EXHIBIT 4(C)
PRICING SUPPLEMENT
TXU EASTERN FUNDING COMPANY
6 MARCH 2000
(POUND)225,000,000 7.25 PER CENT. NOTES DUE 2030
ISSUED PURSUANT TO THE (POUND)2,000,000,000 EURO MEDIUM TERM NOTE PROGRAMME
(the "PROGRAMME")
(Terms used herein shall be deemed to be defined as such for the purposes of the
Conditions)
THE NOTES CONSTITUTE LONGER TERM DEBT SECURITIES ISSUED IN ACCORDANCE WITH
REGULATIONS MADE UNDER SECTION 4 OF THE BANKING ACT 1987. The Issuer of the
Notes is not an authorised institution or a European authorised institution (as
such are defined in the Banking Act 1987 (Exempt Transactions) Regulations
1997). Repayment of the principal and payment of any interest or premium in
connection with the Notes has been guaranteed by TXU Europe Limited, which is
not an authorised institution or a European authorised institution.
This Pricing Supplement, under which the Notes described herein (the "NOTES")
are issued, is supplemental to, and should be read in conjunction with, the
Offering Circular (the "OFFERING CIRCULAR") dated 15 December 1999 issued in
relation to the Programme. The Notes will be issued on the terms of this Pricing
Supplement read together with the Offering Circular.
PROVISIONS APPEARING ON THE FACE OF THE NOTES
1. Series No.: 1
2. Tranche No.: 1
3. ISIN: XS0108297044
4. Currency: pounds sterling ("(POUND)")
5. Nominal Amount of Tranche: (pound)225,000,000
6. Issue Date: 8 March 2000
PROVISIONS APPEARING ON THE BACK OF THE NOTES
7. Form: Bearer
8. Denomination(s): (pound)1,000,(pound)10,000 and
(pound)100,000
9. Redenomination into Euro (of Notes Redenomination not applicable
denominated in a currency that may
be redenominated into Euro in
accordance with Condition 7(i)):
10. Interest Commencement Date Issue Date
(other than Zero Coupon Notes):
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11. Interest Rate (including after 7.25 per cent. per annum
Maturity Date)
12. Interest Payment Date(s) (other than 8 March of every year
Zero Coupon Notes): commencing 8 March 2001
13. Relevant Time (Floating Rate Notes): N/A
14. Interest Determination Date N/A
(Floating Rate Notes):
15. Primary Source for the Floating Rate N/A
(Floating Rate Notes):
16. Reference Banks (Floating Rate N/A
Notes - if Primary Source is
"Reference Banks"):
17. Relevant Financial Centre N/A
(Floating Rate Notes):
18. Benchmark (Floating Rate Notes): N/A
19. Representative Amount (Floating Rate N/A
Notes):
20. Relevant Currency (Floating Rate N/A
Notes):
21. Effective Date (Floating Rate Notes): N/A
22. Specified Duration (Floating Rate N/A
Notes):
23. Margin (if applicable): N/A
24. Rate Multiplier (if applicable): N/A
25. Maximum/Minimum Interest Rate (if N/A
applicable):
26. Maximum/Minimum Instalment Amount (if N/A
applicable)
27. Maximum/Minimum Redemption Amount (if N/A
applicable):
28. Interest Amount (Fixed Rate Note or (pound)72.50 per each(pound)1,000
Variable Coupon Amount Note): denomination Note(pound)725.00 per
each(pound)10,000 denomination Note
(pound)7,250.00 per each(pound)
10,000 denomination Note
29. Day Count Fraction 30/360
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30. Interest Period Date(s) (if N/A
applicable):
31. Redemption Amount (including early Nominal Amount, save for early
redemption): redemption upon the occurrence of
a Category II Restructuring
Event - see Appendix A hereto
32. Maturity Date: 8 March 2030
33. Redemption for Taxation Reasons Yes
permitted on days other than
Interest Payment Dates:
34. Amortisation Yield (Zero Coupon Notes): N/A
35. Terms of redemption at the option N/A
of the Issuer or description of any
other Issuer's option (if applicable):
36. Issuer's Option Period (if applicable): N/A
37. Terms of redemption at the option See Appendix A hereto
of the Noteholders or description of
any other Noteholders' option (if
applicable):
38. Noteholders' Option Period (if See Appendix A hereto
applicable):
39. Instalment Date(s) (if applicable): N/A
40. Instalment Amount(s) (if applicable): N/A
41. Unmatured Coupons to become void upon Yes
early redemption:
42. Talons to be attached to Notes and, Yes in respect of Definitive
if Notes (15 Interest Payment
applicable, the number of Interest
Payment Dates between the maturity
of the Talon) Dates between the maturity
of each Talon (if applicable):
43. Business Day Jurisdictions for London
Condition 7(g) (jurisdictions
required to be open for payment):
44. Additional steps that may only be N/A
taken following approval by an
Extraordinary Resolution in accordance
with Condition 11(a) (if applicable):
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45. Details of any other additions or See Appendix B
variations to the Conditions (if
applicable):
