of Control (as defined in
§ 5(7) of the Terms and Conditions). In any such case, investors will not receive a make-whole amount or
any other compensation in light of the early redemption of the Subordinated Notes.
Each Tranche of Subordinated Notes is also subject to early redemption (in whole, but not in part) at the
7

Issuer's option upon the occurrence of a Rating Agency Event or a Tax Event (each as defined in § 5(4) of
the Terms and Conditions) (i) at 101 per cent. of its Aggregate Principal Amount plus any Remuneration
accrued to but excluding the Redemption Date and any Deferred Remuneration Payments (as set out in
§ 5(3) of the Terms and Conditions) if such redemption occurs prior to the relevant First Call Date, or (ii) at
its Aggregate Principal Amount plus any Remuneration accrued to but excluding the Redemption Date and
any Deferred Remuneration Payments if such redemption occurs on or after the relevant First Call Date.
Investors will, other than the 101 per cent of the Aggregate Principal Amount, not receive any
compensation in light of the early redemption of the Subordinated Notes.
Further, in the event the Issuer and/or any Subsidiary (as defined in § 3(1) of the Terms and Conditions)
has, severally or jointly, purchased Subordinated Notes of a Tranche equal to at least 80 per cent. of the
Aggregate Principal Amount of the Subordinated Notes of a Tranche initially issued, the remaining
Subordinated Notes of a Tranche may be called and redeemed (in whole but not in part) at their
outstanding Aggregate Principal Amount plus any Remuneration accrued to but excluding the Redemption
Date and any Deferred Remuneration Payments. In any such case, investors will not receive a make-
whole amount or any other compensation in light of the early redemption of the Subordinated Notes.
In the event of an early redemption of the Subordinated Notes, a Holder is exposed to the risk that his
investment will have a lower than expected yield and to the risks connected with any reinvestment of the
cash proceeds received as a result of the early redemption. In such circumstances, the Holders are
exposed to the reinvestment risk if market interest rates decline. That is, Holders may reinvest the
redemption proceeds paid to them only at the relevant lower interest rates then prevailing.
Changes in the tax treatment of "hybrid" instruments are possible.
In 2014, the OECD has published, in the context of its base erosion and profit shifting (BEPS) project, a
report on how to neutralise the effects of hybrid mismatch arrangements, which encompass any
arrangement that results in a mismatch in relation to the tax treatment of an entity or instrument under the
laws of two or more tax jurisdictions (e.g. a mismatch where payments under any instrument are tax
deductible in the country of the issuer but not taxed in the country of the recipient). In such a situation, the
OECD recommends, as a primary rule, that the payer jurisdiction denies the deduction. As a consequence
of this report, several countries are working on national legislation to implement such recommendation. In
Germany, for example, a task force comprising officials of the German Federal as well as the States'
Ministries of Finance was established to develop draft legislation in this respect. Depending on the
outcome of possible legislative changes, the interest payments under the Subordinated Notes may no
longer be tax deductible in Germany. This would give rise to a Tax Event pursuant to § 5(3) of the Terms
and Conditions and would entitle the Issuer to early call and redeem the Subordinated Notes.
Claims under the Subordinated Notes are subordinated and only senior to the share capital of the
Issuer. In any insolvency proceedings of the Issuer, the Holders may recover proportionally less
than holders of unsubordinated and other subordinated liabilities of the Issuer, or nothing at all,
and the remedies for Holders in the insolvency proceedings of the Issuer may be limited.
The Issuer's obligations under the Subordinated Notes are unsecured deeply subordinated obligations of
the Issuer ranking junior to all unsubordinated obligations and to all subordinated obligations within the
meaning of section 39 paragraph 1 of the German Insolvency Code (Insolvenzordnung) and at least pari
passu amongst themselves and with all present unsecured obligations of the Issuer (including the
Genussscheine) which rank junior to all unsubordinated obligations and to all subordinated obligations
under section 39 paragraph 1 of the German Insolvency Code, except for any subordinated obligations
required to be preferred by mandatory provisions of law or as expressly provided for by the terms of the
relevant instrument. The obligations of the Issuer under the Subordinated Notes are senior only to the
claims of the Issuer's general partners (persönlich haftende Gesellschafter) and limited partnership
shareholders (Kommanditaktionäre) arising out of their respective participation in the equity of the Issuer.
