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24OCT201405403904
OFFERING MEMORANDUM NOT FOR GENERAL DISTRIBUTIONIN THE UNITED
STATES
Guaranteed on a senior secured basis by Arrow Global Guernsey
Holdings Limitedand certain of its subsidiaries
g400,000,000 Senior Secured Floating Rate Notes due 2025
Interest payable on January 1, April 1, July 1 and October 1
Arrow Global Finance plc (the Issuer), a public limited company
incorporated in England and Wales, is hereby offering (the
Offering) e400,000,000 Senior SecuredFloating Rate Notes due 2025
(the Notes).
The Issuer is a finance subsidiary of Arrow Global Guernsey
Holdings Limited (AGGHL), which in turn is a subsidiary of Arrow
Global Group PLC (AGG). The net proceedsof the Offering will be
used to redeem all of the Issuer’s outstanding e335,000,000 Senior
Secured Floating Rate Notes due 2021 (the 2021 Notes) and to repay
a portionof the amounts drawn under the Arrow Global Revolving
Credit Facility.
Interest will be paid on the Notes quarterly in arrear on
January 1, April 1, July 1 and October 1 of each year, beginning on
July 1, 2017. The Notes will bear interest at arate per annum equal
to the three-month Euro Inter-bank Offered Rate (EURIBOR) plus
2.875% per year, reset quarterly, provided that EURIBOR shall never
be less than0%. The Notes will mature on April 1, 2025.
The Issuer may redeem some or all of the Notes on or after April
1, 2019 at the redemption prices set out in this offering
memorandum (this Offering Memorandum). Priorto April 1, 2019, the
Issuer may redeem, at its option, some or all of the Notes at a
redemption price equal to 100% of the principal amount thereof,
plus accrued andunpaid interest, if any, plus the applicable
‘‘make-whole’’ premium, as described in this Offering Memorandum.
Prior to April 1, 2019 the Issuer may redeem up to 40% ofthe
aggregate principal amount of the Notes using the net cash proceeds
from certain equity offerings at a price equal to 102.875% of the
principal amount thereof, plusaccrued and unpaid interest, if any,
if at least 60% of the originally issued aggregate principal amount
of the Notes remains outstanding. Additionally, the Issuer
mayredeem all, but not less than all, of the Notes in the event of
certain developments affecting taxation. Upon the occurrence of
certain events constituting a Change ofControl, as defined herein,
the Issuer may be required to make an offer to repurchase all the
Notes at a redemption price equal to 101% of the principal amount
thereof,plus accrued and unpaid interest, if any.
The Notes will be the general obligations of the Issuer and will
be senior in right of payment to all existing and future
indebtedness of the Issuer that is subordinated in rightof payment
to the Notes, will be pari passu in right of payment among
themselves and with all existing and future indebtedness of the
Issuer that is not subordinated inright of payment to the Notes,
will be effectively senior to all existing and future indebtedness
of the Issuer and its subsidiaries that is unsecured or secured by
liens juniorto the liens securing the Notes, will be effectively
subordinated to all existing and future indebtedness of the Issuer
and its subsidiaries that is secured by liens senior tothe liens
securing the Notes, or secured by property and assets that do not
secure the Notes, to the extent of the value of the property and
assets securing suchindebtedness, and will be effectively
subordinated to all obligations of the subsidiaries of the Issuer
that do not guarantee the Notes.
From the Issue Date, the Notes will be guaranteed (the
Guarantees) on a senior basis by AGGHL, its subsidiary Arrow Global
Investments Holdings Limited (AGIHL)(together, the Parent
Guarantors) and certain other subsidiaries of AGGHL (the Subsidiary
Guarantors and, together with the Parent Guarantors, the
Guarantors). TheNotes will not be guaranteed by AGG.
From the Issue Date, the Notes will be secured by substantially
all of the assets of the Issuer and the Guarantors (the
Collateral), including first-priority security interests inthe
shares of the Issuer and the Subsidiary Guarantors, as described in
‘‘Description of the Notes—Security.’’ The Collateral also secures
our obligations under theIssuer’s e230,000,000 Senior Secured
Floating Rate Notes due 2023 (the 2023 Notes) and the Issuer’s
£220,000,000 5.125% Senior Secured Notes due 2024 (the 2024Notes
and, together with the 2023 Notes, the Existing Notes), and the
Arrow Global Revolving Credit Facility, and may also secure
additional debt in the future. Pursuantto the terms of the
Intercreditor Agreement, any liabilities in respect of obligations
under the Arrow Global Revolving Credit Facility and certain
hedging obligations thatare secured by assets that also secure our
obligations under the Notes and the Guarantees will receive
priority with respect to any proceeds received upon anyenforcement
action over any such assets. The Collateral may be released in
circumstances described in ‘‘Description of the Notes—Security.’’
In the event ofenforcement of the Collateral, the holders of the
Notes will receive proceeds from the Collateral only after the
lenders under the Arrow Global Revolving Credit Facility
andcounterparties to certain hedging obligations have been repaid
in full. See ‘‘Description of the Notes—Security.’’
This Offering Memorandum constitutes a prospectus for the
purpose of part IV of the Luxembourg law dated July 10, 2005 on
prospectuses for securities, as amended,and for the purpose of the
rules and regulations of the Luxembourg Stock Exchange.
There is currently no public market for the Notes. Application
has been made for listing particulars to be approved by the
Luxembourg Stock Exchange and for the Notesto be admitted to the
Official List of the Luxembourg Stock Exchange and to be admitted
for trading on the Euro MTF Market thereof. There can be no
assurance that theNotes offered hereby will be listed and admitted
to trade on the Euro MTF Market. The Euro MTF Market of the
Luxembourg Stock Exchange is not a regulated marketpursuant to the
provisions of Directive 2004/39/EC on markets in financial
instruments.
Investing in the Notes involves a high degree of risk. See
‘‘Risk Factors’’ beginning on page 36.
Issue Price for the Notes: 100% plus accrued interest, if any,
from and including the Issue Date
The Notes and the Guarantees have not been, and will not be,
registered under the United States Securities Act of 1933, as
amended (the U.S. Securities Act), orthe laws of any state or other
jurisdiction of the United States, and may not be offered or sold
within the United States except pursuant to an exemption from, orin
a transaction not subject to, the registration requirements of the
U.S. Securities Act. In the United States, the Offering is being
made only to qualifiedinstitutional buyers (QIBs) within the
meaning of Rule 144A under the U.S. Securities Act (Rule 144A) in
compliance with Rule 144A. Prospective purchasers ofthe Notes that
are QIBs are hereby notified that the seller may be relying on the
exemption from the provisions of Section 5 of the U.S. Securities
Act provided byRule 144A. Outside the United States, the Offering
is being made in reliance on Regulation S under the U.S. Securities
Act (Regulation S). For additionalinformation about eligible
offerees and transfer restrictions, see ‘‘Transfer
Restrictions.’’
The Notes will be issued in registered form in minimum
denominations of e100,000 and integral multiples of e1,000 in
excess thereof. The Notes will be represented byone or more global
notes and we expect to deliver the Notes in book-entry form through
Euroclear Bank SA/NV (Euroclear) and Clearstream Banking,
S.A.(Clearstream) on or about March 29, 2017. See ‘‘Book-Entry;
Delivery and Form.’’
Physical Bookrunners and Global Coordinators
J.P. Morgan Goldman Sachs International HSBC DNB Markets
Joint Bookrunners
ABN AMRO Lloyds Bank Morgan Stanley NatWest Markets
Offering Memorandum dated March 21, 2017
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TABLE OF CONTENTS
Important Information . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
Forward-Looking Statements . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
Use of Terms . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ix
Presentation of Financial and Other Information . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . xiv
Market and Industry Data . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xx
Exchange Rate Information . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxi
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
The Offering . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
Summary Historical Consolidated Financial and Other Information
. . . . . . . . . . . . . . . . . . . . . 26
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
77
Selected Historical Consolidated Financial Data . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . 79
Management’s Discussion and Analysis of Financial Condition and
Results of Operations . . . . 82
Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 129
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
141
Regulation and Compliance . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Management . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
186
Principal Shareholders . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
195
Certain Relationships and Related Party Transactions . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . 196
Description of Other Indebtedness . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
Description of the Notes . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
212
Book-Entry; Delivery and Form . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
Certain Tax Considerations . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
296
Transfer Restrictions . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
299
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
302
Independent Auditors . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
302
Where You Can Find More Information . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . 303
Service of Process and Enforcement of Civil Liabilities . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . 304
Limitations on Validity and Enforceability of Guarantees and
Security and Certain InsolvencyLaw Considerations . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 305
Listing and General Information . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Index to Financial Information . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
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IMPORTANT INFORMATION
In this Offering Memorandum:
• Issuer refers to Arrow Global Finance plc, a public limited
company incorporated under the laws ofEngland and Wales; and
• Parent Guarantors refer to Arrow Global Guernsey Holdings
Limited, a non-cellular companylimited by shares incorporated under
the laws of Guernsey (AGGHL), and Arrow Global InvestmentsHoldings
Limited, a private limited company incorporated in England and
Wales (AGIHL). AGGHLowns 100% of the shares of AGIHL, which in turn
holds 100% of the shares of the Issuer.