46. The Agents appointed in respect of Citibank, N.A.
the Notes are:
PROVISIONS APPLICABLE TO GLOBAL NOTES AND GLOBAL CERTIFICATES
47. Notes to be represented on issue by: Temporary Global Note
48. Applicable TEFRA exemption TEFRA D
(if "C Rules" or "not applicable"):
49. Temporary Global Note exchangeable The Temporary Global Note is
for Definitive Notes (if yes): exchangeable for interests
in the Permanent Global Note upon
certification as to non-U.S.
beneficial ownership not earlier
than 40 days after the Issuer Date
50. Permanent Global Note exchangeable The Permanent Global Note is
for Definitive Notes at the exchangeable in whole, but not
request of the holder (if yes) in part, for Definitive Notes
(with attached Coupons and Talons):
(i) upon not less than 60 days'
written notice being given to
the Issuing and Paying Agent
by Euroclear and/or
Clearstream, Luxembourg,
(acting on the instructions of
any holder of an interest in
the Permanent Global Note);
or
(ii) not later than 60 days after
the receipt of notice by the
Issuing and Paying Agent
from Euroclear and/or
Clearstream, Luxembourg
(acting on the instructions of
any holder of an interest in
the Permanent Global Note) or
the Trustee following the
occurrence of an Exchange
Event,
where "EXCHANGE EVENT" means:
(1) an Event of Default has
occurred and is
continuing;
(2) the Issuer has been
notified that either
Euroclear or Clearstream,
Luxembourg has been
closed for business for
a continuous period of 14
days (other than by
reason of holiday,
statutory or otherwise)
or has announced an
intention permanently
to cease business or has
in fact done so and no
alternative clearing
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system satisfactory
to the Trustee is
available; or
(3) the Issuer has or will
become obliged to pay
additional amounts as
provided for or referred
to in Condition 8 which
would not be required
were the Notes in
definitive form.
PROVISIONS RELATING ONLY TO THE SALE AND LISTING OF THE NOTES
51. Issue Price: 99.428 per cent.
52. Details of any additions or variations N/A
to the selling restrictions:
53. Listing: Luxembourg
54. Dealer's Commission: 0.25 per cent
55. Method of issue of Notes: Syndicated Issue
56. The following Dealers are subscribing Barclays Bank PLC
the Notes: Deutsche Bank AG London
The Royal Bank of Scotland plc
57. Common Code: 010829704
58. Net Proceeds: (pound)222,306,750
59. Use of Proceeds (if different from that N/A
stated in the Offering Circular):
The Issuer confirms that:
(a) as at the date hereof, it has complied with its obligations under the
listing rules of the Luxembourg Stock Exchange in relation to the
admission to, and continuing listing of, the Programme and of any
previous issues made under it and listed on the same exchange as the
Programme; and
(b) it will have complied with its obligations under the listing rules of
the Luxembourg Stock Exchange by the time when the Notes are so
admitted; and
(c) as at the date hereof, it has not, since the last publication of
information in compliance with the listing rules of the Luxembourg
Stock Exchange about the Programme, any previous issues made under the
Programme and listed on the Luxembourg Stock Exchange, or the Notes,
having made all reasonable enquiries, become aware of any change in
circumstances which could reasonably be regarded as significantly and
adversely affecting its ability to meet its obligations as issuer in
respect of the Notes as they fall due; and
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(d) as at the date hereof, it has complied and will continue to comply
with, its obligations under the Banking Act 1987 (Exempt Transactions)
Regulations 1997 to lodge all relevant information in relation to the
Notes with the London Stock Exchange.