In the event of winding-up, dissolution, liquidation of the Issuer the obligations of the Issuer under the
Subordinated Notes, and in case of the insolvency of the Issuer or composition or other proceedings for
the avoidance of insolvency of the Issuer, the rights of the Holders towards the Issuer under the
Subordinated Notes are subordinated to the claims of all holders of unsubordinated obligations and
subordinated obligations within the meaning of section 39 paragraph 1 of the German Insolvency Code, so
that in any such case payments in respect of the Subordinated Notes will not be made until all claims
against the Issuer under obligations which rank senior to obligations of the Issuer under the Notes have
been satisfied in ful (i.e. not only with a quota).
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Investors should take into consideration that unsubordinated liabilities may also arise out of events that are
not reflected on the Issuer's balance sheet, including, without limitation, the issuance of guarantees or
other payment undertakings. Claims of beneficiaries under such guarantees or other payment
undertakings will, in winding-up or insolvency proceedings of the Issuer, become unsubordinated liabilities
and will therefore be paid in full before payments are made to Holders.
The Holders have limited rights in German insolvency proceedings.
In an insolvency over the assets of the Issuer, claims against the Issuer under the Subordinated Notes
would be treated as deeply subordinated insolvency claims (nachrangige Insolvenzforderungen).
According to section 174 paragraph 3 of the German Insolvency Code, deeply subordinated insolvency
claims must not be registered with the insolvency court unless the insolvency court handling the case has
granted special permission allowing these deeply subordinated insolvency claims to be filed which is not
the rule, but the exception. The Holders would not participate in any creditors' committee
(Gläubigerausschuss) pursuant to German Insolvency Code and would have very limited rights within the
creditors' assembly (Gläubigerversammlung) pursuant to German Insolvency Code. They may be invited
to participate in the creditors' assembly, but would not be entitled to vote within such meetings (section 77
paragraph 1 of the German Insolvency Code).
In case of insolvency plan proceedings (Insolvenzplanverfahren) the Holders generally would have no
voting right on the adoption of an insolvency plan presented by the Issuer, the relevant insolvency
administrator or custodian (sections 237 and 246 of the German Insolvency Code). In addition, their claims
would be waived after the adoption of the insolvency plan unless the insolvency plan makes an exception
to this general rule (section 225 paragraph 1 German Insolvency Code).
The Holders' only remedy against the Issuer is the institution of legal proceedings to enforce
payment or to file an application for insolvency proceedings.
The only remedy against the Issuer available to the Holders for recovery of amounts which have become
due in respect of the Subordinated Notes will be the institution of legal proceedings to enforce payment of
the amounts or to file an application for the institution of insolvency proceedings. On an insolvency or
liquidation of the Issuer, any Holder may only declare its Subordinated Notes due and payable and may
claim the amounts due and payable under the Subordinated Notes, after the Issuer has discharged or
secured in ful (i.e. not only with a quota) all claims that rank senior to the Subordinated Notes.
The Subordinated Notes do not include express events of default or a cross default.
The Holders of the Subordinated Notes should be aware that the Terms and Conditions of the
Subordinated Notes do not contain any express event of default provisions. There will also not be any
cross default under the Subordinated Notes.
There is no limitation on the Issuer to incur additional indebtedness ranking senior or pari passu
with the Subordinated Notes. The Subordinated Notes do not contain any financial covenants.
The Issuer has not entered into any restrictive covenants in connection with the issuance of the
Subordinated Notes regarding its ability to incur additional indebtedness ranking pari passu or senior to
the obligations under or in connection with the Subordinated Notes. The incurrence of any such additional
indebtedness may significantly increase the likelihood of a deferral of payments of Remuneration under
the Subordinated Notes and/or may reduce the amount recoverable by Holders in the event of insolvency
or liquidation of the Issuer. In addition, under the Subordinated Notes, the Issuer will not be restricted from
paying dividends or issuing or repurchasing their other securities. Holders of Subordinated Notes will not
be protected under the terms of the Subordinated Notes in the event of a highly leveraged transaction, a
reorganisation or a restructuring, merger or similar transaction that may adversely affect Holders.
An active trading market for the Subordinated Notes may not develop.
