As filed with the Securities and Exchange Commission on July 9, 1998
Securities Act File No. 333-_____
Investment Company Act File No. 811-____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
Form N-2
|X| Registration Statement Under The Securities Act of 1933
| | Pre-Effective Amendment No.
| | Post-Effective Amendment No.
and/or
|X| Registration Statement Under The Investment Company Act of 1940
| | Amendment No.
(check appropriate box or boxes)
ABC Exchangeable Preferred Trust
(Exact Name of Registrant as Specified in Charter)
c/o Puglisi & Associates
850 Library Avenue
Suite 204
Newark, Delaware 19715
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (302) 738-6680
RL&F Service Corp.
One Rodney Square
10th Floor
10th and King Streets
Wilmington, Delaware 19801
(Name and Address of Agent for Service)
Copy to:
Craig E. Chapman, Esq.
Brown & Wood LLP
One World Trade Center
New York, New York 10048-0557
Approximate date of proposed public offering: As soon as practicable
after the effective date of this Registration Statement.
If any securities being registered on this form will be offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities Act
of 1933, as amended, other than securities offered in connection with a
dividend reinvestment plan, check the following box. | |
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. | |
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. | |
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. | |
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
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Amount Proposed Maximum Proposed Maximum Amount of
Title of Securities Being Offering Price Aggregate Offering Registration
Being Registered Registered Per Share(1) Price(1) Fee(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Securities
representing shares of
beneficial interest.......... 40,000 Shares $25.00 $1,000,000 $295.00
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Transmitted to the designated lockbox at Mellon Bank in Pittsburgh, PA.
The Registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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<PAGE>
CROSS-REFERENCE SHEET*
<TABLE>
<CAPTION>
Item Number in Form N-2 Caption in Prospectus
PART A--INFORMATION REQUIRED IN A PROSPECTUS
<S> <C>
1. Outside Front Cover........................... Front Cover Page
2. Inside Front and Outside Back Cover Page...... Front Cover Page; Inside Front Cover Page; Underwriting
3. Fee Table and Synopsis........................ Prospectus Summary; Fee Table
4. Financial Highlights.......................... Not Applicable
5. Plan of Distribution.......................... Front Cover Page; Prospectus Summary; Net Asset Value; Underwriting
6. Selling Shareholders.......................... Not Applicable
7. Use of Proceeds............................... Use of Proceeds and Collateral Arrangements; Investment Objective
and Policies
8. General Description of the Registrant......... Front Cover Page; Prospectus Summary; The Trust; Investment
Objective and Policies; Investment Restrictions; Risk Factors;
Dividends and Distributions; Additional Information
9. Management.................................... Trustees; Management Arrangements
10. Capital Stock, Long-Term Debt and Other
Securities.................................... Description of Trust Securities
11. Defaults and Arrears on Senior Securities..... Not Applicable
12. Legal Proceedings............................. Not Applicable
13. Table of Contents of the Statement of
Additional Information........................ Not Applicable
PART B--INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
14. Cover Page.................................... Not Applicable
15. Table of Contents............................. Not Applicable
16. General Information and History............... Not Applicable
17. Investment Objective and Policies............. Prospectus Summary; Investment Objective and Policies; Investment
Restrictions
18. Management.................................... Trustees; Management Arrangements
19. Control Persons and Principal Holders of
Securities ................................... Management Arrangements; Underwriting; Legal Matters; Experts
20. Investment Advisory and Other Services........ Management Arrangements
21. Brokerage Allocation and Other Practices...... Investment Objective and Policies
22. Tax Status.................................... Certain United States Federal Income Tax Considerations
23. Financial Statements.......................... Experts; Independent Auditors' Report; Statement of Assets,
Liabilities and Capital
</TABLE>
PART C--OTHER INFORMATION
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
__________
* Pursuant to the General Instructions to Form N-2, all information required
to be set forth in Part B: Statement of Additional Information has been
included in Part A: The Prospectus.
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus, one to
be used in connection with an underwritten offering in the United States and
Canada (the "U.S. Prospectus"), and one to be used in connection with a
concurrent international underwritten offering outside the United States and
Canada (the "International Prospectus" and, together with the U.S. Prospectus,
the "Prospectuses"). The Prospectuses will be identical in all respects except
for the front cover page, the section entitled "Underwriting" and the outside
back cover page.
The form of the U.S. Prospectus is included herein and the form of
the front cover page, "Underwriting" section and outside back cover page of
the International Prospectus are included following the back cover page of the
U.S. Prospectus as pages X-1 through X-5.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
PROSPECTUS
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED July 8, 1998
________ Trust Securities
ABC Exchangeable Preferred Trust
Of the total of ______ Trust Securities Exchangeable for Preference
Shares (the "Trust Securities") of ABC Exchangeable Preferred Trust (the
"Trust") being offered, ______ Trust Securities initially are being offered in
the United States and Canada by the U.S. Underwriters (the "U.S. Offering")
and _______ Trust Securities initially are being offered in a concurrent
international offering outside the United States and Canada by the
International Managers (the "International Offering" and, together with the
U.S. Offering, the "Offerings"). The public offering price and the
underwriting discount per Trust Security are identical for both of the
Offerings. See "Underwriting."
Each of the Trust Securities offered hereby will represent a
proportionate share of a beneficial ownership interest in the Trust and will
be sold at an initial public offering price of US$25. Except as described
herein, holders of the Trust Securities will receive non-cumulative dividend
distributions in an amount equal to US$_____ per Trust Security per annum,
payable quarterly in arrears in an amount equal to US$______ per Trust
Security on each ________, _______, _______, and _____ of each year (each, a
"Dividend Payment Date"), to holders of record as of the immediately
preceding _______, _______, ______ and _____, respectively (each, a "Record
Date"). The first distribution in respect of the period from and including the
original issue date (the "Issue Date") to but excluding _____, 1998 will equal
US$_______ per Trust Security.
The Trust is a newly-created Delaware business trust established for
the sole purpose of issuing the Trust Securities and investing the proceeds
thereof in and holding ______% Mandatorily Redeemable Debt Securities due 2048
(the "Debt Securities") issued by [NAME], a special purpose unlimited company
incorporated under the laws of, and domiciled in, the United Kingdom (the
"U.K. Company"), with an aggregate principal amount equal to such proceeds.
The Trust's investment objective is to distribute to the holders of Trust
Securities (a) pro rata based on the number of Trust Securities outstanding
the interest the Trust receives on the Debt Securities from time to time and
(b) upon the occurrence of an Exchange Event (as defined herein), the proceeds
of the redemption of the Debt Securities, which will be American Depositary
Receipts ("ADRs") evidencing, for each Trust Security, one American Depositary
Share ("ADS") representing four fully paid non-cumulative preference shares,
liquidation preference US$6.25 per share (the "ABC Preference Shares"), issued
by [NAME] ("ABC"), provided that, if the Exchange Event is the redemption of
the ABC Preference Shares for cash, holders of Trust Securities will be
entitled to receive US$25 per Trust Security and not ADRs. The ABC Preference
Shares will accrue non-cumulative dividends at the rate of US$______ per share
per annum, payable quarterly in arrears in an amount equal to US$_______ per
share on each Dividend Payment Date to holders of record as of the immediately
preceding Record Date. See "Investment Objective and Policies." (continued on
following page) See "Risk Factors," beginning on page 14 of this Prospectus,
for certain considerations relevant to an investment in the Trust Securities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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Price to Sales Proceeds to
Public Load(1) Trust(2)(3)
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<S> <C> <C> <C>
Per Trust Security.................................. $ (3) $
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Total(4)............................................ $ (3) $
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</TABLE>
(1) In view of the fact that the proceeds of the sale of the Trust
Securities will ultimately be invested in the ABC Preference
Shares, ABC has agreed to indemnify the several U.S.
Underwriters and the International Managers (together, the
"Underwriters") against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(2) Before deducting estimated expenses of $___________ payable by
the Trust.
(3) In view of the fact that the proceeds of the sale of the Trust
Securities will ultimately be invested in the ABC Preference
Shares, ABC has agreed to pay the Underwriters, as
compensation, $___ per Trust Security (or $___ in the aggregate
if the Underwriters' over-allotment options are exercised in
full). See "Underwriting."
(4) The Trust has granted the U.S. Underwriters and the
International Managers options, exercisable for 30 days from
the date hereof, to purchase up to _______ and _______
additional Trust Securities, respectively (subject to decrease
pro rata as a result of the issuance and sale of Trust
Securities in connection with the formation of the Trust),
solely to cover over-allotments, if any. If all such Trust
Securities are purchased, the total Price to Public and
Proceeds to Trust will be $_______ and $______, respectively.
See "Underwriting."
The Trust Securities are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, and
subject to approval of certain legal matters by counsel for the Underwriters
and certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the Trust Securities will be made through the
facilities of The Depository Trust Company on or about , 1998.
Merrill Lynch & Co. [Co-Managers]
________________
The date of this Prospectus is , 1998.
<PAGE>
(continued from cover page)
The Trust will not be managed like a typical closed-end investment
company. The Trust has adopted a fundamental policy that 100% of its portfolio
will be invested in the Debt Securities and that the Debt Securities may not
be disposed of during the term of the Trust other than in connection with an
Exchange Event. For information concerning the ADSs that may be received by
the holders of Trust Securities upon the occurrence of an Exchange Event and
the ABC Preference Shares represented thereby, see the accompanying prospectus
of ABC. The Trust Securities are a suitable investment only for investors who
are able to understand the unique nature of the Trust and the economic
characteristics of the Debt Securities, and the ADSs and the ABC Preference
Shares that may be issued upon an Exchange Event. See "Investment Objective
and Policies."
The Trust will be treated as a grantor trust for U.S. Federal income
tax purposes. In general, for U.S. Federal income tax purposes no gain or loss
should be recognized by U.S. holders of the Trust Securities upon an exchange.
However, U.S. holders will recognize taxable gain or loss upon receipt of
cash, if any, upon an exchange or dissolution of the Trust. See "Certain
United States Federal Income Tax Considerations."
Application will be made to list the Trust Securities on the New
York Stock Exchange (the "NYSE"). Prior to the Offerings there has been no
public market for the Trust Securities. Shares of closed-end investment
companies have in the past frequently traded at a discount from their net
asset values and initial public offering prices. The risk of loss associated
with this characteristic of closed-end investment companies may be greater for
investors expecting to sell shares of a closed-end investment company soon
after the completion of an initial public offering.
This Prospectus sets forth concisely information about the Trust
that a prospective investor ought to know before investing and should be read
and retained for future reference.
_____________________________________
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE TRUST
SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>
PROSPECTUS SUMMARY
The following summary should be read in conjunction with the more
detailed information appearing elsewhere in this Prospectus. Unless otherwise
indicated, the information contained in this Prospectus assumes that the
Underwriters' over-allotment option is not exercised.
The Trust
ABC Exchangeable Preferred Trust is a newly-created Delaware
business trust that will be registered as a non-diversified closed-end
management investment company under the U.S. Investment Company Act of 1940,
as amended (the "Investment Company Act"). The term of the Trust will expire
on or shortly after the occurrence of an Exchange Event. The Trust will be
treated as a grantor trust for United States Federal income tax purposes.
The Offering
The Trust is offering ___________ Trust Securities, each
representing a proportionate share of beneficial interest in the Trust, at an
initial public offering price of US$25 per Trust Security. The Underwriters
have been granted an option, exercisable for 30 days from the date of this
Prospectus, to purchase up to an aggregate of _________ additional Trust
Securities (subject to decrease pro rata as a result of the issuance and sale
of Trust Securities in connection with the formation of the Trust) solely to
cover over-allotments, if any. See "Underwriting."
Use of Proceeds and Collateral Arrangements
The following transactions will take place on the Issue Date. The
Trust will use the proceeds from the sale of the Trust Securities in the
Offerings to subscribe for and purchase from the U.K. Company Debt Securities
with an aggregate principal amount equal to such proceeds. The Trust, as the
holder of the Debt Securities, will be entitled to receive interest due
thereon quarterly in arrears on each Dividend Payment Date (each, an "Interest
Payment Date"), initially at the rate per annum of _______% and thereafter at
the rate per annum determined as of ______ of each year by the Administrator
(each such rate shall equal the sum of _______% and a spread designed to cover
anticipated ongoing Trust costs and expenses). The Debt Securities will be
issued only in bearer form and will be denominated and pay interest in U.S.
dollars. The Debt Securities will be listed on the Luxembourg Stock Exchange
and, unless redeemed earlier, will be redeemed on _____, 2047. The U.K.
Company will use the proceeds from the sale of the Debt Securities to purchase
at a price equal to their liquidation preference fully paid, non-dividend
paying preference shares, liquidation preference US$25 per share (the "Jersey
Preference Shares"), issued by [NAME], a company incorporated with limited
liability under the laws of, and domiciled in, Jersey, the Channel Islands
(the "Jersey Subsidiary"). The Jersey Subsidiary will use the proceeds from
the sale of the Jersey Preference Shares to purchase the ADSs from ABC at a
price per ADS equal to the aggregate liquidation preference of the four ABC
Preference Shares represented thereby. Pursuant to a security and pledge
agreement (the "Security and Pledge Agreement") to be entered into among the
Trust, the U.K. Company, the Jersey Subsidiary and The Bank of New York , as
collateral agent (the "Collateral Agent"), the Jersey Preference Shares and
the ADSs will be irrevocably deposited with the Collateral Agent and pledged
to secure the obligations of the U.K. Company under the Debt Securities and
the Jersey Subsidiary under the Jersey Preference Shares. Prior to the
occurrence of an Exchange Event, ownership of the Jersey Preference Shares and
the ADSs will remain with the U.K. Company and the Jersey Subsidiary,
respectively, although pursuant to the Security and Pledge Agreement, the
Jersey Subsidiary will agree to vote, or to cause the Collateral Agent and the
ADR depositary to vote, the ADSs and the ABC Preference Shares represented by
the ADSs as directed by the holders of the Trust Securities.
Also on the Issue Date, ABC will use the proceeds from the issue of
the ABC Preference Shares to make a capital contribution to a business trust
established under the laws of the State of Delaware (the "Distribution
Trust"). The Distribution Trust will use ABC's capital contribution to make a
loan (the "Distribution Loan") to a Delaware limited liability company that is
a wholly-owned subsidiary of ABC (the "USLLC"). The USLLC will use the
proceeds of the Distribution Loan to make a loan (the "ABC Subsidiary Loan")
to a subsidiary or branch of ABC (the "ABC Subsidiary").
Reference is made to page 9 for a diagram of the foregoing
transactions.
ABC
Reference is made to the accompanying prospectus of ABC with respect
to the ADSs that may be received by a holder of Trust Securities upon the
occurrence of an Exchange Event and the ABC Preference Shares represented
thereby. The prospectus of ABC is being attached hereto and delivered to
prospective purchasers of Trust Securities together with this Prospectus for
convenience of reference only. The prospectus of ABC does not constitute a
part of this Prospectus, nor is it incorporated by reference herein.
