<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 15, 1998
SECURITIES ACT FILE NO. 333-60719
INVESTMENT COMPANY ACT FILE NO. 811-08939
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-2
/X/ REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
/X/ PRE-EFFECTIVE AMENDMENT NO. 1
/ / POST-EFFECTIVE AMENDMENT NO.
AND/OR
/X/ REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
/X/ AMENDMENT NO. 1
(CHECK APPROPRIATE BOX OR BOXES)
NAB 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>
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED(1) PER TRUEPRS(2) OFFERING PRICE(2) FEE(3)
<S> <C> <C> <C> <C>
Trust Units Exchangeable for Preference Shares
("TrUEPrS")..................................... 18,400,000 TrUEPrS $25.00 $460,000,000 $135,700
</TABLE>
(1) Includes an aggregate of 2,400,000 TrUEPrS that (i) may be issued in
connection with the exercise of over-allotment options and (ii) were
subscribed for and purchased by an affiliate of Merrill Lynch, Pierce,
Fenner & Smith Incorporated in connection with the formation of NAB
Exchangeable Preferred Trust.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Includes $295 previously paid. Payment of $135,405 was transmitted to the
designated lockbox at Mellon Bank in Pittsburgh, PA in connection with the
filing of this Pre-Effective Amendment No. 1.
------------------------------
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.
*FORMERLY XYZ EXCHANGEABLE PREFERRED TRUST.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE SHEET*
<TABLE>
<CAPTION>
ITEM NUMBER IN FORM N-2 CAPTION IN PROSPECTUS
------------------------------------------------ -----------------------------------------------------------
<C> <S> <C>
PART A--INFORMATION REQUIRED IN A PROSPECTUS
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 Description of the TrUEPrS
Securities......................................
11. Defaults and Arrears on Senior Securities....... Not Applicable
12. Legal Proceedings............................... Not Applicable
13. Table of Contents of the Statement of Additional Not Applicable
Information.....................................
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 Management Arrangements; Underwriting
Securities......................................
20. Investment Advisory and Other Services.......... Management Arrangements
21. Brokerage Allocation and Other Practices........ Investment Objective and Policies
22. Tax Status...................................... Taxation
23. Financial Statements............................ Experts; Independent Auditors' Report; Statement of Assets
and Liabilities
</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.
ii
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED SEPTEMBER 15, 1998
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.
<PAGE>
PROSPECTUS
16,000,000 TRUEPRS-SM-
NAB EXCHANGEABLE PREFERRED TRUST
---------------
Each of the TrUEPrS offered hereby (the "Offering") will represent a
proportionate share of a beneficial ownership interest in assets of the Trust
and, as described herein, upon the occurrence of an Exchange Event (as defined
herein), will be exchanged for either (i) American Depositary Receipts
evidencing, for each TrUEPrS, one American Depositary Share ("ADS") representing
two fully-paid preference shares, liquidation preference US$12.50 per share
("NAB Preference Shares"), issued by National Australia Bank Limited (A.C.N 004
044 937) ("NAB" or the "Company") or (ii) cash in an amount of US$25 per
TrUEPrS, plus the accrued dividend distributions thereon for the current
quarterly dividend period. Each TrUEPrS will be sold at an initial offering
price of US$25. Except as described herein, holders of the TrUEPrS will receive
non-cumulative dividend distributions in an amount equal to US$ per TrUEPrS
per annum, payable quarterly in arrears in an amount equal to US$ per
TrUEPrS on March 31, June 30, September 30 and December 31 of each year,
commencing December 31, 1998 (each, a "Dividend Payment Date"), to holders of
record as of the immediately preceding March 15, June 15, September 15 and
December 15, respectively (each, a "Record Date"). The first dividend
distribution in respect of the period from and including September , 1998 (the
"Issue Date") to but excluding December 31, 1998 will equal US$ per
TrUEPrS.
The TrUEPrS have been approved for listing on the New York Stock Exchange
(the "NYSE"), subject to official notice of issuance. Trading of the TrUEPrS on
the NYSE is expected to commence within a 30-day period after the initial
delivery of the TrUEPrS. See "Underwriting."
(CONTINUED ON FOLLOWING PAGE)
SEE "PROSPECTUS SUMMARY--RISK FACTORS," BEGINNING ON PAGE 9 OF THIS
PROSPECTUS AND "RISK FACTORS," BEGINNING ON PAGE 23 OF THIS PROSPECTUS, FOR
CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE TRUEPRS.
---------------------
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(1) LOAD(2) TRUST(3)(4)
<S> <C> <C> <C>
Per TrUEPrS.............................................. $25.00 (4) $25.00
Total(5)................................................. $400,000,000 (4) $400,000,000
</TABLE>
(1) Plus accrued dividends, if any, from , 1998.
(2) In view of the fact that the proceeds of the sale of the TrUEPrS will
ultimately be invested in the NAB Preference Shares, the Trust and NAB have
agreed to indemnify the several U.S. Underwriters (the "Underwriters")
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) Before deducting estimated expenses of $632,000 payable by the Trust. See
"Management Arrangements--Estimated Expenses."
(4) In view of the fact that the proceeds of the sale of the TrUEPrS will
ultimately be invested in the NAB Preference Shares, the Trust and NAB have
agreed to pay the Underwriters, as compensation (the "Underwriters'
Compensation"), $ per TrUEPrS or $ in the aggregate (or
$ in the aggregate if the Underwriters' over-allotment options are
exercised in full); provided that such compensation for sales of more than
10,000 TrUEPrS to any single purchaser will be $ per TrUEPrS and, to
the extent such sales are made, the actual amount of Underwriter's
Compensation will be less than the aggregate amounts specified herein. See
"Fee Table" and "Underwriting."
(5) The Trust has granted the U.S. Underwriters an option, exercisable for 30
days from the date hereof, to purchase up to 2,396,000 additional TrUEPrS
solely to cover over-allotments, if any. If all such TrUEPrS are purchased,
the total Price to Public and Proceeds to Trust will be $ and $ ,
respectively. See "Underwriting." The total Price to Public and Proceeds to
the Trust excludes $100,000 relating to 4,000 TrUEPrS sold to ML IBK
Positions, Inc. in connection with the formation of the Trust.
------------------------------
The TrUEPrS 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 TrUEPrS will be made through the facilities of The Depository
Trust Company on or about , 1998.
- ------------------------------
- -SM-Service mark of Merrill Lynch & Co., Inc.
------------------------------
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER SALOMON SMITH BARNEY
A.G. EDWARDS & CO., INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
------------------------------
The date of this Prospectus is , 1998.
