TIDMLLOY
RNS Number : 7937C
Lloyds Banking Group PLC
21 October 2020
NOTICE OF ADJOURNED SECURITYHOLDER MEETINGS
THIS NOTICE IS IMPORTANT AND REQUIRES THE IMMEDIATE ATTENTION OF
SECURITYHOLDERS.
If Securityholders are in any doubt about any aspect of the
proposals in this notice and/or the action they should take, they
are recommended to seek their own financial advice immediately from
their stockbroker, bank manager, solicitor, accountant or other
financial adviser authorised under the Financial Services and
Markets Act 2000 (if they are in the United Kingdom) or from
another appropriately authorised independent financial adviser and
such other professional advisor from their own professional
advisors as they deem necessary.
FURTHER INFORMATION REGARDING THE MATTERS REFERRED TO IN THIS
ANNOUNCEMENT IS AVAILABLE IN THE CONSENT SOLICITATION MEMORANDUM
(THE "CONSENT SOLICITATION MEMORANDUM") ISSUED BY THE ISSUER ON 29
SEPTEMBER 2020, AND ELIGIBLE SECURITYHOLDERS (AS DEFINED BELOW) ARE
ENCOURAGED TO READ THIS ANNOUNCEMENT IN CONJUNCTION WITH THE
SAME.
LLOYDS BANKING GROUP PLC
(incorporated with limited liability in Scotland registered
number 95000)
(the "Issuer")
NOTICE OF SEPARATE SECURITYHOLDER MEETINGS
to the holders of the
GBP1,494,392,000 7.625 per cent. Fixed Rate Reset Additional
Tier 1 Perpetual Subordinated Contingent Convertible Securities
Callable 2023 (ISIN: XS1043552188)
(the "PNC9 Securities")
GBP750,009,000 7.875 per cent. Fixed Rate Reset Additional Tier
1 Perpetual Subordinated Contingent Convertible Securities Callable
2029 (ISIN: XS1043552261)
(the "PNC15 Securities")
(each a "Series" and together the "Securities", and the holders
thereof, the "Securityholders") of the Issuer presently
outstanding.
NOTICE IS HEREBY GIVEN that separate adjourned meetings (each a
"Meeting" and together, the "Meetings") of the Securityholders of
each Series convened by the Issuer will be held via teleconference
on 5 November 2020 for the purpose of considering and, if thought
fit, passing the applicable resolution set out below which will be
proposed as an Extraordinary Resolution in accordance with the
provisions of the relevant Trust Deed each dated 1 April 2014, as
amended, restated, modified and/or supplemented from time to time
(each, the "Trust Deed" and together, the "Trust Deeds") each made
between the Issuer and BNY Mellon Corporate Trustee Services
Limited (the "Trustee") as trustee for the Securityholders and
constituting the Securities.
The adjourned Meeting in respect of the:
(i) PNC9 Securities (the "PNC9 Securities Meeting") will
commence at 10 a.m. (London time) (11 a.m. CET); and
(ii) PNC15 Securities (the "PNC15 Securities Meeting") will
commence at 10.15 a.m. (London time) (11.15 a.m. CET) or after the
completion of the PNC9 Securities Meeting (whichever is later).
Capitalised terms used in this notice and not otherwise defined
herein shall have the meanings given to them in the Consent
Solicitation Memorandum dated 29 September 2020 (the "Consent
Solicitation Memorandum"), which is available for inspection by
Eligible Securityholders (as defined below) during normal business
hours at the specified offices of the Principal Paying and
Conversion Agent on any weekday (public holidays excepted) and on
the website of the Issuer
(https://www.lloydsbankinggroup.com/investors/fixed-income-investors/consent-solicitation)
(the "Issuer's Website") up to and including the date of the
Meeting (see "Documents Available for Inspection" below). In
accordance with normal practice, the Trustee, the Tabulation Agent
and the Principal Paying and Conversion Agent have not been
involved in the formulation of the Securityholder Proposals
outlined in this Consent Solicitation Memorandum or the
Extraordinary Resolution. The Trustee, the Tabulation Agent, the
Solicitation Agent and the Principal Paying and Conversion Agent,
express no opinion on, and make no representations as to the merits
of, the Securityholder Proposal set out in the Consent Solicitation
Memorandum, the relevant Extraordinary Resolution or the proposed
amendments referred to in the relevant Extraordinary Resolution set
out below.
None of the Trustee, the Tabulation Agent, the Solicitation
Agent or the Principal Paying and Conversion Agent makes any
representation that all relevant information has been disclosed to
Securityholders in or pursuant to this Notice, the Consent
Solicitation Memorandum or otherwise. None of the Trustee, the
Tabulation Agent, the Solicitation Agent or the Principal Paying
and Conversion Agent has approved the draft amended Documents
referred to in the relevant Extraordinary Resolution set out below
and the Trustee recommends that Securityholders arrange to inspect
and review such draft amended Documents as provided below in this
Notice. Accordingly, Securityholders of the relevant Series should
take their own independent legal, financial, tax or other advice on
the merits and the consequences of voting in favour of the relevant
Extraordinary Resolution, including any tax consequences, and on
the impact of the implementation of the relevant Extraordinary
Resolution.
None of the Trustee, the Tabulation Agent, the Solicitation
Agent or the Principal Paying and Conversion Agent are responsible
for the accuracy, completeness, validity or correctness of the
statements made in the Consent Solicitation Memorandum or omissions
therefrom.
Neither this Notice nor the Consent Solicitation Memorandum
constitute or form part of, and should not be construed as, an
offer for sale, exchange or subscription of, or a solicitation of
any offer to buy, exchange or subscribe for, any securities of the
Issuer or any other entity. The distribution of the Consent
Solicitation Memorandum may nonetheless be restricted by law in
certain jurisdictions. Persons into whose possession the Consent
Solicitation Memorandum comes are required to inform themselves
about, and to observe, any such restrictions.
BACKGROUND
The UK Financial Conduct Authority ("FCA") has confirmed that it
will no longer persuade or compel banks to submit rates for the
calculation of the LIBOR benchmark after the end of 2021 and
expects that some panel banks will cease contributing to LIBOR
panels at such time. In addition, the Bank of England and the FCA
announced that they have mandated a working group to promote a
broad-based transition to the Sterling Overnight Index Average
("SONIA") across sterling bond, loan and derivative markets, so
that SONIA is established as the primary sterling interest rate
benchmark by the end of 2021. Therefore, the continuation of LIBOR
on the current basis cannot and will not be guaranteed after 2021,
and regulators have urged market participants to take active steps
to implement the transition to SONIA and other risk-free rates
ahead of this deadline.
On the basis that the First Reset Date of each Series falls
after 2021, the Issuer has convened the Meetings for the purpose of
enabling the relevant Securityholders to consider and resolve, if
they think fit, to approve the relevant Security Proposal (as
further described below) by way of an Extraordinary Resolution in
relation to the relevant Series implementing a change in the Reset
Reference Rate such that (i) the Reset Reference Rate ceases to be
a LIBOR linked mid-swap rate (specifically being the mid-rate for a
5 year Sterling fixed-for-floating interest rate swap (where the
floating leg pays 6 month GBP LIBOR semi-annually)) and becomes a
SONIA linked mid-swap rate (specifically being the mid-rate for a 5
year Sterling fixed-for-floating interest rate swap (where the
floating leg pays daily compounded SONIA annually)); (ii) the Reset
Reference Rate Adjustment is made to reflect the economic
difference between the LIBOR and SONIA rates; (iii) the Margin
applicable to each Series of Securities remains unaltered by these
changes; (iv) the fallbacks relating to the Reset Reference Rate
are amended; and (v) new fallbacks are included in case a Benchmark
Event occurs with respect to the Reset Rate of Interest.
The pricing methodology proposed for the adjustment to the Reset
Reference Rate on conversion of the Reset Reference Rate from a
LIBOR linked mid-swap rate to a SONIA linked mid-swap rate uses
only market observable screen spot rates. The determination of the
relevant market observable screen spot rates will take place at or
around 2 p.m. (London time) (the "Pricing Time") on 5 November 2020
(the "Pricing Date", except where there is an adjournment of the
Meeting, in which case the Pricing Date will be specified in the
notice of the adjourned Meeting). If there is an adjourned Meeting,
the adjustment to the Reset Reference Rate may be different to the
amounts which would have been calculated if the relevant
Extraordinary Resolution had been passed (and the Eligibility
Condition satisfied) at the initial Meeting.
The date from which the proposed change in Reset Reference Rate
is to occur will be the Effective Date (which is expected to be 5
November 2020).
Prudential Regulatory Authority ("PRA")
In paragraph 2.22 of the PRA's Policy Statement dated March 2020
(PS5/20: Regulatory capital instruments: Update to Pre-Issuance
Notification (PIN) requirements)[1] (the "Policy Statement") the
PRA accepts that if "targeted amendments" are made to capital
instruments "in relation to benchmark rates", the instruments will
continue to be 'substantially the same' for the purposes of the
Policy Statement. Sam Woods, the Deputy Governor of PRA, has also
reiterated this in his letter dated 18 December 2019 where he has
stated that the PRA does not believe it is desirable to reassess
the eligibility of the additional tier 1 and tier 2 capital where
the amendments are solely to replace the benchmark reference
rate.
