Obligation Grencke 8.25% ( XS1262884171 ) en EUR

Grencke

100 % ⇌

Allemagne

XS1262884171 ( en EUR )

8.25% par an ( paiement annuel )

Perpétuelle

Prospectus brochure de l'obligation Grenke XS1262884171 en EUR 8.25%, échéance Perpétuelle

31/03/2026 ( Dans 146 jours )

Grenke est une société allemande spécialisée dans le financement de matériel informatique et de technologies de l'information, proposant des solutions de location et de leasing.

L'Obligation émise par Grencke ( Allemagne ) , en EUR, avec le code ISIN XS1262884171, paye un coupon de 8.25% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le Perpétuelle

Prospectus dated 15 December 2016

GRENKE AG
(Baden-Baden, Federal Republic of Germany)
Perpetual Non-cumulative Fixed to Reset Rate Additional Tier 1 Notes

GRENKE AG (until 10 May 2016: GRENKELEASING AG) ("GRENKE AG" or the "Issuer") wil issue unsecured Perpetual Non-cumulative Fixed
to Reset Rate Additional Tier 1 Notes (the "Additional Tier 1 Notes") with an aggregate principal amount of EUR 20,000,000 (the "Aggregate
Principal Amount") on 20 December 2016 (the "Issue Date") at an issue price of 103 per cent. of the Aggregate Principal Amount (plus
accrued interest) to be consolidated and form a single series with the outstanding EUR 30,000,000 Perpetual Non-cumulative Fixed to Reset
Rate Additional Tier 1 Notes issued on 22 July 2015 upon exchange of the temporary global note of the Additional Tier 1 Notes into the
permanent global note. The Additional Tier 1 Notes will be issued in bearer form in denominations of EUR 200,000 (the "Principal Amount").
The Additional Tier 1 Notes will bear interest from and including the Issue Date to but excluding 31 March 2021 (the "First Reset Date") at a
fixed rate of 8.25 per cent. per annum (the "Initial Interest"), payable annually in arrears on 31 March of each year, commencing on 31 March
2017 and ending on the First Reset Date (each an "Initial Interest Payment Date"). Unless previously redeemed, the interest of the Additional
Tier 1 Notes will be reset on the First Reset Date and at 5 year intervals thereafter (each a "Reset Date"). On each Reset Date, the interest will
be determined on the basis of the then prevailing 5 year EUR swap rate plus the initial credit spread (each a "Reset Interest" and together with
the Initial Interest the "Interest") in accordance with § 3 (2) (b) of the Terms and Conditions of the Additional Tier 1 Notes (the "Terms and
Conditions"). Each Reset Interest is payable from and including the Reset Date to but excluding the fol owing Reset Date. It is payable annually
in arrears on 31 March of each year, commencing on 31 March 2021 (each a "Reset Interest Payment Date" and together with the Initial
Interest Payment Date the "Interest Payment Date").
The Issuer, at its sole discretion, is entitled to cancel payments of Interest on any Interest Payment Date. In addition, Interest wil not accrue, in
whole or in part, on any Interest Payment Date to the extent set forth in § 3 (6) (a) and (b) of the Terms and Conditions. Interest payments are
non-cumulative. This means that Interest payments will not be increased in order to compensate shortfalls in preceding Interest payments.
Furthermore, since the holders of the Additional Tier 1 Notes (the "Holder") have no enforceable right to Interest payments, a shortfall in Interest
payments does not qualify as an event of default.
The Additional Tier 1 Notes bear Interest on the nominal amount of the Additional Tier 1 Notes as amended from time to time. The nominal
amount may be lower than the Aggregate Principal Amount as a result of a write-down. A write-down occurs if the Common Equity Tier 1 capital
ratio of the Issuer and its consolidated subsidiaries and structured entities pursuant to International Financial Reporting Standards (the
"GRENKE Group") fal s below 5.125 per cent. (the "Trigger Event"). In this case, the redemption amount and the nominal amount of the