RESPONSIBILITY
The Issuer and the Guarantor accept responsibility for the information appearing
in this Pricing Supplement.
Signed on behalf of the Issuer Signed on behalf of the Guarantor
By: /s/ M. F. Andrews By: /s/ P. C. Marsh
------------------------------ -------------------------------
Duly Authorised Signatory Duly Authorised Signatory
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APPENDIX A
Condition 6(e) is deleted and replaced with the following:
"(e) Redemption at the option of the Noteholders
If, at any time while any of the Notes remains outstanding, a Potential Put
Event occurs and during the Relevant Period, or (other than where the Potential
Put Event is a Category II Restructuring Event) prior to the commencement of the
Relevant Period, an Independent Financial Adviser shall have certified in
writing to the Trustee that such Potential Put Event will not be or is not, in
its opinion, materially prejudicial to the interests of the Noteholders, the
following provisions of this Condition 6(e) shall cease to have any further
effect in relation to such Potential Put Event.
If, at any time while any of the Notes remains outstanding, a Potential Put
Event occurs and an Independent Financial Advisor shall have certified in
writing to the Trustee that such Potential Put Event is, in its opinion,
materially prejudicial to the interests of the Noteholders (a "NEGATIVE
CERTIFICATION"), then, unless at any time the Issuer shall have given a notice
under Condition 6(c), the holder of each Note will, upon the giving of a Put
Event Notice (as defined below), have the option (the "PUT OPTION") to require
the Issuer to redeem or, at the option of the Issuer, purchase (or procure the
purchase of) that Note on the Put Date (as defined below), at its Put Event
Redemption Amount together with (or, where purchased, together with an amount
equal to) interest (if any) accrued to (but excluding) the Put Date.
Any certification by an Independent Financial Adviser as aforesaid as to whether
or not, in its opinion any Potential Put Event is materially prejudicial to the
interests of the Noteholders shall, in the absence of manifest error, be
conclusive and binding on the Trustee, the Issuer, the Guarantor and the
Noteholders.
Promptly upon, and in any event within 14 days after, the Issuer becoming aware
that a Potential Put Event has occurred, the Issuer shall, and at any time upon
the Trustee becoming similarly so aware the Trustee may, and if so requested by
the holders of at least one-quarter in nominal amount of the Notes then
outstanding shall, give notice (a "PUT EVENT NOTICE") to the Noteholders in
accordance with Condition 16 specifying the nature of the Potential Put Event
and the procedure for exercising the Put Option, provided that where the
Potential Put Event is a Category II Restructuring Event the Issuer shall again
give such notice 90 days prior to the Revocation Date (such latter notice, a
"CATEGORY II PUT EVENT NOTICE").
To exercise the Put Option, the holder of a Note must deposit such Note with any
Paying Agent at its specified office, on a day which is a Business Day in the
City of London and in the place of such specified office falling within the
period (the "PUT PERIOD") of (i), in the case where the Put Option is in respect
of an event other than a Category II Restructuring Event, 45 days after that on
which a Put Event Notice is given or (ii) otherwise, at any time up to 15 days
prior to the Put Date, accompanied by a duly completed and signed notice of
exercise in the form (for the time being current) obtainable from any specified
office of any Paying Agent (a "PUT NOTICE") and in which the holder may specify
a bank account to which payment is to be made under this Condition 6. Where any
Note is delivered without all Coupons relating to it which mature after the day
(the "PUT DATE") being (i) in the case where the Put Option is in respect of an
event other than a Category II Restructuring Event, the fifteenth day after the
date of expiry of the Put Period or (ii) otherwise, the Revocation Date
(provided that such day is a Business Day in the City of London, otherwise the
next day which is a Business Day in the City of London), the exercise of the Put
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Option in respect of such Note shall be subject to the provision of such
indemnity as the Issuer may reasonably require. The Paying Agent to which such
Note and Put Notice are delivered shall issue to the Noteholder concerned a
non-transferable receipt in respect of the Note so delivered. Payment in respect
of any Note so delivered shall be made, if the holder duly specifies in the Put
Notice an account with a bank to which payment is to be made, on the Put Date by
transfer to that bank account and, in every other case, on or after the Put Date
in each case against presentation and surrender or (as the case may be)
endorsement of such receipt at any specified office of any Paying Agent. A Put
Notice, once given, shall be irrevocable. For the purposes of Conditions 9, 10,
11, 12, 14, 16 and 17 and for certain other purposes specified in the Trust
Deed, receipts issued pursuant to this Condition 6(e) shall be treated as if
they were Notes. The Issuer shall redeem or, at the option of the Issuer,
purchase (or procure the purchase of) the relevant Note on the applicable Put
Date unless previously redeemed or purchased.