As the only changes which would be made to the Securities
pursuant to the Proposed Amendments are to change the underlying
Reset Reference Rate and supporting fall-back provisions for such
Reset Reference Rate as described in this Consent Solicitation
Memorandum and to make the necessary consequential adjustments, the
Issuer considers that capital eligibility of each Series of
Securities will remain unaffected.
The PRA has been informed of these Consent Solicitations and the
Issuer is not aware of any objection being raised by the PRA with
respect to this view being taken by the Issuer with respect to the
eligibility of the Securities.
SECURITYHOLDER PROPOSAL
Pursuant to the above, the Issuer has convened separate Meetings
by the above notice to request that Securityholders of each Series
consider and agree by Extraordinary Resolution to the matters
contained in the relevant Extraordinary Resolutions set out below.
The original meetings held on 21 October 2020 were adjourned due to
a lack of quorum.
The Issuer, under the Securityholder Proposal, is requesting
that the Securityholders of the relevant Series consider and if
thought fit, approve the relevant Extraordinary Resolution. If
approved by the Securityholders of the relevant Series, the
Extraordinary Resolution will be binding on all holders of such
Series of Securities, including those Securityholders who do not
vote in favour of the relevant Extraordinary Resolution or who do
not vote in connection with the relevant Extraordinary
Resolution.
In order to implement the change in Reset Reference Rate from a
LIBOR linked mid-swap rate (specifically being the mid-rate for a 5
year Sterling fixed-for-floating interest rate swap (where the
floating leg pays 6 month GBP LIBOR semi-annually)) to a SONIA
linked mid-swap rate (specifically being the mid-rate for a 5 year
Sterling fixed-for-floating interest rate swap (where the floating
leg pays daily compounded SONIA annually)) certain adjustments will
be made to the Reset Reference Rate payable in respect of the
Securities to the extent that either Series of Securities remains
outstanding beyond the First Reset Date. The Conditions will be
amended by incorporating an adjustment (the "Reset Reference Rate
Adjustment") which will be added to the Reset Reference Rate when
calculating the relevant Reset Rate of Interest in order to reflect
the difference in LIBOR linked mid-swap rate and SONIA linked
mid-swap rate.
The Reset Reference Rate Adjustment for the Securities to be
determined on the Pricing Date and effective on the Effective Date
will be equal to the LIBOR vs SONIA IRS Basis.
The LIBOR vs SONIA IRS Basis is a number of basis points rounded
to the nearest 0.1 basis points (with 0.05 basis points rounded
upwards) as calculated by the Solicitation Agent on the Pricing
Date. The detailed provisions relating to the calculation of the
Reset Reference Rate Adjustment are set out in Annex B to this
Notice.
The Securityholder Proposal is being put to Securityholders for
the reasons set out in the Consent Solicitation Memorandum.
Securityholders are referred to the Consent Solicitation
Memorandum which provides further background to the Security
Proposals and the reasons therefor.
CONSENT SOLICITATION
Securityholders are further given notice that the Issuer has
invited holders of the Securities of each Series (each such
invitation a "Consent Solicitation") to consent to the approval, by
Extraordinary Resolution at the relevant Meeting, of the
modification of the Conditions relating to the relevant Series as
described in paragraph 1 of the relevant Extraordinary Resolution
as set out below, all as further described in the Consent
Solicitation Memorandum (as defined in paragraph 10 of the relevant
Extraordinary Resolutions set out below).
The Consent Solicitation Memorandum and any other documents or
materials relating to the Consent Solicitations are only for
distribution or to be made available to persons who are (i) located
and resident outside the United States and who are not U.S. persons
(as defined in Regulation S under the Securities Act) or acting for
the account or benefit of any U.S. person, (ii) eligible
counterparties or professional clients (each as defined in MiFID
II) and, if applicable and acting on a non-discretionary basis, who
are acting on behalf of a beneficial owner that is also an eligible
counterparty or a professional client, in each case in respect of
the relevant Series of Securities and (iii) otherwise a person to
whom the relevant Consent Solicitation can be lawfully made and
that may lawfully participate in the relevant Consent Solicitation
(all such persons "Eligible Securityholders").
Subject to the restrictions described in the previous paragraph,
Securityholders may obtain from the date of this Notice a copy of
the Consent Solicitation Memorandum from the Tabulation Agent, the
contact details for which are set out below. In order to receive a
copy of the Consent Solicitation Memorandum, a Securityholder will
be required to provide confirmation as to his or her status as an
Eligible Securityholder.
EXTRAORDINARY RESOLUTION
IN RESPECT OF THE GBP1,494,392,000 7.625 PER CENT. FIXED RATE
RESET ADDITIONAL TIER 1 PERPETUAL SUBORDINATED CONTINGENT
CONVERTIBLE SECURITIES CALLABLE 2023
"THAT this Meeting of the holders (together, the "PNC9
Securityholders") of the presently outstanding GBP1,494,392,000
7.625 per cent. Fixed Rate Reset Additional Tier 1 Perpetual
Subordinated Contingent Convertible Securities Callable 2023 (the
"PCN9 Securities") of Lloyds Banking Group plc (the "Issuer"),
constituted by the trust deed dated 1 April 2014 as amended,
restated, modified and/or supplemented from time to time (the
"Trust Deed") made between the Issuer and BNY Mellon Corporate
Trustee Services Limited (the "Trustee") as trustee for, inter
alios, the PNC9 Securityholders:
1. (subject to paragraph 9 of this Extraordinary Resolution)
assents to the modification of the Trust Deed and of the terms and
conditions of the PNC9 Securities (the "Conditions") as set out in
Schedule 2 to the Trust Deed as any of the same may from time to
time be modified or amended and restated in accordance with the
Trust Deed, in order that:
a. the Reset Rate of Interest for the PCN9 Securities applicable
from, and including the First Reset Date will be the sum of the
relevant Adjusted Reset Reference Rate plus the Margin to be
calculated more fully as set out in Annex A to this Notice;
b. the fallbacks relating to the Reset Reference Rate are amended; and
c. new fallbacks are included in case a Benchmark Event occurs
with respect to the Reset Rate of Interest,
all as more fully set out in Annex A to this Notice.