<PAGE>
(CONTINUED FROM COVER PAGE)
The Trust is a newly-created Delaware business trust established for the
sole purpose of (a) issuing the TrUEPrS, (b) investing the proceeds thereof in
and holding % Mandatorily Redeemable Debt Securities due December 31, 2047
(the "Debt Securities") issued by Cuzzano (UK) Company, a special purpose
unlimited company incorporated under the laws of England and Wales, and
domiciled in the United Kingdom (the "U.K. Company"), with an aggregate
principal amount equal to such proceeds, and (c) entering into the ADSs Purchase
Contract between the Trust and the Jersey Subsidiary referred to herein (the
"ADSs Purchase Contract"). The Trust's investment objective is to distribute to
the holders of TrUEPrS (a) prior to an Exchange Date (as defined herein) PRO
RATA based on the number of TrUEPrS outstanding the interest the Trust receives
on the Debt Securities from time to time and (b) upon the occurrence of an
Exchange Event, (i) if the Exchange Event is anything other than the (x)
redemption, (y) mandatory repurchase (such repurchase being referred to as a
"Buy-Back") or (z) reduction of a portion of the capital of each NAB Preference
Share immediately followed by redemption by NAB of the remaining capital thereof
on the next Business Day (as defined herein) following the date of such
reduction of capital (such reduction of capital and subsequent redemption are
collectively referred to herein as "Capital Reduction"), in each case, of the
NAB Preference Shares for cash, ADRs evidencing, for each TrUEPrS, one ADS
representing two NAB Preference Shares, and (ii) if the Exchange Event is a
redemption, Buy-Back or Capital Reduction of the NAB Preference Shares for cash,
US$25 per TrUEPrS plus an amount equal to the accrued but unpaid interest on
each US$25 principal amount of the Debt Securities from and including the
Interest Payment Date immediately preceding the Exchange Date to but excluding
such Exchange Date. Prior to the Exchange Date, the NAB Preference Shares will
not pay dividends. On the Exchange Date (unless the Exchange Event is the
redemption, Buy-Back or Capital Reduction of the NAB Preference Shares for
cash), each NAB Preference Share will automatically convert into a
dividend-paying NAB Preference Share which will accrue non-cumulative dividends
at the rate of US$ 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. As used herein, the term
"NAB Preference Shares" refers to such shares both before and after such
conversion. See "Investment Objective and Policies."
The Trust will not be managed like a typical closed-end investment company.
The Trust has adopted a fundamental policy (a) to invest 100% of its portfolio
in the Debt Securities and not to dispose of the Debt Securities during the term
of the Trust other than in connection with a mandatory redemption thereof as a
result of an Exchange Event and (b) to enter into the ADSs Purchase Contract and
not to dispose of the ADSs Purchase Contract during the term of the Trust. For
information concerning the ADSs that may be received by the holders of TrUEPrS
upon the occurrence of an Exchange Event and the NAB Preference Shares
represented thereby, see the accompanying prospectus of NAB. The TrUEPrS 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 NAB Preference Shares that may be delivered in exchange for
TrUEPrS 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 TrUEPrS upon receipt of the ADSs
upon an exchange or dissolution of the Trust. 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 "Taxation--Certain United States Federal Income
Tax Considerations."
Prior to the Offering there has been no public market for the TrUEPrS.
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 should know before investing and should be read and
retained for future reference.
2
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE TRUEPRS 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."
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF, OR AN INVITATION TO
PURCHASE OR SUBSCRIBE FOR, THE TRUEPRS IN THE COMMONWEALTH OF AUSTRALIA OR ANY
OF ITS STATES OR TERRITORIES. THE TRUEPRS MAY NOT BE OFFERED, SOLD OR DELIVERED
IN OR TO ANY RESIDENT OF THE COMMONWEALTH OF AUSTRALIA OR ANY OF ITS STATES OR
TERRITORIES. SEE "UNDERWRITING."
3
<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
NAB 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 16,000,000 TrUEPrS, each representing a proportionate
share of beneficial interest in the assets of the Trust, at an initial public
offering price of US$25 per TrUEPrS. The Trust has granted the Underwriters an
option, exercisable for 30 days from the date of this Prospectus, to purchase up
to an aggregate of 2,396,000 additional TrUEPrS solely to cover over-allotments,
if any. See "Underwriting." In accordance with the requirements of the
Investment Company Act, on September 10, 1998, the Trust issued 4,000 TrUEPrS
(the "Initial TrUEPrS") to ML IBK Positions, Inc., an affiliate of Merrill
Lynch, Pierce, Fenner & Smith Incorporated, for the purchase price of US$25 per
TrUEPrS.
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 TrUEPrS in the Offering and the Initial
TrUEPrS to subscribe for and purchase from the U.K. Company Debt Securities with
an aggregate principal amount equal to such proceeds. The Trust will also enter
into the ADSs Purchase Contract. 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"), at the
rate per annum of %. 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 December 31, 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 Cuzzano (Investments) Limited, 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 make a payment to NAB in consideration for the
issuance by NAB of NAB Preference Shares to the ADR depositary and the issuance
by the ADR depositary of the ADSs to the Jersey Subsidiary at a price per ADS
equal to US$25 (I.E., the aggregate liquidation preference of the two NAB
Preference Shares represented thereby). Pursuant to a security and pledge
agreement (the "ADRs 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 Subsidiary will
irrevocably and unconditionally deposit and pledge the ADRs evidencing the ADSs
(i) to the holder of the Jersey Preference Shares (initially the U.K. Company)
to secure its redemption obligations under the Jersey Preference Shares and (ii)
to the Trust to secure its obligation to deliver ADSs under the ADSs Purchase
Contract. Also, pursuant to the ADRs Security and Pledge Agreement, the U.K.
Company, with the consent of the Jersey Subsidiary, will irrevocably and
unconditionally assign and hypothecate its interest in such pledge to the Trust
to secure its redemption obligations under the Debt Securities. Pursuant to a
separate security and pledge agreement (the "Jersey Preference Shares Security
and Pledge Agreement" and, together with the ADRs Security and Pledge Agreement,
the "Security and Pledge Agreements") to be entered into among the Trust, the
U.K. Company and the Collateral Agent, the U.K. Company will
4
<PAGE>
irrevocably and unconditionally deposit the Jersey Preference Shares with the
Collateral Agent and pledge the Jersey Preference Shares to secure its
redemption obligations to the Trust under the Debt Securities. 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 ADRs Security and Pledge Agreement, the
Jersey Subsidiary will agree to, or will cause the Collateral Agent to, direct
the ADR depositary to vote the NAB Preference Shares represented by the ADSs as
directed by the holders of the TrUEPrS.