Investment Objective and Policies; Dividends and Distributions
The Trust's investment objective is to distribute to the holders of
Trust Securities (a) pro rata based on the number of Trust Securities
outstanding the interest the Trust receives on the Debt Securities from time
to time and (b) upon the occurrence of an Exchange Event, the proceeds of the
redemption of the Debt Securities, which will be ADRs evidencing, for each
Trust Security, one ADS, provided that, if the Exchange Event is the
redemption of the ABC Preference Shares for cash, holders of Trust Securities
will be entitled to receive US$25 per Trust Security and not ADRs. See
"Investment Objective and Policies."
Except as described herein, holders of Trust Securities will receive
non-cumulative dividend distributions in an amount equal to US$______ per
Trust Security per annum, payable quarterly in arrears in an amount equal to
US$______ per Trust Security on each Dividend Payment Date to holders of
record on the immediately preceding Record Date. The first distribution in
respect of the period from and including the Issue Date to but
excluding _____, 1998 will equal US$______ per Trust Security. See "Investment
Objective and Policies--Trust Assets."
Dividend payments on the Trust Securities will be made from the
interest payments received by the Trust on the Debt Securities. Interest
payments on the Debt Securities will be made from distributions received by
the U.K. Company as income beneficiary entitling it to income payments (the
"Income Entitlements") from the Distribution Trust. The U.K. Company's right
to receive Income Entitlements will not represent an absolute ownership
interest in the Distribution Trust or the income thereof, but rather an
entitlement to receive interest payments on the Distribution Loan only to the
extent actually distributed to the U.K. Company by the Distribution Trust; if
any Income Entitlement payable on any Interest Payment Date is not paid to the
U.K. Company or at its direction on such date for any reason, the Distribution
Trust will have no further obligation to pay such Income Entitlement to the
U.K. Company. ABC will have a reversionary income interest in the Distribution
Trust after any Exchange Event.
Under the terms of the Distribution Trust, no Income Entitlement
shall be paid or payable on any Interest Payment Date if (i) an Exchange Event
has occurred or will occur prior to such Interest Payment Date, (ii) the amount
of Income Entitlement payable on such date, together with the aggregate amount
of dividends paid on or before such date during the then current fiscal year of
ABC on any preference shares or ordinary shares of ABC, would exceed ABC's
distributable profits or (iii) the payment of such Income Entitlement would be
prohibited or limited by applicable law or regulation or by any instruments or
agreements to which ABC is subject (collectively, the "Payment Prohibitions").
Three Business Days prior to each Interest Payment Date, ABC will notify the
Distribution Trust as to whether any of the Payment Prohibitions exists or will
exist on such Interest Payment Date.
On each Interest Payment Date, (i) the ABC Subsidiary will make an
interest payment on the ABC Subsidiary Loan to the USLLC; (ii) out of such
payment, the USLLC will make an interest payment on the Distribution Loan to the
Distribution Trust; (iii) out of such payment, if no Payment Prohibition exists,
the Distribution Trust will distribute the Income Entitlements to the U.K.
Company; and (iv) out of such distribution, if any, the U.K. Company will pay
(a) interest on the Debt Securities to the Trust and (b) ongoing costs and
expenses of the U.K. Company, the Jersey Holding Company (as defined herein),
the Jersey Charitable Trust (as defined herein), the Jersey Subsidiary and the
Collateral Agent and an indemnity fee payable to [NAME], an affiliate of ABC
(the "ABC Affiliate"). On such Interest Payment Date (which will also be a
Dividend Payment Date), The Bank of New York, as Administrator, will use all the
interest received by the Trust on the Debt Securities to pay dividends on the
Trust Securities and anticipated ongoing costs and expenses of the Trust.
Trust Assets
The Trust's assets will consist of US$_______ aggregate principal
amount of Debt Securities (US$______ aggregate principal amount of Debt
Securities if the Underwriters' over-allotment option is exercised in full),
and any distributions thereon.
Exchange Event
Upon the occurrence of any of the following events (each, an
"Exchange Event"), each Trust Security will be mandatorily exchanged for one
ADS or US$25, as applicable, from the proceeds of the sequential redemption of
the ABC Preference Shares (in the case of the redemption thereof for cash) and
(in all cases) the Jersey Preference Shares and the Debt Securities: (i)
______, 2047 or the date of any earlier cash redemption of the ABC Preference
Shares; (ii) any date selected by ABC in its absolute discretion; (iii) the
failure of the U.K. Company to pay to the Trust for any reason within three
Business Days of an Interest Payment Date the interest then due on the Debt
Securities in full without deduction or withholding for any taxes, duties or
other charges; (iv) on any date, the total capital ratio or the Tier 1 capital
ratio of ABC (either as reported by ABC to the [applicable regulatory agency]
on a quarterly basis or as determined at any time by the [applicable
regulatory agency] in its sole discretion) falls below 8% or 4%, respectively
(or, in each case, such lesser percentage (the "Required Percentage"), as may
apply at the time), and is not increased to at least 8% or 4%, respectively
(or such lesser Required Percentage), within 90 days; (v) any change in the
ownership of the securities issued by, or the business purpose (as specified
in the constituent documents of the relevant entities) of, the U.K. Company,
the Jersey Holding Company, the Jersey Charitable Trust, the Jersey
Subsidiary, the USLLC or the Distribution Trust or any failure by ABC to own,
directly or indirectly, all of the equity of the ABC Subsidiary (including any
successor borrower hereinafter referred to); provided that, the ABC
Subsidiary, with the consent of the USLLC, may assign the ABC Subsidiary Loan
or the USLLC may replace the ABC Subsidiary Loan with another loan , in each
case, to another subsidiary or branch office of ABC with prospective payment
terms identical to, and other terms substantially the same as, those of the
ABC Subsidiary Loan, in which case such other subsidiary or branch office and
loan shall be deemed to be the ABC Subsidiary and the ABC Subsidiary Loan,
respectively, and any such action shall not constitute an Exchange Event; and
(vi) any application is made by (A) ABC, the U.K. Company, the Jersey Holding
Company, the Jersey Charitable Trust, the Jersey Subsidiary, the USLLC, the
Distribution Trust or the ABC Subsidiary (each, a "Relevant Entity") to a
court for an order that the Relevant Entity be wound up or (B) any other
entity to a court for an order appointing a liquidator, provisional
liquidator, administrator or controller in respect of any Relevant Entity, or
any one of the same is appointed, whether or not under an order (unless the
application is withdrawn or the order is stayed, or the liquidator,
provisional liquidator, administrator or controller is removed, within 21 days
of the date on which the application or appointment is made, as applicable).
If the Exchange Event is anything other than a redemption of the ABC
Preference Shares for cash, then each Jersey Preference Share and Debt
Security will be redeemed, automatically and sequentially, for one ADS. If a
redemption of the ABC Preference Shares for cash occurs, then the Jersey
Preference Shares and Debt Securities will be redeemed, automatically and
sequentially, for cash. After any such redemption of the Debt Securities, the
Collateral Agent will deliver the ADSs or the cash for which the Debt
Securities are redeemed, as the case may be, to the Administrator, and the
Administrator, on behalf of the Trust, will on the Exchange Date (i) in the
case of a redemption for cash, distribute the proceeds to the holders of Trust
Securities at the rate of US$25 per Trust Security then outstanding or (ii) in
all other cases, distribute the proceeds to the holders of Trust Securities at
the rate of one ADS per Trust Security then outstanding. The holders of the
Trust Securities will thereafter have no further claims against the Trust and
the Administrator will wind up the Trust.
Upon the occurrence of an Exchange Event, ADRs or cash, as the case
may be, will be delivered in exchange for Trust Securities upon or as soon as
possible after the date on which such event occurs (after taking into account
any cure period provided therefor).
Term of the Trust
The Trust will dissolve as soon as possible after the exchange of
the Trust Securities for ADRs or cash, as the case may be, upon the occurrence
of an Exchange Event. See "Investment Objective and Policies" and "Risk
Factors--Limited Term."
Certain United States Federal Income Tax Considerations
The Trust will be classified a grantor trust for United States
Federal income tax purposes and the Debt Securities held by the Trust will be
treated as equity in ABC. Accordingly, each holder will be treated for United
States Federal income tax purposes as owning equity of ABC and will be
required to include in income, as dividends, the holder's pro rata share of
the gross amount of the interest paid on the Debt Securities to the extent of
the current and accumulated earnings and profits (as determined for United
States Federal income tax purposes) of ABC.
A holder's exchange of Trust Securities for ADSs upon the occurrence
of an Exchange Event generally will not constitute a taxable event for United
States Federal income tax purposes. However, the receipt of cash in redemption
of the Trust Securities would constitute a taxable event for United States
Federal income tax purposes, and a holder of Trust Securities generally would
be required to recognize gain or loss in respect of Trust Securities redeemed
for cash. See "Certain United States Federal Income Tax Considerations."
Management Arrangements
The Trust will be internally managed and will not have an investment
adviser. The Trust's portfolio will consist only of US$_______ aggregate
principal amount of Debt Securities (US$_______ aggregate principal amount of
Debt Securities if the Underwriters' over-allotment options are exercised in
full), and any distributions thereon, and will not be actively managed. The
activities of the Trust will be limited so as to ensure that the Trust will
qualify as a grantor trust for United States Federal income tax purposes. The
administration of the Trust will be overseen by the trustees (the "Trustees")
thereof. The day-to-day administration of the Trust will be carried out by The
Bank of New York (or its successor), as the Administrator. The Bank of New
York (or its successor) will also act as custodian (the "Custodian") for the
Trust's assets and as paying agent, transfer agent and registrar (the "Paying
Agent") with respect to the Trust Securities. Except as aforesaid, and except
for The Bank of New York's role as Collateral Agent under the Security and
Pledge Agreement and as depositary for the ADRs, The Bank of New York will
have no other affiliation with, and will not be engaged in any other
transaction with, the Trust. For their services, the fees of the
Administrator, the Custodian, the Trustees and the Paying Agent will be
deducted from the interest payments on the Debt Securities. See "Management
Arrangements."
Risk Factors
The Trust has adopted a fundamental policy that 100% of its
portfolio be invested in the Debt Securities, and the distributions thereon,
and that the Debt Securities may not be disposed of during the term of the
Trust except upon the occurrence of an Exchange Event. The Trust will not be
managed like a typical closed-end investment company.
The Trust is classified as a "non-diversified" investment company
under the Investment Company Act. Consequently, the Trust is not limited by
the Investment Company Act in the proportion of its assets that may be
invested in the securities of a single issuer. Since the only securities held
by the Trust will be the Debt Securities, the Trust may be subject to greater
risk than would be the case for an investment company with more diversified
investments.
The Trust Securities have no trading history and it is not possible
to predict how they will trade in the secondary market. The Underwriters
currently intend, but are not obligated, to make a market in the Trust
Securities. There can be no assurance that a secondary market will develop or,
if a secondary market does develop, that it will provide the holders of the
Trust Securities with liquidity of investment or that it will continue for the
life of the Trust Securities.
The Trust is a newly organized closed-end investment company with no
previous operating history. Shares of closed-end investment companies
frequently trade at a discount from their net asset value, which is a risk
separate and distinct from the risk that the Trust's net asset value will
decrease. The risk of loss associated with this characteristic of closed-end
investment companies may be greater for investors expecting to sell shares of
a closed-end investment company soon after the completion of an initial public
offering.
Except as described below, holders of the Trust Securities will not
be entitled to any rights with respect to the ABC Preference Shares (including,
without limitation, rights to receive any dividends or other distributions in
respect thereof) until such time, if any, as the Trust shall have delivered ADSs
representing the ABC Preference Shares in exchange for Trust Securities upon the
occurrence of an Exchange Event (which will not occur if the Exchange Event is
the redemption of the ABC Preference Shares for cash). Each Trust Security will
entitle the holder thereof to direct the exercise of the voting rights attaching
to one ADS and four ABC Preference Shares. The holders of ADSs will be entitled
to vote the ABC Preference Shares represented thereby together with the holders
of ordinary shares of ABC (a) in all cases with respect to matters described
herein and (b) after ABC fails to pay in full on any Dividend Payment Date the
accrued dividends in respect of the quarterly dividend period then ended and
until the first Dividend Payment Date thereafter as of which ABC has paid in
full four consecutive quarterly dividends on the ABC Preference Shares, with
respect to all matters on which the holders of the ordinary shares of ABC are
entitled to vote. In addition, the holders of ADSs will have the right to vote
separately as a class in certain circumstances involving a variation of the
rights of holders of the ADSs or the ABC Preference Shares. As long as the ADSs
are owned by the Jersey Subsidiary, the Jersey Subsidiary will, or will direct
the Collateral Agent and the ADR depositary to, vote the ADSs and the ABC
Preference Shares as directed by the holders of Trust Securities. See "Risk
Factors."
Listing
Application will be made to list the Trust Securities on the NYSE.
Ratings
The Trust Securities will be rated _______ by Moody's Investors
Service, Inc. and _______ by Standard & Poor's Ratings Service. A security
rating is not a recommendation to buy, sell or hold securities, is subject to
revision or withdrawal at any time by the assigning rating organization, and
should be evaluated independently of any other rating.
<PAGE>
<TABLE>
<CAPTION>
FEE TABLE
<S> <C>
Shareholder Transaction Expenses
Maximum Sales Load (as a percentage of offering price).......................... % (a)
Automatic Dividend Reinvestment Plan Fees....................................... Not Applicable
Annual Expenses (as a percentage of net assets)
Management Fees(b).................................................................. %
Other Expenses(c)................................................................... %
=====================
Total Annual Expenses(c)............................................................ %
=====================
1 year 3 years
Example
An investor would pay the following expenses on a $1,000 investment, including the maximum sales
load of $ and assuming (1) no annual expenses and (2) a 5% annual return throughout the $ $
periods.
</TABLE>
__________
(a) See the cover page of this Prospectus and "Underwriting."
(b) See "Management Arrangements." The Trust will be internally managed;
consequently there will be no separate investment advisory fee paid
by the Trust. The Bank of New York will act as the Administrator of
the Trust.
(c) The organization costs of the Trust in the amount of $ and the costs
associated with the initial registration and the Offerings, estimated
to be approximately $ , will be paid by the Trust with the facility
fee paid to the Trust by the U.K. Company in connection with the
investment by the Trust in the Debt Securities. The anticipated
ongoing administrative and other expenses of the Trust will be paid
from the interest on the Debt Securities. Any unanticipated operating
expenses of the Trust will be paid by the ABC Affiliate. See
"Management Arrangements--Estimated Expenses." Absent such
arrangements, the Trust's "Other Expenses" and "Total Annual
Expenses" would be approximately % of the Trust's net assets.
The foregoing Fee Table is intended to assist investors in
understanding the costs and expenses that a holder of Trust Securities will
bear directly or indirectly. The Example set forth above utilizes a 5% annual
rate of return as mandated by Securities and Exchange Commission regulations.
The Example should not be considered a representation of future expenses or
annual rates of return, and actual expenses or annual rates of return may be
more or less than those assumed for purposes of the Example.