2. (subject to paragraph 9 of this Extraordinary Resolution)
authorises, directs, requests and empowers:
(a) the Issuer and the Trustee to execute a deed supplemental to
the Trust Deed applicable to the PNC9 Securities (the "Supplemental
Trust Deed") to effect the modifications referred to in paragraph 1
of this Extraordinary Resolution, in the form or substantially in
the form of the draft produced to this Meeting and for the purpose
of identification signed by the chairman thereof, with such
amendments thereto (if any) as the Trustee shall require or agree
to; and
(b) the Issuer and the Trustee to execute and to do all such
deeds, instruments, acts and things as may be necessary, desirable
or expedient in its sole opinion to carry out and to give effect to
this Extraordinary Resolution and the implementation of the
modifications referred to in paragraph 1 of this Extraordinary
Resolution;
3. discharges and exonerates the Trustee from all liability for
which they may have become or may become responsible under the
Trust Deed or the PNC9 Securities or any Transaction Document or
any document related thereto in respect of any act or omission in
connection with the passing of this Extraordinary Resolution or its
implementation, the modifications referred to in paragraph 1 of
this Extraordinary Resolution or the implementation of those
modifications or the executing of any deeds, agreements, documents
or instructions, the performance of any acts, matters or things to
be done to carry out and give effect to the matters contemplated in
the Supplemental Trust Deed, the Notice or this Extraordinary
Resolution;
4. irrevocably waives any claim that the PNC9 Securityholders
may have against the Trustee arising as a result of any loss or
damage which we may suffer or incur as a result of the Trustee
acting upon this Extraordinary Resolution (including but not
limited to circumstances where it is subsequently found that this
Extraordinary Resolution is not valid or binding on the holders)
and the PNC9 Securityholders further confirm that the PNC9
Securityholders will not seek to hold the Trustee liable for any
such loss or damage;
5. expressly agrees and undertakes to indemnify and hold
harmless the Trustee from and against all losses, liabilities,
damages, costs, charges and expenses which may be suffered or
incurred by them as a result of any claims (whether or not
successful, compromised or settled), actions, demands or
proceedings brought against the Trustee and against all losses,
costs, charges or expenses (including legal fees) which the Trustee
may suffer or incur which in any case arise as a result of the
Trustee acting in accordance with the Extraordinary Resolution and
the Trust Deed;
6. (subject to paragraph 9 of this Extraordinary Resolution)
sanctions and assents to every abrogation, modification, compromise
or arrangement in respect of the rights of the PNC9 Securityholders
appertaining to the PNC9 Securities against the Issuer, whether or
not such rights arise under the Conditions, involved in, resulting
from or to be effected by the amendments referred to in paragraph 1
of this Extraordinary Resolution and their implementation;
7. waives any and all requirements, restrictions and conditions
precedent set forth in the Transaction Documents on any person, in
implementing the Supplemental Trust Deed, this Extraordinary
Resolution and the Security Proposal;
8. discharges and exonerates the Issuer from all liability for
which it may have become or may become responsible under the Trust
Deed, the PNC9 Securities or any Transaction Document or any
document related thereto in respect of any act or omission in
connection with the passing of this Extraordinary Resolution or the
executing of any deeds, agreements, documents or instructions, the
performance of any acts, matters or things to be done to carry out
and give effect to the matters contemplated in the Supplemental
Trust Deed, the Notice or this Extraordinary Resolution;
9. declares that the implementation of this Extraordinary
Resolution shall be conditional on:
(a) the passing of this Extraordinary Resolution; and
(b) the quorum required for, and the requisite majority of votes
cast at, this Meeting being satisfied by Eligible PNC9
Securityholders, irrespective of any participation at this Meeting
by Ineligible PNC9 Securityholders and that, in the event that the
Extraordinary Resolution is passed at this Meeting but such
condition is not satisfied, the chairman of this Meeting and the
Trustee are hereby authorised, directed, requested and empowered to
adjourn this Meeting for such period being not less than 13 clear
days nor more than 42 clear days, and to such place as may be
appointed by the chairman of this Meeting and approved by the
Trustee, for the purpose of reconsidering resolutions 1 to 11 of
this Extraordinary Resolution with the exception of resolution 9(b)
of this Extraordinary Resolution. At any such adjournment of this
Meeting, one or more persons present holding Securities or being
proxies or representatives and holding or representing in aggregate
not less than 25 per cent. of the aggregate principal amount
outstanding of the PNC9 Securities shall form a quorum and shall
have the power to pass such Extraordinary Resolution, and this
condition set out in this paragraph 9(b) will be satisfied if the
quorum required for, and the requisite majority of votes cast at,
such adjourned Meeting are satisfied by Eligible PNC9
Securityholders irrespective of any participation at the adjourned
Meeting by Ineligible PNC9 Securityholders;
10. acknowledges that the following terms, as used in this
Extraordinary Resolution, shall have the meanings given below:
"Consent Solicitation" means the invitation by the Issuer to all
Eligible PNC9 Securityholders to consent to the modification of the
Conditions relating to the PNC9 Securities as described in the
Consent Solicitation Memorandum and as the same may be amended in
accordance with its terms;
"Consent Solicitation Memorandum" means the consent solicitation
memorandum dated 29 September 2020 prepared by the Issuer in
relation to the Consent Solicitation;
"Eligible PNC9 Securityholder" or "Eligible Securityholder"
means each PNC9 Securityholder who is (a) located and resident
outside the United States and not a U.S. person (as defined in
Regulation S under the Securities Act), (b) an eligible
counterparty or a professional client (each as defined in MiFID II)
and, if applicable and acting on a non-discretionary basis, who is
acting on behalf of a beneficial owner that is also an eligible
counterparty or a professional client, in each case in respect of
the PNC9 Securities and (c) otherwise a person to whom the Consent
Solicitation can be lawfully made and that may lawfully participate
in the Consent Solicitation;
"Ineligible PNC9 Securityholder" or "Ineligible Securityholder"
means each PNC9 Securityholder who is not a person to whom the
Consent Solicitation is being made, on the basis that such PNC9
Securityholder is either (i) a U.S. person and/or located or
resident in the United States and/or (ii) is not an eligible
counterparty or a professional client (each as defined in MiFID II)
and, if applicable and acting on a non-discretionary basis, who is
not acting on behalf of a beneficial owner that is also an eligible
counterparty or a professional client and/or (iii) a person to whom
the Consent Solicitation cannot otherwise be lawfully made; and
"Securities Act" means the U.S. Securities Act of 1933, as
amended.
11. agrees that capitalised terms in this document where not
defined herein shall have the meanings given to them in the Consent
Solicitation Memorandum dated 29 September 2020 (a copy of which is
available for inspection as referred to in the Notice)."
EXTRAORDINARY RESOLUTION
IN RESPECT OF THE GBP750,009,000 7.875 PER CENT. FIXED RATE
RESET ADDITIONAL TIER 1 PERPETUAL SUBORDINATED CONTINGENT
CONVERTIBLE SECURITIES CALLABLE 2029
"THAT this Meeting of the holders (together, the "PNC15
Securityholders") of the presently outstanding GBP750,009,000 7.875
per cent. Fixed Rate Reset Additional Tier 1 Perpetual Subordinated
Contingent Convertible Securities Callable 2029 (the "PCN15
Securities") of Lloyds Banking Group plc (the "Issuer"),
constituted by the trust deed dated 1 April 2014 as amended,
restated, modified and/or supplemented from time to time (the
"Trust Deed") made between the Issuer and BNY Mellon Corporate
Trustee Services Limited (the "Trustee") as trustee for, inter
alios, the PNC15 Securityholders:
1. (subject to paragraph 9 of this Extraordinary Resolution)
assents to the modification of the Trust Deed and of the terms and
conditions of the PNC15 Securities (the "Conditions") as set out in
Schedule 2 to the Trust Deed as any of the same may from time to
time be modified or amended and restated in accordance with the
Trust Deed, in order that:
a. the Reset Rate of Interest for the PCN15 Securities
applicable from, and including the First Reset Date will be the sum
of the relevant Adjusted Reset Reference Rate plus the Margin to be
calculated more fully as set out in Annex A to this Notice;
b. the fallbacks relating to the Reset Reference Rate are amended; and
c. new fallbacks are included in case a Benchmark Event occurs
with respect to the Reset Rate of Interest,
all as more fully set out in Annex A to this Notice.
2. (subject to paragraph 9 of this Extraordinary Resolution)
authorises, directs, requests and empowers:
(a) the Issuer and the Trustee to execute a deed supplemental to
the Trust Deed applicable to the PNC15 Securities (the
"Supplemental Trust Deed") to effect the modifications referred to
in paragraph 1 of this Extraordinary Resolution, in the form or
substantially in the form of the draft produced to this Meeting and
for the purpose of identification signed by the chairman thereof,
with such amendments thereto (if any) as the Trustee shall require
or agree to; and
(b) the Issuer and the Trustee to execute and to do all such
deeds, instruments, acts and things as may be necessary, desirable
or expedient in its sole opinion to carry out and to give effect to
this Extraordinary Resolution and the implementation of the
modifications referred to in paragraph 1 of this Extraordinary
Resolution;
3. discharges and exonerates the Trustee from all liability for
which they may have become or may become responsible under the
Trust Deed or the PNC15 Securities or any Transaction Document or
any document related thereto in respect of any act or omission in
connection with the passing of this Extraordinary Resolution or its
implementation, the modifications referred to in paragraph 1 of
this Extraordinary Resolution or the implementation of those
modifications or the executing of any deeds, agreements, documents
or instructions, the performance of any acts, matters or things to
be done to carry out and give effect to the matters contemplated in
the Supplemental Trust Deed, the Notice or this Extraordinary
Resolution;
4. irrevocably waives any claim that the PNC15 Securityholders
may have against the Trustee arising as a result of any loss or
damage which we may suffer or incur as a result of the Trustee
acting upon this Extraordinary Resolution (including but not
limited to circumstances where it is subsequently found that this
Extraordinary Resolution is not valid or binding on the holders)
and the PNC15 Securityholders further confirm that the PNC15
Securityholders will not seek to hold the Trustee liable for any
such loss or damage;
5. expressly agrees and undertakes to indemnify and hold