On the Issue Date, NAB will use the proceeds from the issue of the NAB
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 NAB's capital contribution to make a loan (the
"Distribution Loan") to a Delaware limited liability company that is a
wholly-owned subsidiary of NAB (the "USLLC"). The USLLC will use the proceeds of
the Distribution Loan to make one or more loans (each, a "NAB Loan") to NAB
and/or one or more wholly-owned subsidiaries or branches of NAB (each, a "NAB
Borrower").
Reference is made to page 12 for a diagram of the foregoing transactions.
NAB
Reference is made to the accompanying prospectus of NAB with respect to the
NAB Preference Shares represented by the ADSs that may be received by a holder
of TrUEPrS upon the occurrence of an Exchange Event. THE PROSPECTUS OF NAB IS
BEING ATTACHED HERETO AND DELIVERED TO PROSPECTIVE PURCHASERS OF TRUEPRS
TOGETHER WITH THIS PROSPECTUS FOR CONVENIENCE OF REFERENCE ONLY. THE PROSPECTUS
OF NAB 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 TrUEPrS
(a) prior to an Exchange Date, the interest the Trust receives on the Debt
Securities from time to time, PRO RATA based on the number of TrUEPrS
outstanding and (b) upon the occurrence of an Exchange Event, (i) if the
Exchange Event is anything other than a redemption, Buy-Back or Capital
Reduction of the NAB Preference Shares for cash, ADRs evidencing, for each
TrUEPrS, one ADS, and (ii) if the Exchange Event is a redemption, Buy-Back or
Capital Reduction of the NAB Preference Shares for cash, US$25 per TrUEPrS plus
an amount equal to the accrued but unpaid interest on each US$25 principal
amount of the Debt Securities from and including the Interest Payment Date
immediately preceding the Exchange Date to but excluding such Exchange Date. See
"Investment Objective and Policies."
Except as described herein, holders of TrUEPrS will receive non-cumulative
dividend distributions in an amount equal to US$ per TrUEPrS per annum,
payable quarterly in arrears in an amount equal to US$ per TrUEPrS 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 December 31, 1998 will equal US$ per TrUEPrS.
See "Investment Objective and Policies--Trust Assets."
Dividend payments on the TrUEPrS 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 income payments (the "Income Entitlements")
received by the U.K. Company, to the extent received, as the income beneficiary
of 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
Income Entitlements 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 on such date for any reason, the
Distribution Trust will have no obligation to pay such Income Entitlement to the
U.K. Company and the U.K. Company will have no right to require such payment. In
5
<PAGE>
the event an Income Entitlement is not paid to the U.K. Company for any reason,
an Exchange Event will occur because the U.K. Company will have insufficient
funds to pay interest due on the Debt Securities.
On and after an Exchange Date, the U.K. Company will cease to be the income
beneficiary of the Distribution Trust; PROVIDED, HOWEVER, if the Exchange Event
is the redemption, Buy-Back or Capital Reduction of the NAB Preference Shares
for cash, the U.K. Company will be entitled to receive an Income Entitlement
equal to the accrued but unpaid interest on the Debt Securities for the period
from and including the Interest Payment Date immediately preceding the Exchange
Date to but excluding the Exchange Date.
Under the terms of the Distribution Trust, other than in connection with a
redemption, Buy-Back or Capital Reduction of the NAB Preference Shares for cash,
no Income Entitlement shall be paid or payable to the U.K. Company on any
Interest Payment Date if (i) an Exchange Event has occurred prior to such 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 NAB on any preference shares or ordinary shares of NAB,
would exceed NAB's earnings during the prior fiscal year or (iii) such payment
would be prohibited or limited by applicable law, regulation or order or by any
instrument or agreement to which NAB is subject (collectively, the "Payment
Prohibitions").
On each Interest Payment Date, (i) the NAB Borrower will make an interest
payment on the NAB Loan to the USLLC; (ii) the USLLC will use such payment to
make an interest payment on the Distribution Loan to the Distribution Trust;
(iii) if no Payment Prohibition exists, the Distribution Trust will distribute
such payment as an Income Entitlement to the U.K. Company; and (iv) the U.K.
Company will use the entire proceeds of such Income Entitlement to pay (a)
interest on the Debt Securities to the Trust, (b) ongoing costs and expenses of
the U.K. Company and the Jersey Subsidiary, (c) quarterly dividend payments on
the U.K. Company's voting shares to the Jersey Holding Company (as defined
herein), which dividends will be used by the Jersey Holding Company to pay
ongoing expenses of the Jersey Holding Company, the Jersey Charitable Trust, the
Collateral Agent and (pursuant to an expense agreement (the "Trust Expense
Agreement") between the Jersey Holding Company and The Bank of New York, in its
capacities as Administrator, Custodian and Paying Agent of the Trust) the Trust,
and (d) an indemnity fee payable to National Australia Group Europe Limited, an
affiliate of NAB (the "NAB Affiliate"). On each 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
dividend distributions on the TrUEPrS.
TRUST ASSETS
Prior to the Exchange Date, the Trust's assets will consist of (a)
US$400,100,000 aggregate principal amount of Debt Securities (US$460,000,000
aggregate principal amount of Debt Securities if the Underwriters'
over-allotment option is exercised in full), and any distributions thereon, and
(b) the ADSs Purchase Contract. See "Investment Objective and Policies--Trust
Assets."