Additional Tier 1 Notes will automatically be reduced by the amount which is required to fully restore GRENKE Group's Common Equity Tier 1
capital ratio. It does not exceed the nominal amounts which are outstanding at the time of the occurrence of the Trigger Event. The write-down
procedure is more fully described in § 5 (8) (a) of the Terms and Conditions. Once the Additional Tier 1 Notes have been written down, the
Issuer may, in its discretion, write-up the redemption amount and the nominal amount of the Additional Tier 1 Notes to the Aggregate Principal
Amount pursuant to § 5 (8) (b) of the Terms and Conditions.
The Additional Tier 1 Notes have no final maturity date. The Holders are not entitled to demand redemption of the securities. However, the
Issuer may redeem the Additional Tier 1 Notes with effect as of the First Reset Date and any Reset Interest Payment Date thereafter in
accordance with § 5 (4) of the Terms and Conditions. Generally, any preceding write-down of the nominal amount of the Additional Tier 1 Notes
must have been compensated by a subsequent write-up prior to redemption unless the Holders accept that the Issuer redeem the Additional
Tier 1 Notes at a reduced nominal amount. The Issuer may furthermore redeem the Additional Tier 1 Notes for regulatory or tax reasons with a
notice period of not less than 30 days in accordance with § 5 (2) and (3) of the Terms and Conditions. In any case, redemption requires consent
by the competent supervisory authority.
The Additional Tier 1 Notes are subordinated securities. In the case of (i) the winding-up, dissolution or liquidation of the Issuer 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 claims of all unsubordinated creditors, to claims under instruments which qualify as Tier 2 instruments pursuant
to Article 62 of Regulation (EU) no. 575/2013 ("CRR") and any claims which rank pari passu with these Tier 2 instruments, as wel as claims
specified in § 39 (1) of the German Insolvency Code. The Additional Tier 1 Notes rank pari passu among themselves and among any other
claims which are subordinated to all of the claims mentioned in the foregoing sentence.
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 20 July
2015 (the "Prospectus"). This Prospectus constitutes a prospectus within the meaning of Article 5.3 of the Prospectus Directive and wil 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 GRENKE Group (www.grenke.de). Application has been made to list the Additional Tier 1 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 economic 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 Additional Tier 1 Notes have been assigned the fol owing securities codes: temporary ISIN XS1535994328, temporary Common Code
153599432, temporary WKN A2DAGY, ISIN XS1262884171, Common Code 126288417, WKN A161ZB. The Additional Tier 1 Notes are
expected to have the same rating as the outstanding EUR 30,000,000 Perpetual Non-cumulative Fixed to Reset Rate Additional Tier 1 Notes
issued on 22 July 2015 with which they will be consolidated and form a single series. The outstanding EUR 30,000,000 Perpetual Non-
cumulative Fixed to Reset Rate Additional Tier 1 Notes have been rated with a rating of BB- by Standard & Poor's Credit Market Services
Europe Limited.
The Additional Tier 1 Notes are not intended to be sold and should not be sold to retail clients in the European Economic Area
("EEA"), as defined in the rules set out in the Product Intervention (Contingent Convertible Instruments and Mutual Society Shares)
Instrument 2015 (as amended or replaced from time to time) other than in circumstances that do not and will not give rise to a
contravention of those rules by any person. Prospective investors are referred to the section headed "Restrictions on marketing and
sales to retail investors" on page 2 of this Prospectus for further information.
Structuring Adviser to the Issuer / Bookrunner
HSBC