harmless the Trustee from and against all losses, liabilities,
damages, costs, charges and expenses which may be suffered or
incurred by them as a result of any claims (whether or not
successful, compromised or settled), actions, demands or
proceedings brought against the Trustee and against all losses,
costs, charges or expenses (including legal fees) which the Trustee
may suffer or incur which in any case arise as a result of the
Trustee acting in accordance with the Extraordinary Resolution and
the Trust Deed;
6. (subject to paragraph 9 of this Extraordinary Resolution)
sanctions and assents to every abrogation, modification, compromise
or arrangement in respect of the rights of the PNC15
Securityholders appertaining to the PNC15 Securities against the
Issuer, whether or not such rights arise under the Conditions,
involved in, resulting from or to be effected by the amendments
referred to in paragraph 1 of this Extraordinary Resolution and
their implementation;
7. waives any and all requirements, restrictions and conditions
precedent set forth in the Transaction Documents on any person, in
implementing the Supplemental Trust Deed, this Extraordinary
Resolution and the Security Proposal;
8. discharges and exonerates the Issuer from all liability for
which it may have become or may become responsible under the Trust
Deed, the PNC15 Securities or any Transaction Document or any
document related thereto in respect of any act or omission in
connection with the passing of this Extraordinary Resolution or the
executing of any deeds, agreements, documents or instructions, the
performance of any acts, matters or things to be done to carry out
and give effect to the matters contemplated in the Supplemental
Trust Deed, the Notice or this Extraordinary Resolution;
9. declares that the implementation of this Extraordinary
Resolution shall be conditional on:
(a) the passing of this Extraordinary Resolution; and
(b) the quorum required for, and the requisite majority of votes
cast at, this Meeting being satisfied by Eligible PNC15
Securityholders, irrespective of any participation at this Meeting
by Ineligible PNC15 Securityholders and that, in the event that the
Extraordinary Resolution is passed at this Meeting but such
condition is not satisfied, the chairman of this Meeting and the
Trustee are hereby authorised, directed, requested and empowered to
adjourn this Meeting for such period being not less than 13 clear
days nor more than 42 clear days, and to such place as may be
appointed by the chairman of this Meeting and approved by the
Trustee, for the purpose of reconsidering resolutions 1 to 11 of
this Extraordinary Resolution with the exception of resolution 9(b)
of this Extraordinary Resolution. At any such adjournment of this
Meeting, one or more persons present holding Securities or being
proxies or representatives and holding or representing in aggregate
not less than 25 per cent. of the aggregate principal amount
outstanding of the PNC15 Securities shall form a quorum and shall
have the power to pass such Extraordinary Resolution, and this
condition set out in this paragraph 9(b) will be satisfied if the
quorum required for, and the requisite majority of votes cast at,
such adjourned Meeting are satisfied by Eligible PNC15
Securityholders irrespective of any participation at the adjourned
Meeting by Ineligible PNC15 Securityholders;
10. acknowledges that the following terms, as used in this
Extraordinary Resolution, shall have the meanings given below:
"Consent Solicitation" means the invitation by the Issuer to all
Eligible PNC15 Securityholders to consent to the modification of
the Conditions relating to the PNC15 Securities as described in the
Consent Solicitation Memorandum and as the same may be amended in
accordance with its terms;
"Consent Solicitation Memorandum" means the consent solicitation
memorandum dated 29 September 2020 prepared by the Issuer in
relation to the Consent Solicitation;
"Eligible PNC15 Securityholder" or "Eligible Securityholder"
means each PNC15 Securityholder who is (a) located and resident
outside the United States and not a U.S. person (as defined in
Regulation S under the Securities Act), (b) an eligible
counterparty or a professional client (each as defined in MiFID II)
and, if applicable and acting on a non-discretionary basis, who is
acting on behalf of a beneficial owner that is also an eligible
counterparty or a professional client, in each case in respect of
the PNC15 Securities and (c) otherwise a person to whom the Consent
Solicitation can be lawfully made and that may lawfully participate
in the Consent Solicitation;
"Ineligible PNC15 Securityholder" or "Ineligible Securityholder"
means each PNC15 Securityholder who is not a person to whom the
Consent Solicitation is being made, on the basis that such PNC15
Securityholder is either (i) a U.S. person and/or located or
resident in the United States and/or (ii) is not an eligible
counterparty or a professional client (each as defined in MiFID II)
and, if applicable and acting on a non-discretionary basis, who is
not acting on behalf of a beneficial owner that is also an eligible
counterparty or a professional client and/or (iii) a person to whom
the Consent Solicitation cannot otherwise be lawfully made; and
"Securities Act" means the U.S. Securities Act of 1933, as
amended.
11. agrees that capitalised terms in this document where not
defined herein shall have the meanings given to them in the Consent
Solicitation Memorandum dated 29 September 2020 (a copy of which is
available for inspection as referred to in the Notice)."
INELIGIBLE SECURITYHOLDERS
Submission of Ineligible Holder Instructions
In respect of any Securities held through Euroclear Bank SA/NV
("Euroclear") or Clearstream Banking, S.A. ("Clearstream,
Luxembourg"), the submission of Ineligible Holder Instructions will
be deemed to have occurred upon receipt by the Tabulation Agent
from Euroclear or Clearstream, Luxembourg, as applicable, of a
valid instruction (an "Ineligible Holder Instruction") submitted in
accordance with the requirements of Euroclear or Clearstream,
Luxembourg, as applicable. Each such Ineligible Holder Instruction
must specify, among other things, the aggregate principal amount of
the Securities of the relevant Series to which such Ineligible
Holder Instruction relates, the securities account number at
Euroclear or Clearstream, Luxembourg, as applicable, in which the
relevant Securities are held and whether the Ineligible
Securityholder wishes to instruct the Principal Paying and
Conversion Agent to appoint one or more representatives of the
Tabulation Agent to attend the relevant Meeting (and any such
adjourned such Meeting) and vote in favour of or against the
relevant Extraordinary Resolution. The receipt of such Ineligible
Holder Instruction by Euroclear or Clearstream, Luxembourg, as
applicable, will be acknowledged in accordance with the standard
practices of Euroclear or Clearstream, Luxembourg, as applicable,
and will result in the blocking of the relevant Securities in the
relevant Ineligible Securityholder's account with Euroclear or
Clearstream, Luxembourg, as applicable, so that no transfers may be
effected in relation to the such Securities until the earlier of
(i) the date on which the relevant Ineligible Holder Instruction is
validly revoked (including their automatic revocation on the
termination of the related Consent Solicitation) and (ii) the
conclusion of the relevant Meeting (or, if applicable, any
adjourned such Meeting).
Only Direct Participants (as defined under " Voting and Quorum "
below) may submit Ineligible Holder Instructions. Each beneficial
owner of Securities who is an Ineligible Securityholder and is not
a Direct Participant, must arrange for the Direct Participant
through which such beneficial owner of Securities who is an
Ineligible Securityholder holds its Securities to submit an
Ineligible Holder Instruction on its behalf to Euroclear or
Clearstream, Luxembourg, as applicable, before the deadlines
specified by the relevant clearing system.
By delivering, or arranging for the delivery on its behalf, of
an Ineligible Holder Instruction in accordance with the procedures
described below, a Securityholder shall be deemed to agree,
undertake, acknowledge and represent to the Issuer, the Tabulation
Agent and the Solicitation Agent that at (i) the time of submission
of such Ineligible Holder Instruction, (ii) the Expiration Date and
(iii) the time of the relevant Meeting and at the time of any
adjourned Meeting (and if a Securityholder is unable to make any
such acknowledgement or give any such representation or warranty,
such Securityholder or Direct Participant should contact the
Tabulation Agent immediately):
(a) It is an Ineligible Securityholder.
It is not a person or entity (a "Person") (A) that is, or is
directly or indirectly owned or controlled by a Person that is,
described or designated in (i) the most current "Specially
Designated Nationals and Blocked Persons" list (which as of the
date hereof can be found at:
https://www.treasury.gov/ofac/downloads/sdnlist.pdf) or (ii) the
Foreign Sanctions Evaders List (which as of the date hereof can be
found at: http://www.treasury.gov/ofac/downloads/fse/fselist.pdf)
or (iii) the most current "Consolidated list of persons, groups and
entities subject to EU financial sanctions" (which as of the date
hereof can be found at:
https://eeas.europa.eu/headquarters/headquarters-homepage_en/8442/Consolidated%20list%20of%20sanctions);
or (B) that is otherwise the subject of any sanctions administered
or enforced by any Sanctions Authority, other than solely by virtue
of their inclusion in: (i) the most current "Sectoral Sanctions
Identifications" list (which as of the date hereof can be found at:
https://www.treasury.gov/ofac/downloads/ssi/ssilist.pdf) (the SSI
List), (ii) Annexes 3, 4, 5 and 6 of Council Regulation No.
833/2014, as amended from time to time including by Council
Regulation No. 960/2014 and Council Regulation (EU) No 1290/2014
and Council Regulation (EU) No 2015/1797 (the "EU Annexes"), or
(iii) any other list maintained by a Sanctions Authority, with
similar effect to the SSI List or the EU Annexes. For these
purposes "Sanctions Authority" means each of: (i) the United States
government; (ii) the United Nations; (iii) the European Union (or
any of its member states or the United Kingdom); (iv) any other
equivalent governmental or regulatory authority, institution or
agency which administers economic, financial or trade sanctions;
and (v) the respective governmental institutions and agencies of
any of the foregoing including, without limitation, the Office of
Foreign Assets Control of the US Department of the Treasury, the
United States Department of State, the United States Department of
Commerce and Her Majesty's Treasury. The representation set out
above shall not be sought or given at any time after such
representation is first made if and to the extent that it is or
would be unenforceable by reason of breach of (i) any provision of
Council Regulation (EC) No 2271/1996 of 22 November 1996 (or any
law or regulation implementing such Regulation in any member state
of the European Union or the United Kingdom) or (ii) any
similar
blocking or anti-boycott law in the European Union or the United
Kingdom.
(b) It is assuming all the risks inherent in participating in
the Consent Solicitation and has undertaken all the appropriate
analyses of the implications of the Consent Solicitation without
reliance on the Issuer, the Trustee, the Principal Paying and
Conversion Agent, the Solicitation Agent or the Tabulation
Agent.