EXCHANGE EVENT
The earliest occurrence of any of the following dates or events shall
constitute an "Exchange Event" as of the "Exchange Date" applicable to such
Exchange Event as specified below:
(i) December 31, 2047 or the date of any redemption, Buy-Back or Capital
Reduction of the NAB Preference Shares for cash (see "Investment Objective
and Policies--Exchange Event"), in which case the Exchange Date will be the
earlier of such dates;
(ii) any date selected by NAB in its absolute discretion, in which case
the Exchange Date will be such date;
(iii) the failure of the Trust to receive for any reason on or within
three Business Days after an Interest Payment Date the interest then due on
the Debt Securities in full without deduction or
6
<PAGE>
withholding for any taxes, duties or other charges, in which case the
Exchange Date will be the fourth Business Day following such Interest
Payment Date;
(iv) any date on which the Total Capital Adequacy Ratio or the Tier 1
Capital Ratio of NAB (either as reported quarterly by NAB to the Australian
Prudential Regulation Authority or any authority succeeding to its powers
and functions (the "Regulatory Authority"), or as determined at any time by
the Regulatory Authority in its absolute discretion) is below 8% or 4%,
respectively (or, in each case, such lesser percentage (the "Required
Percentage"), as may be prescribed by the Regulatory Authority for NAB at
the time), and such ratio is not increased by NAB to at least 8% or 4%,
respectively (or such lesser Required Percentage), within 90 days after the
date on which NAB makes such quarterly report or receives notice from the
Regulatory Authority of such determination by such Regulatory Authority, in
which case the Exchange Date will be the Business Day immediately following
the expiration of such 90-day period;
(v) any change in (A) the legal ownership of the securities (other than
the Debt Securities) issued by, (B) any provision of the constituent
documents of (unless such change has been consented to by the record holders
of more than 50% of the TrUEPrS or, in the opinion of competent legal
counsel selected by the Trust, such change would not have a material adverse
effect on the rights of the holders of the TrUEPrS), or (C) the business
purpose (or, solely with respect to the Jersey Charitable Trust, the powers
of the trustees thereof) (as specified in the constituent documents) of, any
of the U.K. Company, the Jersey Holding Company, the Jersey Charitable Trust
or the Jersey Subsidiary, in which case the Exchange Date will be the date
on which any such change occurs;
(vi) any change in the business purpose of the Distribution Trust (as
specified in the constituent documents thereof), in which case the Exchange
Date will be the date on which any such change occurs;
(vii) the common securities of the Distribution Trust cease to be
wholly-owned, directly or indirectly, by NAB or a direct or indirect
wholly-owned subsidiary or branch of NAB, in which case the Exchange Date
will be the date on which the Distribution Trust ceases to be so
wholly-owned;
(viii) the USLLC ceases to be NAB or a direct or indirect wholly-owned
subsidiary or branch of NAB, in which case the Exchange Date will be the
date on which the USLLC ceases to be NAB or so wholly-owned;
(ix) any NAB Borrower ceases to be NAB or a direct or indirect,
wholly-owned subsidiary or branch of NAB, in which case the Exchange Date
will be the date on which such NAB Borrower ceases to be NAB or a direct or
indirect wholly-owned subsidiary or branch of NAB;
(x) (A) a proceeding is commenced by NAB, the U.K. Company, the Jersey
Holding Company, the Jersey Charitable Trust, the Jersey Subsidiary, the
USLLC, the Distribution Trust or any NAB Borrower (each, a "Relevant
Entity") or a person that controls the Relevant Entity for an order that
such Relevant Entity be wound up or liquidated or for the appointment of a
provisional liquidator, liquidator, administrator, controller or similar
official in respect of such Relevant Entity or all or substantially all of
its property, in which case the Exchange Date will be the date on which the
proceeding is filed; (B) a proceeding is commenced by any other person for
an order that a Relevant Entity be wound up or for the appointment of a
provisional liquidator, liquidator, administrator, controller or similar
official in respect of a Relevant Entity or all or substantially all of its
property (unless such proceeding is discontinued or dismissed within 21 days
of its having been filed), in which case the Exchange Date will be the
Business Day immediately following the expiration of such 21-day period; (C)
a provisional liquidator, liquidator, administrator, controller or similar
official is appointed by a court or otherwise in respect of any Relevant
Entity or all or substantially all of its property (unless such appointment
is revoked or set aside within 21 days of such appointment), in which case
the Exchange Date will be the Business Day immediately following the
expiration of such 21-day period; or (D) the Trust dissolves in accordance
with the terms of the Declaration of Trust (as
7
<PAGE>
defined herein) or for any other reason, in which case the Exchange Date
will be the Business Day immediately preceding the effective date of such
dissolution; and
(xi) the Collateral Agent fails, at any time, to have a valid first,
perfected and enforceable security interest in, and lien on, the Jersey
Preference Shares and the ADRs evidencing the ADSs representing the NAB
Preference Shares, and, in each case, any redemption proceeds from any of
the foregoing, and such failure is not remedied on or before ten Business
Days after written notice of such failure is given to the U.K. Company or
the Jersey Subsidiary, as the case may be, by the Collateral Agent as
contemplated by the Security and Pledge Agreements, in which case the
Exchange Date will be the Business Day immediately following the expiration
of such ten-Business Day period.
Notwithstanding the foregoing, (i) the USLLC or the NAB Borrower may, with the
consent of the Distribution Trust or the USLLC, respectively, assign all or any
portion of the Distribution Loan or its NAB Loan, respectively, and (ii) the
Distribution Trust or the USLLC may replace all or any portion of the
Distribution Loan or any NAB Loan, respectively, with another loan, in each case
under (i) and (ii), to NAB or to one or more direct or indirect wholly-owned
subsidiaries or branches of NAB, in which case NAB or such other subsidiary or
branch will be deemed to be the USLLC or such NAB Borrower, as applicable, and
such loan will be deemed to be the Distribution Loan or such NAB Loan, as
applicable, and each such action will not constitute an Exchange Event.
Upon the occurrence of an Exchange Event, each holder of a TrUEPrS will be
entitled to receive a distribution of either (i) if the Exchange Event is
anything other than a redemption, Buy-Back or Capital Reduction of the NAB
Preference Shares for cash, one ADS per TrUEPrS or (ii) if the Exchange Event is
a redemption, Buy-Back or Capital Reduction of the NAB Preference Shares for
cash, US$25 per TrUEPrS plus an amount equal to the accrued but unpaid interest
on each US$25 principal amount of the Debt Securities from and including the
Interest Payment Date immediately preceding the Exchange Date to but excluding
such Exchange Date. In the case of any such distribution of ADSs, the holders of
TrUEPrS shall become the record holders of the ADSs as of the opening of
business on the Exchange Date, and ADRs evidencing such ADSs will be delivered
to such holders as soon as practicable on or after the Exchange Date.
Dividend distributions on the TrUEPrS will cease to accrue on and after the
Exchange Date. In the case of any Exchange Event other than a redemption,
Buy-Back or Capital Reduction of the NAB Preference Shares for cash, no dividend
distributions will be payable on the TrUEPrS on the Exchange Date (even if such
Exchange Date is a Dividend Payment Date). Instead, non-cumulative dividends
will begin to accrue on the NAB Preference Shares from and including the last
Interest Payment Date prior to an Exchange Date. Accordingly, the dividends for
any quarterly dividend period ending on or after the Exchange Date will be
payable as dividends on the NAB Preference Shares and in accordance with the
terms of the NAB Preference Shares.
TERM OF THE TRUST
The Trust will dissolve as soon as practicable after the exchange of the
TrUEPrS for ADSs or cash, as the case may be, upon the occurrence of an Exchange
Event. See "Investment Objective and Policies-- Trust Dissolution" and "Risk
Factors--Limited Term."
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
UNITED STATES
The Trust will be classified as a grantor trust for United States Federal
income tax purposes and the Debt Securities held by the Trust will be treated as
equity in NAB. Accordingly, each holder will be treated for United States
Federal income tax purposes as owning equity of NAB 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 NAB.