The ultimate parent company of the Parent Guarantors, their
respective subsidiaries and the Issuer isArrow Global Group PLC
(AGG), a public limited company incorporated under the laws of
England andWales whose shares are listed on the London Stock
Exchange. AGG is neither a guarantor of the Notesnor otherwise
subject to the Indenture. See ‘‘Summary—Corporate and Financing
Structure’’ for adiagram depicting the simplified corporate
structure of AGG and its consolidated subsidiaries(collectively,
the Consolidated Group). AGG’s registered office is located at
Belvedere, 12 Booth Street,Manchester M2 4AW. AGG’s telephone
number is +44 800 130 0169.
Except where the context otherwise requires or it is otherwise
indicated, AGGHL and its consolidatedsubsidiaries are referred to
collectively as the AGGHL Group, and the Consolidated Group, we, us
andour refer to AGG and its consolidated subsidiaries. In
‘‘Description of the Notes,’’ AGGHL is referred toas the
‘‘Company.’’
In making an investment decision, prospective investors must
rely on their own examination of theConsolidated Group and the
terms of the Offering, including the merits and risks involved. In
addition,neither we nor J.P. Morgan Securities plc, Goldman Sachs
International, HSBC Bank plc, DNB Markets, adivision of DNB Bank
ASA, ABN AMRO Bank N.V., Lloyds Bank plc, Morgan Stanley &
Co.International plc or The Royal Bank of Scotland plc (trading as
NatWest Markets) (the Initial Purchasers)nor any of our or their
respective representatives is making any representation to you
regarding thelegality of an investment in the Notes, and you should
not construe anything in this OfferingMemorandum as legal, business
or tax advice. You should consult your own advisors as to legal,
tax,business, financial and related aspects of an investment in the
Notes. You must comply with all lawsapplicable in any jurisdiction
in which you buy, offer or sell the Notes or possess or distribute
thisOffering Memorandum, and you must obtain all applicable
consents and approvals; neither we nor theInitial Purchasers shall
have any responsibility for any of the foregoing legal
requirements.
We accept responsibility for the information contained in this
Offering Memorandum. To the best of ourknowledge and belief, the
information contained in this Offering Memorandum with regard to us
and oursubsidiaries and the Notes is in accordance with the facts
and does not omit anything likely to affect theimport of such
information. The information contained in this Offering Memorandum
is as of the datehereof. Neither the delivery of this Offering
Memorandum at any time after the date of publication nor
anysubsequent commitment to purchase the Notes shall, under any
circumstances, create an implicationthat there has been no change
in the information set forth in this Offering Memorandum or in
ourbusiness since the date of this Offering Memorandum.
The Initial Purchasers, the Trustee, the Security Agent and the
agents make no representation orwarranty, express or implied, as to
the accuracy or completeness of the information contained in
thisOffering Memorandum. Nothing contained in this Offering
Memorandum is, or shall be relied upon as, apromise or
representation by the Initial Purchasers as to the past or
future.
The information contained in this Offering Memorandum has been
furnished by us and other sources webelieve to be reliable. This
Offering Memorandum contains summaries, believed to be accurate, of
someof the terms of specific documents, but reference is made to
the actual documents, copies of which willbe made available upon
request, for the complete information contained in those documents.
Youshould contact us or the Initial Purchasers with any questions
about the Offering or if you requireadditional information to
verify the information contained in this Offering Memorandum. All
summariesare qualified in their entirety by this reference. Copies
of such documents and other information relatingto the issuance of
the Notes and the Guarantees will be available at the specified
offices of the listingagent in Luxembourg. See ‘‘Listing and
General Information.’’
ii
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By receiving this Offering Memorandum, you acknowledge that you
have not relied on the InitialPurchasers in connection with your
investigation of the accuracy of this information or your
decisionwhether to invest in the Notes.
No person is authorized in connection with any offering made by
this Offering Memorandum to give anyinformation or to make any
representation not contained in this Offering Memorandum and, if
given ormade, any other information or representation must not be
relied upon as having been authorized by theIssuer, the Guarantors
or the Initial Purchasers. The information contained in this
Offering Memorandumis accurate as of the date hereof. Neither the
delivery of this Offering Memorandum at any time nor anysubsequent
commitment to purchase the Notes and the Guarantees shall, under
any circumstances,create any implication that there has been no
change in the information set forth in this OfferingMemorandum or
in the business of the Issuer or the Guarantors since the date of
this OfferingMemorandum.
The Notes and the Guarantees are subject to restrictions on
transferability and resale and may not betransferred or resold,
except as permitted under the U.S. Securities Act and applicable
state securitieslaws, pursuant to registration or exemption
therefrom. So long as the Notes are listed on the Official Listof
the Luxembourg Stock Exchange and admitted to trading on the Euro
MTF Market, the Notes willotherwise be freely transferable and
negotiable. As a prospective investor, you should be aware that
youmay be required to bear the financial risks of this investment
for an indefinite period of time. See ‘‘Plan ofDistribution’’ and
‘‘Transfer Restrictions.’’
AGGHL is not licensed or registered in Guernsey by the Guernsey
Financial Services Commission (theGFSC) or registered or authorized
by the GFSC as a collective investment scheme, and the GFSC hasnot
and will not approve the content or dissemination of this Offering
Memorandum or any otherdocument relating to or in connection with
the Notes and the Guarantees. Pursuant to the Protection
ofInvestors (Bailiwick of Guernsey) Law, 1987, as amended (the POI
Law), AGGHL shall not, in anydocuments issued by it, make any
statements, promises or forecasts that it knows to be
misleading,false or deceptive in a material particular, or
dishonestly conceal any material facts, or recklessly
make(dishonestly or otherwise) a statement, promise or forecast
that is misleading, false or deceptive in amaterial particular.
Failure to comply with the foregoing requirements of the POI Law
is a criminal offence and may renderthe directors of AGGHL liable
to prosecution. Further, any contract agreed with an investor
incontravention of the POI Law may be unenforceable and the
investor may be entitled to a return of anymonies paid.
The Notes and the Guarantees may not be offered directly to the
public in or from within the Bailiwick ofGuernsey other than by
persons regulated under the POI Law or to persons regulated under
any ofGuernsey’s financial services regulatory laws including,
without limitation, a person licensed under thePOI Law and in each
case provided that the offeror and the offering documents comply
with therequirements of the POI Law and all applicable rules,
regulations and guidance notes issued by theGFSC.
We intend to list the Notes on the Official List of the
Luxembourg Stock Exchange for trading on the EuroMTF Market, and
have submitted this Offering Memorandum to the competent authority
in connectionwith the listing application. In the course of any
review by the competent authority, we may be requestedto make
changes to the financial and other information included in this
Offering Memorandum.Comments by the competent authority may require
significant modification or reformulation ofinformation contained
in this Offering Memorandum or may require the inclusion of
additionalinformation, including financial information in respect
of the Guarantors. We may also be required toupdate the information
in this Offering Memorandum to reflect changes in our business,
financialcondition or results of operations and prospects. We
cannot guarantee that our application foradmission of the Notes to
trading on the Euro MTF Market and to list the Notes on the
Official List of theLuxembourg Stock Exchange will be approved and
settlement of the Notes is not conditioned onobtaining this
listing.
We and the Initial Purchasers reserve the right to reject all or
a part of any offer to purchase the Notes, forany reason. We and
the Initial Purchasers also reserve the right to sell less than all
the Notes offered bythis Offering Memorandum or to sell to any
purchaser less than the amount of Notes it has offered
topurchase.
iii
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This Offering Memorandum contains references to credit ratings.
A credit rating is not arecommendation to buy, sell or hold the
Notes or any other securities, and does not comment on theadequacy
of market price or the suitability of any security for a particular
investor. A credit rating may besubject to revision, suspension or
withdrawal at any time by the relevant credit rating agency.
Neither therating agency nor the Issuer is obligated to provide the
holders of the Notes with any notice of anyrevision, suspension or
withdrawal of any rating. The credit ratings referred to in this
OfferingMemorandum have been issued by Standard & Poor’s Credit
Market Services Europe Limited (S&P),which is established in
the European Union and is registered under Regulation (EC) No.
1060/2009 ofthe European Parliament and of the Council of 16
September 2009 on credit rating agencies.
This Offering Memorandum is confidential and has been prepared
by us solely for use in connection withthe Offering. The
distribution of this Offering Memorandum and the offer and sale of
the Notes and theGuarantees are restricted by law in some
jurisdictions. This Offering Memorandum does not constitutean offer
to sell or an invitation to subscribe for or purchase any of the
Notes and the Guarantees in anyjurisdiction in which such offer or
invitation is not authorized or to any person to whom it is
unlawful tomake such an offer or invitation. Each prospective
offeree or purchaser of the Notes and the Guaranteesmust comply
with all applicable laws and regulations in force in any
jurisdiction in which it purchases,offers or sells the Notes and
the Guarantees or possesses or distributes this Offering
Memorandum, andmust obtain any consent, approval or permission
required under any regulations in force in anyjurisdiction to which
it is subject or in which it makes such purchases, offers or sales,
and neither theIssuer nor the Initial Purchasers shall have any
responsibility thereof. See ‘‘Notice to U.S. Investors,’’‘‘Notice
to Certain European Investors,’’ ‘‘Plan of Distribution’’ and
‘‘Transfer Restrictions.’’