(c) It has observed the laws of all relevant jurisdictions,
obtained all requisite governmental, exchange control or other
required consents, complied with all requisite formalities and paid
any issue, transfer or other taxes or requisite payments due from
it in each respect in connection with any vote in relation to the
relevant Extraordinary Resolution, in any jurisdiction and that it
has not taken or omitted to take any action in breach of the
representations or which will or may result in the Issuer, the
Solicitation Agent, the Tabulation Agent or any other person acting
in breach of the legal or regulatory requirements of any such
jurisdiction in connection with any votes in relation to the
relevant Extraordinary Resolution.
(d) It has full power and authority to vote in the relevant
Meeting (or any such adjourned Meeting).
(e) Each Ineligible Holder Instruction is made on the terms and
conditions set out in this notice and therein.
(f) Each Ineligible Holder Instruction is being submitted in
compliance with the applicable laws or regulations of the
jurisdiction in which the Securityholder is located or in which it
is resident or located and no registration, approval or filing with
any regulatory authority of such jurisdiction is required in
connection with each such Ineligible Holder Instruction.
(g) It holds and will hold, until the earlier of (i) the date on
which its Ineligible Holder Instruction is validly revoked, and
(ii) conclusion of the relevant Meeting or (if applicable) any
relevant adjourned Meeting, as the case may be, the Securities the
subject of the Ineligible Holder Instruction, in the relevant
Clearing System and, if it holds its Securities through Euroclear,
or Clearstream in accordance with the requirements of the relevant
Clearing System and by the deadline required by the relevant
Clearing System, it has submitted, or has caused to be submitted,
an Ineligible Holder Instruction to the relevant Clearing System,
as the case may be, to authorise the blocking of such Securities
with effect on and from the date thereof so that no transfers of
such Securities may be effected until the occurrence of any of the
events listed in (i) or (ii) above.
(h) It acknowledges that none of the Issuer, the Trustee, the
Solicitation Agent, the Tabulation Agent and/or the Principal
Paying and Conversion Agent or any of their respective affiliates,
directors, officers, employees or agents has made any
recommendation as to whether to vote on the relevant Extraordinary
Resolution and it represents that it has made its own decision with
regard to voting on the relevant Extraordinary Resolution based on
any independent legal, financial, tax or other advice that it has
deemed necessary to seek.
(i) It acknowledges that all authority conferred or agreed to be
conferred pursuant to these acknowledgements, representations,
warranties and undertakings and every obligation of the
Securityholder offering to vote on the relevant Extraordinary
Resolution shall to the extent permitted by applicable law be
binding upon the successors, assigns, heirs, executors, trustees in
bankruptcy and legal representatives of the Securityholder voting
on the relevant Extraordinary Resolution and shall not be affected
by, and shall survive, the death or incapacity of the
Securityholder voting on the relevant Extraordinary Resolution, as
the case may be.
(j) The Securities have not been and will not be registered
under the Securities Act, or the securities laws of any state or
other jurisdiction of the United States, and may not be offered or
sold in the United States or to, or for the account or benefit of,
U.S. persons, unless an exemption from the registration
requirements of the Securities Act is available (terms used in this
paragraph that are, unless otherwise specified, defined in
Regulation S are used as defined in Regulation S).
(k) The terms and conditions of the Consent Solicitation shall
be deemed to be incorporated in, and form a part of, the Ineligible
Holder Instruction which shall be read and construed accordingly
and that the information given by or on behalf of such
Securityholder in the Ineligible Holder Instruction is true and
will be true in all respects at the time of the relevant Meeting
(or any relevant adjourned Meeting).
(l) No information has been provided to it by the Issuer,
Trustee, the Solicitation Agent or the Tabulation Agent, or any of
their respective directors or employees, with regard to the tax
consequences for Securityholders arising from the participation in
any Consent Solicitation, the implementation of any Extraordinary
Resolution, and it acknowledges that it is solely liable for any
taxes and similar or related payments imposed on it under the laws
of any applicable jurisdiction as a result of its participation in
any Consent Solicitation, and agrees that it will not and does not
have any right of recourse (whether by way of reimbursement,
indemnity or otherwise) against the Issuer, the Trustee, the
Solicitation Agent or the Tabulation Agent, or any of their
respective directors or employees, or any other person in respect
of such taxes and payments.
If the relevant Ineligible Securityholder is unable to give any
of the representations and warranties described above, such
Ineligible Securityholder should contact the Tabulation Agent.
Each Ineligible Securityholder submitting an Ineligible Holder
Instruction in accordance with its terms shall be deemed to have
agreed to indemnify the Issuer, the Solicitation Agent, the
Tabulation Agent, the Principal Paying and Conversion Agent, the
Trustee and any of their respective affiliates, directors,
officers, employees or agents against all and any losses, costs,
fees, claims, liabilities, expenses, charges, actions or demands
which any of them may incur or which may be made against any of
them as a result of any breach of any of the terms of, or any of
the representations, warranties and/or undertakings given pursuant
to, such vote by such Securityholder.
REQUIREMENTS OF U.S. SECURITIES LAWS
If an Extraordinary Resolution is passed and implemented in
respect of any Series, the Supplemental Trust Deed relating to the
relevant Series will contain a statement that, until the expiry of
the period of 40 days after the date of the Supplemental Trust
Deed, sales of the relevant Securities may not be made in the
United States or to U.S. persons unless made outside the United
States pursuant to Rules 903 and 904 of Regulation S.
Securityholders who have submitted and not revoked a valid
Consent Instruction or Ineligible Holder Instruction in respect of
the relevant Extraordinary Resolution by 10 a.m. (London time) (11
a.m. (CET)) on 3 November 2020 (the "Expiration Deadline"), by
which they will have given instructions for the appointment of one
or more representatives of the Tabulation Agent by the Principal
Paying and Conversion Agent as their proxy to vote in favour of or
against (as specified in the relevant Consent Instruction or
Ineligible Holder Instruction) the relevant Extraordinary
Resolution at the relevant Meeting (or any adjourned such relevant
Meeting), need take no further action to be represented at the
relevant Meeting (or any such adjourned such Meeting).
GENERAL INFORMATION
The attention of Securityholders is particularly drawn to the
quorum required for the Securityholders Meetings and for any
adjourned Meeting which is set out in paragraphs 1 , 2 , 3 , 4 and
5 of " Voting and Quorum " below. Having regard to such
requirements, Securityholders are strongly urged either to attend
the Meeting or to take steps to be represented at the Meeting, as
referred to below, as soon as possible.
VOTING AND QUORUM
1. The provisions governing the convening and holding of the
Meeting are set out in Schedule 3 (Provisions for Meetings of
Holders) to the relevant Trust Deed, a copy of which is available
for inspection by the Securityholders during normal business hours
at the specified offices of the Principal Paying and Conversion
Agent on any weekday (public holidays excepted) and on the Issuer's
Website up to and including the date of the Meetings and at the
Meetings.
All of the Securities are represented by a global Security and
are held by a common depositary for Euroclear Bank S.A./N.V.
("Euroclear") and Clearstream Banking, S.A. ("Clearstream,
Luxembourg"). For the purpose of the Meetings, a "Securityholder"
shall mean each person who is for the time being shown in the
records of Euroclear or Clearstream, Luxembourg as the holder of a
particular principal amount outstanding of the Securities.
A Securityholder wishing to attend the relevant Meeting in
person must produce at the Meeting a valid form of proxy issued by
the Principal Paying and Conversion Agent relating to the
Securities in respect of which it wishes to vote.
Any Securityholder who wishes to vote in respect of the relevant
Extraordinary Resolution but does not wish to attend the relevant
Meeting in person should: (i) in the case of a beneficial owner
whose Securities are held in book--entry form by a custodian,
request such beneficial owner's custodian to vote on the relevant
Extraordinary Resolution in accordance with the procedures set out
in Section 4 - " Procedures in connection with the Consent
Solicitations " of the Consent Solicitation Memorandum, or (ii) in
the case of a Securityholder whose Securities are held in
book--entry form directly in the relevant Clearing System, vote on
the relevant Extraordinary Resolution in accordance with the
procedures set out in Section 4 - " Procedures in connection with
the Consent Solicitations " of the Consent Solicitation
Memorandum.
Securityholders should note that the timings and procedures set
out below reflect the requirements for Securityholders' Meetings
set out in the relevant Trust Deed, but that the Clearing Systems
and the relevant intermediaries may have their own additional
requirements as to timings and procedures for voting on the
relevant Extraordinary Resolution. Accordingly, Securityholders
wishing to vote in respect of the relevant Extraordinary Resolution
are strongly urged either to contact their custodian (in the case
of a beneficial owner whose Securities are held in book--entry form
by a custodian) or the relevant Clearing System (in the case of a
Securityholder whose Securities are held in book--entry form
directly in the relevant Clearing System), as soon as possible.
2. At any Meeting, one or more persons present holding
Securities or being proxies or representatives and holding or
representing in aggregate not less than 25 per cent. of the
aggregate Principal Amount Outstanding of the relevant Series of
Securities shall (subject as provided below) form a quorum and
shall have the power to pass the Extraordinary Resolution.