Prospectus dated 15 December 2016

IMPORTANT NOTICE

Restrictions on marketing and sales to retail investors
The Additional Tier 1 Notes discussed in this Prospectus are complex financial instruments and are not a
suitable or appropriate investment for all investors. In some jurisdictions, regulatory authorities have
adopted or published laws, regulations or guidance with respect to the offer or sale of securities such as
the Additional Tier 1 Notes to retail investors.
In particular, in June 2015, the U.K. Financial Conduct Authority (the "FCA") published the Product
Intervention (Contingent Convertible Instruments and Mutual Society Shares) Instrument 2015 (the "PI
Instrument") which took effect on 1 October 2015. Under the rules set out in the PI Instrument (as
amended or replaced from time to time, the "PI Rules"), certain contingent write-down or convertible
securities (including any beneficial interests therein), such as the Additional Tier 1 Notes, must not be sold
to retail clients in the EEA and there must not be any communication or approval of an invitation or
inducement to participate in, acquire or underwrite such securities (including any beneficial interests
therein) where that invitation or inducement is addressed to or disseminated in such a way that it is likely
to be received by a retail client in the EEA (in each case, within the meaning of the PI Rules), other than in
accordance with the limited exemptions set out in the PI Rules.
The Manager (as defined below) is required to comply with the PI Rules. By purchasing, or making or
accepting an offer to purchase, any Additional Tier 1 Notes from the Issuer and/or the Manager, each
prospective investor represents, warrants, agrees with and undertakes to the Issuer and the Manager that:
1.
it is not a retail client in the EEA (as defined in the PI Rules);
2.
whether or not it is subject to the PI Rules, it will not sell or offer the Additional Tier 1 Notes (or any
beneficial interest therein) to retail clients in the EEA or communicate (including the distribution of
this Prospectus) or approve an invitation or inducement to participate in, acquire or underwrite the
Additional Tier 1 Notes (or any beneficial interests therein) where that invitation or inducement is
addressed to or disseminated in such a way that it is likely to be received by a retail client in the
EEA (in each case within the meaning of the PI Rules). In any such case other than (i) in relation
to any sale or offer to sell the Additional Tier 1 Notes (or any beneficial interests therein) to a retail
client in or resident in the United Kingdom of Great Britain and Northern Ireland (the "United
Kingdom"), in circumstances that do not and will not give rise to a contravention of the PI Rules
by any person and/or (ii) in relation to any sale or offer to sell the Additional Tier 1 Notes (or any
beneficial interests therein) to a retail client in any EEA member state other than the United
Kingdom, where (a) it has conducted an assessment and concluded that the relevant retail client
understands the risks of an investment in the Additional Tier 1 Notes (or such beneficial interests
therein) and is able to bear the potential losses involved in an investment in the Additional Tier 1
Notes (or such beneficial interests therein) and (b) it has at all times acted in relation to such sale
or offer in compliance with the Markets in Financial Instruments Directive (2004/39/EC) ("MiFID")
to the extent it applies to it or, to the extent MIFID does not apply to it, in a manner which would be
in compliance with MiFID if it were to apply to it; and
3.
it will at all times comply with all applicable laws, regulations and regulatory guidance (whether
inside or outside the EEA) relating to the promotion, offering, distribution and/or sale of the
Additional Tier 1 Notes (or any beneficial interests therein), including (without limitation) any such
laws, regulations and regulatory guidance relating to determining the appropriateness and/or
suitability of an investment in the Additional Tier 1 Notes (or any beneficial interests therein) by
investors in any relevant jurisdiction.
Where acting as agent on behalf of a disclosed or undisclosed client when purchasing, or making or
accepting an offer to purchase, any Additional Tier 1 Notes from the Issuer and/or the Manager, the
2

Prospectus dated 15 December 2016

foregoing representations, warranties, agreements and undertakings will be given by and be binding upon
both the agent and its underlying client.
RESPONSIBILITY STATEMENT
GRENKE AG (until 10 May 2016: GRENKELEASING AG) ("GRENKE AG" or the "Issuer", and together
with its consolidated subsidiaries and structured entities pursuant to International Financial Reporting
Standards the "GRENKE Group") with its registered office in Baden-Baden, 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 Bookrunner set forth on the cover page
("Manager"). The Manager has not independently verified the Prospectus and does not assume any
responsibility for the accuracy of the information and statements contained in this Prospectus and no
express or implied representations are made by the Manager or its 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 GRENKE 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 Manager 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 Manager has not
independently verified any such information and accepts no responsibility for the accuracy thereof.
The distribution of this Prospectus and the offering, sale and delivery of Additional Tier 1 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 "Important Notice" and "Selling Restrictions". In particular, the Additional Tier 1 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, Additional
Tier 1 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 Additional Tier 1 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 the Manager 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 guidance
relating to determining the appropriateness and/or suitability of an investment in the securities described
herein by investors in any relevant jurisdiction.
3

Prospectus dated 15 December 2016

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
Additional Tier 1 Notes and should not be considered as a recommendation by the Issuer or the
Manager that any recipient of the Prospectus should subscribe or purchase any Additional Tier 1
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.
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 GRENKE 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 GRENKE 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. GRENKE 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 fol owing sections of this Prospectus: "Risk Factors" and "General Information about GRENKE
AG and GRENKE Group". These sections include more detailed descriptions of factors that might have an
impact on GRENKE 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 Manager assumes 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