Investing in the Notes involves a high degree of risk. See
‘‘Risk Factors’’ beginning on page 36.
TAX CONSIDERATIONS
Prospective purchasers of the Notes are advised to consult their
own tax advisors as to theconsequences of purchasing, holding and
disposing of the Notes, including, without limitation,
theapplication of U.S. federal tax laws to their particular
situations, as well as any consequences to themunder the laws of
any other taxing jurisdiction, and the consequences of purchasing
the Notes at a priceother than the initial issue price. See
‘‘Certain Tax Considerations.’’
STABILIZATION
IN CONNECTION WITH THE ISSUE OF THE NOTES, J.P. MORGAN
SECURITIES PLC (THESTABILIZING MANAGER) (OR PERSONS ACTING ON
BEHALF OF THE STABILIZING MANAGER)MAY OVER-ALLOT NOTES OR EFFECT
TRANSACTIONS WITH A VIEW TO SUPPORTING THEMARKET PRICE OF THE NOTES
AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISEPREVAIL. HOWEVER,
THERE IS NO ASSURANCE THAT THE STABILIZING MANAGER (ORPERSONS
ACTING ON BEHALF OF A STABILIZING MANAGER) WILL
UNDERTAKESTABILIZATION ACTION. ANY STABILIZATION ACTION MAY BEGIN
ON OR AFTER THE DATE ONWHICH ADEQUATE PUBLIC DISCLOSURE OF THE
FINAL TERMS OF THE OFFER OF THE NOTESIS MADE AND, IF BEGUN, MAY BE
ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THEEARLIER OF 30
DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60 DAYS AFTER THE DATEOF
THE ALLOTMENT OF THE NOTES.
NOTICE TO U.S. INVESTORS
Each purchaser of the Notes will be deemed to have made the
representations, warranties andacknowledgements that are described
in this Offering Memorandum under ‘‘Transfer Restrictions.’’
The Notes and the Guarantees have not been and will not be
registered under the U.S. Securities Act orwith the U.S. Securities
and Exchange Commission (the SEC) or any other securities
regulatory authorityof any state or other jurisdiction in the
United States and may not be offered or sold in the United
States,except to QIBs within the meaning of Rule 144A, in reliance
on the exemption from the registrationrequirements of the U.S.
Securities Act provided by Rule 144A. Prospective investors are
hereby notifiedthat sellers of the Notes may be relying on the
exemption from the registration requirements of Section 5of the
U.S. Securities Act provided by Rule 144A. The Notes may be offered
and sold outside the UnitedStates in reliance on Regulation S. For
a description of certain restrictions on transfers of the Notes,
see‘‘Transfer Restrictions.’’
iv
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The securities offered hereby have not been reviewed or
recommended by any U.S. federal or statesecurities commission or
regulatory authority. Furthermore, the foregoing authorities have
not passedupon the merits of the Offering or confirmed the accuracy
or determined the adequacy of this OfferingMemorandum. Any
representation to the contrary is a criminal offense under the laws
of the UnitedStates.
NOTICE TO CERTAIN EUROPEAN INVESTORS
European Economic Area
This Offering Memorandum has been prepared on the basis that all
offers of Notes will be madepursuant to an exemption under the
Prospectus Directive, as amended, as implemented in MemberStates of
the European Economic Area (EEA), from the requirement to produce a
prospectus for offers ofthe Notes. Accordingly, any person making
or intending to make any offer within the EEA of the Notesthat are
subject of the Offering contemplated in this Offering Memorandum
must only do so incircumstances in which no obligation arises for
the Issuer, any of the Guarantors or the Initial Purchasersto
produce a prospectus for such offer. Neither the Issuer nor any
Guarantor nor the Initial Purchasershave authorized, nor do they
authorize, the making of any offer of the Notes through any
financialintermediary, other than offers made by the Initial
Purchasers, which constitute the final placement of theNotes
contemplated in this Offering Memorandum. The expression Prospectus
Directive meansDirective 2003/71/EC (and amendments thereto,
including Directive 2010/73/EU, to the extentimplemented in the
Relevant Member State) and includes any relevant implementing
measure in theRelevant Member State.
In relation to each Member State of the EEA that has implemented
the Prospectus Directive (each, aRelevant Member State), with
effect from and including the date on which the Prospectus
Directive isimplemented in that Relevant Member State (the Relevant
Implementation Date), no offer has beenmade and no offer will be
made of the Notes to the public in that Relevant Member State prior
to thepublication of a prospectus in relation to the Notes that has
been approved by the competent authority inthat Relevant Member
State or, where appropriate, approved in another Relevant Member
State andnotified to the competent authority in that Relevant
Member State, all in accordance with the ProspectusDirective,
except that, with effect from and including the Relevant
Implementation Date, an offer of theNotes may be made to the public
in that Relevant Member State at any time:
(i) to any legal entity which is a qualified investor as defined
in the Prospectus Directive;
(ii) to fewer than 150 natural or legal persons (other than
‘‘qualified investors’’ as defined in theProspectus Directive), as
permitted under the Prospectus Directive, subject to obtaining the
priorconsent of the relevant dealer or dealers nominated by the
Issuer for any such offer; or
(iii) in any other circumstances falling within Article 3(2) of
the Prospectus Directive,
provided that no such offer of Notes shall result in a
requirement for the publication by the Issuer, anyGuarantor or the
Initial Purchasers of a prospectus pursuant to Article 3 of the
Prospectus Directive.
For the purposes of this provision, the expression an ‘‘offer of
Notes to the public’’ in relation to anyNotes in any Relevant
Member State means the communication in any form and by any means
ofsufficient information on the terms of the offer and the Notes to
be offered so as to enable an investor todecide to purchase or
subscribe for the Notes, as such expression may be varied in the
RelevantMember State by any measure implementing the Prospectus
Directive in that Relevant Member State.
Each subscriber for or purchaser of the Notes in the Offering
located within a Relevant Member State willbe deemed to have
represented, acknowledged and agreed that it is a ‘‘qualified
investor’’ within themeaning of Article 2(1)(e) of the Prospectus
Directive. The Issuer, any Guarantor, the Initial Purchasersand
their respective affiliates, and others will rely upon the truth
and accuracy of the foregoingrepresentation, acknowledgement and
agreement. Notwithstanding the above, a person who is not
aqualified investor and who has notified the Initial Purchasers of
such fact in writing may, with the consentof the Initial
Purchasers, be permitted to subscribe for or purchase the Notes in
the Offering.
United Kingdom
This Offering Memorandum is for distribution only to persons who
(i) have professional experience inmatters relating to investments
falling within Article 19(5) of the Financial Services and Markets
Act 2000(Financial Promotion) Order 2005, as amended (the Financial
Promotion Order), (ii) are persons falling
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within Article 49(2)(a) to (d) (high net worth companies,
unincorporated associations, etc.) of theFinancial Promotion Order,
(iii) are outside the United Kingdom (the UK) or (iv) are persons
to whom aninvitation or inducement to engage in investment activity
(within the meaning of Section 21 of theFinancial Services and
Markets Act 2000) in connection with the issue or sale of any Notes
mayotherwise lawfully be communicated or caused to be communicated
(all such persons together beingreferred to as relevant persons).
This Offering Memorandum is directed only at relevant persons
andmust not be acted on or relied on by persons who are not
relevant persons. Any investment orinvestment activity to which
this Offering Memorandum relates is available only to relevant
persons andwill be engaged in only with relevant persons.
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FORWARD-LOOKING STATEMENTS
This Offering Memorandum includes forward-looking statements.
When used in this document, thewords ‘‘anticipate,’’ ‘‘believe,’’
‘‘estimate,’’ ‘‘forecast,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘plan’’ and
‘‘project’’ andsimilar expressions, as they relate to us, our
management or third parties, identify forward-lookingstatements.