3. To be passed at the relevant Meeting, the Extraordinary
Resolution requires (a) a majority in favour consisting of at least
75 per cent. of the votes cast; or (b) a resolution in writing
signed by or on behalf of Securityholders holding not less than 75
per cent. in principal amount outstanding of the relevant Series of
Securities, which resolution in writing may be contained in one
document or in several documents in like form each signed by or on
behalf of one or more of the Securityholders. The question
submitted to the Meeting shall be decided in the first instance by
a show of hands unless a poll is (before, or on the declaration of,
the result of the show of hands) demanded by the chairman of the
Meeting, the Issuer, the Trustee or by any person present holding a
Security or being a proxy or representative and representing or
holding in the aggregate not less than 2 per cent. of the principal
amount outstanding of the relevant Series of Securities so held or
represented by him a declaration by the Chairman that a resolution
has been carried or carried by a particular majority or lost or not
carried by a particular majority shall be conclusive evidence of
the fact without proof of the number or proportion of the votes
recorded in favour of or against such resolution.
4. The implementation of each Consent Solicitation and the
related Extraordinary Resolution will be conditional on:
(a) the passing of the relevant Extraordinary Resolution; and
(b) the quorum required for, and the requisite majority of votes
cast at, the relevant Meeting being satisfied by Eligible
Securityholders, irrespective of any participation at the relevant
Meeting by Ineligible Securityholders (including the satisfaction
of such condition at an adjourned Meeting) (the "Eligibility
Condition"),
(together, the "Consent Conditions").
5. If passed, the Extraordinary Resolution passed at the Meeting
will be binding upon all the Securityholders of the relevant Series
whether or not present or voting at the Meeting.
DOCUMENTS AVAILABLE FOR INSPECTION
Copies of items (a) to (c) below (together, the "Securityholder
Information") will be available from the date of this Notice, for
inspection during normal business hours at the specified offices of
the Principal Paying and Conversion Agent on any weekday (public
holidays excepted) and on the Issuer's Website up to and including
the date of the Meeting and at the Meeting.
(a) this Notice;
(b) the current drafts of each Supplemental Trust Deed as
referred to in the relevant Extraordinary Resolution set out above
(the "Supplemental Trust Deeds"); and
(c) such other ancillary documents as may be approved by the
Trustee and/or such other relevant party as are necessary or
desirable to give effect to the Securityholder Proposal in
full.
This Notice should be read in conjunction with the
Securityholder Information.
The Securityholder Information may be supplemented from time to
time. Existing Securityholders should note that each Supplemental
Trust Deed may be subject to amendment (where such amendments are
in line with the Proposed Amendments up until 7 days prior to the
date fixed for the relevant Meeting. Should such amendments be
made, blacklined copies (showing the changes from the originally
available Supplemental Trust Deeds) and clean versions will be
available for inspection, at the specified office of the Principal
Paying and Conversion Agent and on the Issuer's Website.
Existing Securityholders will be informed of any such amendments
to the Supplemental Trust Deeds by announcements released on the
regulatory news service of the London Stock Exchange.
CONTACT INFORMATION
Further information relating to the Proposed Amendments can be
obtained from the Solicitation Agent directly:
Lloyds Bank Corporate Markets
plc
10 Gresham Street
London EC2V 7AE
United Kingdom
Telephone number: +44 20 7158
1719 / 1726
Attention: Liability Management
Group
Email: liability.management@lloydsbanking.com
The address of the Principal Paying and Conversion Agent, the
Tabulation Agent and the Trustee are set out below:
Trustee Tabulation Agent
BNY Mellon Corporate Trustee Lucid Issuer Services Limited
Services Limited Tankerton Works
40th Floor 12 Argyle Walk
One Canada Square London WC1H 8HA
London E14 5AL United Kingdom
United Kingdom
Fax: +44 (0)207 964 4637 Telephone number: +44 20 7704
0880
Email: corpsov4@bnymellon.com Email: lloydsbank@lucid-is.com
Attention: Trustee Administration
Manager
Principal Paying and Conversion
Agent
The Bank of New York Mellon,
London Branch,
One Canada Square
London E14 5AL
United Kingdom
Telephone: +44 1202 689 984
Email: corpsov4@bnymellon.com
Attention: Corporate Trust Administration
(Structured Finance)
Securityholders whose Securities are held by Euroclear or
Clearstream, Luxembourg should contact the Tabulation Agent at the
address details above for further information on the process for
voting at the Meeting.
ANNOUNCEMENTS
If the Issuer is required to make an announcement relating to
matters set out in this Notice, any such announcement will be made
in accordance with all applicable rules and regulations via notices
to the Clearing Systems for communication to Securityholders and an
announcement released on the regulatory news service of the London
Stock Exchange.
This Notice is given by:
LLOYDS BANKING GROUP PLC
Dated 21 October 2020
ANNEX A
Amendments to the Relevant Conditions and Trust Deed of the
Securities
(A) Condition 5(d) shall be deleted and replaced with the
following:
5(d) Reset Interest Rate
The Interest Rate will be reset (the "Reset Rate of Interest")
in accordance with this Condition 5 on each Reset Date. The Reset
Rate of Interest in respect of each Reset Period will be determined
by the Calculation Agent on the relevant Reset Determination Date
as the sum of the relevant Adjusted Reset Reference Rate plus the
Margin, converted to a quarterly rate in accordance with market
convention (rounded to three decimal places, with 0.0005 rounded
down).
(B) Following provision shall be included in the Conditions as
new Condition 5(i):
(i) Benchmark discontinuation
A. Notwithstanding the provisions above in Condition 5(d), if a
Benchmark Event occurs in relation to an Original Reference Rate
when any required Reset Rate of Interest (or any component part
thereof), remains to be determined by reference to such Original
Reference Rate, then the following provisions of this Condition
5(i)(A) shall apply.
(i) Independent Adviser
The Issuer shall use its reasonable endeavours to appoint and
consult with an Independent Adviser, as soon as reasonably
practicable, to advise the Issuer in determining a Successor Rate,
failing which an Alternative Rate (in accordance with Condition
5(i)(A)(ii)) and, in either case, an Adjustment Spread (in
accordance with Condition 5(i)(A)(iii)) and any Benchmark
Amendments (in accordance with Condition 5(i)(A)(iv)).
(ii) Successor Rate or Alternative Rate
If the Issuer, following consultation with the Independent
Adviser, determines that:
(A) there is a Successor Rate, then such Successor Rate and the
applicable Adjustment Spread shall subsequently be used in place of
the Original Reference Rate to determine the Reset Rate of Interest
(or the relevant component part(s) thereof) for all relevant future
payments of interest on the AT1 Securities (subject to the further
operation of this Condition 5(i)); or
(B) there is no Successor Rate but that there is an Alternative
Rate, then such Alternative Rate and the applicable Adjustment
Spread shall subsequently be used in place of the Original
Reference Rate to determine the Reset Rate(s) of Interest (or the
relevant component part(s) thereof) for all relevant future
payments of interest on the AT1 Securities (subject to the further
operation of this Condition 5(i)).
(iii) Adjustment Spread
The applicable Adjustment Spread shall be applied to the
Successor Rate or the Alternative Rate (as the case may be) for
each subsequent determination of a Reset Rate of Interest (or a
component part thereof) by reference to such Successor Rate or
Alternative Rate (as applicable).
(iv) Benchmark Amendments
If any Successor Rate or Alternative Rate and, in either case,
the applicable Adjustment Spread is determined in accordance with
this Condition 5(i)(A) and the Issuer, following consultation with
the Independent Adviser, determines (A) that amendments to these
Conditions and/or the Trust Deed are necessary to ensure the proper
operation of such Successor Rate or Alternative Rate and/or (in
either case) the applicable Adjustment Spread (such amendments, the
"Benchmark Amendments"); and (B) the terms of the Benchmark
Amendments, then the Issuer shall, subject to giving notice thereof
in accordance with Condition 5(i)(B), without any requirement for
the consent or approval of AT1 Securityholders, vary these
Conditions and/or the Trust Deed to give effect to such Benchmark
Amendments with effect from the date specified in such notice.
At the request of the Issuer, but subject to receipt by the
Trustee of a certificate signed by two authorised signatories of
the Issuer pursuant to Condition 5(i)(B), the Trustee shall (at the
expense of the Issuer), without any requirement for the consent or
approval of the AT1 Securityholders, be obliged to concur with the
Issuer in effecting any Benchmark Amendments (including, inter
alia, by the execution of a deed or an agreement supplemental to or
amending the Trust Deed and/or the Agency Agreement (as
applicable)) and the Trustee shall not be liable to any party for
any consequences thereof, provided that the Trustee shall not be
obliged so to concur if in the sole opinion of the Trustee doing so
would impose more onerous obligations upon it or expose it to any
additional duties, responsibilities or liabilities or reduce or
amend rights and/or the protective provisions afforded to the
Trustee in these Conditions or the Trust Deed (including, for the
avoidance of doubt, any supplemental trust deed) in any way.