The Trustee is under no obligation to ascertain whether a Potential Put Event or
any event which could lead to the occurrence of, or could constitute a,
Potential Put Event has occurred and until it shall have actual knowledge or
express notice to the contrary, the Trustee may assume that no Potential Put
Event or such other event has occurred.
In this Condition 6(e):
"BUSINESS DAY" means, in relation to any place, a day on which commercial banks
and foreign exchange markets generally settle payments in that place.
"CATEGORY I RESTRUCTURING EVENT " means the occurrence of any one or more of the
following events:
(A) (aa) the Secretary of State and/or Director General of
Electricity Supply (or any successor) gives the Guarantor or
the holder of the PES Licence written notice of revocation (or
issues a public notice generally) of the PES Licence
(excluding any second tier supply licence and provided that
the giving of notice pursuant to paragraph 3 of Part 1 of the
PES Licence in each case as in effect on the date of the
Pricing Supplement, or any other similar provision in any
other PES Licence, shall not be deemed to constitute the
revocation of the PES Licence); or
(bb) the Guarantor or the holder of the PES Licence agrees in
writing with the Secretary of State and/or Director General of
Electricity Supply to any revocation or surrender of the PES
Licence; or
(cc) any legislation (whether primary or subordinate) is
enacted terminating or revoking the PES Licence,
except in any such case in circumstances where a licence or licences
(each, a "SUCCESSOR LICENCE") on substantially not less favourable
terms is or are granted to the Guarantor or one or more Relevant
Subsidiaries or Subsidiaries (not being an Excluded Subsidiary) of the
Guarantor at least 51 per cent. of the ordinary share capital of which
is owned directly or indirectly by the Guarantor and which is
Controlled by the Guarantor; or
(B) any modification (other than a modification which is of a formal, minor
or technical nature) is made to the terms and conditions of the PES
Licence on or after the date of the Pricing Supplement, unless two
directors of the Guarantor have certified in good faith to the Trustee
that the modified terms and conditions are not materially less
favourable to the business of the Group; or
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(C) (aa) the Pooling and Settlement Agreement is terminated under
Clause 67.4 thereof and not replaced by one or more
agreements, commercial arrangements or open market mechanisms
or frameworks, in each case on terms which two directors of
the Guarantor certify in good faith to the Trustee to be not
materially less favourable to the business of the Group; or
(bb) a holder of the PES Licence is given notice pursuant to
Clause 67.3.2 of the Pooling and Settlement Agreement
requiring it to cease to be a party thereto; or
(cc) any notice declaring an event of default (as defined in the
Pooling and Settlement Agreement) is given to a holder of the
PES Licence under Clause 66.1.1 or 66.2 thereof and such
default remains unremedied or unwaived; or
(dd) any modification (other than a modification which is of a
formal, minor or technical nature) is made to the Pooling and
Settlement Agreement on or after the date of the Pricing
Supplement, unless two directors of the Guarantor have
certified in good faith to the Trustee that any such
modification has not had and will not have a materially
adverse effect on the financial rights and obligations of a
holder of the PES Licence under the Pooling and Settlement
Agreement or a materially adverse effect on the business of
the Group, provided that any such modification shall, to the
extent it grants or confers powers or discretions on the
Director General of Electricity Supply (or any successor)
under or in respect of the Pooling and Settlement Agreement,
be deemed not to have a materially adverse effect as
aforesaid, but for the avoidance of doubt any modification to
the Pooling and Settlement Agreement made by the Director
General of Electricity Supply (or any successor) by virtue of
or pursuant to any such powers or discretions and which
otherwise would have a materially adverse effect as provided