Forward-looking statements include statements regarding our
business strategy, financialcondition, results of operations and
market data, as well as any other statements that are not
historicalfacts. These statements reflect beliefs of our
management, as well as assumptions made by ourmanagement and
information currently available to us. Although we believe that
these beliefs andassumptions are reasonable, these statements are
subject to numerous factors, risks and uncertaintiesthat could
cause actual outcomes and results to be materially different from
those projected. Thesefactors, risks and uncertainties expressly
qualify all subsequent oral and written forward-lookingstatements
attributable to us or persons acting on our behalf and include,
among others, the following:
• failure to comply with applicable legislation, regulation or
codes of conduct of the debt purchaseand the broader consumer
credit industry, or changes to the regulatory environment in the
UK,Portugal, France, Belgium, Italy, the Netherlands or any other
jurisdiction where we may operate inthe future, including by reason
of the planned withdrawal of the UK from the EU;
• inability to obtain, share and retain customer data under
privacy, data protection and related laws;
• changes in the economic environment in the markets in which we
operate, including, among otherfactors, as a result of the planned
withdrawal of the UK from the EU;
• deterioration in the value of the debt portfolios we have
purchased or the inability to collect sufficientamounts on our
current and future debt portfolios and future purchases;
• failure of statistical models and analytical tools to
accurately project remaining cash flow from ourdebt portfolios;
• an insufficient supply of debt portfolios available to
purchase, or our inability to obtain sufficientfunding to purchase
further available debt portfolios;
• inability to compete on the basis of price or the loss of
competitive advantages;
• failure, inaccuracy or loss of access to our data analytics
systems, IT systems or proprietarycustomer profiles, or our
competitors’ development of comparable tools;
• loss of key relationships with vendors of debt portfolios,
third party debt collection agencies (DCAs)and other business
partners;
• failure by our third-party suppliers and partners to
adequately perform or comply with applicablelaws and
regulations;
• inability to manage our growth and maintain effective
operations in line with growth;
• security breaches, interruptions in technology, increased
technology costs or an inability tosuccessfully anticipate, manage
or adopt technological advances within our industry;
• changes in our customers’ financial circumstances, including
being subject to personal insolvencyprocedures, and other factors
affecting the ability of our customers to pay their debts;
• seasonal purchase and business patterns;
• negative attention and news regarding the debt collection
industry and individual debt collectors;
• failure to retain senior management and other key
employees;
• effects on our results from our inability to obtain account
documents for some of the accounts thatwe purchase;
• purchase of portfolios containing accounts that are not
eligible to be collected or are subject tolimitations and
requirements imposed by parties selling the portfolios to us;
• revaluation of our purchased loan portfolios;
• inability to meet financial and other reporting requirements
or implement effective internal controland portfolio pricing
standards;
• failure by us, and/or our DCAs, to service underlying accounts
in our debt portfolios;
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• examinations and challenges by tax authorities and ongoing
risks of litigation;
• inability to complete, integrate effectively and realize the
benefits of current or potential futureacquisitions and business
combinations, including achieving any anticipated synergies;
• failure by us, and/or third parties, to protect proprietary
processes and systems;
• purchase of portfolios pursuant to pre-determined fixed
arrangements at higher prices than desired;
• fluctuations in foreign exchange rates; and
• exposure to unexpected risk and potential losses through
derivative transactions.
See ‘‘Risk Factors’’ for further details.
The foregoing factors and other factors described under ‘‘Risk
Factors’’ should not be construed asexhaustive. We do not assume
any obligation to update any forward-looking statements and
disclaimany obligation to update our view of any risks or
uncertainties described herein or to publicly announcethe result of
any revisions to the forward-looking statements made in this
Offering Memorandum, exceptas required by law.
In addition, this Offering Memorandum contains information
concerning our industry generally, which isforward-looking in
nature and based on a variety of assumptions regarding the ways in
which ourindustry will develop. We have based these assumptions on
information currently available to us,including through the market
research and industry reports referred to in this Offering
Memorandum.Although we believe that this information is reliable,
we have not independently verified and cannotguarantee its accuracy
or completeness. If any one or more of these assumptions turn out
to beincorrect, actual market results may differ from those
predicted. While we do not know what impact anysuch differences may
have on our business, if there are such differences, they could
have a materialadverse effect on our future results of operations
and financial condition, and on the trading price of theNotes.
Unless required by law, we assume no obligation to update the
forward-looking statements contained inthis Offering Memorandum to
reflect actual results, changes in assumptions or changes in
factorsaffecting these statements.
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USE OF TERMS
Our Business
In this Offering Memorandum, except where the context otherwise
requires or it is otherwise indicated,with respect to our
business:
• AGGHL Group means AGGHL and its consolidated subsidiaries.
AGGHL was our ultimate parentholding company prior to the
restructuring in connection with the IPO on October 7, 2013,
whenAGG became our ultimate holding company;
• Audit and Risk Committee means the audit and risk committee of
the Board, which existed untilJanuary 25, 2017, when it was
separated into the Audit Committee and the Risk Committee;
• Audit Committee means the audit committee of the Board;
• Board means the board of directors of AGG;
• CAGR means compound annual growth rate;
• Capquest acquisition means the acquisition of the entire
issued share capital of Quest TopcoLimited and its direct and
indirect subsidiaries for £159.5 million in cash by AGIHL on
November 28,2014;
• Capquest Group means Quest Topco Limited and its subsidiaries,
as acquired by AGIHL pursuantto the Capquest acquisition;
• CC Companies means Arrow Global Limited, Arrow Global Massey
Limited, Arrow Global LeghLimited and Capquest Debt Recovery
Limited, which are authorized by the FCA to conductconsumer
credit-related regulated activities in the UK;
• CCA means the UK Consumer Credit Act 1974 and related
secondary legislation;
• CEO means Chief Executive Officer;
• CFO means Chief Financial Officer;
• CIO means Chief Investment Officer;
• CNPD means the Comissão Nacional de Protecção de Dados (the
National Data ProtectionCommission in Portugal);
• Conduct and Compliance Committee means the conduct and
compliance committee of AGG;
• CONC means the FCA’s Consumer Credit sourcebook;
• Consolidated Group means AGG, our ultimate holding company
since October 2013, and itsconsolidated subsidiaries;
• Contingent Collections means collections of overdue
receivables on behalf of third parties;
• COO means Chief Operating Officer;
• CRO means Chief Risk Officer;
• CSA means the UK Credit Services Association;
• DBSG means the UK Debt Buyers and Sellers Group;
• DCAs means debt collection agencies;
• Debt Originators means financial institutions or other initial
credit providers to consumers, certainof which entities choose to
sell Paying Accounts or non-Paying Accounts receivables related
theretoto debt purchasers;
• Debt Sellers means Debt Originators and Secondary Sellers;
• Disclosure Committee means the disclosure committee of the
Board;
• European Economic Area or EEA means the European Union,
Iceland, Norway and Liechtenstein;
• European Union or EU means the union formed by The Treaty on
European Union, which enteredinto force on November 1, 1993;
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• Eurozone means the Member States that have adopted the euro as
their common currency andsole legal tender;
• Experian means Experian PLC;
• FCA means the Financial Conduct Authority, a regulatory body
that regulates financial services‘‘providers’’ and ‘‘activities’’
in the UK;
• FCA Handbook means the FCA’s Handbook of rules and
guidance;
• Forward Flow Agreement means an agreement to sell several
portfolios over a period of time at apre-determined price and
quality of debt;
• FOS means the UK Financial Ombudsman Service;
• FSMA means the Financial Services and Markets Act 2000;
• Gesphone means Gesphone—Serviços de Tratamento e Aquisição
de D́ıvidas S.A., a Portugueseservicer of non-performing loans,
which we acquired on April 1, 2015;
• GFSC means the Guernsey Financial Services Commission;
• Guernsey Data Protection Law means the Data Protection
(Bailiwick of Guernsey) Law, 2001, asamended;
• ICO means the UK Information Commissioner’s Office;
• ISO 27001 means the International Organization for
Standardization’s certificate for informationtechnology, security
techniques, and information security management systems;
• IT means information technology;
• InVesting acquisition means the acquisition of the InVesting
Group by AGIHL on May 4, 2016 fore100.0 million;
• InVesting Group means Arrow Global Investments Holdings
Benelux B.V. (formerly known asInVesting B.V.) and its direct and
indirect subsidiaries;
• London Stock Exchange means London Stock Exchange PLC;
• MCS means Promotoria MCS Holding SAS, a French market leader
in retail banking assets, inwhich we acquired a 15% interest in
December 2014;
• Member State means a member state of the European Union;
• Nomination Committee means the nomination committee of the
Board;
• OFT means the UK Office of Fair Trading;
• Paying Account means an account that has shown at least one
payment over the last three monthsor at least two payments over the
last six months;
• PCB means the Proprietary Collections Bureau;
• POI Law means the Protection of Investors (Bailiwick of
Guernsey) Law, 1987, as amended;
• Portfolio ERC Model means the model used by us to model future
estimated remaining collectionson debt portfolios acquired by
us;
• Portfolio Review Committee means the portfolio review
committee of AGG;
• Portuguese acquisitions means the acquisition of Whitestar on
April 22, 2015 and of Gesphone onApril 1, 2015, and related loan
portfolios, as further described in this Offering Memorandum;
• Redrock acquisition means the acquisition of Redrock Capital
Partners S.A., on February 29, 2016,for £2.9 million;
• Remuneration Committee means the remuneration committee of the
Board;
• Risk Committee means the risk committee of the Board;
• Secondary Seller means a seller of defaulted debt portfolios
where the seller did not provide theinitial credit to the
consumer;
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• TCF means treating customers fairly according to Principle 6
of the FCA’s Principles for Businesses;
• UK means the United Kingdom of Great Britain and Northern
Ireland;
• UK Corporate Governance Code means the UK Corporate Governance
Code dated September2012 issued by the Financial Reporting Council,
and as reissued in September 2014;
• UK Referendum means the UK referendum on EU membership held on
June 23, 2016;
• United States or U.S. means the United States of America, its
territories and possessions, anystate of the United States of
America and the District of Columbia;
• UTCCR means the Unfair Terms in Consumer Contracts Regulations
1999;
• Whitestar means Whitestar Asset Solutions, S.A., a leading
Portuguese servicer of secured andunsecured loans, which we
acquired on April 22, 2015 through our acquisition of shares in its
parentcompany, Silver Parallel S.A. While we acquired only 33.0% of
the shares of Silver Parallel S.A.(which in turn owns 100% of the
shares of Whitestar), we obtained full voting control and a
100%economic interest in Silver Parallel S.A. on payment of the
initial consideration of e19.9 million onApril 22, 2015. On
December 22, 2015, Silver Parallel S.A. was merged into Whitestar
AssetSolutions S.A. On April 1, 2016, we acquired further shares of
Whitestar for e19.3 million, to bringour ownership to 75% of the
shares of Whitestar;
• Zenith acquisition means the proposed acquisition of the
Zenith Group, announced by us onDecember 6, 2016; and
• Zenith Group means Zenith Service S.p.A. and its direct and
indirect subsidiaries.