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<PAGE>
A holder's exchange of TrUEPrS 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 upon exchange of the TrUEPrS
in connection with the redemption, Buy-Back or Capital Reduction of the NAB
Preference Shares for cash would constitute a taxable event for United States
Federal income tax purposes, and a holder of TrUEPrS generally would be required
to recognize gain or loss in respect of TrUEPrS exchanged for cash. See
"Taxation--Certain United States Federal Income Tax Considerations."
AUSTRALIA
The Trust will not be treated as a resident of Australia for Australian
income tax purposes. As it is not in receipt of Australian source income it will
not be subject to Australian tax on income earned. Therefore, quarterly
distributions by the Trust to non-Australian resident holders of TrUEPrS will
not be subject to Australian tax whether by withholding or otherwise.
There should be no Australian tax consequences to the Trust of the delivery
of the ADSs to holders of TrUEPrS upon the occurrence of an Exchange Event. The
sale of TrUEPrS or the NAB Preference Shares represented by the ADSs may
generate assessable income to certain U.S. holders. The sale of TrUEPrS or ADSs
by a U.S. holder may be subject to Australian capital gains tax where a U.S.
holder is a non-Australian resident but the U.S. holder and the U.S. holder's
associates together beneficially hold or at any time during the five years
preceding such sale held shares or interest in shares representing 10% or more
in value of the issued capital of an Australian listed company, such as NAB.
Subject to certain conditions, the terms of the NAB Preference Shares
provide for holders to be grossed-up for Australian withholding tax on payments
made on the NAB Preference Shares being dividends or amounts deemed to be
dividends for Australian tax purposes. See "Taxation--Certain Australian Tax
Considerations."
MANAGEMENT ARRANGEMENTS
The Trust will be internally managed and will not have an investment
adviser. Prior to the Exchange Date, the Trust's portfolio will consist only of
(a) US$400,100,000 aggregate principal amount of Debt Securities (US$460,000,000
principal amount of Debt Securities if the Underwriters' over-allotment option
is exercised in full), and any distributions thereon and (b) the ADSs Purchase
Contract. The Trust's portfolio 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 TrUEPrS. Except as aforesaid, and except for The Bank of New
York's role as Collateral Agent and securities intermediary under the Security
and Pledge Agreements, as paying and transfer agent for the Debt Securities and
the NAB Preference Shares 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 paid by the Jersey
Holding Company pursuant to the Trust Expense Agreement. See "Management
Arrangements."
RISK FACTORS
The Trust has adopted a fundamental policy (a) to invest 100% of its
portfolio in the Debt Securities, and the distributions thereon, and not to
dispose of the Debt Securities during the term of the Trust other than in
connection with a mandatory redemption thereof as a result of an Exchange Event,
and (b) to enter into the ADSs Purchase Contract and not to dispose of the ADSs
Purchase Contract during the term of the Trust. The Trust will not be managed
like a typical closed-end investment company.
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<PAGE>
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 prior
to the Exchange Date 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 TrUEPrS 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 TrUEPrS. 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 TrUEPrS with liquidity of investment or
that it will continue for the life of the TrUEPrS.
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 TrUEPrS will not be entitled to
any rights with respect to the NAB 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 NAB Preference Shares in exchange for TrUEPrS upon the
occurrence of an Exchange Event (other than the redemption, Buy-Back or Capital
Reduction of the NAB Preference Shares for cash). Pursuant to the ADRs Security
and Pledge Agreement and the ADR deposit agreement, each TrUEPrS will entitle
the holder thereof to direct the exercise of the voting rights attaching to one
ADS and the two NAB Preference Shares represented thereby. The holders of NAB
Preference Shares will be entitled to vote together with the holders of ordinary
shares of NAB (to the extent such holders are entitled to vote) on the basis of
one vote per NAB Preference Share on any poll (a) in all cases with respect to
certain matters specified herein and (b) during a Special Voting Period (as
defined herein), with respect to all matters on which the holders of the
ordinary shares of NAB are entitled to vote. A "Special Voting Period" is the
period from and including (i) any Dividend Payment Date on which NAB fails to
pay in full the dividends accrued in respect of the quarterly dividend period
then ended or (ii) the fourth Business Day after the Exchange Date occurring as
a result of any failure by the Trust to receive in full the interest payable on
the Debt Securities unless, prior to such date, NAB has paid in full an optional
dividend on the NAB Preference Shares in an aggregate amount equal to the amount
of interest not so received (an "Optional Dividend"), in each case to but
excluding the first Dividend Payment Date thereafter as of which NAB has paid in
full four consecutive quarterly dividends on the NAB Preference Shares. In
addition, the holders of the NAB Preference Shares will have the right to vote
separately as a class in certain circumstances involving a variation of the
rights of holders of the NAB Preference Shares. Pursuant to the ADRs Security
and Pledge Agreement, so long as the ADRs are owned by the Jersey Subsidiary,
the Jersey Subsidiary will, or will cause the Collateral Agent to, direct the
ADR depositary to vote the NAB Preference Shares represented by the ADSs as
directed by the holders of TrUEPrS. See "Risk Factors."
LISTING
The TrUEPrS have been approved for listing on the New York Stock Exchange
(the "NYSE"), subject to official notice of issuance. Trading of the TrUEPrS on
the NYSE is expected to commence within a 30-day period after the initial
delivery of the TrUEPrS. See "Underwriting."
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<PAGE>
FEE TABLE
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load (as a percentage of offering price)................... 0%(a)
Automatic Dividend Reinvestment Plan Fees................................ Not Applicable
ANNUAL EXPENSES (as a percentage of net assets)
Management Fees(b)....................................................... 0%
Other Expenses(c)........................................................ 0%
--------------------
TOTAL ANNUAL EXPENSES(C)................................................. 0%
--------------------
--------------------
<CAPTION>
1 year 3 years
--------- ---------
<S> <C> <C>
Example
- ---------------------------------------------------------------------------
An investor would pay the following expenses on a $1,000 investment, $0 $0
including the maximum sales load of $0 and assuming (1) no annual
expenses and (2) a 5% annual return throughout the periods...............
</TABLE>
- ------------------------
(a) There is no sales load because, in view of the fact that the proceeds of the
sale of the TrUEPrS will ultimately be invested in the NAB Preference
Shares, NAB has agreed to pay a portion of the Underwriters' compensation.