Prospectus dated 15 December 2016

TABLE OF CONTENTS
Page

Risk Factors ............................................................................................................................................ 6
Risk Factors regarding the Additional Tier 1 Notes ........................................................................... 6
Risk Factors regarding GRENKE AG and GRENKE Group ..............................................................15
Terms and Conditions ..........................................................................................................................20
Terms and Conditions of the Additional Tier 1 Notes ......................................................................20
Interest Payments and Distributable Items of the Issuer .................................................................43
Available Distributable Items of GRENKE AG ...................................................................................44
Potential write-down and Common Equity Tier 1 Capital Ratio of the Issuer ................................45
General Information about GRENKE AG as Issuer ...........................................................................46
Selected Financial Information ...........................................................................................................46
Consolidated Statement of Financial Position Data .........................................................................46
Consolidated Capitalisation of GRENKE AG .....................................................................................46
History and Development of GRENKE AG .........................................................................................47
Investments ...........................................................................................................................................47
Known Trends .......................................................................................................................................48
Business Overview and Principal Markets ........................................................................................48
Organisational Structure .....................................................................................................................49
Acquisitions ..........................................................................................................................................50
Material adverse change in the prospects of the Issuer ..................................................................50
Administrative, Management and Supervisory Bodies ....................................................................50
Conflict of Interests ..............................................................................................................................51
Board Practices ....................................................................................................................................51
Controlling Persons .............................................................................................................................52
Historical Financial Information ..........................................................................................................52
Auditors .................................................................................................................................................52
Legal, Arbitration Proceedings and Other Proceedings ..................................................................52
Significant Change in GRENKE AG's Financial or Trading Position ..............................................53
Share Capital .........................................................................................................................................53
Articles of Association .........................................................................................................................53
Rating .....................................................................................................................................................53
Taxation .................................................................................................................................................54
Subscription and Sale of the Additional Tier 1 Notes ......................................................................59
Selling Restrictions ..............................................................................................................................59
General Information .............................................................................................................................62
Authorisation ........................................................................................................................................62
Use of Proceeds ...................................................................................................................................62
Listing and Admission to Trading ......................................................................................................62
Clearing Systems .................................................................................................................................62
Credit Rating .........................................................................................................................................62
Documents on Display .........................................................................................................................62
Documents Incorporated by Reference .............................................................................................64
Comparative Table of Documents incorporated by Reference .......................................................64
Availability of Incorporated Documents ............................................................................................65
Names and Addresses .........................................................................................................................66

5

Prospectus dated 15 December 2016

RISK FACTORS
The following is a disclosure of risk factors that may affect the ability of GRENKE AG to fulfil its
respective obligations under the Additional Tier 1 Notes and that are material to the Additional Tier
1 Notes in order to assess the market risk associated with these Additional Tier 1 Notes.
Prospective investors should consider these risk factors before deciding to purchase the
Additional Tier 1 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 Additional Tier 1 Notes below
shall have the same meanings in this section.
RISK FACTORS REGARDING THE ADDITIONAL TIER 1 NOTES
Additional Tier 1 Notes may not be a suitable Investment for all Investors
Each potential investor in the Additional Tier 1 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 Additional Tier 1 Notes, the merits and risks of investing in the Additional Tier 1
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 Additional
Tier 1 Notes and the impact the Additional Tier 1 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
Additional Tier 1 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 Additional Tier 1 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 Additional Tier 1 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 advisers as to the tax consequences of the
purchase, ownership and disposition of Additional Tier 1 Notes.
Payments of Interest under the Additional Tier 1 Notes may be cancelled at the Issuer's discretion.
Interest payments depend, among other things, on the Issuer's Distributable Items. Interest
payments are non-cumulative.
The Issuer has the option to cancel any payment of Interest on the Additional Tier 1 Notes by giving prior
notice to the Holders without undue delay and at the latest on the Interest Payment Date as set out in
§ 3 (6) of the Terms and Conditions. Interest payments may especially be cancelled to prevent a Trigger
Event to occur.
6