The Offering; The Notes; Our Debt
In this Offering Memorandum, except where the context otherwise
requires or it is otherwise indicated,with respect to the Offering,
the Notes and our other debt:
• 2020 Indenture means the indenture dated January 29, 2013
among, inter alios, the Issuer, theCompany and The Bank of New York
Mellon, London Branch, as trustee, as supplemented by a
firstsupplemental indenture dated March 28, 2013, a second
supplemental indenture datedDecember 10, 2014, a third supplemental
indenture dated March 19, 2015 and a fourthsupplemental indenture
dated June 3, 2016 (as it may be further amended, supplemented
and/orrestated from time to time);
• 2020 Notes means the Issuer’s £220,000,000 7.875% Senior
Secured Notes due 2020 issuedpursuant to the 2020 Indenture;
• 2021 Indenture means the indenture dated November 4, 2014
among, inter alios, the Issuer, theCompany and The Bank of New York
Mellon, London Branch, as trustee, as supplemented by a
firstsupplemental indenture dated December 10, 2014, a second
supplemental indenture datedSeptember 28, 2015 and a third
supplemental indenture dated June 3, 2016 (as it may be
furtheramended, supplemented and/or restated from time to
time);
• 2021 Notes means the Issuer’s e335,000,000 Senior Secured
Floating Rate Notes due 2021 issuedpursuant to the 2021 Indenture
on November 4, 2014 and on September 28, 2015;
• 2023 Indenture means the indenture dated April 21, 2016 among,
inter alios, the Issuer, theCompany and The Bank of New York
Mellon, London Branch, as trustee, as supplemented by a
firstsupplemental indenture dated June 3, 2016 (as it may be
further amended, supplemented and/orrestated from time to
time);
• 2023 Notes means the Issuer’s e230,000,000 Senior Secured
Floating Rate Notes due 2023 issuedpursuant to the 2023
Indenture;
• 2024 Notes means the Issuer’s £220,000,000 5.125% Senior
Secured Notes due 2024 issuedpursuant to the 2024 Indenture;
• 2024 Indenture means the indenture dated September 9, 2016
among, inter alios, the Issuer, theCompany and The Bank of New York
Mellon, London Branch, as trustee (as it may be furtheramended,
supplemented and/or restated from time to time);
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• Arrow Global Revolving Credit Facility means, as to the period
prior to July 29, 2016, the revolvingcredit facility made available
under the credit agreement entered into on January 29, 2013,
asamended on April 11, 2013, September 6, 2013, December 31, 2014,
March 30, 2015, June 22,2015, December 23, 2015 and February 9,
2016, among the Issuer, the Guarantors, the SecurityAgent and the
other parties named therein, and, from July 29, 2016, means the
revolving creditfacility made available under the credit agreement
entered into on July 29, 2016 and amended onFebruary 24, 2017, and
as it may be further amended from time to time, among the Issuer,
theGuarantors, the Security Agent and the other parties named
therein, with the size of the facility being£215.0 million;
• Collateral means assets that are subject to the security
interests securing the obligations of theIssuer and the Guarantors
under the Notes, the Guarantees, the Existing Notes, the
guaranteesunder the Existing Notes and the Arrow Global Revolving
Credit Facility;
• ERISA means the United States Employee Retirement Income
Security Act of 1974, as amendedfrom time to time, and the
applicable regulations thereunder;
• EURIBOR means the Euro Inter-bank Offered Rate;
• Existing Indentures means the 2023 Indenture and the 2024
Indenture;
• Existing Notes means the 2023 Notes and the 2024 Notes;
• Guarantees means the full and unconditional guarantees of the
Notes by the Guarantors;
• Guarantors means the Parent Guarantors and the Subsidiary
Guarantors;
• IFRS means International Financial Reporting Standards, as
adopted by the European Commissionfor use in the European
Union;
• Indenture means the indenture to be dated as of the Issue Date
and governing the Notes, by andamong the Issuer, the Guarantors,
the Trustee and the Security Agent;
• Indentures means, collectively, the Existing Indentures and
the Indenture;
• Intercreditor Agreement means the intercreditor agreement
originally dated January 29, 2013, asamended and restated on
November 25, 2014 and August 11, 2016, among the Issuer,
theGuarantors, the borrowers under the Arrow Global Revolving
Credit Facility, the trustee under theExisting Notes, the Security
Agent, the facility agent and the other parties named therein, to
whichthe Trustee will accede on the Issue Date in respect of the
Notes, as amended, restated or otherwisemodified or varied from
time to time;
• InVesting Facility means the InVesting Group’s overdraft
credit facility, which also included aguarantee facility, which was
kept in place in connection with the InVesting acquisition.
OnFebruary 24, 2017, the InVesting Facility was terminated, the
amount of e9.7 million (£8.2 million, asconverted to pounds
sterling at a rate of e1.1731 to £1.00, the Bloomberg Composite
Rate onDecember 30, 2016) then outstanding thereunder was repaid
with borrowings under the ArrowGlobal Revolving Credit Facility,
and the e0.3 million of borrowings outstanding under the
guaranteefacility of the InVesting Facility were re-characterized
as an ancillary facility under the Arrow GlobalRevolving Credit
Facility;
• IPO means the initial public offering of AGG, which was
completed in October 2013;
• IRS means the U.S. Internal Revenue Service;
• ISIN means International Securities Identification Number;
• Issue Date means the date of issuance of the Notes;
• LIBOR means the London Inter-bank Offered Rate;
• LTV Ratio has the meaning given in ‘‘Description of Other
Indebtedness—Arrow Global RevolvingCredit Facility’’;
• Non-Guarantor Subsidiaries means all the consolidated
subsidiaries of AGGHL, other than theGuarantors and the Issuer;
• Notes means the Issuer’s e400,000,000 Senior Secured Floating
Rate Notes due 2025, to be issuedpursuant to the Indenture and
offered hereby;
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• Offering means the offering of the Notes;
• Prospectus Directive means Directive 2003/71/EC (and
amendments thereto, includingDirective 2010/73/EU, to the extent
implemented in the Relevant Member State), and includes anyrelevant
implementing measure in the Relevant Member State;
• Qualified Institutional Buyer or QIB means a Qualified
Institutional Buyer as defined in Rule 144A;
• Regulation S means Regulation S under the U.S. Securities
Act;
• Relevant Member State means each Member State of the EEA that
has implemented theProspectus Directive;
• Rule 144A means Rule 144A under the U.S. Securities Act;
• Security Agent means The Royal Bank of Scotland plc;
• SSLTV Ratio has the meaning given in ‘‘Description of Other
Indebtedness—Arrow GlobalRevolving Credit Facility’’;
• Stabilizing Manager means J.P. Morgan Securities plc;
• Subsidiary Guarantors means Arrow Global (Holdings) Limited,
Arrow Global Guernsey Limited,Arrow Global Receivables Management
Limited, Arrow Global Accounts Management Limited,Arrow Global
Limited, Capquest Investments Limited, Capquest Debt Recovery
Limited, ArrowGlobal Europe Limited, Quest Topco Limited, Quest
Bidco Limited, Quest Newco Limited, CapquestGroup Limited, Arrow
Global Investments Holdings Benelux B.V., Fiditon Holding
B.V.,Incassobureau Fiditon B.V., Vesting Finance Holding B.V. and
Vesting Finance Incasso B.V.;
• Total Commitments means the committed financing described in
‘‘Description of OtherIndebtedness—Arrow Global Revolving Credit
Facility’’;
• Trustee means The Bank of New York Mellon, London Branch, as
trustee under the Indenture andthe Existing Indentures; and
• U.S. Securities Act means the United States Securities Act of
1933, as amended.
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PRESENTATION OF FINANCIAL AND OTHER INFORMATION
As more fully described below, we present in this Offering
Memorandum:
• historical financial information for the Consolidated Group,
which comprises the results of AGG andits consolidated
subsidiaries, including the AGGHL Group, the Capquest Group
(following the dateof its acquisition, November 28, 2014) and the
InVesting Group (following the date of its acquisition,May 4,
2016), as of and for the years ended December 31, 2014, December
31, 2015 andDecember 31, 2016, prepared in accordance with
IFRS;
• certain pro forma financial information to illustrate the
impact of the Offering and the use of proceedsthereof to redeem the
2021 Notes in full and to repay a portion of the amounts drawn
under theArrow Global Revolving Credit Facility, as well as the
refinancing of the InVesting Facility withadditional amounts
borrowed under the Arrow Global Revolving Credit Facility, on our
consolidatedfinancial statements had these events occurred on
January 1, 2016 (with respect to consolidatedstatement of
comprehensive income data) or on December 31, 2016 (with respect to
consolidatedbalance sheet data); and
• financial measures not determined in accordance with IFRS.