<PAGE>
STRUCTURAL DIAGRAM
Diagram of the transactions described in the Prospectus.
<PAGE>
THE TRUST
ABC Exchangeable Preferred Trust (the "Trust") is a newly-created
Delaware business trust and will be registered as a closed-end management
investment company under the U.S. Investment Company Act of 1940, as amended
(the "Investment Company Act"). The Trust was formed on , 1998 pursuant to a
Certificate of Trust as filed with the Secretary of State of the State of
Delaware on _______, 1998 and a Trust Agreement dated as of such date, which
was amended and restated as of , 1998 (as so amended and restated, the
"Declaration of Trust"). The term of the Trust will expire as soon as possible
after the exchange of the Trust Securities for ADRs or cash, as the case may
be, upon the occurrence of an Exchange Event. The Trust will be treated as a
grantor trust for United States Federal income tax purposes. The Trust's
principal office is located at 850 Library Avenue, Suite 204, Newark, Delaware
19715, and its telephone number is (302) 738-6680.
USE OF PROCEEDS AND COLLATERAL ARRANGEMENTS
The proceeds of the Offerings (without giving effect to the expenses
of the Offerings payable by the Trust) will be $________ (or $_________ if the
Underwriters' over-allotment options are exercised in full). On the Issue Date
(as defined herein), the proceeds of the Offerings will be used to purchase
US$_______ aggregate principal amount (or US$______ aggregate principal amount
if the Underwriters' over-allotment options are exercised in full) of ______%
Mandatorily Redeemable Debt Securities due 2047 (the "Debt Securities") from
[NAME], a special purpose unlimited company incorporated under the laws of,
and domiciled in, the United Kingdom (the "U.K. Company"). The Trust, as the
holder of the Debt Securities, will be entitled to receive interest thereon
initially at the rate per annum of _______% and thereafter at the rate per
annum determined as of ______ of each year by the Administrator (which rate
shall equal the sum of ______% and a spread designed to cover the Trust's
anticipated ongoing costs and expenses), payable quarterly in arrears on each
Dividend Payment Date (each, an "Interest Payment Date"). The Debt Securities
will be listed on the Luxembourg Stock Exchange and, unless redeemed earlier
due to an Exchange Event (as defined herein), will be redeemed on ______,
2047. The Debt Securities will be issued only in bearer form and will be
denominated and pay interest in U.S. dollars.
The following transactions will take place on the Issue Date.
Reference is made to page 11 for a diagram of the transactions.
The U.K. Company will use the proceeds from the sale of the Debt
Securities to purchase at a price equal to their liquidation preference fully
paid, non-dividend paying preference shares, liquidation preference US$25 per
share (the "Jersey Preference Shares"), issued by [NAME], a company
incorporated with limited liability under the laws of, and domiciled in,
Jersey, the Channel Islands (the "Jersey Subsidiary"). The Jersey Subsidiary
will use the proceeds from the sale of the Jersey Preference Shares to
purchase from [NAME] ("ABC") ___ American Depositary Shares ("ADSs"), each
representing four fully paid non-cumulative preference shares, liquidation
preference US$6.25 per share (the "ABC Preference Shares"), of ABC at a price
per ADS equal to the aggregate liquidation preference of the four ABC
Preference Shares represented thereby.
ABC will use the proceeds from the issue of the ABC Preference
Shares to make a capital contribution to a business trust established under
the laws of the State of Delaware (the "Distribution Trust"). The Distribution
Trust will use ABC's capital contribution to make a loan (the "Distribution
Loan") to a Delaware limited liability company that is a wholly-owned
subsidiary of ABC (the "USLLC"). The USLLC will use the proceeds of the
Distribution Loan to make a loan (the "ABC Subsidiary Loan") to a subsidiary
or branch of ABC (the "ABC Subsidiary").
The ADSs and the Jersey Preference Shares will be deposited with The
Bank of New York, as the collateral agent (the "Collateral Agent"), pursuant to
the security and pledge agreement (the "Security and Pledge Agreement") to be
entered into among the Trust, the U.K. Company, the Jersey Subsidiary and the
Collateral Agent. Pursuant to the terms of the Security and Pledge Agreement,
the U.K. Company and the Jersey Subsidiary will deposit the ADSs and the Jersey
Preference Shares with the Collateral Agent and irrevocably and unconditionally
(i) pledge the ADSs and the Jersey Preference Shares to secure the obligations
of the U.K. Company under the Debt Securities and the Jersey Subsidiary under
the Jersey Preference Shares, respectively, and (ii) direct the Collateral
Agent, upon the occurrence of an Exchange Event, to transfer the ADSs to the
Trust. Prior to the occurrence of an Exchange Event, ownership of the Jersey
Preference Shares and the ADSs will remain with the U.K. Company and the Jersey
Subsidiary, respectively, although pursuant to the Security and Pledge
Agreement, the Jersey Subsidiary will agree to vote, or cause the Collateral
Agent and the ADR depositary to vote, the ADSs and the ABC Preference Shares
represented by the ADSs as directed by the holders of the Trust Securities. Each
Trust Security will entitle the holder to direct the exercise of the voting
rights attaching to one ADS and four ABC Preference Shares.
The Debt Securities will be held by the Custodian for the Trust.
INVESTMENT OBJECTIVE AND POLICIES
General
The Trust will invest the proceeds of the Offerings in the Debt
Securities issued by the U.K. Company. The Trust's investment objective is to
distribute to the holders of Trust Securities (a) pro rata based on the number
of Trust Securities outstanding the interest the Trust receives on the Debt
Securities from time to time and (b) upon the occurrence of an Exchange Event,
the proceeds of the redemption of the Debt Securities, which will be American
Depositary Receipts ("ADRs") evidencing, for each Trust Security, one ADS
representing four ABC Preference Shares, provided that if the Exchange Event
is the redemption of the ABC Preference Shares for cash, holders of Trust
Securities will be entitled to receive US$25 per Trust Security and not ADRs.
The ABC Preference Shares will accrue non-cumulative dividends at the rate of
US $______ per share per annum, payable quarterly in arrears in an amount
equal to US$______ per share on each Dividend Payment Date (as defined herein)
to holders of record as of the immediately preceding Record Date (as defined
herein). Upon the occurrence of an Exchange Event, holders of Trust Securities
shall receive one ADS or US$25 in cash, as the case may be, per Trust
Security. Upon the occurrence of an Exchange Event, the Administrator will
notify The Depository Trust Company (the "Depository") and publish a notice in
The Wall Street Journal or another daily newspaper of national circulation
stating whether ADRs or cash will be delivered in exchange for the Trust
Securities.
The Trust has adopted a fundamental policy as required by the
Declaration of Trust to invest 100% of its portfolio in the Debt Securities,
and any distributions thereon, and not to dispose of the Debt Securities
during the term of the Trust except upon the occurrence of an Exchange Event.
The foregoing fundamental policy of the Trust may not be changed without the
vote of 100% of the holders of the Trust Securities.
Trust Assets
The Trust's assets will consist of US$______ aggregate principal
amount of Debt Securities (US$______ aggregate principal amount of Debt
Securities if the Underwriters' over-allotment options are exercised in full),
and any distributions thereon. Except as described herein, holders of the
Trust Securities will receive non-cumulative dividend distributions in an
amount equal to US$______ per Trust Security per annum, payable quarterly in
arrears in an amount equal to US$______ per Trust Security on each __________,
_____, ______, and (______ of each year _______ each, a "Dividend Payment
Date"), to holders of record as of the immediately preceding _____, _______,
______ and ______ (each, a "Record Date"), respectively. The first
distribution in respect of the period from and including the original issue
date (the "Issue Date") to but excluding ______, 1998 will equal US$______ per
Trust Security. See "Dividends and Distributions."
In the event that any Dividend Payment Date for the Trust Securities
or Interest Payment Date for the Debt Securities is not a Business Day, then
the dividend or interest payable on such date need not be made on such
Dividend Payment Date or Interest Payment Date, as applicable, but instead may
be made on the next succeeding Business Day with the same force and effect as
if made on such Dividend Payment Date or Interest Payment Date, as the case
may be. As used herein, "Business Day" means a day other than a day on which
banking institutions in Australia, New Zealand, the United Kingdom, New York
or Delaware are authorized or required by law or executive order to remain
closed and on which the New York Stock Exchange (the "NYSE") is open for
trading.
ABC
THIS PROSPECTUS RELATES ONLY TO THE TRUST SECURITIES OFFERED HEREBY
AND DOES NOT RELATE TO ABC, THE ADSs OR THE ABC PREFERENCE SHARES. ABC HAS
FILED A REGISTRATION STATEMENT ON FORM F-3 WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION") WITH RESPECT TO THE ADSs AND THE ABC PREFERENCE
SHARES THAT MAY BE RECEIVED BY A HOLDER OF TRUST SECURITIES UPON THE
OCCURRENCE OF AN EXCHANGE EVENT. THE PROSPECTUS OF ABC CONSTITUTING A PART OF
SUCH REGISTRATION STATEMENT INCLUDES INFORMATION RELATING TO ABC, THE ADSs AND
THE ABC PREFERENCE SHARES. THE PROSPECTUS OF ABC IS BEING ATTACHED HERETO AND
DELIVERED TO PROSPECTIVE PURCHASERS OF TRUST SECURITIES TOGETHER WITH THIS
PROSPECTUS FOR CONVENIENCE OF REFERENCE ONLY. THE PROSPECTUS OF ABC DOES NOT
CONSTITUTE A PART OF THIS PROSPECTUS, NOR IS IT INCORPORATED BY REFERENCE
HEREIN.
Exchange Event
Upon the occurrence of any of the following events (each, an
"Exchange Event"), each Trust Security will be mandatorily exchanged for one
ADS or US$25, as applicable, from the proceeds of the sequential redemption of
the ABC Preference Shares (in the case of the redemption thereof for cash) and
(in all cases) the Jersey Preference Shares and the Debt Securities: (i)
______, 2047 or the date of any earlier cash redemption of the ABC Preference
Shares; (ii) any date selected by ABC in its absolute discretion; (iii) the
failure of the U.K. Company to pay to the Trust for any reason within three
Business Days of an Interest Payment Date the interest then due on the Debt
Securities in full without deduction or withholding for any taxes, duties or
other charges; (iv) on any date, the total capital ratio or the Tier 1 capital
ratio of ABC (either as reported by ABC to the [applicable regulatory agency]
on a quarterly basis or as determined at any time by the [applicable
regulatory agency] in its sole discretion) falls below 8% or 4%, respectively
(or, in each case, such lesser percentage (the "Required Percentage"), as may
apply at the time) and is not increased to at least 8% or 4%, respectively (or
such lesser Required Percentage), within 90 days; (v) any change in the
ownership of the securities issued by, or the business purpose (as specified
in the constituent documents of the relevant entities) of, the U.K. Company,
the Jersey Holding Company (as defined herein), the Jersey Charitable Trust
(as defined herein), the Jersey Subsidiary, the USLLC or the Distribution
Trust or any failure by ABC to own, directly or indirectly, all of the equity
of the ABC Subsidiary (including any successor borrower hereinafter referred
to); provided that, the ABC Subsidiary, with the consent of the USLLC, may
assign the ABC Subsidiary Loan or the USLLC may replace the ABC Subsidiary
Loan with another loan, in each case, to another subsidiary or branch office
of ABC with prospective payment terms identical to, and other terms
substantially the same as, those of the ABC Subsidiary Loan, in which case
such other subsidiary or branch office and loan shall be deemed to be the ABC
Subsidiary and the ABC Subsidiary Loan, respectively, and any such action
shall not constitute an Exchange Event; and (vi) any application is made by
(A) ABC, the U.K. Company, the Jersey Holding Company, the Jersey Charitable
Trust, the Jersey Subsidiary, the USLLC, the Distribution Trust or the ABC
Subsidiary (each, a "Relevant Entity") to a court for an order that the
Relevant Entity be wound up or (B) any other entity to a court for an order
appointing a liquidator, provisional liquidator, administrator or controller
in respect of any Relevant Entity, or any one of the same is appointed,
whether or not under an order (unless the application is withdrawn or the
order is stayed, or the liquidator, provisional liquidator, administrator or
controller is removed, within 21 days of the date on which the application or
appointment is made, as applicable).
If the Exchange Event is anything other than a redemption of the ABC
Preference Shares for cash, then each Jersey Preference Share and Debt
Security will be redeemed, automatically and sequentially, for one ADS. If a
redemption of the ABC Preference Shares for cash occurs, then the Jersey
Preference Shares and Debt Securities will be redeemed automatically and
sequentially, for cash. After any such redemption of the Debt Securities, the
Collateral Agent will deliver the ADSs or the cash for which the Debt
Securities are redeemed, as the case may be, to the Administrator and the
Administrator, on behalf of the Trust, will (i) in the case of a redemption
for cash, distribute the proceeds to the holders of Trust Securities at the
rate of US$25 per Trust Security then outstanding or (ii) in all other cases,
distribute the proceeds to the holders of Trust Securities at the rate of one
ADS per Trust Security then outstanding. The holders of the Trust Securities
will thereafter have no further claims against the Trust and the Administrator
will wind up the Trust.
Upon the occurrence of an Exchange Event, the ADRs or cash, as the
case may be, will be delivered in exchange for the Trust Securities upon or as
soon as possible after the date on which such event occurs (after taking into
account any cure period provided therefor).
Intervening Vehicles
The U.K. Company. The U.K. Company is a special purpose unlimited
company incorporated under the laws of, and domiciled in, the United Kingdom.
The U.K. Company is wholly-owned by an exempt company established under the
laws of, and domiciled in, Jersey, the Channel Islands (the "Jersey Holding
Company"), which holds all of the U.K. Company's ordinary shares. These
ordinary shares will be the only capital stock of the U.K. Company. The
ordinary shares of the Jersey Holding Company will be the only capital stock
of the Jersey Holding Company and are held by a charitable trust established
under the laws of, and domiciled in, Jersey, the Channel Islands (the "Jersey
Charitable Trust").
The U.K. Company was established for the purpose of, among other
things, owning all of the ordinary shares of the Jersey Subsidiary, issuing
the Debt Securities to the Trust and investing the proceeds thereof in the
Jersey Preference Shares. The U.K. Company will elect to be treated as a
partnership for United States Federal income tax purposes under U.S. Treasury
Regulations Sections 301.7701-1 through -3.
The U.K. Company will have at least two directors and an independent
auditor. The Memorandum and Articles of Association of the U.K. Company will
prohibit it from taking any action that would have a material adverse effect
on the holders of the Trust Securities. There will be no annual shareholder
meetings. There will be one directors' meeting each year at which the
director(s) will nominate directors, if necessary, and approve the annual
accounts. The U.K. Company will also appoint a paying agent located in The
City of New York to receive Income Entitlements from the Distribution Trust
and make payments on the Debt Securities to the Trust.