above shall not by virtue of this sub-paragraph be deemed not
to have such an effect; or
(ee) a holder of the PES Licence ceases to be a party to the
Pooling and Settlement Agreement for any other reason (other
than pursuant to (bb) and (cc) above) except where a licence
or licences is or are granted to one or more Subsidiaries as
contemplated by sub-paragraph (A) above and at or about the
same time all rights and obligations of such holder pursuant
to the Pooling of Settlement Agreement which are attributable
to such licence(s) are assigned and transferred to such
Subsidiary and/or Subsidiaries in such manner as the Trustee
may approve (such approval not to be unreasonably withheld or
delayed) or such Subsidiary or Subsidiaries enters or enter
into one or more agreements, commercial arrangements or open
market mechanisms or frameworks in relation to such licence(s)
which two directors of each of the Issuer and Guarantor
certify to be not materially less favourable to the business
of the Group; or
(D) any legislation (whether primary or subordinate) is enacted which
removes, qualifies or amends (other than an amendment which if of a
formal, minor or technical nature) the duties of the Secretary of State
and/or the Director General of Electricity Supply under Section 3 of
the Electricity Act as in force on the date of the Pricing Supplement,
unless two directors of the Guarantor have certified in good faith to
the Trustee that such removal, qualification or amendment is unlikely
to have a materially adverse effect on the financial condition of the
Group or any Relevant Subsidiary.
A "CATEGORY II RESTRUCTURING EVENT " occurs where the Secretary of State and/or
Director General of Electricity Supply (or any successor) gives the Guarantor or
the holder of the PES Licence written notice of revocation (or issues a public
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notice generally) of the PES Licence pursuant to paragraph 3 of Part 1 of the
PES Licence, except in any such case in circumstances where a licence or
licences (each, a "SUCCESSOR LICENCE") on substantially not less favourable
terms is or are granted to the Guarantor or one or more Relevant Subsidiaries or
Subsidiaries (not being an Excluded Subsidiary) of the Guarantor at least 51 per
cent. of the ordinary share capital of which is owned directly or indirectly by
the Guarantor and which is Controlled by the Guarantor.
"CONTROL" means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a person, whether through
the ownership of voting securities, by contract or otherwise (and references to
"Controlled" shall be construed accordingly).
"ELECTRICITY ACT" means the Electricity Act 1989 as amended or re-enacted from
time to time and all subordinate legislation made pursuant thereto.
"EXCLUDED SUBSIDIARY" means any Subsidiary of the Guarantor:
(i) which is a single purpose company whose principal assets and business
comprise the ownership, acquisition, development and/or operation of
assets comprising a Project;
(ii) in its capacity as a partner in, and whose only material asset is its
interest in, a single purpose partnership whose principal assets and
business comprise a Project (as defined in Condition 10 (Events of
Default);
(iii) none of whose indebtedness for borrowed money in respect of the
financing of such ownership, acquisition, development and/or operation
of such assets comprising a Project is subject to any recourse
whatsoever to any member of the Group (other than such Subsidiary or
another Excluded Subsidiary) in respect of the repayment thereof,
except as expressly referred to in sub-paragraph (ii) of the definition
of Project Finance Indebtedness (as defined in Condition 10 (Events of
Default)); and
(iv) which has been designated as such by the Guarantor by written notice to
the Trustee,
provided that the Guarantor may give notice to the Trustee at any time that any
Excluded Subsidiary is no longer an Excluded Subsidiary, whereupon it shall
cease to be an Excluded Subsidiary.
"GENERATION LICENCE" means the electricity generation licence granted by the
Secretary of State to Eastern Merchant Generation Limited under the Electricity
Act as in effect on the date of the Pricing Supplement.