In connection with any such variation in accordance with this
Condition 5(i)(A)(iv), the Issuer shall comply with the rules of
any stock exchange on which the AT1 Securities are for the time
being listed or admitted to trading.
Notwithstanding any other provision of this Condition 5(i)(A),
no Successor Rate or Alternative Rate will be adopted, nor will the
applicable Adjustment Spread be applied, nor will any other
amendment to the terms and conditions of the AT1 Securities be made
to effect the Benchmark Amendments, if and to the extent that, in
the determination of the Issuer, the same could reasonably be
expected to prejudice the qualification of the AT1 Securities as
Tier 1 Capital.
B. Any Successor Rate, Alternative Rate, Adjustment Spread and
the specific terms of any Benchmark Amendments, determined under
this Condition 5(i) will be notified promptly by the Issuer to the
Trustee, the Calculation Agent, the Paying and Conversion Agents,
the Transfer Agents and, in accordance with Condition 17, the AT1
Securityholders. Such notice shall be irrevocable and shall specify
the effective date of the Benchmark Amendments, if any.
No later than notifying the Trustee of the same, the Issuer
shall deliver to the Trustee a certificate signed by two authorised
signatories of the Issuer where a Benchmark Event in relation to an
Original Reference Rate has occurred in accordance with Condition
5(i)(A) above:
(I) confirming (i) that a Benchmark Event has occurred, (ii) the
Successor Rate or, as the case may be, the Alternative Rate, (iii)
the Adjustment Spread and (iv) the specific terms of the Benchmark
Amendments (if any), in each case as determined in accordance with
the provisions of this Condition 5(i);
(II) certifying that the Benchmark Amendments (if any) are
necessary to ensure the proper operation of such Successor Rate or
Alternative Rate and (in either case) the applicable Adjustment
Spread; and
(III) certifying that (i) the Issuer has duly consulted with an
Independent Adviser with respect to each of the matters above or,
if that is not the case, (ii) explaining, in reasonable detail, why
the Issuer has not done so.
The Trustee shall be entitled to rely on such certificate
(without enquiry or liability to any person) as sufficient evidence
thereof. The Successor Rate or Alternative Rate and the Adjustment
Spread and the Benchmark Amendments (if any) specified in such
certificate will (in the absence of manifest error in the
determination thereof and without prejudice to the Trustee's
ability to rely on such certificate as aforesaid) be binding on the
Issuer, the Trustee, the Calculation Agent, the Paying and
Conversion Agents, the Transfer Agents and the AT1
Securityholders.
C. Without prejudice to the obligations of the Issuer under
Condition 5(i)(A), the Original Reference Rate and the fallback
provisions provided for in Condition 5(d), will continue to apply
unless and until the Calculation Agent has been notified of the
Successor Rate or the Alternative Rate (as the case may be) and the
Adjustment Spread and Benchmark Amendments (if any) determined in
accordance with Condition 5(i)(A) and Condition 5(i)(B).
An Independent Adviser appointed pursuant to this Condition 5(i)
shall act in good faith as an expert and (in the absence of bad
faith or fraud) shall have no liability whatsoever to the Trustee,
the Calculation Agent, the Paying and Conversion Agents, the
Transfer Agents or the AT1 Securityholders for any advice given to
the Issuer in connection with any determination made by the Issuer,
pursuant to this Condition 5(i).
In making any determination pursuant to this Condition 5(i), the
Issuer shall act in good faith and, in the absence of bad faith or
fraud, the Issuer shall have no liability whatsoever to the
Trustee, the Calculation Agent, the Paying and Conversion Agents,
the Transfer Agents or the AT1 Securityholders for any such
determination made by it.
(C) Condition 13(b) shall be amended as follows:
(b) Modification of the Trust Deed:
The Trustee may agree, without the consent of the AT1
Securityholders, to (i) any modification of any of the provisions
of the Trust Deed that is of a formal, minor or technical nature or
is made to correct a manifest error, and (ii) any other
modification (except as mentioned in the Trust Deed), and any
waiver or authorisation of any breach or proposed breach, of any of
the provisions of the Trust Deed that is in the opinion of the
Trustee not materially prejudicial to the interests of the AT1
Securityholders. The Trustee shall be obliged to concur with the
Issuer in effecting any Benchmark Amendments in the circumstances
and as otherwise set out in Condition 5(i) (and subject to receipt
of the certificate of the Issuer required pursuant to Condition
5(i)(B)) without the consent of the Securityholders. Any such
modification, authorisation or waiver shall be binding on the AT1
Securityholders and, if the Trustee so requires, shall be notified
to the AT1 Securityholders as soon as practicable.
(D) Condition 19 shall be amended as follows:
(i) Following definitions will be added to Condition 19 in
appropriate places in alphabetical order:
"Adjusted Reset Reference Rate" means the sum, converted to a
semi-annual rate in accordance with market convention, of (i) the
relevant Reset Reference Rate; and (ii) the Reset Reference Rate
Adjustment;
"Adjustment Spread" means either (a) a spread (which may be
positive, negative or zero), or (b) a formula or methodology for
calculating a spread, in each case to be applied to the Successor
Rate or the Alternative Rate (as the case may be) and is the
spread, formula or methodology which:
(i) in the case of a Successor Rate, is formally recommended, or
formally provided as an option for parties to adopt, in relation to
the replacement of the Original Reference Rate with the Successor
Rate by any Relevant Nominating Body; or
(ii) if no such recommendation has been made, or in the case of
an Alternative Rate, the Issuer, following consultation with the
Independent Adviser, determines is customarily applied to the
relevant Successor Rate or Alternative Rate (as the case may be) in
international debt capital markets transactions to produce an
industry-accepted replacement rate for the Original Reference Rate;
or
(iii) if the Issuer determines there is no such spread, formula
or methodology customarily applied, the Issuer determines,
following consultation with the Independent Adviser is recognised
or acknowledged as being the industry standard for over-the-counter
derivative transactions which reference the Original Reference
Rate, where such rate has been replaced by the Successor Rate or
the Alternative Rate (as the case may be);
"Alternative Rate" means an alternative benchmark or screen rate
which the Issuer determines in accordance with Condition
5(i)(A)(ii) is customarily applied in international debt capital
markets transactions for the purposes of determining rates of
interest (or the relevant component part thereof) for a
commensurate interest period and in the same currency as the AT1
Securities;
"Benchmark Amendments" has the meaning given to it in Condition
5(i)(A)(iv);
"Benchmark Event" means, with respect to an Original Reference
Rate:
(i) the Original Reference Rate ceasing to be published for a
period of at least five business days or ceasing to exist; or
(ii) the making of a public statement by the administrator of
the Original Reference Rate that it has ceased or that it will
cease publishing the Original Reference Rate permanently or
indefinitely (in circumstances where no successor administrator has
been appointed that will continue publication of the Original
Reference Rate); or
(iii) the making of a public statement by the supervisor of the
administrator of the Original Reference Rate that the Original
Reference Rate has been or will be permanently or indefinitely
discontinued; or
(iv) the making of a public statement by the supervisor of the
administrator of the Original Reference Rate that means the
Original Reference Rate will be prohibited from being used either
generally or in respect of the AT1 Securities, or that its use will
be subject to restrictions or adverse consequences; or
(v) the making of a public statement by the supervisor of the
administrator of the Original Reference Rate that, the Original
Reference Rate is or will be (or is or will be deemed by such
supervisor to be) no longer representative of its relevant
underlying market; or
(vi) it has or will prior to the next Reset Determination Date
become unlawful for any Paying and Conversion Agent, the
Calculation Agent or the Issuer to calculate any payments due to be
made to any AT1 Securityholder using the Original Reference Rate
(including, without limitation, under the Benchmark Regulation (EU)
2016/1011, if applicable),
provided that the Benchmark Event shall be deemed to occur in
the case of paragraphs (ii) and (iii) above, on the date of the
cessation of the Original Reference Rate or the discontinuation of
the Original Reference Rate, in the case of paragraph (iv) above,
on the date of prohibition of use of the Original Reference Rate
and, in the case of paragraph (v) above, on the date with effect
from which the Original Reference Rate will no longer be (or will
be deemed by the relevant supervisor to no longer be)
representative of its relevant underlying market and which is
specified in the relevant public statement, and, in each case, not
the date of the relevant public statement;
"Independent Adviser" means an independent financial institution
of international repute or an independent adviser of recognised
standing with appropriate expertise appointed by the Issuer at its
own expense under Condition 5(i)(A)(i);
"Original Reference Rate" means the screen rate originally
specified for the purpose of determining the Reset Rate of Interest
(or any relevant component part(s) thereof) on the AT1 Securities
(provided that if, following one or more Benchmark Events, such
originally specified Reset Reference Rate (or any Successor Rate or
Alternative Rate which has replaced it) has been replaced by a (or
a further) Successor Rate or Alternative Rate and a Benchmark Event
subsequently occurs in respect of such Successor Rate or
Alternative Rate (as applicable), the term "Original Reference
Rate" shall be deemed to include any such Successor Rate or
Alternative Rate, as the case may be);
"Relevant Nominating Body" means:
(i) the central bank for the currency to which the screen rate
relates, or any central bank or other supervisory authority which
is responsible for supervising the administrator of the screen
rate; or
(ii) any working group or committee sponsored by, chaired or
co-chaired by or constituted at the request of (a) the central bank
for the currency to which the screen rate relates, (b) any central
bank or other supervisory authority which is responsible for
supervising the administrator of the screen rate, (c) a group of
the aforementioned central banks or other supervisory authorities
or (d) the Financial Stability Board or any part thereof;
"Reset Reference Rate Adjustment" means [-] per cent. (expressed
on an annual basis);[2]
"Successor Rate" means a successor to or replacement of the
Original Reference Rate which is formally recommended by any
Relevant Nominating Body;
(ii) Definitions for 'Margin', 'Reset Period', 'Reset Reference
Rate', 'Mid-Swap Quotations', 'Reset Reference Bank Rate' and
'Screen Page' will be deleted and replaced with the following
definitions in Condition 19 in appropriate places in alphabetical
order:
For the purposes of the PNC9 Securities, "Margin" means 5.01 per
cent. (expressed on a semi-annual basis) and for the purposes of
the PNC15 Securities, "Margin" means 4.83 per cent. (expressed on a
semi-annual basis);
"Reset Period" means the period from (and including) the First
Reset Date to (but excluding) the next Reset Date (such period, the
"First Reset Period"), and each successive period from and
including a Reset Date to but excluding the next succeeding Reset
Date;
"Reset Reference Rate" means in respect of the relevant Reset
Period, (i) the applicable annual mid-swap rate for swap
transactions in pounds sterling (with a maturity equal to 5 years)
where the floating leg pays daily compounded SONIA annually and
calculated and published by ICE Benchmark Administration Limited on
the relevant Reset Determination Date and displayed at 11.15 a.m.