The Jersey Subsidiary. The Jersey Subsidiary is a company
incorporated with limited liability under the laws of, and domiciled in,
Jersey, Channel Islands. The U.K. Company will own all the ordinary shares of
the Jersey Subsidiary. The Jersey Subsidiary was established for the purpose
of, among other things, issuing the Jersey Preference Shares to the U.K.
Company and investing the proceeds thereof in the ADSs. The Jersey Subsidiary
will elect to be disregarded as an entity that is separate from its owner
(i.e., the U.K. Company) for United States Federal income tax purposes under
U.S. Treasury Regulations Sections 301.7701-1 through -3.
The Jersey Subsidiary will be managed by a Board of Directors and
have an independent auditor. The Memorandum and the Articles of Association of
the Jersey Subsidiary will prohibit the Board of Directors from taking any
action that would have a material adverse effect on the holders of the Trust
Securities. There will be no annual shareholder meetings. There will be one
directors' meeting each year at which the director(s) will nominate directors,
if necessary, and approve the annual accounts.
The Distribution Trust. The Distribution Trust is a business trust
established under the laws of the State of Delaware. The Distribution Trust
will operate in accordance with the distribution trust agreement that
establishes its terms; the U.K. Company will have no right to cause any
variation of such terms. The Distribution Trust will elect to be disregarded
as an entity that is separate from its owner (i.e., ABC) for United States
Federal income tax purposes under U.S. Treasury Regulations Sections
301.7701-1 through -3.
The administration of the Distribution Trust will be overseen by the
trustees thereof.
On the Issue Date, ABC will use the proceeds from the issuance of
the ABC Preference Shares to make a capital contribution of US$_______ (or
US$______ if the Underwriters exercise their over-allotment options in full)
to the Distribution Trust and the Distribution Trust will use ABC's capital
contribution to make the Distribution Loan to the USLLC. The Distribution Loan
will mature five years after the redemption date of the Debt Securities on
_______, 2052. The Distribution Loan will be the only asset, and interest
thereon will be the only source of revenue, of the Distribution Trust.
Interest on the Distribution Loan will accrue from the Issue Date and be due
and payable on each Interest Payment Date initially at the rate of ______% per
annum and thereafter at the rate per annum determined as of ______ of each
year by a trustee of the Distribution Trust (each such rate shall equal the
sum of ______% and a spread designed to enable the U.K. Company to make
interest payments on the Debt Securities when due and to pay its anticipated
ongoing expenses and those of the Jersey Holding Company, the Jersey
Charitable Trust, the Jersey Subsidiary and the Collateral Agent and the
indemnity fee payable by the U.K. Company to the ABC Affiliate). ABC will have
a reversionary income interest in the Distribution Trust after any Exchange
Event.
Under the terms of the Distribution Trust, no Income Entitlement
shall be paid or payable on any Interest Payment Date if (i) an Exchange Event
has occurred or will occur prior to such Interest Payment Date, (ii) the amount
of Income Entitlement payable on such date, together with the aggregate amount
of dividends paid on or before such date during the then current fiscal year of
ABC on any preference shares or ordinary shares of ABC, would exceed ABC's
distributable profits or (iii) the payment of such Income Entitlement would be
prohibited or limited by applicable law or regulation or by any instruments or
agreements to which ABC is subject (collectively, the "Payment Prohibitions").
Three Business Days prior to each Interest Payment Date, ABC will notify the
Distribution Trust as to whether any of the Payment Prohibitions exists or will
exist on such Interest Payment Date.
The USLLC. The USLLC is a Delaware limited liability company that is
a wholly-owned subsidiary of ABC. The USLLC will elect to be disregarded as an
entity that is separate from its owner (i.e., ABC) for United States Federal
income tax purposes under U.S. Treasury Regulations Sections 301.7701-1
through -3. The USLLC will be managed by a Board of Directors pursuant to a
limited liability company agreement. ABC will have the right to appoint,
remove or replace any director and to increase or decrease the number of
directors provided that the number of directors shall be at least two.
Upon receiving the proceeds of the Distribution Loan, the USLLC will
make the ABC Subsidiary Loan to the ABC Subsidiary. The ABC Subsidiary Loan
will be the only asset, and interest thereon will be the only source of
revenue, of the USLLC. The ABC Subsidiary Loan will mature five years after
the maturity date of the Debt Securities on ______, 2052. Interest on the ABC
Subsidiary Loan will accrue from the Issue Date and be due and payable on each
Interest Payment Date initially at the rate of ______% per annum and
thereafter at the rate per annum determined as of ______ of each year by the
Board of Directors of the USLLC (each such rate shall equal the sum of the
interest rate on the Distribution Loan plus a spread designed to enable the
USLLC to pay the interest on the Distribution Loan due on such date, net of
any deduction or withholding for any taxes, duties or other charges).
Trust Dissolution
The Trust will dissolve as soon as possible after the exchange of
the Trust Securities for ADRs or cash, as the case may be, upon the occurrence
of an Exchange Event.
INVESTMENT RESTRICTIONS
The Trust has adopted a fundamental policy that the Trust may not
purchase any securities or instruments other than the Debt Securities and any
distributions thereon; issue any securities or instruments except for the
Trust Securities; make short sales or purchase securities on margin; write put
or call options; borrow money; underwrite securities; purchase or sell real
estate, commodities or commodities contracts; or make loans. The Trust has
adopted a fundamental policy that 100% of its portfolio be invested in Debt
Securities and any distributions thereon, and not to dispose of the Debt
Securities during the term of the Trust, except upon the occurrence of an
Exchange Event.
RISK FACTORS
No Active Portfolio Management
It is a fundamental policy of the Trust that 100% of its portfolio
be invested in the Debt Securities and any distributions thereon, and not to
dispose of the Debt Securities during the term of the Trust, except upon the
occurrence of an Exchange Event. The Trust will not be managed like a typical
closed-end investment company.
Absence of Trading History; Marketability; Possibility of the Trust Securities
Trading at a Discount from Net Asset Value
The Trust Securities have no trading history and it is not possible
to predict how they will trade in the secondary market. The trading price of
the Trust Securities may vary considerably prior to an Exchange Event due to,
among other things, complex and interrelated political, economic, financial
and other factors that can affect the capital markets generally, the stock
exchanges or quotation systems on which ABC's shares are traded and the market
segment of which ABC is a part and fluctuations in interest rates and rates of
exchange between the [CURRENCY OF THE COUNTRY] and the U.S. dollar and other
factors that are difficult to predict and beyond the Trust's control.
Reference is made to the accompanying prospectus of ABC.
The Trust Securities are a new issue of securities and, accordingly,
have no established trading market. The Underwriters currently intend, but are
not obligated, to make a market in the Trust Securities. There can be no
assurance that a secondary market will develop or, if a secondary market does
develop, that it will provide the holders of the Trust Securities with
liquidity of investment or that it will continue for the life of the Trust
Securities. Application will be made to list the Trust Securities on the NYSE.
There can be no assurance that such application will be accepted or that, if
accepted, the Trust Securities will not later be delisted or that trading in
the Trust Securities on the NYSE will not be suspended. In the event of a
delisting or suspension of trading on such exchange, the Trust will apply for
listing of the Trust Securities on another national securities exchange or for
quotation on another trading market. If the Trust Securities are not listed or
traded on any securities exchange or trading market, or if trading of the
Trust Securities is suspended, pricing information for the Trust Securities
may be more difficult to obtain, and the price and liquidity of the Trust
Securities may be adversely affected.
The Trust is a newly organized closed-end investment company with no
previous operating history. Shares of closed-end investment companies
frequently trade at a discount from their net asset value, which is a risk
separate and distinct from the risk that the Trust's net asset value will
decrease. The Trust cannot predict whether the Trust Securities will trade at,
below or above their net asset value. The risk of purchasing investments that
might trade at a discount is more pronounced for investors who wish to sell
their investments in a relatively short period of time after completion of the
Trust's initial public offering because for those investors realization of a
gain or loss on their investments is likely to be more dependent upon the
existence of a premium or discount than upon portfolio performance. Trust
Securities are not subject to redemption.
Limited Term
The term of the Trust will expire as soon as possible after the
exchange of the Trust Securities for ADRs or cash, as the case may be, upon
the occurrence of an Exchange Event.
Non-Diversified Portfolio
The Trust's assets will consist entirely of the Debt Securities and
distributions thereon. As a result, investments in the Trust may be subject to
greater risk than would be the case for a company with a more diversified
portfolio of investments.
Limited Stockholder Rights
Except as described below, holders of the Trust Securities will not
be entitled to any rights with respect to the ADSs or the ABC Preference
Shares (including, without limitation, rights to receive any dividends or
other distributions in respect thereof) until such time, if any, as the Trust
shall have delivered the ADSs in exchange for Trust Securities upon the
occurrence of an Exchange Event (unless the Exchange Event is the redemption
of the ABC Preference Shares for cash). In addition, the Trust as the holder
of the Debt Securities, has no voting rights in relation to the U.K. Company.
Each Trust Security will entitle the holder thereof to direct the
exercise of the voting rights attaching to one ADS and four ABC Preference
Shares. The holders of ADSs will be entitled to vote the ABC Preference Shares
represented thereby together with the holders of ordinary shares of ABC, on the
basis of one vote per share on any poll, (a) in all cases, with respect to
certain matters described herein and (b) after ABC fails to pay in full on any
Dividend Payment Date the accrued dividends in respect of the quarterly dividend
period then ended and until the first Dividend Payment Date thereafter as of
which ABC has paid in full four consecutive quarterly dividends on the ABC
Preference Shares, with respect to all matters on which the holders of the
ordinary shares of ABC are entitled to vote. In addition, the holders of ADSs
will have the right to vote separately as a class in certain circumstances
involving a variation of the rights of holders of the ADSs or the ABC Preference
Shares. As long as the ADSs are owned by the Jersey Subsidiary, the Jersey
Subsidiary will, or will direct the Collateral Agent and the ADR depositary to,
vote the ADSs and the ABC Preference Shares as directed by the holders of the
Trust Securities.
Year 2000 Noncompliance
Many computer systems were designed using only two digits to
designate years. These systems may not be able to distinguish the Year 2000
from the Year 1900 (commonly known as the "Year 2000 Problem"). Like other
investment companies and financial and business organizations, the Trust could
be adversely affected if the computer systems used by the Trust's service
providers do not properly address this problem prior to January 1, 2000. The
Trust has sought assurances from its service providers that they are taking
all necessary steps to ensure that their computer systems will accurately
reflect the Year 2000, and the Trust will continue to monitor the situation.
At this time, however, no assurance can be given that the Trust's service
providers have anticipated every step necessary to avoid any adverse effect on
the Trust attributable to the Year 2000 Problem.
DESCRIPTION OF THE TRUST SECURITIES
Each Trust Security represents a proportionate share of beneficial
interest in the Trust, and a total of _________ Trust Securities will be
issued in the Offerings, assuming no exercise of the Underwriters'
over-allotment options. Upon liquidation of the Trust, holders of Trust
Securities are entitled to share pro rata based on the number of Trust
Securities outstanding in the net assets of the Trust available for
distribution. Holders of Trust Securities have no preemptive, redemption or
conversion rights. The Trust Securities, when issued and outstanding, will be
fully paid and nonassessable.
Voting Rights
Holders are entitled to one vote for each Trust Security on all
matters to be voted on by holders and are not able to cumulate their votes in
the election of Trustees. The Trust intends to hold annual meetings as
required by the rules of the NYSE. The holders have the right, upon the
declaration in writing or vote of more than two-thirds of the outstanding
Trust Securities, to remove a Trustee. The Trustees will call a meeting of
holders to vote on the removal of a Trustee upon the written request of the
record holders of 10% of the Trust Securities or to vote on other matters upon
the written request of the record holders of more than 50% of the Trust
Securities (unless substantially the same matter was voted on during the
preceding 12 months).
Each Trust Security will entitle the holder thereof to direct the
exercise of the voting rights attaching to one ADS and four ABC Preference
Shares. The holders of ADSs will be entitled to vote together with the holders
of ordinary shares of ABC, on the basis of one vote per share on any poll, (a)
in all cases, with respect to certain matters described below and (b) after ABC
fails to pay in full on any Dividend Payment Date the accrued dividends in
respect of the quarterly dividend period then ended and until the first Dividend
Payment Date thereafter as of which ABC has paid four consecutive quarterly
dividends on the ABC Preference Shares, with respect to all matters on which the
holders of the ordinary shares of ABC are entitled to vote. The matters referred
to in clause (a) of the preceding sentence upon which the holders of ABC
Preference Shares will always have a right to vote are: any proposal to reduce
the share capital of ABC; any resolution to approve the terms of a share
buy-back arrangement; any proposal that affects the rights attached to the ABC
Preference Shares; any proposal to wind up ABC; any proposal for the disposal of
the whole of the property, business and undertaking of ABC; and any matter
during the winding up of ABC. In addition, the holders of ADSs will have the
right to vote separately as a class in certain circumstances involving a
variation of the rights of holders of the ADSs or the ABC Preference Shares. As
long as the ADSs are held by the Jersey Subsidiary, the Jersey Subsidiary will,
or will direct the Collateral Agent and the ADR depositary to, vote the ABC
Preference Shares as directed by the holders of the Trust Securities.
Modifications and amendments of the terms of the Trust Securities,
the Debt Securities and the Jersey Preference Shares may be made with the
consent of not less than a majority of the holders of the Trust Securities;
provided that, no such modification or amendment may, without the consent of
100% of the holders of the Trust Securities, change the amount or timing of
any dividend on the Trust Securities, the amount or timing of interest
payments on the Debt Securities, the liquidation preference of the Jersey
Preference Shares, the redemption amount of the Debt Securities and the Jersey
Preference Shares or otherwise adversely affect the foregoing terms.
Modifications and amendments may be made without the consent of any holder of
the Trust Securities to cure any ambiguity, defect or inconsistency in the
Declaration of Trust or any instrument defining the terms of the Trust
Securities, the Debt Securities and the Jersey Preference Shares, provided
that, such action will not adversely affect in any material respect the
interests of the holders of the Trust Securities.
Restrictions on Ownership and Transfer
Generally, under the [COUNTRY] Corporations Law, the concept of
voting share does not include certain types of preference shares with limited
voting rights. Because holders of the ABC Preference Shares have been
conferred a right to vote following a missed dividend, the ABC Preference
Shares will be treated as voting shares for relevant purposes. Therefore, a
person with an entitlement to ABC Preference Shares, including holders of
Trust Securities, should consider this entitlement with any entitlement to
other voting shares in ABC in the context of the regulatory thresholds
summarized below.
In summary, under the [COUNTRY] Corporations Law, a person or group
of persons cannot acquire voting shares in a public company if that person or
group of persons or another person would then be "entitled" (which is defined
very broadly) to more than 20% of the voting shares in ABC unless those shares
are acquired in a manner specifically permitted by law. This restriction also
limits the options available to a shareholder wanting to sell a shareholding
of more than 20% in an [COUNTRY] public company. The [COUNTRY] Corporations
Law also imposes certain substantial shareholding disclosure obligations on
persons who are or become "entitled" to 5% or more of the voting shares in a
company listed on the [COUNTRY] Stock Exchange, such as ABC.