Prospectus dated 15 December 2016

Interest will not accrue if (but only to the extent that) payment of interest on the Additional Tier 1 Notes,
together with any other Distributions that are simultaneously planned or made or that have been made by
the Issuer on other Tier 1 Instruments in the then current financial year of the Issuer, would exceed the
Distributable Items, provided, however, that for purposes of this determination the Distributable Items shall
be increased by an amount equal to the aggregate expense accounted for in respect of Distributions on
Tier 1 Instruments (including the Additional Tier 1 Notes) when determining the profit which forms the
basis of the Distributable Items. In such event, Holders would receive no, or reduced, Interest payments
on the relevant Interest Payment Date. With the annual profit and any distributable reserves of GRENKE
AG forming an essential part of the Distributable Items, investors should also carefully review the risk
factors under "Risk factors regarding GRENKE AG and the GRENKE Group" since any change in the
financial prospects of the Issuer or its inherent profitability, in particular a reduction in the amount of profit
or distributable reserves on an unconsolidated basis, may have an adverse effect on the Issuer's ability to
make a payment in respect of the Additional Tier 1 Notes.
Any non-payment of Interest will likely have an adverse effect on the market price of the Additional Tier 1
Notes. In addition, as a result of this Issuer's option, the market price of the Additional Tier 1 Notes may be
more volatile than the market prices of other debt securities which do not grant this option to the Issuer.
Generally, the Additional Tier 1 Notes may be more sensitive to adverse changes in the Issuer's financial
condition.
Interest payments are non-cumulative. Therefore, if Interest payments are cancelled, the Holders will not
receive any compensation for the cancelled Interest payments at a later point in time. Moreover, the Issuer
is not prohibited from making payments on any instrument ranking senior to or pari passu with the
Additional Tier 1 Notes. Cancellation of Interest payments does not constitute a default of the Issuer or a
breach of any other obligations under the Additional Tier 1 Notes or for any other purpose.
"Distributable Items" means, with respect to any payment of interest, the profit (Gewinn) as of the end of
the financial year of the Issuer immediately preceding the relevant Interest Payment Date for which
audited financial statements are available, plus (i) any profits carried forward and any distributable
reserves (ausschüttungsfähige Rücklagen), minus (ii) any losses carried forward and any profits which are
non-distributable pursuant to applicable law or the articles of association of the Issuer and any amounts
allocated to the non-distributable reserves, provided that such profits, losses and reserves shall be
determined on the basis of the financial statements of the Issuer prepared in accordance with German
commercial law. For an overview of GRENKE AG's Distributable Items for the preceding financial years
see the section "Available Distributable Items of GRENKE AG".
"Distribution" means any kind of payment of dividend or interest.
"Tier 1 Instruments" means any capital instrument which, according to CRR, qualifies as Common Equity
Tier 1 capital or Additional Tier 1 capital.
Interest payments may be excluded and cancelled for regulatory reasons.
The risk described in this section applies only if and to the extent that the relevant CRR provisions and the
relevant provisions under the German Banking Act apply to the Additional Tier 1 Notes issued by
GRENKE AG. Interest payments will also be excluded if (and to the extent) the competent supervisory
authority instructs the Issuer to cancel an Interest payment or such Interest payment is prohibited by law or
administrative order on any Interest Payment Date.
The CRR prohibits the Issuer from making an Interest payment if (but only to the extent that) the relevant
Interest payment would exceed the Issuer's available Distributable Items or if such payment does not meet
any of the other conditions set out in Art. 52 (1) lit.(l) CRR. However, it cannot be excluded that the
European Union and/or the Federal Republic of Germany and/or any other competent authority enacts
further legislation affecting the Issuer and thereby also adversely affecting the right of the Holders to
receive Interest payments on any Interest Payment Date.
The right of the competent supervisory authority under German law to issue an order to the Issuer to
cancel all or part of the Interest payments is stipulated in § 45 (2) and (3) of the German Banking Act (as
amended by the German law implementing CRD IV) (Kreditwesengesetz - "KWG"). Under the relevant
provisions, regulatory action can be taken in cases of inadequate own funds or inadequate liquidity. CRD
IV also introduced capital buffer requirements that are in addition to the minimum capital requirement (and
the additional requirements under § 10 (3) or (4) KWG or § 45b (1) s. 2 KWG, if applicable) and are
7