The "GROSS REDEMPTION YIELD" on the Notes and the Reference Stock will be
expressed as a percentage and will be calculated on the basis indicated by the
Joint Index and Classification Committee of the Institute and Faculty of
Actuaries as reported in the Journal of the Institute of Actuaries, Vol. 105,
Part I, 1978, page 18 or such other basis as the Trustee may approve.
"GROUP" means the Guarantor and its Subsidiary Undertakings and "member of the
Group" shall be construed accordingly.
"INDEBTEDNESS FOR BORROWED MONEY" means any present or future indebtedness
(whether being principal, premium, interest or other amounts) for or in respect
of (i) money borrowed, (ii) liabilities under or in respect of any acceptance or
acceptance credit, or (iii) any notes, bonds, debentures, debenture stock, loan
stock or other securities offered, issued or distributed whether by way of
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public offer, private placing, acquisition consideration or otherwise and
whether issued for cash or in whole or in part or for a consideration other than
cash.
"INDEPENDENT FINANCIAL ADVISER" means a financial adviser appointed by the
Issuer and approved by the Trustee (such approval not to be unreasonably
withheld or delayed) or, if the Issuer shall not have appointed such an adviser
within 21 days after becoming aware of the occurrence of a Potential Put Event
and the Trustee is indemnified to its satisfaction against the costs of such
adviser, a financial adviser appointed by the Trustee following consultation
with the Issuer.
A "LOSS OF CONTROL EVENT" occurs where TXU Europe Limited ceases to own directly
or indirectly at least a majority of the ordinary share capital of TXU Europe
Group plc and all Principal Subsidiaries (as defined in Condition 10 (Events of
Default)) or ceases to Control TXU Europe Group plc and all Principal
Subsidiaries.
"PES LICENCE" means the public electricity supply licence granted by the
Secretary of State to Eastern Electricity plc under the Electricity Act (but for
the avoidance of doubt excluding for this purpose any second tier licence) as in
effect on the date of the Pricing Supplement and/or any Successor Licence.
"POTENTIAL PUT EVENT" means any of (a) a Rating Downgrade Event, (b) a Loss of
Control Event, (c) a Category I Restructuring Event or (d) a Category II
Restructuring Event
"POOLING AND SETTLEMENT AGREEMENT" means the agreement dated 30 March 1990 (as
amended and restated as at 22 April 1994) made by Eastern Electricity plc with
The National Grid Company plc and others setting out the rules and procedures
for the operation of an electricity trading pool and of a settlement system and,
while the same has effect, the Initial Settlement Agreement also dated 30 March
1990 and made between the same parties, in each case as in force on the date of
the Pricing Supplement.
A "PUT EVENT" occurs on the date of the last to occur of (a) a Potential Put
Event and (b) the relevant Negative Certification.
The "PUT EVENT REDEMPTION AMOUNT" of a Note means its principal amount, save
that where the Put Event arose as a result of a Category II Restructuring Event
"Put Event Redemption Amount" means the higher of:
(i) the principal amount thereof; and
(ii) that price (the "REDEMPTION PRICE"), expressed as a percentage rounded
to three decimal places (0.0005 being rounded downwards), at which the
Gross Redemption Yield on the Notes, if they were to be purchased at
such price on the third dealing day prior to the publication of the
Category II Put Event Notice, would be equal to the Gross Redemption
Yield on such dealing day of the 6 per cent. Treasury Stock due 7
December 2028 or such other United Kingdom Government Stock as the
Trustee, with the advice of three leading brokers operating in the
gilt-edged market and/or gilt-edged market makers, shall determine to
be appropriate (the "REFERENCE STOCK") on the basis of the middle
market price of the Reference Stock prevailing on such dealing day, as
determined by Deutsche Bank AG London (or such other person(s) as the
Trustee may approve). Any reference in the Terms and Conditions to
"principal" shall be deemed to include any sum payable as the
Redemption Price.
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"RATED SECURITIES" means the Notes, if at any time and for so long as they have
a rating from a Rating Agency, and otherwise any other unsecured and
unsubordinated debt of the Issuer or a Relevant Subsidiary (or of any Subsidiary
of the Guarantor which is guaranteed on an unsecured and unsubordinated basis by
the Guarantor or a Relevant Subsidiary) having an initial maturity of five years
or more which is rated by a Rating Agency.