(London time) on the relevant Reset Determination Date on such
Bloomberg or Reuters page (the "Screen Page") or, as the case may
be, on such other information service that may replace Bloomberg or
Reuters, in each case, as may be nominated by ICE Benchmark
Administration Limited; or (ii) if such rate is not displayed on
the Screen Page at such time and date (other than in the
circumstances provided for in Condition 5(i)), the relevant Reset
Reference Bank Rate, where:
"Mid-Swap Quotations" means the arithmetic mean of the bid and
offered rates for the annual fixed leg (calculated on an Actual/365
day count basis) of a fixed for floating interest rate swap
transaction in pounds sterling which (i) has a term commencing on
the relevant Reset Date which is equal to 5 years; (ii) is in an
amount that is representative of a single transaction in the
relevant market at the relevant time with an acknowledged dealer of
good credit in the relevant swap market; and (iii) has a floating
leg based on (subject as otherwise provided pursuant to Condition
5(i)) the overnight SONIA rate compounded for 12-months (calculated
on an Actual/365 day count basis); and
"Reset Reference Bank Rate" means the percentage rate determined
on the basis of the Mid-Swap Quotations provided by the Reset
Reference Banks to the Calculation Agent at or around 11:00 a.m.
(London time) on the relevant Reset Determination Date and,
rounded, if necessary, to the nearest 0.001 per cent. (0.0005 per
cent. being rounded upwards). If at least four quotations are
provided, the Reset Reference Bank Rate will be the rounded
arithmetic mean of the quotations provided, eliminating the highest
quotation (or, in the event of equality, one of the highest) and
the lowest quotation (or, in the event of equality, one of the
lowest). If only two or three quotations are provided, the Reset
Reference Bank Rate will be the rounded arithmetic mean of the
quotations provided. If only one quotation is provided, the Reset
Reference Bank Rate will be the rounded quotation provided. If no
quotations are provided, the Reset Reference Bank Rate will be (i)
in the case of each Reset Period other than the First Reset Period,
the relevant Reset Reference Rate but calculated as at the last
available date preceding the relevant Reset Determination Date on
which such a rate was published; or (ii) in the case of the First
Reset Period, an amount equal to 2.042 per cent[3].
(D) Clause 14.1 (Modification) of the relevant Trust Deed shall
be deleted and replaced with the following:
14.1 Modification: Subject to the Issuer giving such notice to,
and receiving such permission from, the Relevant Regulator as may
from time to time be required by the Relevant Regulator under the
Applicable Regulations, the Trustee may from time to time and at
any time without the consent of the Holders concur with the Issuer
in:
14.1.1 making any modification to the Conditions, this Trust
Deed or the Agency Agreement which in its opinion is not materially
prejudicial to the interests of the Holders; or
14.1.2 making any modification to the Conditions, this Trust
Deed or the Agency Agreement which is of a formal, minor or
technical nature or is made to correct a manifest error,
but such power in Clause 14.1.1 does not extend to any such
modification which require the passing of a special quorum
resolution under paragraph 3 of Schedule 3. In addition, the
Trustee shall be obliged to concur with the Issuer in effecting any
amendments to the Conditions, this Trust Deed or the Agency
Agreement in the circumstances and as otherwise set out in
Condition 5(i) (and subject to receipt of the certificate of the
Issuer required pursuant to Condition 5(i)(B)) without the
requirement for consent of the Holders.
ANNEX B
Pricing Methodology
Rationale for the Proposal
Due to the differences in the nature of LIBOR and SONIA, the
replacement of the LIBOR linked mid-swap rate (specifically being
the mid-rate for a 5 year Sterling fixed-for-floating interest rate
swap (where the floating leg pays 6 month GBP LIBOR semi-annually))
as the Reset Reference Rate for the Securities with a SONIA linked
mid-swap rate (specifically being the mid-rate for a 5 year
Sterling fixed-for-floating interest rate swap (where the floating
leg pays daily compounded SONIA annually)) will require certain
adjustments to the Reset Reference Rate payable in respect of the
Securities to the extent that either Series of Securities remains
outstanding beyond the First Reset Date. The Conditions will be
amended by incorporating an adjustment (the "Reset Reference Rate
Adjustment") which will be added to the Reset Reference Rate when
calculating the relevant Reset Rate of Interest in order to reflect
the difference between LIBOR linked mid-swap rates and SONIA linked
mid-swap rates.
The pricing methodology proposed for the adjustment to the Reset
Reference Rate on conversion of the Reset Reference Rate from a
LIBOR linked mid-swap rate to a SONIA linked mid-swap rate uses
only market observable screen spot rates.
The date from which the proposed change in reference rate is to
occur will be the Effective Date (which is expected to be 5
November 2020)
The determination of the relevant market observable screen spot
rates will take place at or around 2 p.m. (London time) (the
"Pricing Time") on 5 November 2020 (the "Pricing Date", except
where there is an adjournment of the Meeting, in which case the
Pricing Date will be specified in the notice of the adjourned
Meeting). If there is an adjourned Meeting, the adjustment to the
Reset Reference Rate may be different to the amounts which would
have been calculated if the relevant Extraordinary Resolution had
been passed (and the Eligibility Condition satisfied) at the
initial Meeting.
Determination of the Reset Reference Rate Adjustment
The Reset Reference Rate Adjustment for the Securities to be
determined on the Pricing Date and effective on the Effective Date
will be equal to the LIBOR vs SONIA IRS Basis.
The LIBOR vs SONIA IRS Basis is a number of basis points rounded
to the nearest 0.1 basis points (with 0.05 basis points rounded
upwards) as calculated by the Solicitation Agent on the Pricing
Date, as follows:
On the Pricing Date, at or around the Pricing Time, the
Solicitation Agent will determine:
a) the 5 Year SONIA annual mid-swap rate (being the mid-rate for
5 year Sterling fixed-for-floating interest rate swap transactions
(where the floating leg pays daily compounded SONIA annually) as
quoted on Bloomberg page ICAB9); and
b) the 5 Year LIBOR semi-annual mid-swap rate (being the
mid-rate for 5 year Sterling fixed-for-floating interest rate swap
transactions (where the floating leg pays 6 month GBP LIBOR
semi-annually) as quoted on Bloomberg page ICAB9), converted to an
annual rate in accordance with market convention (rounded to three
decimal places, with 0.0005 rounded down)
Thereafter the Solicitation Agent will calculate the LIBOR vs
SONIA IRS Basis by subtracting (a) from (b)
To the extent that either (a) or (b) is not available on the
relevant page on Bloomberg as set out above, both (a) and (b) shall
be as quoted on such other page as may replace it on Bloomberg, or
on such similar or replacement service as may be determined by the
Solicitation Agent in its sole discretion.
The Reset Reference Rate Adjustment will be announced to
Securityholders as soon as practicable following the Pricing Time
on the Pricing Date.
[1]
https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/policy-statement/2020/ps520.pdf
[2] Amount to be determined in accordance with Annex B to the Notice of Securityholder Meetings.
[3] Amount determined by reference to the intra-day high for the
5 year mid-swap rate cited as on 20 March 2014, being the pricing
date for the Securities at the time of their issuance (Source:
Bloomberg).
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October 21, 2020 06:04 ET (10:04 GMT)
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