The Trust will pay the remainder of such compensation (approximately
$ , or $ , if the Underwriters' over-allotment option is
exercised in full) out of the facility fee to be paid on the Issue Date to
the Trust by the U.K. Company in connection with the investment by the Trust
in the Debt Securities. 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 $32,000 and the costs
associated with the initial registration and the Offerings, estimated to be
approximately $600,000, will be paid by the Trust out of the facility fee to
be paid on the Issue Date to the Trust by the U.K. Company in connection
with the investment by the Trust in the Debt Securities. The ongoing
administrative and other expenses of the Trust will be paid by the Jersey
Holding Company pursuant to the Trust Expense Agreement. Subject to the
satisfaction of certain conditions, operating expenses of the Trust not paid
by the Jersey Holding Company under the Trust Expense Agreement will be paid
by the NAB Affiliate if covered by the terms of an expense and indemnity
agreement among the Trust, the U.K. Company, the Jersey Holding Company, the
Jersey Subsidiary and the Jersey Charitable Trust. See "Management
Arrangements--Estimated Expenses." Absent such arrangements, the Trust's
"Other Expenses" and "Total Annual Expenses" are estimated initially to be
$310,000 in the aggregate or 0.078% 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 TrUEPrS 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.
11
<PAGE>
STRUCTURAL DIAGRAM
[DIAGRAM ILLUSTRATING PARTIES, OWNERSHIP
AND PAYMENT AND INVESTMENT DIRECTION]
12
<PAGE>
THE TRUST
NAB 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 July 28, 1998 pursuant to a
Certificate of Trust as filed with the Secretary of State of the State of
Delaware on July 29, 1998 and as restated and filed on September 10, 1998 and a
Trust Agreement dated as of such date, which was amended and restated (as
amended and restated, the "Declaration of Trust"). The term of the Trust will
expire as soon as possible after the exchange of the TrUEPrS for ADSs 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 Offering (without giving effect to the expenses of the
Offering payable by the Trust) and the 4,000 TrUEPrS (the "Initial TrUEPrS")
issued by the Trust to ML IBK Positions, Inc., will be US$400,100,000 (or
US$460,000,000 if the Underwriters' over-allotment option is exercised in full).
On the Issue Date (as defined herein), the proceeds of the Offering and the
proceeds from the sale of the Initial TrUEPrS will be used to purchase
US$400,100,000 aggregate principal amount (or US$460,000,000 aggregate principal
amount if the Underwriters' over-allotment option is exercised in full) of %
Mandatorily Redeemable Debt Securities due December 31, 2047 (the "Debt
Securities") from Cuzzano (UK) Company, a special purpose unlimited company
incorporated under the laws of England and Wales, 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 at the rate per annum of %,
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 on an earlier Exchange Date (as defined herein),
will be redeemed on December 31, 2047. The Debt Securities will be issued only
in bearer form and will be denominated and pay interest in U.S. dollars. See
"Investment Objective and Policies--Trust Assets."
The following transactions will take place on the Issue Date. Reference is
made to page 12 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 Cuzzano (Investments) Limited, 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 make a
payment to National Australia Bank Limited (A.C.N. 004 044 937) ("NAB") in
consideration for the issuance by NAB to the ADR depositary of fully-paid
preference shares, liquidation preference US$12.50 per share (the "NAB
Preference Shares"), of NAB and the issuance by the ADR depositary to the Jersey
Subsidiary of American Depositary Shares ("ADSs"), each representing two NAB
Preference Shares at a price per NAB Preference Share of US$12.50 (their
liquidation preference) or US$25 per ADS. No dividends will accrue or be paid on
the NAB Preference Shares represented by the ADSs unless an Exchange Event
(other than a redemption, Buy-Back or Capital Reduction of the NAB Preference
Shares for cash) occurs. On and after such an Exchange Date, non-cumulative
dividends will be payable, if and when declared by the board of directors of NAB
out of profits legally available therefor, in U.S. dollars in an amount equal to
US$ per NAB Preference Share per annum, payable quarterly in arrears in
an amount equal to US$ per NAB Preference Share on each Dividend Payment
Date (as defined herein) to holders of record as of the immediately preceding
Record Date (as defined herein).
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<PAGE>
NAB will use the proceeds from the issue of the NAB 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 NAB's capital contribution to make a loan (the "Distribution Loan") to a
Delaware limited liability company that is a wholly-owned subsidiary of NAB (the
"USLLC"). The USLLC will use the proceeds of the Distribution Loan to make one
or more loans (each, a "NAB Loan") to NAB and/or one or more subsidiaries or
branches of NAB (each, a "NAB Borrower").
The American Depositary Receipts ("ADRs") evidencing the ADSs will be
deposited with The Bank of New York, as the collateral agent (the "Collateral
Agent"), pursuant to a security and pledge agreement (the "ADRs Security and
Pledge Agreement") to be entered into among the Trust, the U.K. Company, the
Jersey Subsidiary and the Collateral Agent and governed by New York law.
Pursuant to the terms of the ADRs Security and Pledge Agreement, (i) the Jersey
Subsidiary will irrevocably and unconditionally deposit the ADRs evidencing the
ADSs with the Collateral Agent, (ii) the Jersey Subsidiary will irrevocably and
unconditionally pledge its interest in the ADRs evidencing the ADSs (A) to the
holder of the Jersey Preference Shares (initially the U.K. Company) to secure
its redemption obligations under the Jersey Preference Shares and (B) to the
Trust to secure its obligation to deliver ADSs under the ADSs Purchase Contract,
(iii) the U.K. Company, with the consent of the Jersey Subsidiary, will
irrevocably and unconditionally assign and hypothecate to the Trust its interest
in such pledge to secure its redemption obligations under the Debt Securities
and (iv) the Jersey Subsidiary and the U.K. Company will irrevocably and
unconditionally direct the Collateral Agent, upon the occurrence of an Exchange
Event (other than a redemption, Buy-Back or Capital Reduction of the NAB
Preference Shares for cash), to transfer the ADRs to the Trust. Pursuant to a
separate security and pledge agreement (the "Jersey Preference Shares Security
and Pledge Agreement" and, together with the ADRs Security and Pledge Agreement,
the "Security and Pledge Agreements") to be entered into among the Trust, the
U.K. Company and the Collateral Agent and governed by Jersey, Channel Islands
law, the U.K. Company will irrevocably and unconditionally deposit the Jersey
Preference Shares with the Collateral Agent and pledge the Jersey Preference
Shares to secure its redemption obligations to the Trust under the Debt
Securities. Prior to the occurrence of an Exchange Event, ownership of the
Jersey Preference Shares and the ADRs will remain with the U.K. Company and the
Jersey Subsidiary, respectively, although pursuant to the ADRs Security and
Pledge Agreement, the Jersey Subsidiary will agree to, or will cause the
Collateral Agent to, direct the ADR depositary to vote the NAB Preference Shares
represented by the ADSs as directed by the holders of the TrUEPrS. Each TrUEPrS
will entitle the holder to direct the exercise of the voting rights attaching to
one ADS and the two NAB Preference Shares represented thereby.