"RATING AGENCY" means any of Standard & Poor's Rating Service, a division of the
McGraw-Hill Companies, Inc., Moody's Investors Service Limited or Duff & Phelps
Credit Rating Co. or any of their respective Subsidiaries and their successors
or any rating agency substituted for either of them (or any permitted substitute
of them) by the Issuer from time to time with the prior written approval of the
Trustee (such approval not to be unreasonably withheld or delayed).
A "RATING DOWNGRADE EVENT" shall be deemed to have occurred if the then current
rating assigned to the Rated Securities by any Rating Agency (whether provided
by a Rating Agency at the invitation of the Issuer or by its own volition) is
withdrawn or reduced from an investment grade rating (BBB-/Baa3, or their
respective equivalents for the time being, or better) to a non-investment grade
rating (BB+/Bal, or their respective equivalents for the time being, or worse)
or, if the Rating Agency shall then have already rated the Rated Securities
below investment grade (as described above), the rating is lowered one full
rating category (from BB+/Bal to BB/Ba2 or such similar lowering), PROVIDED that
a Rating Downgrade Event shall be deemed not to have occurred if the rating
assigned to the Rated Securities by each Rating Agency making the relevant
reduction in rating or, where applicable, declining to assign a rating of at
least investment grade as provided in this Condition 6(e), is subsequently
increased to, or, as the case may be, there is assigned to the Notes or other
unsecured and unsubordinated debt of the Issuer, the Guarantor or a Relevant
Subsidiary (or of any Subsidiary of the Guarantor which is guaranteed on an
unsecured and unsubordinated basis by the Guarantor or a Relevant Subsidiary)
having an initial maturity of five years or more by such Rating Agency, an
investment grade rating (BBB-/Baa3 or their respective equivalents for the time
being) or better prior to any Negative Certification being issued.
"RELEVANT INDEBTEDNESS" means any present or future indebtedness (whether being
principal, premium, interest or other amounts) in the form of or represented by
notes, bonds, debentures, debenture stock, loan stock or other securities,
whether issued for cash or in whole or in part for a consideration other than
cash, and which, with the agreement of the person issuing the same, are quoted,
listed or ordinarily dealt in on any stock exchange or recognised
over-the-counter or other securities market, but shall in any event not include
Project Finance Indebtedness.
"RELEVANT LICENCES" means the Generation Licence and the PES Licence and, in any
such case, and from time to time any other licence or licences relating to the
generation and/or distribution of electricity granted to the Guarantor and/or
any Relevant Subsidiary or Subsidiary as contemplated pursuant to paragraph (A)
of "Category I Restructuring Event " below and "RELEVANT LICENCE" shall be
construed accordingly.
"RELEVANT PERIOD" means the period of 90 days, starting from and including the
day on which the Category I Restructuring Event, Rating Downgrade Event or Loss
of Control Event, as the case may be, occurs or, in relation to a Category II
Restructuring Event, the period commencing 90 days prior to the Put Date up to
but excluding the Put Date.
"RELEVANT SUBSIDIARY" means a member of the Group that holds a Relevant Licence.
"REVOCATION DATE" means the date of the determination of the PES Licence
following the 25 year notice period pursuant to a Category II Restructuring
Event.
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"SECRETARY OF STATE" means the Secretary of State for Trade and Industry (or any
successor).
"SUBSIDIARY" means a "subsidiary" within the meaning of Section 736 of the
Companies Act.
"SUBSIDIARY UNDERTAKING" shall have the meaning given to it by Section 258 of
the Companies Act 1985 (but, in relation to the Issuer, shall exclude any
undertaking (as defined in the Companies Act 1985) whose accounts are not
included in the then latest published audited consolidated accounts of the
Issuer, or (in the case of an undertaking which has first become a subsidiary
undertaking of a member of the Group since the date as at which any such audited
accounts were prepared) would not have been so included or consolidated if it
had become so on or before that date).
Any reference to an obligation being guaranteed shall include a reference to an
indemnity being given in respect of the obligation."