Prospectus dated 15 December 2016

required to be met with Common Equity Tier 1 capital. The respective CRD IV requirements have been
implemented into German law through sections 10c et seq. KWG which introduced various new capital
buffers. Those include (i) the capital conservation buffer (as implemented in Germany by § 10c KWG), (ii)
the institution-specific counter-cyclical buffer (as implemented in Germany by § 10d KWG) and (iv) the
systemic risk buffer (as implemented in Germany by § 10e KWG). While the capital conservation buffer
will, after a phase-in period, be in any case applicable to the Issuer, one or all of the other buffers may
additionally be established and be applicable to the Issuer. All applicable buffers will be aggregated in a
combined buffer (as implemented by § 10i KWG), applying a calculation specified in § 10i KWG. If the
Issuer does not meet such combined buffer requirement, the Issuer will be restricted from making Interest
payments on the Additional Tier 1 Notes in certain circumstances (set out in § 10i KWG, to be read in
conjunction with § 37 of the German Solvency Regulation (Solvabilitätsverordnung - "SolvV")) until the
Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - "BaFin") has
approved a capital conservation plan in which the Issuer needs to explain how it can be ensured that the
Interest payments and certain other discretionary payments, including distributions on Common Equity
Tier 1 instruments and variable compensation payments, do not exceed the maximum distributable
amount. The maximum distributable amount is calculated as a percentage of the profits of the institution
since the last distribution of profits as further defined in § 37 (2) SolvV. The applicable percentage is
scaled according to the extent of the breach of the combined buffer requirement. As an example, if the
scaling is in the bottom quartile of the combined buffer requirement, no discretionary distributions will be
permitted to be paid. As a consequence, in the event of breach of the combined buffer requirement it may
be necessary to reduce discretionary payments, including potentially exercising the Issuer's discretion to
cancel (in whole or in part) Interest payments in respect of the Additional Tier 1 Notes. Again, it cannot be
excluded that the European Union and/or the Federal Republic of Germany and/or any other competent
authority enacts further legislation affecting the Issuer and thereby also adversely affecting the right of the
Holders to receive Interest payments on any Interest Payment Date.
Accordingly, even if the Issuer was intrinsically profitable and willing to make Interest payments, it could be
prevented from doing so by regulatory provisions and/or regulatory action. In all such instances, Holders
would receive no, or reduced, Interest payments on the relevant Interest Payment Date.
"CRD IV" means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on
access to the activity of credit institutions and the prudential supervision of credit institutions and
investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC.
Interest may only be payable on a reduced nominal amount. A write-down may occur several times
and may reduce the outstanding amount and the nominal amount of the Additional Tier 1 Notes to
zero. The Issuer is entitled but not obligated to write-up the redemption amount and the nominal
amount of the Additional Tier 1 Notes to the Aggregate Principal Amount.
Interest is payable on the nominal amount of the Additional Tier 1 Notes as amended from time to time.
This amount may be lower than the Aggregate Principal Amount. Upon the occurrence of a Trigger Event,
i.e. if the Common Equity Tier 1 capital ratio of the GRENKE Group falls below 5.125 per cent., the
redemption amount and the nominal amount of the Additional Tier 1 Notes are automatically reduced by
the amount of the relevant write-down. This is the amount which is required to fully restore GRENKE
Group's Common Equity Tier 1 capital ratio to the relevant threshold of 5.125 per cent. In the case of a
write-down, Holders are therefore subject to the risk of receiving a lower Interest.
Trigger Events and therefore write-downs may occur repeatedly. Write-downs may not exceed the
outstanding nominal amounts at the time of the relevant Trigger Event. The occurrence of a Trigger Event
is inherently unpredictable and depends on a number of factors, any of which may be outside the control
of the Issuer. The calculation of the Issuer's Common Equity Tier 1 Capital Ratio could be affected by a
wide range of factors, including changes in the mix of the Issuer's business, major events affecting its
earnings, dividend payments by the Issuer, regulatory changes (including changes to the definitions and
calculations of regulatory capital ratios and their components) and the Issuer's ability to manage risk-
weighted assets. Such ratio will also depend on the management of the Issuer's capital position, and may
be affected by changes in applicable accounting rules or by changes to regulatory adjustments which
modify the regulatory capital impact of accounting rules.
In any financial year fol owing a write-down, the Issuer may discretionally decide to write-up the
redemption amount and the nominal amount of the Additional Tier 1 Notes to its Aggregate Principal
Amount (unless previously repaid or acquired and devalued). This requires a sufficient annual surplus, that
a write-up would not result in an annual loss and that, at the time of the intended write-up, no Trigger
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Prospectus dated 15 December 2016