Financial Information for the Consolidated Group and the AGGHL
Group
Group structure. AGG acquired, by way of share-for-share
exchange, the entire issued share capitalof Arrow Global One
Limited, which in turn had acquired by way of share-for-share
exchange the entireissued share capital of AGGHL (the previous
ultimate holding company of the AGGHL Group) onOctober 7, 2013 as
part of a restructuring of the AGGHL Group in connection with the
IPO. The terms ofthe restructuring required the principles of
merger accounting for group reconstructions to be applied.The
adoption of merger accounting presented AGG as if it had always
been the ultimate parent of theAGGHL Group.
AGG has been the ultimate parent holding company of the AGGHL
Group since October 2013. We haveused the consolidated financial
information of AGG in this Offering Memorandum because, as a
listedcompany, AGG in the ordinary course publishes consolidated
financial and other information andbecause the reporting covenant
in the Existing Indentures provides us, and the reporting covenant
in theIndenture will provide us, the flexibility to provide annual
and quarterly consolidated financial statementsof AGG in lieu of
annual and quarterly consolidated financial statements of AGGHL,
together with adescription of the material differences between the
two sets of financial statements.
Consolidated Group versus the AGGHL Group. Although we have the
flexibility to conduct any ofour operations at AGG or at one or
more subsidiaries of AGG that would not be subsidiaries of
AGGHL(and, accordingly, would not be Guarantors or Restricted
Subsidiaries under the Indenture and wouldnot contribute to the
revenue of the AGGHL Group), to date no such operations are being
conducted.The differences between the AGGHL Group and the
Consolidated Group from a financial reportingstandpoint are
attributable to the following, none of which we consider to be
material:
• the statement of comprehensive income of the Consolidated
Group reflects certain holdingcompany operating expenses at the AGG
level that are not reflected at the AGGHL Group level;
• the balance sheet of the AGGHL Group reflects the intercompany
interest accruing on share-basedtransaction payments from Arrow
Global Limited (AGL) (which is an indirect subsidiary of AGGHL)to
AGG, which has the effect of reducing total equity attributable to
shareholders at AGGHL andincreasing current liabilities of AGGHL,
which are eliminated on consolidation at the ConsolidatedGroup
level; and
• the statement of cash flow of the AGGHL Group reflects the
intercompany loans from AGGHL toAGG to fund dividend payments to
AGG, largely for the payment by AGG of dividends to
itsshareholders, which intercompany loans are eliminated on
consolidation at the ConsolidatedGroup level.
Financial information presented. Unless otherwise indicated, the
financial information as of and forthe years ended December 31,
2014, December 31, 2015 and December 31, 2016 presented in
thisOffering Memorandum is the historical consolidated financial
information of AGG (which is neither aGuarantor nor a Restricted
Subsidiary under the 2021 Indenture or the Existing Indentures, and
will notbe a Guarantor or a Restricted Subsidiary under the
Indenture).
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The consolidated financial statements of AGG as of and for the
years ended December 31, 2014,December 31, 2015 and December 31,
2016 have been audited by KPMG LLP. See ‘‘IndependentAuditors’’ for
further details.
For the year ended December 31, 2015, we have reconsidered the
presentation of income frompurchased loan portfolios and have
combined the previously separate ‘‘Income from purchased
loanportfolios’’ and ‘‘Portfolio write-ups’’ line items into a
single line on the face of our statement ofcomprehensive income, as
we believe this better represents the substance of the revenue
streams. Thepresentation for the year ended December 31, 2014 was
revised accordingly within the comparativeinformation in the
financial statements for the year ended December 31, 2015 and this
new presentationis generally followed throughout this Offering
Memorandum. However, since we did not revise thepublished results
for the year ended December 31, 2014, our results for that year
included in the financialinformation section of this Offering
Memorandum are presented on a historical basis.
We use certain defined terms in this Offering Memorandum to
refer to certain items in our consolidatedfinancial statements. See
‘‘Use of Terms’’ for the relevant definitions. The following table
sets forth thedefined terms used and the corresponding items in our
consolidated financial statements:
As used in this Offering Memorandum As presented in our
consolidated financial statementsArrow Global Revolving Credit
Facility Revolving credit facilityBalance Sheet Statement of
Financial PositionCore Collections Collections in the
periodInterest on 2020 Notes, 2021 Notes, 2023 Senior secured notes
interestNotes and 2024 NotesInVesting Facility Bank
overdraftsNon-Recourse Facility Other borrowingsPortuguese Facility
Bank overdrafts2020 Notes, 2021 Notes, 2023 Notes and Senior
secured notes2024 Notes
When presented in tabular format in this Offering Memorandum,
both the defined term and thecorresponding term used in our
consolidated financial statements are included.
As noted above, we prepare our financial statements in
accordance with IFRS, which differs in varioussignificant respects
from accounting principles generally accepted in the United States
(U.S. GAAP).Moreover, the financial information included in this
Offering Memorandum would not comply with certainrequirements of
the SEC applicable to financial information included in reports
filed with the SEC bydomestic registrants. Compliance with such
requirements would require, among other things, theexclusion of
certain non-IFRS financial measures and would likely require a
different presentation orcharacterization of certain figures, for
example, items that are characterized in our consolidated
financialstatements as non-recurring (which we define as those that
are separately identified by virtue of their sizeand incidence to
allow a full understanding of our underlying performance). For
purposes of this OfferingMemorandum, we have characterized
non-recurring items as exceptional items, as the SEC
permitsadjustments of a performance measure in respect of
non-recurring or unusual items only when thenature of the charge or
gain is such that it is not reasonably likely to recur within two
years or there wasno similar charge or gain within the prior two
years. In making an investment decision, you should relyupon your
own examination of the terms of the Offering and the financial
information contained in thisOffering Memorandum. You should
consult your own professional advisors for an understanding of
thedifferences between IFRS on one hand and U.S. GAAP on the other
hand, and how those differencescould affect the financial
information contained in this Offering Memorandum.
The preparation of financial statements in conformity with IFRS
requires us to use certain criticalaccounting estimates. It also
requires management to exercise its judgment in the process of
applyingour accounting policies. The areas involving a higher
degree of judgment or complexity, or areas whereassumptions and
estimates are significant to the financial statements, are
described in ‘‘Management’sDiscussion and Analysis of Financial
Condition and Results of Operations—Critical Accounting Policiesand
Use of Estimates.’’
We do not present separate financial statements of AGIHL or the
Subsidiary Guarantors in this OfferingMemorandum because all such
entities are wholly owned, directly or indirectly, by AGG and AGGHL
andthe financial position, results of operations and cash flows of
such entities are therefore consolidatedwithin the respective
financial statements included in this Offering Memorandum.
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The financial information and financial statements of the
Consolidated Group, the AGGHL Group and theIssuer included in this
Offering Memorandum are presented in pounds sterling.
Issuer Financial Statements
In connection with the listing of the Notes, we also present in
this Offering Memorandum auditedconsolidated financial statements
of the Issuer as of and for the year ended December 31,
2016,prepared in accordance with IFRS.
Other Financial Information
Financial measures not prepared in accordance with IFRS
We use certain financial measures and related ratios to measure
our performance, including measuresthat are not determined in
accordance with IFRS. We believe that when assessing our
financialperformance, it is important to consider both IFRS
measures included in our consolidated financialstatements and
complementary measures not prepared in accordance with IFRS and not
included in ourconsolidated financial statements. We believe that
these complementary measures that are notdetermined in accordance
with IFRS and not included in our consolidated financial statements
provideinvestors additional useful information relating to the
performance of our purchased loan portfolios.These measures are
used in the calculation of our IFRS financial measures, such as
revenue and thebalance sheet carrying value on purchased loan
portfolios, which are included in our consolidatedfinancial
statements.
Measures and ratios that are presented in, or derived from
measures that are presented in ourconsolidated financial
statements, which are prepared in accordance with IFRS, consist of
the following:
• Core Collections, which are presented in our consolidated
financial statements and meancollections on our Existing
Portfolios;
• Collection Activity Costs, which are presented in our
statement of comprehensive income andrepresent the direct costs of
in-house and external collections related to our purchased
loanportfolios such as commissions paid to third-party outsourced
providers, credit bureau data costs,legal costs associated with
collections, as well as the costs of collecting our asset
managementrevenue;
• Collection Cost Ratio, which is the ratio of Collection
Activity Costs to Core Collections and incomefrom asset
management;
• Existing Portfolios, which mean all debt portfolios that we
own at the relevant point in time, whichare shown as ‘‘purchased
loan portfolios’’ on our balance sheet; and
• Net Core Collections, which are Core Collections less
Collection Activity Costs. We present NetCore Collections in order
to calculate our Net IRR (discussed below).