Book-Entry System
The Trust Securities will be issued in the form of one or more
global securities (the "Global Securities") deposited with the Depository and
registered in the name of a nominee of the Depository.
The Depository has advised the Trust and the Underwriters as
follows: The Depository is a limited-purpose trust company organized under the
laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to Section 17A of the
Exchange Act. The Depository was created to hold securities of persons who
have accounts with the Depository ("participants") and to facilitate the
clearance and settlement of securities transactions among its participants in
such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of
certificates. Such participants include securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to the Depository's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a participant, either directly or indirectly.
Upon the issuance of a Global Security, the Depository or its
nominee will credit the respective Trust Securities represented by such Global
Security to the accounts of participants. The accounts to be credited shall be
designated by the Underwriters. Ownership of beneficial interests in such
Global Securities will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests by
participants in such Global Securities will be shown on, and the transfer of
those ownership interests will be effected only through, records maintained by
the Depository or its nominee for such Global Securities. Ownership of
beneficial interests in such Global Securities by persons that hold through
participants will be shown on, and the transfer of that ownership interest
within such participant will be effected only through, records maintained by
such participant. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security.
So long as the Depository for a Global Security, or its nominee, is
the registered owner of such Global Security, such Depository or such nominee,
as the case may be, will be considered the sole owner or holder of the Trust
Securities. Except as set forth below, owners of beneficial interests in such
Global Securities will not be entitled to have the Trust Securities registered
in their names and will not receive or be entitled to receive physical
delivery of the Trust Securities in definitive form and will not be considered
the owners or holders thereof.
Delivery of ADSs or payment of amounts or delivery of other
consideration deliverable on exchange of, and any quarterly distributions on,
Trust Securities registered in the name of or held by the Depository or its
nominee will be made to the Depository or its nominee, as the case may be, as
the registered owner or the holder of the Global Security. None of the Trust,
any Trustee, the Administrator, the Paying Agent or the Custodian for the
Trust Securities will have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial ownership
interests in a Global Security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
The Trust expects that the Depository, upon receipt of any payment
in respect of a Global Security, will credit immediately participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in such Global Security as shown on the records of the Depository.
The Trust also expects that payments by participants to owners of beneficial
interests in such Global Security held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in "street
name," and will be the responsibility of such participants.
A Global Security may not be transferred except as a whole by the
Depository to a nominee or a successor of the Depository. If the Depository is
at any time unwilling or unable to continue as depository and a successor
depository is not appointed by the Trust within ninety days, the Trust will
issue Trust Securities in definitive registered form in exchange for the
Global Security representing such Trust Securities. In addition, the Trust may
at any time and in its sole discretion determine not to have any Trust
Securities represented by one or more Global Securities and, in such extent,
will issue Trust Securities in definitive form in exchange for all of the
Global Securities representing the Trust Securities. Further, if the Trust so
specifies with respect to the Trust Securities, an owner of a beneficial
interest in a Global Security representing Trust Securities may, on terms
acceptable to the Trust and the Depository for such Global Security, receive
Trust Securities in definitive form. In any such instance, an owner of a
beneficial interest in a Global Security will be entitled to physical delivery
in definitive form of Trust Securities represented by such Global Security
equal in number to that represented by such beneficial interest and to have
such Trust Securities registered in its name.
TRUSTEES
The Trustees of the Trust consist of three individuals, none of whom
is an "interested person" of the Trust as defined in the Investment Company
Act. The Trustees of the Trust are responsible for the overall supervision of
the operations of the Trust and perform the various duties imposed on the
trustees of management investment companies by the Investment Company Act.
The Trustees of the Trust are:
<TABLE>
<CAPTION>
Principal Occupation
Name, Age and Address Title During Past Five Years
<S> <C> <C>
Donald J. Puglisi, 52.................................... Managing Trustee Professor of Finance
Department of Finance University of Delaware
University of Delaware
Newark, DE 19716
William R. Latham III, 53................................ Trustee Professor of Economics
Department of Economics University of Delaware
University of Delaware
Newark, DE 19716
James B. O'Neill, 58..................................... Trustee Professor of Economics
Center for Economic University of Delaware
Education & Entrepreneurship
University of Delaware
Newark, DE 19716
</TABLE>
Compensation of Trustees
The annual fees and anticipated out-of-pocket expenses of each
unaffiliated Trustee and any additional fees of the Trust's Managing Trustee
will be deducted from the interest payments on the Debt Securities. The
Trustees will not receive, either directly or indirectly, any compensation,
including any pension or retirement benefits, from the Trust. None of the
Trustees receives any compensation for serving as a trustee or director of any
other affiliated investment company.
MANAGEMENT ARRANGEMENTS
Portfolio Management and Administration
The Trust will be internally managed and will not have an investment
adviser. The Trust's portfolio will consist only of US$______ aggregate
principal amount of Debt Securities (US$______ aggregate principal amount of
Debt Securities if the Underwriters' over-allotment options are exercised in
full), and any distributions thereon, and will not be actively managed. The
Trustees of the Trust will authorize the purchase of the Debt Securities as
directed by the Declaration of Trust. It is a fundamental policy of the Trust
that the Debt Securities may not be disposed of during the term of the Trust,
except upon the occurrence of an Exchange Event.
The Trust will pay all expenses incurred in its formation and other
initial expenses and expenses relating to the Offerings with the facility fee
paid to the Trust by the U.K. Company in connection with the investment by the
Trust in the Debt Securities. Anticipated ongoing expenses of the Trust such
as accounting services, expenses for legal and auditing services, taxes, costs
of printing proxies, listing fees, if any, stock certificates and shareholder
reports, charges of the Administrator, the Custodian and the Paying Agent,
expenses of registering the Trust Securities under Federal and state
securities laws, Commission fees, fees and expenses of Trustees, accounting
costs, brokerage costs, litigation, mailing and other expenses properly
payable by the Trust will be paid from the interest payments on the Debt
Securities. Any unanticipated operating expenses of the Trust will be paid by
the ABC Affiliate. See "--Estimated Expenses."
Administrator. The day-to-day affairs of the Trust will be managed
by The Bank of New York, as the Administrator pursuant to an administration
agreement (the "Administration Agreement"). Under the Administration
Agreement, the Trustees have delegated most of their operational duties to the
Administrator, including without limitation, the duties to: (i) pay, or cause
to be paid, all expenses incurred by the Trust; (ii) calculate the interest
rate on the Debt Securities; (iii) with the approval of the Trustees, engage
legal and other professional advisors (other than the independent public
accountants for the Trust); (iv) instruct the Paying Agent to pay
distributions on Trust Securities as described herein; (v) cause the legal and
other professional advisors engaged by it to prepare and mail, file or publish
all notices, proxies, reports, tax returns and other communications and
documents for the Trust, and keep all books and records for the Trust; (vi) at
the direction of the Trustees, and upon being furnished with reasonable
security and indemnity as the Administrator may require, institute and
prosecute legal and other appropriate proceedings to enforce the rights and
remedies of the Trust; and (vii) make, or cause to be made, all necessary
arrangements with respect to meetings of Trustees and any meetings of holders
of Trust Securities. The Administrator will not, however, select the
independent public accountants for the Trust or sell or otherwise dispose of
the Trust assets (except in connection with the occurrence of an Exchange
Event).
The Administration Agreement may be terminated by either the Trust
or the Administrator upon 60 days prior written notice, except that no
termination shall become effective until a successor Administrator has been
chosen and has accepted the duties of the Administrator.
Except for its roles as Administrator, Custodian and Paying Agent of
the Trust, and except for its role as Collateral Agent under the Security and
Pledge Agreement and as depositary for the ADRs, The Bank of New York has no
other affiliation with, and is not engaged in any other transactions with, the
Trust.
The address of the Administrator is 101 Barclay Street, New York,
New York 10286.
Custodian
The Trust's custodian (the "Custodian") is The Bank of New York
pursuant to a custodian agreement (the "Custodian Agreement"). In the event of
any termination of the Custodian Agreement by the Trust or the resignation of
the Custodian, the Trust must engage a new Custodian to carry out the duties
of the Custodian as set forth in the Custodian Agreement. The Custodian will
also act as Collateral Agent under the Security and Pledge Agreement, under
which it will hold a perfected security interest in the ADSs, the Jersey
Preference Shares or other assets consistent with the terms of the securities
pledged thereunder, and as depositary for the ADRs.
Paying Agent
The paying agent, transfer agent and registrar (the "Paying Agent")
for the Trust Securities is The Bank of New York pursuant to a paying agent
agreement (the "Paying Agent Agreement"). In the event of any termination of
the Paying Agent Agreement by the Trust or the resignation of the Paying
Agent, the Trust will use its best efforts to engage a new Paying Agent to
carry out the duties of the Paying Agent.
Indemnification
The Trust will, to the fullest extent permitted by applicable law,
indemnify each Trustee, the Administrator, the Paying Agent and the Custodian
with respect to any claim, liability, loss which it may incur in acting as
Trustee, Administrator, Paying Agent or Custodian, as the case may be, and any
reasonable expense incurred in connection with any such claim, liability or
loss (including the reasonable costs and expenses of the defense against any
claim or liability) except in the case of willful misfeasance, bad faith,
gross negligence or reckless disregard of their respective duties. Subject to
the satisfaction of certain conditions, the ABC Affiliate will reimburse the
Trust for any amounts it may be required to pay as indemnification to any
Trustee, the Administrator, the Paying Agent or the Custodian.
Estimated Expenses
Organization costs of the Trust in the amount of $ and estimated
costs of the Trust in connection with the initial registration of the Trust
Securities and the Offerings in the amount of approximately $ will be paid by
the Trust with the facility fee paid to the Trust by the U.K. Company in
connection with the investment by the Trust in the Debt Securities. A portion
of the interest received by the Trust on the Debt Securities will be used to
pay, among other things, the anticipated ongoing expenses of the Trust. Any
unanticipated operating expenses of the Trust will be paid by the ABC
Affiliate.
DIVIDENDS AND DISTRIBUTIONS
The Trust intends to distribute to holders dividend distributions in
an amount equal to US$______ per Trust Security per annum, payable quarterly
in arrears in an amount equal to US$______ per Trust Security on each Dividend
Payment Date to holders of record on the immediately preceding Record Date.
The first distribution in respect of the period from and including the Issue
Date to but excluding _______, 1998 will equal US$______ per Trust Security.
Dividend payments on the Trust Securities will be made from the
interest payments received by the Trust on the Debt Securities. Interest
payments on the Debt Securities will be made from distributions received by
the U.K. Company as income beneficiary entitled to Income Entitlements from
the Distribution Trust. The U.K. Company's right to receive Income
Entitlements will not represent an absolute ownership interest in the
Distribution Trust or the income thereof, but rather an entitlement to receive
interest payments on the Distribution Loan only to the extent actually
distributed to the U.K. Company by the Distribution Trust; if any Income
Entitlement payable on any Interest Payment Date is not paid to the U.K.
Company or at its direction on such date for any reason, the Distribution
Trust will have no further obligation to pay such Income Entitlement to the
U.K. Company. See "Investment Objective and Policies--Intervening Vehicles."
On each Interest Payment Date, (i) the ABC Subsidiary will make an
interest payment on the ABC Subsidiary Loan to the USLLC; (ii) out of such
payment, the USLLC will make an interest payment on the Distribution Loan to the
Distribution Trust; (iii) out of such payment, if no Payment Prohibition exists,
the Distribution Trust will distribute the Income Entitlements to the U.K.
Company; and (iv) out of such distribution, if any, the U.K. Company will pay
(a) interest on the Debt Securities to the Trust and (b) ongoing costs and
expenses of the U.K. Company, the Jersey Holding Company, the Jersey Charitable
Trust, the Jersey Subsidiary and the Collateral Agent and the indemnity fee
payable to the ABC Affiliate. On such Interest Payment Date (which will also be
a Dividend Payment Date), the Administrator of the Trust will use all the
interest received by the Trust on the Debt Securities to pay dividends on the
Trust Securities and ongoing costs and expenses of the Trust.
NET ASSET VALUE
The net asset value of the Trust Securities will be calculated by
the Trust no less frequently than quarterly by dividing the value of the net
assets of the Trust (the value of its assets less its liabilities) by the
total number of Trust Securities outstanding. The Trust's net asset value will
be published semi-annually as part of the Trust's semi-annual report to
holders and at such other times as the Trustees may determine. The value of
the Debt Securities held by the Trust will be determined in good faith by the
Board of Trustees pursuant to procedures adopted by them.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of Trust Securities is
based upon the advice of Sullivan & Cromwell, counsel to ABC. The summary
addresses only the tax consequences to persons that acquire Trust Securities
in connection with the Offerings and hold the Trust Securities as a capital
asset. It does not address all tax consequences of the ownership of Trust
Securities and does not take into account the specific circumstance of
investors such as tax-exempt entities, banks, certain insurance companies,
broker dealers, traders in securities that elect to mark to market, investors
liable for the alternative minimum tax, investors that hold Trust Securities
as part of a straddle or hedging or conversion transaction or investors whose
functional currency is not the U.S. dollar. The summary is based on the
Internal Revenue Code of 1986, as amended, its legislative history, existing
and proposed regulations thereunder, published rulings and court decisions as
well as the income tax treaty between the United States and [COUNTRY] (the
"Treaty") all of which are subject to change possibly with retroactive effect.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX
ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF TRUST SECURITIES, AS WELL AS THE EFFECT
OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
U.S. Holders
A "U.S. Holder" is any beneficial owner of Trust Securities that is
(i) a citizen or resident of the United States, (ii) a domestic corporation,
(iii) an estate the income of which is subject to United States Federal income
tax without regard to its source, or (iv) a trust if a court within the United
States is able to exercise primary supervision over administration of the
trust and one or more United States persons having authority to control all
substantial decisions of the trust. A "Non-U.S. Holder" is any beneficial
owner that is not a United States person for United States Federal income tax
purposes.
Classification of the Trust and the Debt Securities and
Distributions on Trust Securities. For United States federal income tax
purposes the Trust will be classified as a grantor trust and not as an
association taxable as a corporation, and the Debt Securities held by the
Trust will be treated as equity in ABC. Accordingly, for United States Federal
income tax purposes, each U.S. Holder generally will be treated as owing
equity of ABC and will be required to include in income, as a dividend, the
holder's share of the gross amount of the interest paid to the Trust on the
Debt Securities to the extent of the current and accumulated earnings and
profits (as determined for United States Federal income tax purposes) of ABC.
For foreign tax credit limitation purposes the payments will be income from
sources without the United States, but generally will be treated separately,
together with the other items of "passive income" (or in the case of certain
holders, "financial services income").