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APPENDIX B
1. The following new Condition 18 is inserted after Condition 17:
"18 FINANCIAL COVENANT
(a) Interest Cover Covenant
The Guarantor shall ensure that at each financial year end by reference to the
annual audited consolidated financial statements of the Group produced under US
GAAP, the ratio of Net Revenues to Interest Payable in respect of the
immediately preceding 12 months shall not be less than 1.75 to 1.0;
where:
"DISTRIBUTION" means any payment of dividends or other distribution and any
return of capital including, without limitation, any payment in respect of, or
on the redemption of, any share capital whether at a premium or otherwise, or
any payment in respect of indebtedness for borrowed money to any person in the
Group or to any person on their behalf, whether in cash or in kind and whether
by way of interest, repayment of principal or otherwise and shall, for the
avoidance of doubt, include any payment in respect of Subordinated Debt and
Subordinated Loan Stock;
"INTEREST PAYABLE" includes, in relation to any period, the aggregate amount of
all of the following insofar as they are payable by, or accrue in respect of
indebtedness of, any member of the Group (except to another member of the Group)
during that period: interest, commissions and fees in respect of moneys
borrowed, discounts in respect of bills, notes or debts discounted, and that
part of any amount under a financing lease or hire purchase, credit sale,
conditional sale or deferred payment agreement which represents any of the
foregoing save for interest payments in respect of Subordinated Debt or which
constitute Distributions. For this purpose, a discount shall be apportioned in
accordance with US GAAP over the period for which that bill, note or debt is to
be outstanding and shall be deemed to accrue from day to day during that period;
"NET REVENUES" means, in relation to any period, the consolidated income of the
Group for that period before Tax, interest and minority interests and before all
extraordinary items, all as shown in the statements of consolidated income of
the Group for that period, adding back Interest Payable and all amounts provided
(through the statements of consolidated income) for depreciation, goodwill and
amortisation;
"SUBORDINATED DEBT" means any indebtedness for borrowed money of the Issuer
which ranks subordinate to the Notes under the former's terms and conditions;
"SUBORDINATED LOAN STOCK" means any loan stock issued by the Issuer which is not
redeemable at the instance of the holder thereof on terms whereby all payments
thereunder rank subordinate to the Notes under the terms of the relevant loan
documentation; and
"TAXES" or "TAX" means any present or future taxes of any nature (including,
without limitation, value added tax), levy, impost, duty or other charge of a
similar nature now or hereafter imposed by the laws of the United Kingdom or the
United States and any other jurisdiction or any political subdivision thereof
(including, without limitation, any penalty or interest payable in connection
with any failure to pay or any delay in paying the same).
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(b) Certification of Compliance with Interest Cover Covenant
The Guarantor will, within 10 Business Days (as defined in Condition 6(e)) in
London ("LONDON BUSINESS DAY") of the filing with the Registrar of Companies of
each set of yearly audited financial statements, deliver to the Trustee a
certificate signed on its behalf by two of their respective directors or one
director and the Company Secretary:
(i) confirming compliance with Condition 18(a) as at the end of
the preceding financial year; and
(ii) setting out in reasonable detail and in a form satisfactory to
the Trustee the computations necessary to demonstrate such
compliance.
(c) Auditor's Certification of Compliance
Within 30 London Business Days of the filing with the Registrar of Companies of
such financial statements in Condition 18(b), the Guarantor will deliver to the
Trustee a certificate of the independent auditors of the Guarantor confirming
compliance with Condition 18(a) as at the end of the preceding financial
period.".
2. Paragraph (f) of Condition 6 (Redemption, Purchase and Options) is
amended by deleting the phrase "at any time" in the second line of the first
sentence and by inserting the following text after the word "price" at the end
of that sentence: ", provided that such purchase(s) may only take place at any
time after the third anniversary of the Issue Date".
3. Paragraph (b) of Condition 10 (Events of Default) is amended by
inserting the following text between the words "Notes" and "the Guarantee" in
the second line of that paragraph: "(which, for the avoidance of doubt, includes
the Guarantor's obligations under Condition 18(a), 18(b) and 18(c))"
4. Paragraph (i) of Condition 10 (Events of Default) is deleted.
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