Non-IFRS measures for which we provide reconciliations to the
most directly comparable IFRSmeasures (and which are also subject
to the qualifications described below) include the following:
• Adjusted EBITDA, which we define as (loss)/profit for the
period adjusted to exclude the effects offinance income and costs
(other than exceptional items), taxation charge on ordinary
activities,exceptional items included under finance income and
costs, profit on disposal of purchased loanportfolios, depreciation
and amortization, foreign exchange gains/(losses)(net),
amortization ofacquisition and bank facility fees (included in
operating expenses), share-based payments (notincluded in
exceptional items), exceptional items included under other
operating expenses andadjusted for the effect of portfolio
amortization.
We present Adjusted EBITDA because we believe that it may
enhance an investor’s understandingof our performance, our ability
to service our debt and other obligations, to maintain our
operationsand to fund our continued growth, and because it is
frequently used by securities analysts, investorsand other
interested parties in the evaluation of companies. We provide the
supplementalreconciliations of Adjusted EBITDA to net cash flow and
to Core Collections because they mayenhance an investor’s
understanding of our cash flow generation that could be used to
service orpay down debt, pay income taxes, purchase new loan
portfolios and for other uses, as asupplemental measure of
profitability. In addition to Gross ERC, our management
monitorsAdjusted EBITDA as a measure of operating cash flow because
it is not impacted by such
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short-term non-cash movements. We believe that Adjusted EBITDA
represents the operating cashflow generation potential of the
business available for the servicing of debt and taxation,
beforeinvestment decisions in portfolio purchases, which are
discretionary;
• Free cash flow pre-financing, taxes and portfolio purchases,
which means Adjusted EBITDAafter the effect of net cash used in
investing activities and working capital movements.
See‘‘Management’s Discussion and Analysis of Financial Condition
and Results of Operations—Liquidity and Capital Resources—Free cash
flow pre-financing, taxes and portfolio purchases’’ for
areconciliation of free cash flow pre-financing, taxes and
portfolio purchases to Core Collections; and
• Net debt, which represents the sum of the outstanding
principal amount of the 2021 Notes, the 2023Notes, the 2024 Notes
(but, going forward, not the 2021 Notes), amounts outstanding under
theArrow Global Revolving Credit Facility, the Portuguese Facility
and the InVesting Facility, amountsoutstanding under the
Non-Recourse Facility and accrued but unpaid interest on
amountsoutstanding under the Arrow Global Revolving Credit
Facility, the Portuguese Facility and theInVesting Facility, less
cash and cash equivalents. With the exception of the discussion
in‘‘Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Liquidity and Capital Resources—Overview,’’
net debt does not reflect deferred consideration inrelation to
acquisition of loan portfolios and deferred consideration in
connection with thePortuguese acquisitions or accrued interest
under the 2021 Notes, the 2023 Notes and the 2024Notes. Net debt
also does not reflect debt issuance costs. Going forward, net debt
will include theprincipal amount of the Notes from the date of
their issuance.
Complementary measures and ratios that are not presented in or
derived from measures that arepresented in our consolidated
financial statements, and are not prepared in accordance with IFRS
(andare subject to the qualifications described below), include the
following:
• 84-Month Gross ERC and 120-Month Gross ERC (together Gross
ERC), which mean ourestimated remaining collections on purchased
loan portfolios over an 84-month or 120-monthperiod, respectively,
representing the expected future Core Collections on purchased
loanportfolios over an 84-month or 120-month period (calculated at
the end of each month, based onour proprietary ERC forecasting
model, as amended from time to time). 84-Month Gross ERC
and120-Month Gross ERC are calculated as of a point in time
assuming no additional purchases aremade thereafter.
• 84-Month Gross ERC and 120-Month Gross ERC are metrics that
are also often used by othercompanies in our industry. We present
these metrics because they represent an estimate of thecash value
of our purchased loan portfolios at any point in time, which is an
importantsupplemental measure for our Board and management to
assess our performance, andunderscores the cash generation capacity
of the assets backing our business. We use120-Month Gross ERC in
addition to 84-Month Gross ERC to reflect the longer term nature
ofour collections because of our high share of financial services
assets, combined with our largeproportion of Paying Accounts.
• The Arrow Global Revolving Credit Facility and the Existing
Indentures currently use, and theIndenture will use, 84-Month Gross
ERC to measure our compliance with certain covenantsand, in certain
circumstances, our ability to incur certain indebtedness under
credit facilitiesand the respective Indentures. Under the Arrow
Global Revolving Credit Facility and theIndentures, Gross ERC is,
or will be, calculated based on projected collections from
PortfolioAssets, which in turn includes a range of receivables
included within the definition of UnderlyingPortfolio Assets. These
Underlying Portfolio Assets may be held directly by us, or could be
heldby third parties. Specifically, we include within Portfolio
Assets (a) Underlying Portfolio Assetsheld by third parties as to
which we have rights to collect and retain amounts generated by
suchUnderlying Portfolio Assets (defined in the Indentures as
Rights to Collect) and (b) UnderlyingPortfolio Assets held by third
parties as to which we have contractual rights or other rights
toamounts generated by such Underlying Portfolio Assets (defined in
the Indentures as Rights toParticipate). Rights to Participate
cover a range of rights to share in pools or other aggregationsof
receivables (based on negotiated percentages) that we do not own
directly or through equityinterests. See ‘‘Description of the
Notes.’’
• 84-Month Gross ERC and 120-Month Gross ERC are projections of
our estimated remainingcollections over an 84 month-period or a
120-month period, respectively, calculated by our
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proprietary Gross ERC forecasting model, which uses our
historical portfolio collectionperformance data, and we cannot
guarantee that we will achieve such collections. Further,
weconstantly refine our methods for calculating 84-Month Gross ERC
and 120-Month Gross ERC.
• The balance sheet value of our purchased loan portfolios is
derived from the same proprietaryGross ERC forecasting model used
to derive 84-Month Gross ERC and 120-Month Gross ERC.The actual
collection periods used for balance sheet valuation are not fixed
at 84 or 120 monthsand vary based on our view of portfolio
characteristics. Accordingly, there are differencesbetween the cash
flow projections used to calculate 84-Month Gross ERC and
120-MonthGross ERC and those used in the calculation of balance
sheet values of purchased loanportfolios.
• 84-Month Gross ERC and 120-Month Gross ERC, as computed by us,
may not be comparableto similar metrics used by other companies in
our industry.
• Our computation of 84-Month Gross ERC and 120-Month Gross ERC
could in the future differfrom the collection forecasts used to
compute and record our purchased loan portfolios on ourbalance
sheet.
• Cash conversion ratio, which represents free cash flow
pre-financing, taxes and portfoliopurchases as a proportion of
Adjusted EBITDA;
• Collections to Date, which means Core Collections to date,
plus putbacks (portions of portfoliosreassigned to the Debt Seller)
plus disposal proceeds on portfolio account sales;
• Effective Interest Rate or EIR, which means under IFRS the
rate that exactly discounts estimatedfuture cash payments or
receipts through the expected life of the financial instrument or,
whenappropriate, a shorter period to the net carrying amount of the
financial asset or financial liability. Forus, this means that the
EIR (which is the loan portfolio’s gross internal rate of return)
is set based onforecast 84-Month Gross ERC at the date of purchase
and the loan portfolio purchase price. EIR isreassessed and may be
adjusted up to 12 months after the purchase of each loan
portfolio;
• Face value of debt, which means the nominal or par value of
such debt (the cost of acquiring suchdebt to us is the purchase
price);
• Gross Cash-on-Cash Multiple, which means Collections to Date
plus the 84-Month Gross ERC or120-Month Gross ERC, as applicable,
all divided by the purchase price for each portfolio;
• Gross IRR, which means a loan portfolio’s gross internal rate
of return calculated using expectedCore Collections for 84 months
from the date of purchase of the loan portfolio;
• Net Cash-on-Cash Multiple, which means Collections to Date
plus the 84-Month Gross ERC or120-Month Gross ERC, as applicable,
net of Collection Activity Costs, all divided by the purchaseprice
for each portfolio; and
• Net IRR, which means a loan portfolio’s internal rate of
return calculated using expected Net CoreCollections for the next
84 months or 120 months, as applicable, subsequent to the date
ofpurchase of the loan portfolio adjusted regularly in line with
Gross ERC.
You should not consider the foregoing items as alternatives to
comparable IFRS measures. Moreover,these measures and related
ratios:
• have limitations as analytical tools and should not be
considered in isolation;
• are not measures of our financial performance or liquidity
under IFRS;
• should not be considered as alternatives to net cash flow from
operating activities or any othermeasure of our liquidity derived
in accordance with IFRS;
• should not be considered as alternatives to (loss)/profit for
the period or any other performancemeasures derived in accordance
with IFRS;
• may not be indicative of our results of operations; and
• do not necessarily indicate whether cash flow will be
sufficient or available for cash requirements.
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In addition, these measures, as we define them, may not be
comparable to other similarly titledmeasures used by other
companies in our industry or otherwise. You should exercise caution
incomparing these measures as reported by us to such measures of
other companies.
In addition, certain measures in this Offering Memorandum are
presented on a constant exchange ratebasis to enhance their
comparability period-to-period. To calculate such measures on a
constantexchange rate basis, we have adjusted the prior period item
such that the foreign currency conversionapplied to that item is
made using the same exchange rate as was applied to that item in
the currentperiod.