Event has occurred or continues to occur. However, there can be no assurance as to the Issuer making
use of its discretion. Furthermore, due to the restrictions applying to a write-up, it cannot be assured that
the Issuer will ever be able to opt for a write-up even if it were willing to. Since an early redemption of the
Additional Tier 1 Notes pursuant to § 5 (4) of the Terms and Conditions requires that preceding write-
downs are fully compensated by a write-up (see "the Additional Tier 1 Notes may be redeemed at the
Issuer's option"), the Holders may not be able to recover their investment at all.
The Additional Tier 1 Notes may be written down (without prospect of a potential write-up in
accordance with the Terms and Conditions) or converted upon the occurrence of a non-viability
event or if the Issuer becomes subject to resolution.
The risk described in this section applies only if and to the extent that the relevant provisions of the
Directive 2014/59/EU (Bank Recovery and Resolution Directive "BRRD") and the implementing
legislation and provisions are applicable to the Additional Tier 1 Notes issued by GRENKE AG. Certain
legal provisions and regulatory measures, in particular the application of bail-in measures, implementing
the BRRD may severely affect the rights of Holders under the Notes. Under the BRRD, resolution
authorities (in the case of the Issuer, to be set up under the single European resolution mechanism) shall
be given the authority to write down the claims of unsecured creditors of a failing institution or one that is
likely to fail (in particular claims under own funds instruments such as the Additional Tier 1 Notes) or to
convert such claims into equity if certain requirements are met (so-called "bail-in tool"). Even though the
BRRD provides for a longer transposition period until January 2016 at the latest with respect to certain
provisions of the bail-in tool, it is expected that the bail-in tool will already be available at an earlier date
under the laws of Germany. Furthermore, member states of the European Union may retain specific
national tools and powers to deal with a failing institution (or one that is likely to fail) in addition to these
powers.
These expected changes in regulatory law, especially the application of the bail-in tool, may result in
claims for payment of principal, interest or other amounts under the Additional Tier 1 Notes being subject
to a permanent reduction, including zero, or a conversion into one or more instruments that constitute
Common Equity Tier 1 capital for the Issuer, such as ordinary shares (each of these measures hereinafter
referred to as "Regulatory Bail-in"). This would probably occur if the Issuer becomes, or is deemed by the
competent supervisory authority to have become, "non-viable" (as defined under the then applicable law)
or in the event of a resolution of the Issuer. Consequently, any amounts so written down in respect of the
Additional Tier 1 Notes would be irrevocably lost and the Holders would cease to have any claims
thereunder, regardless whether or not the bank's financial position is restored. Holders would have no
claim against the Issuer in such a case and there would be no obligation of the Issuer to make payments
under the Additional Tier 1 Notes. Other than in the event that the Issuer's Common Equity Tier 1 Capital
ratio falls below a certain threshold, the Terms and Conditions do not contain a provision which requires
them to be written down in the event of "non-viability" or resolution of the Issuer. However, it is expected
that future changes to applicable supervisory law will result in regulatory powers which could result in a
Regulatory Bail-in.
Potential investors should consider the risk that they may lose all of their investment, including the nominal
amount plus any accrued interest if a Regulatory Bail-in applies. In addition, the legal provisions and
regulatory measures allowing for a Regulatory Bail-in may have a negative impact on the market value of
the Additional Tier 1 Notes even prior to non-viability or resolution. Potential investors should furthermore
note that the provisions of the Terms and Conditions relating to a write-up will not apply if the Additional
Tier 1 Notes have been subject to a Regulatory Bail-in. It is therefore likely that any write-down due to a
Regulatory Bail-in cannot be written up.
The Additional Tier 1 Notes are perpetual securities. Holders have no right to demand redemption
of the Additional Tier 1 Notes.
The Additional Tier 1 Notes do not have a final maturity date. Therefore, the Principal Amounts will only be
paid back to the Holders, if the Issuer decides to previously redeem the Additional Tier 1 Notes. Holders
have no right to call the Additional Tier 1 Notes for their redemption. Investors may expect the Issuer to
make use of a right to call the Additional Tier 1 Notes for redemption at a certain point in time. Should the
Issuer's actions diverge from such expectations, the market value of the Additional Tier 1 Notes and the
development of an active public market could be adversely affected.
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Prospectus dated 15 December 2016