Sale of the Trust Securities. Upon a sale or other disposition of
the Trust Securities (including generally the receipt of a distribution of
cash in redemption of all of a U.S. Holder's Trust Securities), a U.S. Holder
will recognize gain or loss in an amount equal to the difference between the
amount realized and the U.S. Holder's adjusted tax basis. Generally, such gain
or loss will be capital gain or loss and will be long-term capital gain or
loss if the U.S. Holder's holding period exceeds one year. Any such gain will
be income from sources within the United States for foreign tax credit
limitations purposes. Long-term capital gain of a non-corporate U.S. Holder is
generally subject to a maximum tax rate of 28% in respect of property with a
holding period of more than one year and to a maximum tax rate of 20% in
respect of property with a holding period in excess of 18 months.
Consequences of an Exchange Event. As described above under
"Investment Objective and Policies--Exchange Event" upon the occurrence of an
Exchange Event, the Trust will distribute ADSs or, under certain
circumstances, cash to holders of Trust Securities in exchange for their Trust
Securities and in liquidation of the Trust. A U.S. Holder's exchange of Trust
Securities for ADSs generally will not be a taxable event for United States
Federal income tax purposes. A U.S. Holder's basis in the ADSs received upon
exchange will generally be the same as the U.S. Holder's basis in the property
exchanged therefor and such holder's holding period in the ADSs would include
their holding period in such property.
Upon the occurrence of certain Exchange Events, the Trust Securities
may be redeemed for cash. For U.S. federal income tax purposes such redemption
would constitute a taxable disposition of the redeemed Trust Securities and a
U.S. Holder would generally recognize gain or loss in the same manner if there
had been a sale or disposition as described under "--Sale of the Trust
Securities" above.
ADSs Received in an Exchange Event
Distributions on the ADSs. U.S. Holders will include in gross income
the gross amount of any dividend paid including Additional Amounts (as defined
and described in the accompanying prospectus of ABC), if any, before reduction
for [COUNTRY] withholding taxes by ABC, out of its current or accumulated
earnings and profits (as determined for U.S. federal income tax purposes) as
ordinary income when the dividend is actually or constructively received by
the U.S. Holder. The dividend will not be eligible for the dividends received
deduction generally allowed to United States corporations in respect of
dividends received from other United States corporations. The amount of the
dividend distribution includible in income of a U.S. Holder will be the U.S.
dollar value of the [CURRENCY OF THE COUNTRY] payments made, determined at the
spot [CURRENCY OF THE COUNTRY]/U.S. dollar rate on the date such dividend
distribution is includible in the income of the U.S. Holder, regardless of
whether the payment is in fact converted into U.S. Dollars. Generally, any
gain or loss resulting from currency exchange fluctuations during the period
from the date the dividend payment is includible in income to the date such
payment is converted into U.S. dollars will be treated as ordinary income or
loss. Such gain or loss will generally be income from sources within the
United States for foreign tax credit limitation purposes.
Subject to certain limitations, the [COUNTRY] tax withheld, if any,
in accordance with the Treaty and paid over to [COUNTRY] will be creditable
against the U.S. Holder's United States federal income tax liability. For
foreign tax credit limitation purposes, the dividend will be income from
sources without the United States, but generally will be treated separately,
together with the other items of "passive income" (or in the case of certain
holders "financial services income"). Sale or Other Disposition of ADSs. A
U.S. Holder will recognize gain or loss for U.S. federal income tax purposes
upon the sale or other disposition of ADSs in an amount equal to the
difference between the U.S. dollar value of the amount realized and the U.S.
Holder's adjusted tax basis (determined in U.S. dollars) in the ADSs.
Generally, such gain will be capital gain or loss, will be long-term capital
gain or loss if the U.S. Holder's holding period for the ADSs exceeds one year
and any such gain will be income from sources within the United States for
foreign tax credit limitations purposes. Long-term capital gain of a
non-corporate U.S. Holder is generally subject to a maximum tax rate of 28% in
respect of property with a holding period of more than one year and to a
maximum tax rate of 20% in respect of property with a holding period in excess
of 18 months.
PFIC Considerations
ABC does not believe that it will be treated as a passive foreign
investment company (a "PFIC") for United States Federal income tax purposes
but that is a factual determination made annually and therefore may be subject
to change. Because a U.S. Holder of Trust Securities will be treated as owning
an equity interest in ABC for United States Federal income tax purposes, if
ABC were a PFIC a U.S. Holder of Trust Securities as well as a holder of ADSs
would be subject to certain adverse tax consequences.
Non-U.S. Holders
Distributions on the Trust Securities and ADSs. Distributions to a
Non-U.S. Holder will not be subject to United States Federal income tax unless
such distributions are effectively connected with the conduct of a trade or
business within the United States by such Non-U.S. Holder (and are
attributable to a permanent establishment maintained in the United States by
such Non-U.S. Holder, if an applicable income tax treaty so requires as a
condition for such Non-U.S. Holder to be subject to United States taxation on
a net income basis in respect of income from Trust Securities or ADSs), in
which case such Non-U.S. Holder generally will be subject to tax in respect of
distributions in the same manner as a U.S. Holder. Any such effectively
connected distributions received by a non-U.S. corporation may also, under
certain circumstances, be subject to an "additional branch profits" tax at a
30% rate of such lower rate as may be specified by an applicable income tax
treaty.
Sale or Disposition of the Trust Securities and ADSs. A Non-U.S.
Holder will not be subject to United States Federal income tax in respect of
gain recognized on a sale or other disposition of Trust Securities or ADSs
unless (i) the gain is effectively connected with a trade or business of the
Non-U.S. Holder in the United States (and is attributable to a permanent
establishment maintained in the United States by such Non-U.S. Holder, if an
applicable income tax treaty so requires as a condition for such Non-U.S.
Holder to be subject to United States taxation on a net income basis in
respect of gain from the sale or other disposition of the Trust Securities or
ADSs) or (ii) in the case of a Non-U.S. Holder who is an individual, such
holder is present in the United States for 183 or more days in the taxable
year of the sale and certain other conditions apply. Effectively connected
gains realized by a corporate Non-U.S. Holder may also, under certain
circumstances, be subject to an additional "branch profits tax" at a 30% rate
or such lower rate as may be specified by an applicable income tax treaty.
Information Reporting and Backup Withholding Tax. In general,
information reporting requirements will apply to payments of dividends made
within the United States by the Trust or any of its paying agents on the Trust
Securities or, in the case of ADSs, by a U.S. paying agent or other U.S.
intermediary and "backup withholding" at a rate of 31% will apply to such
payments (other than dividends paid before December 31, 1999) made to a U.S.
Holder (other than a corporation or other exempt U.S. Holder) unless the U.S.
Holder furnishes its taxpayer identification number in the manner required by
United States law and applicable regulations, certifies that such number is
correct, certifies as to no loss or exemption from backup withholding and
meets certain other conditions. A Non-U.S. Holder will be exempt from back-up
withholding provided that certain certification requirements are satisfied.
Payment of the proceeds from the disposition of Trust Securities or
ADSs to or through the United States office of a broker is subject to both
information reporting and backup withholding unless the holder establishes an
exemption from information reporting and backup withholding. United States
information reporting and backup withholding generally will not apply to a
payment made outside the United States of the proceeds of a sale of Trust
Securities or ADSs through an office outside the United States of a non-United
States broker. However, United States information reporting will apply to a
payment made outside the United States of the proceeds of a sale of Trust
Securities or ADSs through an office outside the United States of a broker (i)
that is a United States person, (ii) that derives 50% or more of its gross
income for a specified three year period from the conduct of a trade or
business in the United States, (iii) that is a "controlled foreign
corporation" as to the United States, or (iv) with respect to payments made
after December 31, 1999, that is a foreign partnership if, at any time during
its tax year, one or more of its partners are U.S. persons (as defined in U.S.
Treasury Regulations) who in the aggregate hold more than 50% of the income or
capital interest in the partnership or if, at any time during its tax year,
such foreign partnership is engaged in a United States trade of business,
unless the broker has documentary evidence in its files that the holder or
beneficial owner is not a United States person or the holder or beneficial
owner otherwise establishes an exemption. Backup withholding will not apply to
such payments unless the broker has actual knowledge that the payee is a U.S.
person.
Any amounts withheld from a holder under the backup withholding
rules will be allowed as a refund or a credit against such holder's United
States federal income tax liability, provided the required information is
furnished to the Internal Revenue Service.
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in a purchase
agreement (the "U.S. Purchase Agreement"), the Trust has agreed to sell to
each of the underwriters named below (the "U.S. Underwriters"), and each of
the U.S. Underwriters, for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated and _______________________ are acting as representatives (the
"U.S. Representatives"), has severally agreed to purchase, the aggregate
number of Trust Securities set forth opposite its name below:
Number of
U.S. Underwriter Trust Securities
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................
--------------
Total..............................
==============
The Trust has also entered into a purchase agreement (the
"International Purchase Agreement" and, together with the U.S. Purchase
Agreement, the "Purchase Agreements") with Merrill Lynch International and ,
acting as lead managers (the "Lead Managers"), and certain other underwriters
outside the United States and Canada (the "International Managers" and,
together with the U.S. Underwriters, the "Underwriters"). Subject to the terms
and conditions set forth in the International Purchase Agreement, the Trust
has agreed to sell to the International Managers, and the International
Managers have severally agreed to purchase, an aggregate of ___________ Trust
Securities.
In each Purchase Agreement, the Underwriters named therein have
agreed, subject to the terms and conditions set forth in such Purchase
Agreement, to purchase all of the Trust Securities being sold pursuant to such
Purchase Agreement if any of the Trust Securities being sold pursuant to such
Purchase Agreement are purchased. Under certain circumstances, under the
Purchase Agreements, the commitments of non-defaulting Underwriters may be
increased. Each Purchase Agreement provides that the Trust is not obligated to
sell, and the Underwriters named therein are not obligated to purchase, the
Trust Securities under the terms of the Purchase Agreement unless all of the
Trust Securities to be sold pursuant to the Purchase Agreements are
contemporaneously sold. In the event of a failure to close, any funds debited
from any investor's account maintained with an Underwriter will be credited to
such account and any funds received by such Underwriter by check or money
order from any investor will be returned to such investor by check.
The U.S. Representatives have advised the Trust that the U.S.
Underwriters propose to offer the Trust Securities offered hereby in the U.S.
Offering to the public initially at the public offering price set forth on the
cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of $______ per Trust Security. The U.S. Underwriters
may allow, and such dealers may reallow, a discount not in excess of $______
per Trust Security to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be changed.
The sales load of $_____ per Trust Security is equal to _______% of the
initial public offering price. Investors must pay for any Trust Securities
purchased in the initial public offering on or before _____________________,
1998.
The initial public offering price per Trust Security and the
underwriting discount per Trust Security are identical for both Offerings.
The Trust has granted the U.S. Underwriters and the International
Managers options to purchase up to an additional __________ and __________
Trust Securities , respectively, (subject to decrease pro rata by the number
of Trust Securities resulting from the split of the initial Trust Securities
described below) at the initial public offering price, less the underwriting
discount. Such options, which will expire 30 days after the date of this
Prospectus, may be exercised solely to cover over-allotments. To the extent
that the Underwriters exercise such options, each of the Underwriters will
have a firm commitment, subject to certain conditions, to purchase from the
Trust approximately the same percentage of the option shares that the number
of shares to be purchased initially by that Underwriter is of the __________
Trust Securities initially purchased by the Underwriters.
In view of the fact that the proceeds of the sale of the Trust
Securities will ultimately be invested in ADSs representing the ABC Preference
Shares, each Purchase Agreement provides that ABC will pay, as compensation to
the Underwriters, an amount in immediately available funds $___ per Trust
Security.
The Trust has been informed that the Underwriters have entered into
an agreement (the "Intersyndicate Agreement") providing for the coordination
of their activities. Pursuant to the Intersyndicate Agreement, the U.S.
Underwriters and the International Managers are permitted to sell Trust
Securities to each other for purposes of resale at the initial public offering
price, less an amount not greater than the selling concession.
The Trust has been informed that, under the terms of the
Intersyndicate Agreement, the U.S. Underwriters and any dealer to whom they
sell Trust Securities will not offer to sell or resell Trust Securities to
persons who are non-U.S. or non-Canadian persons or to persons they believe
intend to resell to person who are non-U.S. or non-Canadian persons, and the
International Managers and any bank, broker or dealer to whom they sell Trust
Securities will not offer to sell or resell Trust Securities to U.S. persons
or to Canadian persons or to persons they believe intend to resell to U.S.
persons or to Canadian persons, except in the case of transactions pursuant to
the Intersyndicate Agreement which, among other things, permits the
Underwriters to purchase from each other and offer for resale such number of
Trust Securities as the selling Underwriter or Underwriters and the purchasing
Underwriter or Underwriters may agree.
The Underwriters do not intend to confirm sales of Trust Securities
offered hereby to any accounts over which they exercise discretionary
authority.
Prior to the Offerings, there has been no public market for the
Trust Securities. Application will be made to list the Trust Securities on the
NYSE. In connection with the listing, the Underwriters will undertake that
sales of Trust Securities will meet the NYSE's minimum distribution standards.
In view of the fact that the proceeds of the sale of the Trust
Securities will ultimately be invested in ADSs representing the ABC Preference
Shares, ABC has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute
to payments the Underwriters may be required to make in respect thereof.
In connection with the formation of the Trust, ________________, an
affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, subscribed
for and purchased 4,000 Trust Securities for a purchase price of $100,000.
Prior to the Offerings, the initial Trust Securities will be split into the
smallest whole number of Trust Securities that would result in the per Trust
Security amount recorded as capital, after effecting the split, not exceeding
the initial public offering price per Trust Security.
Until the distribution of the Trust Securities is completed, rules
of the Commission may limit the ability of the Underwriters and any selling
group members to bid for and purchase the Trust Securities. As an exception to
these rules, the U.S. Representatives are permitted to engage in certain
transactions that stabilize the price of the Trust Securities. Such
transactions consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of the Trust Securities.
If the Underwriters create a short position in the Trust Securities
in connection with the Offerings, i.e., if they sell more Trust Securities
than are set forth on the cover page of this Prospectus, the U.S.
Representatives may reduce that short position by purchasing Trust Securities
in the open market. The U.S. Representatives may also elect to reduce any
short position by exercising all or part of the over-allotment options
described above.
The U.S. Representatives may also impose a penalty bid on certain
Underwriters and selling group members. This means that if the U.S.
Representatives purchase Trust Securities in the open market to reduce the
Underwriters' short position or to stabilize the price of the Trust
Securities, they may reclaim the amount of the selling concession from the
Underwriters and any selling group members who sold those Trust Securities as
part of the Offerings.
In general, purchases of a security for the purpose of stabilization
or to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases. The imposition of a
penalty bid might also have an effect on the price of a security to the extent
that it were to discourage resales of the security.
Neither the Trust nor any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of the Trust
Securities. In addition, neither the Trust nor any of the Underwriters makes
any representation that the U.S. Representatives will engage in such
transactions or that such transactions, once commenced, will not be
discontinued without notice.
Certain of the Underwriters render investment banking and other
financial services to ABC from time to time.