Pro Forma Financial Information
We present in this Offering Memorandum certain information and
certain ratios that give pro forma effectto the Offering and the
use of the proceeds thereof to redeem all of the Issuer’s
outstanding 2021 Notesand to repay a portion of the amounts drawn
under the Arrow Global Revolving Credit Facility, asdescribed in
‘‘Use of Proceeds’’, as well as the refinancing of the InVesting
Facility with additionalamounts borrowed under the Arrow Global
Revolving Credit Facility. The pro forma adjustments assumethat all
of these events occurred on January 1, 2016 (with respect to
consolidated statement ofcomprehensive income data) or December 31,
2016 (with respect to consolidated balance sheet data).The pro
forma financial information also excludes amounts outstanding under
the Non-Recourse Facilityas it is non-recourse to us. The pro forma
financial information is for informational purposes only anddoes
not necessarily present what our results would actually have been
had the Offering (and the use ofproceeds thereof) actually occurred
on January 1, 2016 (with respect to consolidated statement
ofcomprehensive income data) or December 31, 2016 (with respect to
consolidated balance sheet data),and should not be used as the
basis of projections for our results of operations or financial
condition forany future period. The pro forma financial information
is not calculated in accordance with IFRS, has notbeen prepared in
accordance with the requirements of Regulation S-X of the SEC, the
ProspectusDirective or any generally accepted accounting standards,
and has not been audited or reviewed inaccordance with applicable
auditing standards. Any reliance you place on this information
should fullytake this into consideration.
Illustrative Data
This Offering Memorandum also contains certain illustrative
data. The illustrative data are intended toprovide a high level
overview of our business model, and to provide background for some
of our keyfinancial metrics, which, we believe, is beneficial to
investors. They have not been prepared on the basisof any
recognized accounting framework or in accordance with any
recognized accounting guidance.The illustrative data are based on
hypothetical assumptions, and as such may not give a fair
andaccurate view of our future financial position, results of
operations, cash flows or prospects.
Rounding
Certain numerical figures included in this Offering Memorandum
have been rounded. Discrepancies intables between totals and the
sums of the amounts listed may occur due to such rounding.
Currency Presentation
In this Offering Memorandum, references to pounds sterling, £,
sterling, British pound, GBP, pence or pare to the lawful currency
of the UK, references to euro, EUR or e are to the currency
introduced at thestart of the third stage of European Economic and
Monetary Union pursuant to the Treaty establishingthe European
Community, as amended, and references to U.S. dollars, USD, US$ or
$ are to the lawfulcurrency of the United States.
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MARKET AND INDUSTRY DATA
We obtained market data and certain industry data and forecasts
included in this Offering Memorandumfrom internal company surveys,
market research, consultant surveys, publicly available
information,reports of governmental agencies and industry
publications and surveys. We use:
• forecast industry data for a period from 2014 up to 2020
provided to us by Ernst & Young LLP (EY);
• a report entitled ‘‘Europe Securitisations Outstanding’’
provided by the Securities Industry andFinancial Markets
Association (SIFMA);
• market updates prepared by PriceWaterhouseCoopers’s (PwC)
Portfolio Advisory Group entitled‘‘Market Update Q3 2015,’’
‘‘Market Update Q4 2015,’’ ‘‘Market Update Q1 2016’’ and
‘‘MarketUpdate Q2 2016’’;
• a report of PwC regarding the European Bank Restructuring
Conference held in March 2016 entitled‘‘Capitalising on the
Acceleration in Bank Restructuring’’;
• data published by the European Central Bank, the European
Banking Authority and theUK Parliament;
• reports of Deloitte LLP (Deloitte) entitled ‘‘Uncovering
opportunities in 2017—Deloitte DeleveragingEurope 2016–2017’’ and
‘‘Deloitte Deleveraging Europe 2015-2016’’;
• a report of Oliver Wyman Ltd (Oliver Wyman) and Intrum
Justitia AB (Intrum Justitia) entitled‘‘European Retail and SME
Credit Recovery Time?’’; and
• a report of KPMG International Cooperative (KPMG) entitled
‘‘European Debt Sales 2016.’’
Industry surveys, publications, consultant surveys and forecasts
generally state that the informationcontained therein has been
obtained from sources believed to be reliable, but that the
accuracy andcompleteness of such information is not guaranteed. We
have not independently verified any of the datafrom third-party
sources, nor have we ascertained the underlying economic
assumptions relied upontherein. Similarly, internal surveys,
industry forecasts and market research, which we believe to
bereliable based upon our management’s knowledge of the industry,
have not been independentlyverified. We do, however, accept
responsibility for the correct reproduction of this
information.Statements as to our market position are based on
recently available data. While we are not aware of anymisstatements
regarding our industry data presented herein, our estimates involve
risks anduncertainties and are subject to change based on various
factors, including those discussed under‘‘Risk Factors.’’
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EXCHANGE RATE INFORMATION
Pounds Sterling and Euro
The following table sets forth, for the periods indicated, the
Bloomberg Composite Rate (New York)expressed as euros per £1.00.
The Bloomberg Composite Rate is a ‘‘best market’’ calculation, in
which,at any point in time, the bid rate is equal to the highest
bid rate of all contributing bank indications and theask rate is
set to the lowest ask rate offered by these banks. The Bloomberg
Composite Rate is amid-value rate between the applied highest bid
rate and the lowest ask rate. Neither we nor the InitialPurchasers
make any representation that the sterling or the euro amounts
referred to in this OfferingMemorandum have been, could have been
or could be, in the future, converted into euros or sterling, asthe
case may be, at any particular rate, if at all.
Euro per £1.00Period End Average(1) High Low
Year endedDecember 31, 2012 . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 1.2317 1.2332 1.2857 1.1774December 31, 2013 .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2041 1.1779
1.2343 1.1433December 31, 2014 . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 1.2876 1.2410 1.2876 1.1908December 31, 2015 .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3571 1.3774
1.4416 1.2743December 31, 2016 . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 1.1731 1.2242 1.3654 1.0967
Month endedOctober 31, 2016 . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 1.1150 1.1190 1.1455 1.0967November 30,
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1810
1.1539 1.1810 1.1074December 31, 2016 . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 1.1731 1.1835 1.1947 1.1691January 31,
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1649 1.1621 1.1789 1.1365February 28, 2017 . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 1.1705 1.1736 1.1805
1.1570March 31, 2017 (through March 15, 2017) . . . . . . . . . . .
. 1.1451 1.1531 1.1675 1.1397
(1) The average rate for a year means the average of the closing
rates of each business day during such year. The average ratefor a
month, or for any shorter period, means the average of the closing
rates of each business day on each day during suchmonth or shorter
period.
The euro per pound sterling exchange rate on March 15, 2017 was
e1.1451 to £1.00.
This Offering Memorandum contains translations of certain pounds
sterling amounts into euros and ofcertain euro amounts into pounds
sterling. Unless otherwise stated, such euro amounts are
translatedinto pounds sterling at the rate of e1.1731 to £1.00, the
Bloomberg Composite Rate on December 30,2016.
Fluctuations of the pound sterling relative to the euro have a
significant effect on the translation intopounds sterling of our
euro assets, liabilities, revenue and expenses, and may continue to
do so in thefuture. For further information on the impact of
fluctuations in exchange rates on our operations, see‘‘Risk
Factors—Risks Relating to Our Business—We are subject to
fluctuations in foreign exchangerates.’’
Pounds Sterling and U.S. Dollars
The following table sets forth, for the periods indicated, the
Bloomberg Composite Rate expressed asU.S. dollars per £1.00.
Neither we nor the Initial Purchasers make any representation that
the poundsterling or the U.S. dollar amounts referred to in this
Offering Memorandum have been, could have been
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or could be, in the future, converted into U.S. dollars or
pounds sterling, as the case may be, at anyparticular rate, if at
all.
U.S. dollars per £1.00Period End Average(1) High Low
Year endedDecember 31, 2012 . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 1.6255 1.5852 1.6279 1.5318December 31, 2013 .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6557 1.5649
1.6557 1.4867December 31, 2014 . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 1.5577 1.6476 1.7166 1.5517December 31, 2015 .
. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4736 1.5285
1.5883 1.4632December 31, 2016 . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 1.2340 1.3554 1.4877 1.2123
Month endedOctober 31, 2016 . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 1.2242 1.2334 1.2842 1.2123November 30,
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2506
1.2441 1.2596 1.2243December 31, 2016 . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 1.2340 1.2472 1.2732 1.2226January 31,
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.2579 1.2354 1.2634 1.2047February 28, 2017 . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 1.2380 1.2488 1.2659
1.2380March 31, 2017 (through March 15, 2017) . . . . . . . . . . .
. 1.2291 1.2223 1.2293 1.2153
(1) The average rate for a year means the average of the closing
rates of each business day during such year. The average ratefor a
month, or for any shorter period, means the average of the closing
rates of each business day on each day during suchmonth or shorter
period.
The U.S. dollar per pound sterling exchange rate on March 15,
2017 was $1.2291 to £1.00.
Euros and U.S. Dollars
The following table sets forth, for the periods indicated, the
Bloomberg Composite Rate expressed asU.S. dollars per e1.00.
Neither we nor the Initial Purchasers make any representation that
the euro or theU.S. dollar amounts referred to