The Trust will also enter into the ADSs Purchase Contract between it and the
Jersey Holding Company (the "ADSs Purchase Contract"), pursuant to which the
Jersey Subsidiary will deliver the ADSs to the Trust for distribution to the
holders of TrUEPrS after the occurrence of an Exchange Event (other than a
redemption, Buy-Back or Capital Reduction of the NAB Preference Shares for cash)
and the redemption of the Debt Securities and the Jersey Preference Shares.
The Debt Securities, the Jersey Preference Shares (if applicable), the ADSs
Purchase Contract, and, if applicable, the ADSs to be purchased pursuant to the
terms of the ADSs Purchase Contract will be held by the Custodian for the Trust.
14
<PAGE>
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 TrUEPrS (a) prior to an Exchange Event, the interest the Trust
receives on the Debt Securities from time to time, PRO RATA based on the number
of TrUEPrS outstanding and (b) upon the occurrence of an Exchange Event, (i) if
the Exchange Event is anything other than a (x) redemption, (y) mandatory
repurchase (such repurchase referred to as a "Buy-Back") or (z) reduction of a
portion of the capital of each NAB Preference Share immediately followed by
redemption by NAB of the remaining capital thereof on the next Business Day (as
defined herein) following the date of such reduction of capital (such reduction
of capital and subsequent redemption are collectively referred to herein as
"Capital Reduction"), in each case, of the NAB Preference Shares for cash, ADRs
evidencing, for each TrUEPrS, one ADS representing two NAB Preference Shares,
and (ii) if the Exchange Event is a redemption, Buy-Back or Capital Reduction of
the NAB Preference Shares for cash, US$25 per TrUEPrS plus an amount equal to
the accrued but unpaid interest on each US$25 principal amount of the Debt
Securities from and including the Interest Payment Date immediately preceding
the Exchange Date to but excluding such Exchange Date. Upon the occurrence of an
Exchange Event, the NAB 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. 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 ADSs or cash
will be delivered in exchange for the TrUEPrS.
The Trust has adopted a fundamental policy as required by the Declaration of
Trust (a) 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 and (b) to enter
into the ADSs Purchase Contract and not to dispose of the ADSs Purchase Contract
during the term of the Trust. The foregoing fundamental policy of the Trust may
not be changed without the vote of 100% of the holders of the TrUEPrS.
TRUST ASSETS
Prior to an Exchange Date, the Trust's assets will consist of (a)
US$400,100,000 aggregate principal amount of Debt Securities (US$460,000,000
aggregate principal amount of Debt Securities if the Underwriters'
over-allotment option is exercised in full), and any distributions thereon, and
(b) the ADSs Purchase Contract.
As described above under "--General," upon the occurrence of an Exchange
Event, each TrUEPrS will be exchanged for either (i) one ADS or (ii) US$25 in
cash plus the accrued dividend distribution thereon for the current quarterly
dividend period. The procedure by which the Trust will obtain the ADSs or cash
to be distributed to the holders of TrUEPrS will vary depending upon the nature
of the Exchange Event and, in the case of an Exchange Event resulting from a
redemption, Buy-Back or Capital Reduction of the NAB Preference Shares for cash,
the value, for purposes of calculating United Kingdom tax on capital gains, of
one U.S. dollar or the equivalent thereof in any successor legal currency of the
United States in terms of British pounds or the equivalent thereof in any
successor legal currency of the United Kingdom (the "Dollar Value") on the
Exchange Date (expressed as L/US$).
In the case of any Exchange Event other than a redemption, Buy-Back or
Capital Reduction of the NAB Preference Shares for cash, the Trust will obtain
the ADSs to be distributed to holders of TrUEPrS as a result of the following
sequence of events: (i) the U.K. Company will redeem the Debt Securities for
cash at their aggregate principal amount, (ii) under the terms of the Debt
Securities, the cash proceeds from the redemption referred to in clause (i)
above will automatically be applied to effect the purchase by the Trust
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of the Jersey Preference Shares from the U.K. Company, (iii) the Jersey
Subsidiary will redeem the Jersey Preference Shares for cash at their aggregate
liquidation preference, and (iv) under the terms of the ADSs Purchase Contract,
the cash redemption proceeds of the Jersey Preference Shares will be used by the
Trust to purchase the ADSs from the Jersey Subsidiary.
In the case of an Exchange Event resulting from the redemption, Buy-Back or
Capital Reduction of the NAB Preference Shares for cash, the Trust will obtain
the cash to be distributed to the holders of TrUEPrS as a result of one of the
two sequences described below, depending on the Dollar Value on the Exchange
Date.
If the Dollar Value on the Exchange Date is higher than the Dollar Value on
any date on which the NAB Preference Shares are originally issued (I.E., if the
British pound has depreciated against the U.S. dollar between such dates), then
the sequence of events preceding the distribution of cash to holders of TrUEPrS
will be as follows: (i) the U.K. Company will redeem the Debt Securities for
cash at their aggregate principal amount plus accrued interest from and
including the Interest Payment Date immediately preceding the Exchange Date to
but excluding the Exchange Date, (ii) under the terms of the Debt Securities,
the cash proceeds from the redemption referred to in clause (i) above (excluding
the accrued interest portion thereof) will automatically be applied to effect
the purchase by the Trust of the Jersey Preference Shares from the U.K. Company,
(iii) there will be a redemption, Buy-Back or Capital Reduction of the NAB
Preference Shares for cash in an amount equal to their aggregate liquidation
preference and (iv) the Jersey Subsidiary will use the cash proceeds from the
redemption, Buy-Back or Capital Reduction referred to in clause (iii) above to
redeem the Jersey Preference Shares for cash at their aggregate liquidation
preference.
If the Dollar Value on the Exchange Date is equal to or less than the Dollar
Value on any date on which the NAB Preference Shares are originally issued
(I.E., the British pound has remained the same or appreciated against the U.S.
dollar between such dates), then the sequence of events preceding the
distribution of cash to holders of TrUEPrS will be as follows: (i) there will be
a redemption, Buy-Back or Capital Reduction of the NAB Preference Shares for
cash in an amount equal to their aggregate liquidation preference, (ii) the
Jersey Subsidiary will use the cash proceeds from the redemption, Buy-Back or
Capital Reduction referred to in clause (i) above to redeem the Jersey
Preference Shares for cash at their aggregate liquidation preference, and (iii)
the U.K. Company will use the proceeds from the redemption of the Jersey
Preference Shares referred to in clause (ii) above and the Income Entitlement it
receives on the Exchange Date to redeem the Debt Securities for cash at their
aggregate principal amount plus accrued interest from and including the Interest
Payment Date immediately preceding the Exchange Date to but excluding such
Exchange Date.