The Subordinated Notes constitute a new issue of securities. Prior to this offering, there has been no
public market for the Subordinated Notes. Although application has been made for the Subordinated Notes
to be listed on the official list of and to be admitted to trading on the Regulated Market of the Luxembourg
Stock Exchange, there can be no assurance that an active public market for the Subordinated Notes will
develop nor an assurance about the ability of Holders to sell their Subordinated Notes or the price at which
Holders may be able to sell their Subordinated Notes. Even if such a market were to develop, the
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Subordinated Notes could trade at prices that may be lower than the initial offering price depending on
many factors, including prevailing interest rates, Bertelsmann Group's operating results, the market for
similar securities and other factors, including general economic conditions, performance and prospects, as
well as recommendations of securities analysts. The liquidity of, and the trading market for, the
Subordinated Notes may also be adversely affected by declines in the market for debt securities generally.
Such a decline may affect any liquidity and trading of the Subordinated Notes independent of Bertelsmann
Group's financial performance and prospects. If a market were to develop, the Managers are under no
obligation to maintain such a market. In an illiquid market, an investor might not be able to sell his
Subordinated Notes at all or at any time at fair market prices. The possibility to sell the Subordinated
Notes might additionally be restricted due to country-specific reasons. Further, there can be no assurance
that a market for the Subordinated Notes will not be subject to disruptions. Any such disruptions may have
an adverse effect on the Holders.
The Holders are exposed to risks relating to the reset of remuneration rates based to the 5 year
Swap Rate. Remuneration rate reset may result in a decline of yield.
From and including the relevant First Call Date to but excluding the date on which the Issuer redeems a
Tranche of Subordinated Notes in whole and not in part pursuant to § 5 of the Terms and Conditions, the
Subordinated Notes entitle the Holders to Remuneration at a rate which will be determined on each Reset
Date (as defined in § 4(2) of the Terms and Conditions) at the 5 year Swap Rate (as defined in § 4(2) of
the Terms and Conditions) for the relevant Reset Remuneration Period (as defined in § 4(2) of the Terms
and Conditions) plus the relevant margin. The Holders of securities with a fixed remuneration rate that will
be reset during the term of the securities, as will be the case for the Subordinated Notes, if not previously
redeemed are exposed to the risk of fluctuating remuneration rate levels and uncertain Remuneration
income. Potential investors should be aware that the performance of the 5 year Swap Rate cannot be
anticipated. Due to varying Remuneration income, potential investors are not able to determine a definite
yield to maturity of the Subordinated Notes at the time they purchase them, therefore their return on
investment cannot be compared with that of investments having longer fixed interest periods.
Potential investors in the Subordinated Notes should bear in mind that neither the current nor the historical
level of the 5 year Swap Rate is an indication of the future development of such 5 year Swap Rate.
Furthermore, during each Reset Remuneration Period, it cannot be ruled out that the price of the
Subordinated Notes may fall as a result of changes in the market interest rate, as the market interest rate
fluctuates. During each of these periods, the Holders are exposed to the risks as described under "--
Resettable Fixed rate securities have a market risk".
Resettable fixed rate securities have a market risk.
A holder of fixed rate securities is particularly exposed to the risk that the price of such securities fal s as a
result of changes in the market interest rate. While the nominal remuneration rate of the Subordinated
Notes is fixed until the relevant First Call Date and thereafter will be reset every five years to the
Reference Rate plus the relevant margin as set out in § 4(2) of the Terms and Conditions), the current
interest rate on the capital market (the "market interest rate") typically changes on a daily basis. As the
market interest rate changes, the price of the Subordinated Notes also changes, but in the opposite
direction. If the market interest rate increases, the price of the Subordinated Notes with a fixed interest rate
would typical y fall. If the market interest rate falls, the price of the fixed rate Subordinated Notes would
typically increase. Holders should be aware that movements in these market interest rates can adversely
affect the market price of the Subordinated Notes and can lead to losses for the Holders if they sell the
Subordinated Notes.
In addition, the credit spread of the Issuer, on which the initial fixed interest rate and the margins
applicable with regard to the determination of the fixed interest rate for each Reset Remuneration
Period, may change. A credit spread is the margin payable by the Issuer to the Holders as a premium
for the assumed credit risk of the Issuer. Credit spreads are offered and sold as premiums on current
risk-free interest rates or as discounts on the price.
Factors influencing the credit spread include, among other things, the creditworthiness and rating of the
Issuer, probability of default, recovery rate, remaining term to maturity of obligations under any
collateralisation or guarantee and declarations as to any preferred payment or subordination. The
liquidity situation, the general level of interest rates, overall economic developments, and the currency,
in which the relevant obligation is denominated may also have a positive or negative effect.
10