Prospective investors should be aware that they may be required to bear the financial risks of an
investment in the Additional Tier 1 Notes for an unlimited period of time and may not recover their
investment.
The Additional Tier 1 Notes may be redeemed at the Issuer's option.
The Additional Tier 1 Notes may be redeemed at the option of the Issuer (in whole but not in part) at their
Aggregate Principal Amount plus any Interest accrued to but excluding the First Reset Date or the
respective Reset Interest Payment Date as well as any payments resulting from a Gross-up Event (as
defined in § 7 of the Terms and Conditions) with effect as of the First Reset Date and any Reset Interest
Payment Date thereafter. The Issuer discretionally decides whether to redeem the securities but is subject
to the competent supervisory authority's consent.
An early redemption generally requires that any reductions of the redemption amount or the nominal
amount of the Additional Tier 1 Notes have been fully compensated by a write-up. An exception applies if
the Holders allow the Issuer to redeem the Additional Tier 1 Notes at a reduced redemption amount or
nominal amount. In this case, the Holders might not be able to fully recover the invested funds.
In the event of an early redemption of the Additional Tier 1 Notes, the Holders are furthermore exposed to
the risk that their investment has a lower yield than expected. In addition, the Holders are exposed to risks
connected with any reinvestment of the cash proceeds received as a result of the early redemption.
Therefore, the Holders are exposed to reinvestment risk if market interest rates decline. This means that
Holders might reinvest the redemption proceeds only at the then prevailing lower interest rates.
The Additional Tier 1 Notes may be redeemed by the Issuer at any time in its discretion under
certain regulatory or tax reasons. In such case, the redemption amount may be substantially lower
than the Aggregate Principal Amount due to a write-down that has not been fully written up. In the
case of a write-down to zero, this may result in a full loss of the nominal amount.
The Additional Tier 1 Notes may be redeemed at any time, in whole but not in part, subject to prior
permission by the competent supervisory authority, and without any previous write-down having been
written up (a) for regulatory reasons, if, in the sole discretion of the Issuer, the Additional Tier 1 Notes will
qualify in their ful aggregate nominal amount as Additional Tier 1 capital for the purposes of GRENKE
Group's own funds, but after having been qualified may no longer be treated in full as Additional Tier 1
capital for purposes of complying with the Issuer's own funds requirements or (b) for tax reasons, if the tax
treatment of the Additional Tier 1 Notes changes (including but not limited to the tax deductibility of interest
payable on the Notes or the obligation to pay Additional Amounts) and such change, in the Issuer's
discretion, is materially disadvantageous to the Issuer.
If the Issuer elects, in its sole discretion and subject to prior permission by the competent supervisory
authority, to redeem the Notes, the Notes will become repayable as a consequence thereof. Due to any
previous write-downs that have not been fully written up, in the cases of a redemption for regulatory or tax
reasons, the amount to be repaid under the Additional Tier 1 Notes, if any, may be substantially lower than
the Aggregate Principal Amount of the Additional Tier 1 Notes, and may also be reduced to zero which
would result in a ful loss of all money invested in the Additional Tier 1 Notes.
Holders are subject to the risk of a partial or total failure of the Issuer to make interest and/or
redemption payments.
Any potential investor of the Additional Tier 1 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 under the Additional Tier 1 Notes. 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 Additional Tier 1 Notes.
In addition, market participants could be of the opinion that the creditworthiness of the Issuer has
decreased although this is actually not the case. This may especially be the case 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 occurs, it is likely that third parties would only be willing to
purchase the Additional Tier 1 Notes at a lower price than before the materialisation of said risk.
Therefore, the market value of the Additional Tier 1 Notes may decrease.
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