LEGAL MATTERS
Certain legal matters will be passed upon for the Trust and the
Underwriters by their counsel, Brown & Wood LLP, New York, New York. Certain
matters of Delaware law will be passed upon for the Trust by Richards, Layton
& Finger P.A., Wilmington, Delaware, special Delaware counsel to the Trust.
EXPERTS
The statement of assets, liabilities and capital included in this
Prospectus has been audited by _________________, independent auditors, as
stated in their opinion appearing herein, and has been included in reliance
upon such opinion given on the authority of said firm as experts in auditing
and accounting.
ADDITIONAL INFORMATION
The Trust has filed with the Commission, Washington, D.C. 20549, a
Registration Statement on Form N-2 under the Securities Act with respect to
the Trust Securities offered hereby. Further information concerning the Trust
Securities and the Trust may be found in the Registration Statement, of which
this Prospectus constitutes a part. The Registration Statement may be
inspected without charge at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of all or any part thereof may be obtained from such office after
payment of the fees prescribed by the Commission. The Commission maintains a
Web site at http://www.sec.gov containing reports, proxy and information
statements and other information regarding registrants, such as the Trust,
that file electronically with the Commission.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholder of ABC Exchangeable
Preferred Trust:
We have audited the accompanying statement of assets, liabilities
and capital of ABC Exchangeable Preferred Trust as of ____________________,
1998. This financial statement is the responsibility of the Trust's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the statement of assets,
liabilities and capital is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statement. An audit also includes assessing the accounting
principles used and significant estimates made by the Trust's management, as
well as evaluating the overall financial statement presentation. We believe
that our audit of the financial statement provides a reasonable basis for our
opinion.
In our opinion, the financial statement referred to above presents
fairly, in all material respects, the financial position of ABC Exchangeable
Preferred Trust, as of __________________, 1998 in conformity with generally
accepted accounting principles.
New York, New York
________________, 1998
<PAGE>
ABC EXCHANGEABLE PREFERRED TRUST
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
, 1998
Assets
Cash $100,000
Total Assets............................................. $100, 000
=========
Liabilities
Total Liabilities............................................... $ 0
======
NET ASSETS...................................................... $100,000
========
Capital
____ Trust Securities, par value $.10 per Trust Security; ____
Trust Securities issued and
outstanding (Note 3) $100,000
========
__________
(1) The Trust was created as a Delaware business trust on ________, 1998
and has had no operations other than matters relating to its
organization and registration as a non-diversified, closed-end
management investment company under the U.S. Investment Company Act
of 1940, as amended. Costs incurred in connection with the
organization of the Trust will be paid by the Trust with the facility
fee paid to the Trust by the U.K. Company in connection with the
investment by the Trust in the Debt Securities. The anticipated
ongoing administrative and other expenses of the Trust will be paid
from the interest on the Debt Securities.
(2) Offering expenses will be payable upon completion of the Offerings
and will be paid by the Trust with the facility fee paid to the Trust
by the U.K. Company in connection with the investment by the Trust in
the Debt Securities.
(3) On ______________, 1998, the Trust issued one Trust Security to
_____________, an affiliate of Merrill Lynch, Pierce, Fenner & Smith
Incorporated, in consideration for a purchase price of $100,000.
The Declaration of Trust provides that prior to the Offerings, the
Trust will split the outstanding Trust Securities to be effected on the date
that the price and underwriting discount of the Trust Securities being offered
to the public are determined, but prior to the sale of the Trust Securities to
the Underwriters. The outstanding Trust Securities will be split into the
smallest whole number of Trust Securities that would result in the per Trust
Security amount recorded as capital, after effecting the split, not exceeding
the public offering price per Trust Security.
<PAGE>
- ------------------------------------------------------------------------------
THE FOLLOWING PROSPECTUS OF [NAME] IS ATTACHED AND DELIVERED FOR
CONVENIENCE OF REFERENCE ONLY. THE PROSPECTUS OF [NAME] DOES
NOT CONSTITUTE A PART OF THE FOREGOING PROSPECTUS OF
ABC EXCHANGEABLE PREFERRED TRUST, NOR IS IT
INCORPORATED BY REFERENCE THEREIN.
- ------------------------------------------------------------------------------
<PAGE>
[ABC Prospectus]
[To be provided.]
<PAGE>
<TABLE>
<CAPTION>
====================================================================== ===========================================================
<S> <C>
No dealer, salesperson or other individual has been authorized to give
any information or to make any representations other than those
contained in this Prospectus in connection with the offering Trust Securities
described herein and, if given or made, such information or
representations must not be relied upon as having been authorized by
the Trust or the Underwriters. This Prospectus does not constitute ABC Exchangeable
an offer to sell, or a solicitation of an offer to buy, any Preferred Trust
securities other than those specifically offered hereby, or of any
securities offered hereby, in any jurisdiction to any person to whom
it is unlawful to make an offer or solicitation in such
jurisdiction. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any
implication that there has been no change in the facts set forth in
this Prospectus or in the affairs of the Trust since the date hereof
or since the dates as of which information is set forth herein. In
the event that any such change shall occur during the period in
which applicable law requires delivery of this Prospectus, this
Prospectus will be amended or supplemented accordingly.
================
PROSPECTUS
TABLE OF CONTENTS ================
Page
Prospectus Summary.................................. 3
Fee Table........................................... 8
Structural Diagram.................................. 9
The Trust........................................... 10
Use of Proceeds and Collateral Arrangements......... 10
Investment Objective and Policies................... 11
Investment Restrictions............................. 14 Merrill Lynch & Co.
Risk Factors........................................ 14
Description of the Trust Securities................. 15 [Co-Managers]
Trustees............................................ 17
Management Arrangements............................. 18
Dividends and Distributions......................... 20
Net Asset Value..................................... 20 , 1998
Certain United States Federal Income Tax
Considerations................................... 20
Underwriting........................................ 24
Legal Matters....................................... 26
Experts............................................. 26
Additional Information.............................. 26
Independent Auditors' Report........................ 27
Statement of Assets, Liabilities and Capital........ 28
Prospectus relating to Preference Shares
of [NAME]
Until , 1998 (25 days after the commencement of the
offering), all dealers effecting transactions in the Trust
Securities, whether or not participating in this distribution, may
be required to deliver a Prospectus. This delivery requirement is in
addition to the obligation of dealers to deliver a Prospectus when
acting as underwriters and with respect to their unsold allotments
or subscriptions.
====================================================================== ===========================================================
</TABLE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
PROSPECTUS
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY 8, 1998
________ Trust Securities
ABC Exchangeable Preferred Trust
Of the total of ______ Trust Securities Exchangeable for Preference
Shares (the "Trust Securities") of ABC Exchangeable Preferred Trust (the
"Trust") being offered, ______ Trust Securities initially are being offered in
the United States and Canada by the U.S. Underwriters (the "U.S. Offering")
and _______ Trust Securities initially are being offered in a concurrent
international offering outside the United States and Canada by the
International Managers (the "International Offering" and, together with the
U.S. Offering, the "Offerings"). The public offering price and the
underwriting discount per Trust Security are identical for both of the
Offerings. See "Underwriting."
Each of the Trust Securities offered hereby will represent a
proportionate share of a beneficial ownership interest in the Trust and will
be sold at an initial public offering price of US$25. Except as described
herein, holders of the Trust Securities will receive non-cumulative dividend
distributions in an amount equal to US$______ per Trust Security per annum,
payable quarterly in arrears in an amount equal to US$______ per Trust
Security on each ______, ______, _______, and ________ of each year (each, a
"Dividend Payment Date"), to holders of record as of the immediately preceding
______, ______, ______ and _____, respectively (each, a "Record Date"). The
first distribution in respect of the period from and including the original
issue date (the "Issue Date") to but excluding ______, 1998 will equal
US$_____ per Trust Security.
The Trust is a newly-created Delaware business trust established for
the sole purpose of issuing the Trust Securities and investing the proceeds
thereof in and holding ______% Mandatorily Redeemable Debt Securities due 2048
(the "Debt Securities") issued by [NAME], a special purpose unlimited company
incorporated under the laws of, and domiciled in, the United Kingdom (the
"U.K. Company"), with an aggregate principal amount equal to such proceeds.
The Trust's investment objective is to distribute to the holders of Trust
Securities (a) pro rata based on the number of Trust Securities outstanding
the interest the Trust receives on the Debt Securities from time to time and
(b) upon the occurrence of an Exchange Event (as defined herein), the proceeds
of the redemption of the Debt Securities, which will be American Depositary
Receipts ("ADRs") evidencing, for each Trust Security, one American Depositary
Share ("ADS") representing four fully paid non-cumulative preference shares,
liquidation preference US$6.25 per share (the "ABC Preference Shares"), issued
by [NAME] ("ABC"), provided that, if the Exchange Event is the redemption of
the ABC Preference Shares for cash, holders of Trust Securities will be
entitled to receive US$25 per Trust Security and not ADRs. The ABC Preference
Shares will accrue non-cumulative dividends at the rate of US$______ per share
per annum, payable quarterly in arrears in an amount equal to US$______ per
share on each Dividend Payment Date to holders of record as of the immediately
preceding Record Date. See "Investment Objective and Policies." (continued on
following page) See "Risk Factors," beginning on page 14 of this Prospectus,
for certain considerations relevant to an investment in the Trust Securities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
============================================================================================================================
Price to Sales Proceeds to
Public Load(1) Trust(2)(3)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Trust Security.................................. $ (3) $
============================================================================================================================
Total(4)............................................ $ (3) $
============================================================================================================================
</TABLE>
(1) In view of the fact that the proceeds of the sale of the Trust
Securities will ultimately be invested in the ABC Preference Shares,
ABC has agreed to indemnify the several U.S. Underwriters and the
International Managers (together, the "Underwriters") against
certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of $_____________ payable by the
Trust.
(3) In view of the fact that the proceeds of the sale of the Trust
Securities will ultimately be invested in the ABC Preference Shares,
ABC has agreed to pay the Underwriters, as compensation, $___ per
Trust Security (or $___ in the aggregate if the Underwriters'
over-allotment options are exercised in full). See "Underwriting."
(4) The Trust has granted the U.S. Underwriters and the International
Managers options, exercisable for 30 days from the date hereof, to
purchase up to _______ and _______ additional Trust Securities,
respectively (subject to decrease pro rata as a result of the
issuance and sale of Trust Securities in connection with the
formation of the Trust), solely to cover over-allotments, if any. If
all such Trust Securities are purchased, the total Price to Public
and Proceeds to
Trust will be $_______ and $______, respectively. See "Underwriting."
The Trust Securities are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, and
subject to approval of certain legal matters by counsel for the Underwriters
and certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the Trust Securities will be made through the
facilities of The Depository Trust Company on or about , 1998.
Merrill Lynch International [Co-Managers]
The date of this Prospectus is , 1998.
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in a purchase
agreement (the "U.S. Purchase Agreement"), the Trust has agreed to sell to
each of the underwriters named below (the "U.S. Underwriters"), and each of
the U.S. Underwriters, for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated and acting as representatives (the "U.S. Representatives"), has
severally agreed to purchase, the aggregate number of Trust Securities set
forth opposite its name below:
Number of
U.S. Underwriter Trust Securities
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
--------------
Total........................
==============
The Trust has also entered into a purchase agreement (the
"International Purchase Agreement" and, together with the U.S. Purchase
Agreement, the "Purchase Agreements") with Merrill Lynch International and
acting as lead managers (the "Lead Managers"), and certain other underwriters
outside the United States and Canada (the "International Managers" and,
together with the U.S. Underwriters, the "Underwriters"). Subject to the terms
and conditions set forth in the International Purchase Agreement, the Trust
has agreed to sell to the International Managers, and the International
Managers have severally agreed to purchase, an aggregate of ______ Trust
Securities.
In each Purchase Agreement, the Underwriters named therein have
agreed, subject to the terms and conditions set forth in such Purchase
Agreement, to purchase all of the Trust Securities being sold pursuant to such
Purchase Agreement if any of the Trust Securities being sold pursuant to such
Purchase Agreement are purchased. Under certain circumstances, under the
Purchase Agreements, the commitments of non-defaulting Underwriters may be
increased. Each Purchase Agreement provides that the Trust is not obligated to
sell, and the Underwriters named therein are not obligated to purchase, the
Trust Securities under the terms of the Purchase Agreement unless all of the
Trust Securities to be sold pursuant to the Purchase Agreements are
contemporaneously sold. In the event of a failure to close, any funds debited
from any investor's account maintained with an Underwriter will be credited to
such account and any funds received by such Underwriter by check or money
order from any investor will be returned to such investor by check.
The U.S. Representatives have advised the Trust that the U.S.
Underwriters propose to offer the Trust Securities offered hereby in the U.S.
Offering to the public initially at the public offering price set forth on the
cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of $_______ per Trust Security. The U.S. Underwriters
may allow, and such dealers may reallow, a discount not in excess of $_____
per Trust Security to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be changed.
The sales load of $____ per Trust Security is equal to _____% of the initial
public offering price. Investors must pay for any Trust Securities purchased
in the initial public offering on or before __________, 1998.
The initial public offering price per Trust Security and the
underwriting discount per Trust Security are identical for both Offerings.
The Trust has granted the U.S. Underwriters and the International
Managers options to purchase up to an additional __________ and _______ Trust
Securities, respectively, (subject to decrease pro rata by the number of Trust
Securities resulting from the split of the initial Trust Securities described
below) at the initial public offering price, less the underwriting discount.
Such options, which will expire 30 days after the date of this Prospectus, may
be exercised solely to cover over-allotments. To the extent that the
Underwriters exercise such options, each of the Underwriters will have a firm
commitment, subject to certain conditions, to purchase from the Trust
approximately the same percentage of the option shares that the number of
shares to be purchased initially by that Underwriter is of the ______ Trust
Securities initially purchased by the Underwriters.
In view of the fact that the proceeds of the sale of the Trust
Securities will ultimately be invested in the ADSs representing the ABC
Preference Shares, each Purchase Agreement provides that ABC will pay, as
compensation to the Underwriters, an amount in immediately available funds
$___ per Trust Security.
The Trust has been informed that the Underwriters have entered into
an agreement (the "Intersyndicate Agreement") providing for the coordination
of their activities. Pursuant to the Intersyndicate Agreement, the U.S.
Underwriters and the International Managers are permitted to sell Trust
Securities to each other for purposes of resale at the initial public offering
price, less an amount not greater than the selling concession.
The Trust has been informed that, under the terms of the
Intersyndicate Agreement, the U.S. Underwriters and any dealer to whom they
sell Trust Securities will not offer to sell or resell Trust Securities to
persons who are non-U.S. or non-Canadian persons or to persons they believe
intend to resell to person who are non-U.S. or non-Canadian persons, and the
International Managers and any bank, broker or dealer to whom they sell Trust
Securities will not offer to sell or resell Trust Securities to U.S. persons
or to Canadian persons or to persons they believe intend to resell to U.S.
persons or to Canadian persons, except in the case of transactions pursuant to
the Intersyndicate Agreement which, among other things, permits the
Underwriters to purchase from each other and offer for resale such number of
Trust Securities as the selling Underwriter or Underwriters and the purchasing
Underwriter or Underwriters may agree.
The Underwriters do not intend to confirm sales of Trust Securities
offered hereby to any accounts over which they exercise discretionary
authority.
Prior to the Offerings, there has been no public market for the
Trust Securities. Application will be made to list the Trust Securities on the
NYSE. In connection with the listing, the Underwriters will undertake that
sales of Trust Securities will meet the NYSE's minimum distribution standards.
In view of the fact that the proceeds of the sale of the Trust
Securities will ultimately be invested in the ADSs representing the ABC
Preference Shares, ABC has agreed to indemnify the Underwriters, against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments the Underwriters may be required to make in respect
thereof.
In connection with the formation of the Trust, ______________, an
affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, subscribed
for and purchased 4,000 Trust Securities for a purchase price of $100,000.
Prior to the Offerings, the initial Trust Securities will be split into the
smallest whole number of Trust Securities that would result in the per Trust
Security amount recorded as capital, after effecting the split, not exceeding
the initial public offering price per Trust Security.
Until the distribution of the Trust Securities is completed, rules
of the Commission may limit the ability of the Underwriters and any selling
group members to bid for and purchase the Trust Securities. As an exception to
these rules, the U.S. Representatives are permitted to engage in certain
transactions that stabilize the price of the Trust Securities. Such
transactions consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of the Trust Securities.
If the Underwriters create a short position in the Trust Securities
in connection with the Offerings, i.e., if they sell more Trust Securities
than are set forth on the cover page of this Prospectus, the U.S.
Representatives may reduce that short position by purchasing Trust Securities
in the open market. The U.S. Representatives may also elect to reduce any
short position by exercising all or part of the over-allotment options
described above.
The U.S. Representatives may also impose a penalty bid on certain
Underwriters and selling group members. This means that if the U.S.
Representatives purchase Trust Securities in the open market to reduce the
Underwriters' short position or to stabilize the price of the Trust
Securities, they may reclaim the amount of the selling concession from the
Underwriters and any selling group members who sold those Trust Securities as
part of the Offerings.
In general, purchases of a security for the purpose of stabilization
or to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases. The imposition of a
penalty bid might also have an effect on the price of a security to the extent
that it were to discourage resales of the security.
Neither the Trust nor any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of the Trust
Securities. In addition, neither the Trust nor any of the Underwriters makes
any representation that the U.S. Representatives will engage in such
transactions or that such transactions, once commenced, will not be
discontinued without notice.
Each International Manager has agreed that: (i) it has not offered
or sold and prior to the date six months after the issue of the Trust
Securities will not offer or sell any Trust Securities to persons in the
United Kingdom prior to admission of the Trust Securities to listing in
accordance with Part IV of the Financial Services Act of 1986 (the "Act")
except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995 or the
Act; (ii) it has complied and will comply with all applicable provisions of
the Act with respect to anything done by it in relation to the Trust
Securities in, from or otherwise involving the United Kingdom; and (iii) it
has only issued or passed on, and will only issue or pass on, in the United
Kingdom any document received by it in connection with the issue of the Trust
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act of 1986 (Investment Advertisements) (Exemptions) Order
1996 or is a person to whom the document may otherwise lawfully be issued or
passed on.
Certain of the Underwriters render investment banking and other
financial services to ABC from time to time.
<PAGE>
<TABLE>
<CAPTION>
==================================================================== ===========================================================
<S> <C>
No dealer, salesperson or other individual has been authorized to give
any information or to make any representations other than
those contained in this Prospectus in connection with the offering Trust Securities
described herein and, if given or made, such information or
representations must not be relied upon as having been authorized
by the Trust or the Underwriters. This Prospectus does not ABC Exchangeable
constitute an offer to sell, or a solicitation of an offer to buy, Preferred Trust
any securities other than those specifically offered hereby, or of
any securities offered hereby, in any jurisdiction to any person
to whom it is unlawful to make an offer or solicitation in such
jurisdiction. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any
implication that there has been no change in the facts set forth
in this Prospectus or in the affairs of the Trust since the date
hereof or since the dates as of which information is set forth
herein. In the event that any such change shall occur during the
period in which applicable law requires delivery of this
Prospectus, this Prospectus will be amended or supplemented
accordingly. ================
PROSPECTUS
TABLE OF CONTENTS ================
Page
Prospectus Summary.................................. 3
Fee Table........................................... 8
Structural Diagram.................................. 9
The Trust........................................... 10
Use of Proceeds and Collateral Arrangements......... 10
Investment Objective and Policies................... 11
Investment Restrictions............................. 14 Merrill Lynch International
Risk Factors........................................ 14
Description of the Trust Securities................. 15 [Co-Managers]
Trustees............................................ 17
Management Arrangements............................. 18
Dividends and Distributions......................... 20
Net Asset Value..................................... 20 , 1998
Certain United States Federal Income Tax
Considerations................................... 20
Underwriting........................................ 24
Legal Matters....................................... 26
Experts............................................. 26
Additional Information.............................. 26
Independent Auditors' Report........................ 27
Statement of Assets, Liabilities and Capital........ 28
</TABLE>
Prospectus relating to Preference Shares
of [NAME]
Until , 1998 (25 days after the commencement of the
offering), all dealers effecting transactions in the Trust
Securities, whether or not participating in this distribution, may
be required to deliver a Prospectus. This delivery requirement is
in addition to the obligation of dealers to deliver a Prospectus
when acting as underwriters and with respect to their unsold
allotments or subscriptions.
====================================================================
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
1. Financial Statements
Independent Auditors' Report
Statement of Assets, Liabilities and Capital as of , 1998
2. Exhibits
(a)(1)Trust Agreement*
(2)Form of Amended and Restated Trust Agreement**
(3)Certificate of Trust*
(b) Not applicable
(c) Not applicable
(d)(1)Form of Specimen certificate for Trust Securities (included in
Exhibit 2(a)(2))**
(2)Portions of the Amended and Restated Trust Agreement of the Registrant
defining the rights of Holders of Trust Securities**
(e) Not applicable
(f) Not applicable
(g) Not applicable
(h)(1)Form of U.S. Purchase Agreement**
(2)Form of International Purchase Agreement**
(i) Not applicable
(j) Form of Custodian Agreement**
(k)(1)Form of Administration Agreement**
(2)Form of Paying Agent Agreement**
(3)Form of Specimen for Debt Securities**
(4)Form of Security and Pledge Agreement**
(5)Form of Fund Expense Agreement**
(6)Form of Fund Indemnity Agreement**
(l) Opinion and Consent of Brown & Wood LLP, counsel to the Trust*
(m) Not applicable
(n) (1) Tax Opinion and Consent of Brown & Wood LLP, counsel
to the Trust**
(2)Consent of , independent auditors for the Trust**
(o) Not applicable
(p) Form of Subscription Agreement**
(q) Not applicable
(r) Not applicable
* Filed herewith.
** To be filed by amendment.
Item 25. Marketing Arrangements
See Exhibits (h)(1) and (h)(2) to this Registration Statement.
Item 26. Other Expenses of Issuance and Distribution
The expenses to be incurred in connection with the offering described
in this Registration Statement will be paid by the Trust with the facility fee
paid to the Trust by the U.K. Company in connection with the investment by the
Trust in the Debt Securities.
Item 27. Person Controlled by or under Common Control with Registrant
The Trust will be internally managed and will not have an investment
adviser. The information in the Prospectus under the caption "Management
Arrangements" is incorporated herein by reference.
Item 28. Number of Holders of Securities
There will be one record holder of the Trust Securities as of the
effective date of this Registration Statement.
Item 29. Indemnification
Section 7.6 of the Amended and Restated Trust Agreement, Section 6 of
the U.S. Purchase Agreement, Section 6 of the International Purchase Agreement
and Section 4 of the Registration Agreement provide for indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "1933 Act"), may be permitted to
trustees, officers and controlling persons of the Registrant, pursuant to the
foregoing provisions or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission (the "Commission") such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such trustee, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
Item 30. Business and Other Connections of Investment Adviser
The Trust is internally managed and does not have an investment
adviser.
Item 31. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended, and the rules
promulgated thereunder are maintained at the offices of the Registrant (850
Library Avenue, Suite 204, Newark, Delaware 19715), its custodian (101 Barclay
Street, New York, New York 10286) and its paying agent (101 Barclay Street,
New York, New York 10286).
Item 32. Management Services
Not applicable.
Item 33. Undertakings
(a) The Registrant hereby undertakes to suspend the offering of the
shares covered hereby until it amends its prospectuses contained herein if (1)
subsequent to the effective date of this Registration Statement, its net asset
value per share declines more than 10 percent from its net asset value per
share as of the effective date of the Registration Statement or (2) the net
asset value per share increases to an amount greater than its net proceeds as
stated in the prospectuses contained herein.
(b) The Registrant hereby undertakes that (i) for purpose of
determining any liability under the 1933 Act, the information omitted from the
form of prospectuses filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the registrant
under Rule 497(h) under the 1933 Act shall be deemed to be part of this
registration statement as of the time it was declared effective; (ii) for the
purpose of determining any liability under the 1933 Act, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of the securities at that time shall be deemed to be the initial bona
fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Newark, State of Delaware, on the
8th day of July, 1998.
ABC Exchangeable Preferred Trust
By: /s/ Donald J. Puglisi
---------------------
Donald J. Puglisi
Managing Trustee
Each person whose signature appears below hereby authorizes Donald J.
Puglisi, William R. Latham III or James B. O'Neill, or any of them, as
attorney-in-fact, to sign on his behalf, individually and in each capacity
stated below, any amendment to this Registration Statement (including
post-effective amendments) and to file the same, with all exhibits thereto,
with the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons, in the
capacities and on the date indicated.
Name Title Date
---------- ----------- ---------
/s/ Donald J. Puglisi Managing Trustee July 8, 1998
- --------------------------------
Donald J. Puglisi
/s/ William R Latham III Trustee July 8, 1998
- --------------------------------
William R. Latham III
/s/ James B. O'Neill Trustee July 8, 1998
- --------------------------------
James B. O'Neill
Doc. No. 415242
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
(a)(1) Trust Agreement*
(2) Form of Amended and Restated Trust Agreement**
(3) Certificate of Trust*
(b) Not applicable
(c) Not applicable
(d)(1) Form of Specimen certificate for Trust Securities
(included in Exhibit 2(a)(2))**
(2) Portions of the Declaration of Trust of the Registrant
defining the rights of Holders of
Trust Securities (/**
(e) Not applicable
(f) Not applicable
(g) Not applicable
(h)(1) Form of U.S. Purchase Agreement**
(2) Form of International Purchase Agreement**
(i) Not applicable
(j) Form of Custodian Agreement**
(k)(1) Form of Administration Agreement**
(2) Form of Paying Agent Agreement**
(3) Form of Specimen for Debt Securities**
(4) Form of Security and Pledge Agreement**
(5) Form of Fund Expense Agreement**
(6) Form of Fund Indemnity Agreement**
(l) Opinion and Consent of Brown & Wood LLP, counsel to the Trust**
(m) Not applicable
(n)(1) Tax Opinion and Consent of Brown & Wood LLP, counsel to the Trust**
(2) Consent of independent auditors for the Trust**
(o) Not applicable
(p) Form of Subscription Agreement**
(q) Not applicable
(r) Not applicable
- ------------------------------
(Reference is made to Article III (Section 3.2), Article IV, Article
V and Article VIII (Sections 8.1 and 8.6) of the Trust's Amended and Restated
Trust Agreement filed as Exhibit (a)(2) to this Registration Statement.
* Filed herewith.
** To be filed by amendment.
Exhibit (a)(1)
TRUST AGREEMENT OF ABC EXCHANGEABLE PREFERRED TRUST
TRUST AGREEMENT, dated as of July 6, 1998 among Emma Nakakuki, as
Depositor, and Donald J. Puglisi, William R. Latham III and James B. O'Neill,
as Trustees. The Depositor and the Trustees hereby agree as follows:
1. The trust created hereby shall be known as "ABC Exchangeable
Preferred Trust", in which name the Trustees may conduct the business of the
Trust, make and execute contracts, and sue and be sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to
the Trustees the sum of $1. The Trustees hereby acknowledge receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate. The Trustees hereby declare that they will hold the trust estate
in trust for the Depositor. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12
of the Delaware Code, 12 Del. C. ss. 3801, et seq. and that this document
constitute the governing instrument of the Trust. The Trustees are hereby
authorized and directed to execute and file a certificate of trust with the
Delaware Secretary of State in the form attached hereto.
3. The Depositor and the Trustees will enter into an amended and
restated Trust Agreement, satisfactory to each such party, to provide for the
contemplated operation of the Trust created hereby. Prior to the execution and
delivery of such amended and restated Trust Agreement, the Trustees shall not
have any duty or obligation hereunder or with respect to the trust estate,
except as otherwise required by applicable law or as may be necessary to
obtain prior to such execution and delivery any licenses, consents or
approvals required by applicable law or otherwise.
4. This Trust Agreement may be executed in one or more counterparts.
5. The Trustees may resign upon thirty days prior notice to the
Depositor.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
DEPOSITOR:
/s/ Emma Nakakuki
________________________________________
Emma Nakakuki,
as Depositor
TRUSTEE:
/s/ Donald J. Puglisi
________________________________________
Donald J. Puglisi,
as Trustee
TRUSTEE:
William R. Latham III,
as Trustee
TRUSTEE:
/s/ James B. O'Neill
________________________________________
James B. O'Neill,
as Trustee
Exhibit (a)(3)
CERTIFICATE OF TRUST
OF
ABC EXCHANGEABLE PREFERRED TRUST
This Certificate of Trust of ABC Exchangeable Preferred Trust (the
"Trust") is being duly executed and filed by the undersigned trustees of the
Trust, dated as of July 6, 1998, for the purposes of organizing a business
trust pursuant to the Delaware Business Trust Act, 12 Del. C. ss.ss. 3801 et
seq. (the "Act").
The undersigned hereby certify as follows:
1. Name. The name of the business trust is "ABC Exchangeable
Preferred Trust".
2. Registered Office; Registered Agent. The business address of the
registered office of the Trust in the State of Delaware is One Rodney Square,
10th Floor, 10th and King Streets, in the City of Wilmington, County of New
Castle 19801. The name of the Trust's registered agent at such address is RL&F
Service Corp.
3. Effective Date. This Certificate of Trust shall be effective upon
filing in the Office of the Secretary of State of the State of Delaware.
4. Other Matters. The Trust will be a registered investment company
under the Investment Company Act of 1940, as amended.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being trustees of the Trust,
have duly executed this Certificate of Trust as of the day and year first
above written.
By: /s/ Donald J. Puglisi
_______________________________________
Donald J. Puglisi, as Trustee
By: /s/ William R. Latham III
______________________________________
William R. Latham III, as Trustee
By: /s/ James B. O'Neill
______________________________________
James B. O'Neill, as Trustee