Except as described herein, holders of the TrUEPrS will receive
non-cumulative dividend distributions in an amount equal to US$ per
TrUEPrS per annum, payable quarterly in arrears in an amount equal to
US$ per TrUEPrS on March 31, June 30, September 30 and December 31 of
each year, commencing December 31, 1998 (each, a "Dividend Payment Date"), to
holders of record as of the immediately preceding March 15, June 15, September
15 and December 15 (each, a "Record Date"), respectively. The first distribution
in respect of the period from and including September , 1998 (the "Issue
Date") to but excluding December 31, 1998 will equal US$ per TrUEPrS.
See "Dividends and Distributions."
In the event that any Dividend Payment Date for the TrUEPrS or Interest
Payment Date for the Debt Securities is not a Business Day, 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 each Monday, Tuesday, Wednesday, Thursday or Friday
which is not a day on which banking institutions in Melbourne, Australia, New
York, New York or the city which is the principal place of business of any NAB
Borrower outside
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Australia from time to time (initially Wellington, New Zealand) are authorized
or required by law or executive order to close.
NAB
THIS PROSPECTUS RELATES ONLY TO THE TrUEPrS OFFERED HEREBY AND DOES NOT
RELATE TO NAB, THE ADSs OR THE NAB PREFERENCE SHARES. NAB HAS FILED A
REGISTRATION STATEMENT ON FORM F-3 WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE "COMMISSION") WITH RESPECT TO THE NAB PREFERENCE SHARES AND A REGISTRATION
STATEMENT ON FORM F-6 WITH RESPECT TO THE ADSs AND THE NAB PREFERENCE SHARES
THAT MAY BE RECEIVED BY A HOLDER OF TrUEPrS UPON THE OCCURRENCE OF AN EXCHANGE
EVENT. THE PROSPECTUS OF NAB CONSTITUTING A PART OF SUCH REGISTRATION STATEMENT
ON FORM F-6 INCLUDES INFORMATION RELATING TO NAB, THE ADSs AND THE NAB
PREFERENCE SHARES. THE PROSPECTUS OF NAB IS BEING ATTACHED HERETO AND DELIVERED
TO PROSPECTIVE PURCHASERS OF TrUEPrS TOGETHER WITH THIS PROSPECTUS FOR
CONVENIENCE OF REFERENCE ONLY. THE PROSPECTUS OF NAB DOES NOT CONSTITUTE A PART
OF THIS PROSPECTUS, NOR IS IT INCORPORATED BY REFERENCE HEREIN.
EXCHANGE EVENT
The earliest occurrence of any of the following dates or events shall
constitute an "Exchange Event" as of the "Exchange Date" applicable to such
Exchange Event as specified below:
(i) December 31, 2047 or the date of any redemption, Buy-Back or Capital
Reduction of the NAB Preference Shares for cash, in which case the Exchange
Date will be the earlier of such dates;
(ii) any date selected by NAB in its absolute discretion, in which case
the Exchange Date will be such date;
(iii) the failure of the Trust to receive for any reason on or within
three Business Days after 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, in which case the Exchange Date will be the fourth
Business Day following such Interest Payment Date;
(iv) any date on which the Total Capital Adequacy Ratio or the Tier 1
Capital Ratio of NAB (either as reported quarterly by NAB to the Australian
Prudential Regulation Authority or any authority succeeding to its powers
and functions (the "Regulatory Authority"), or as determined at any time by
the Regulatory Authority in its absolute discretion) is below 8% or 4%,
respectively (or, in each case, such lesser percentage (the "Required
Percentage"), as may be prescribed by the Regulatory Authority for NAB at
the time), and such ratio is not increased by NAB to at least 8% or 4%,
respectively (or such lesser Required Percentage), within 90 days after the
date on which NAB makes such quarterly report or receives notice from the
Regulatory Authority of such determination by such Regulatory Authority, in
which case the Exchange Date will be the Business Day immediately following
the expiration of such 90-day period;
(v) any change in (A) the legal ownership of the securities (other than
the Debt Securities) issued by, (B) any provision of the constituent
documents of (unless such change has been consented to by the record holders
of more than 50% of the TrUEPrS or, in the opinion of competent legal
counsel selected by the Trust, such change would not have a material adverse
effect on the rights of the holders of the TrUEPrS), or (C) the business
purpose (or, solely with respect to the Jersey Charitable Trust, the powers
of the trustees thereof) (as specified in the constituent documents) of, any
of the U.K. Company, the Jersey Holding Company, the Jersey Charitable Trust
or the Jersey Subsidiary, in which case the Exchange Date will be the date
on which any such change occurs;
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(vi) any change in the business purpose of the Distribution Trust (as
specified in the constituent documents), in which case the Exchange Date
will be the date on which any such change occurs;
(vii) the common securities of the Distribution Trust cease to be
wholly-owned, directly or indirectly, by NAB or a direct or indirect
wholly-owned subsidiary or branch of NAB, in which case the Exchange Date
will be the date on which the Distribution Trust ceases to be so
wholly-owned;
(viii) the USLLC ceases to be NAB or a direct or indirect wholly-owned
subsidiary or branch of NAB, in which case the Exchange Date will be the
date on which the USLLC ceases to be NAB or so wholly-owned;
(ix) any NAB Borrower ceases to be NAB or a direct or indirect
wholly-owned subsidiary or branch of NAB, in which case the Exchange Date
will be the date on which such NAB Borrower ceases to be NAB or a direct or
indirect wholly-owned subsidiary or branch of NAB;
(x) (A) a proceeding is commenced by NAB, the U.K. Company, the Jersey
Holding Company, the Jersey Charitable Trust, the Jersey Subsidiary, the
USLLC, the Distribution Trust or any NAB Borrower (each, a "Relevant
Entity") or a person that controls the Relevant Entity for an order that
such Relevant Entity be dissolved, wound up or liquidated or for the
appointment of a provisional liquidator, liquidator, administrator,
controller or similar official in respect of such Relevant Entity or all or
substantially all of its property, in which case the Exchange Date will be
the date on which the proceeding is filed; (B) a proceeding is commenced by
any other person for an order that a Relevant Entity be wound up or for the
appointment of a provisional liquidator, liquidator, administrator,
controller or similar official in respect of a Relevant Entity or all or
substantially all of its property (unless such proceeding is discontinued or
dismissed within 21 days of its having been filed), in which case the
Exchange Date will be the Business Day immediately following the expiration
of such 21-day period; (C) a provisional liquidator, liquidator,
administrator, controller or similar official is appointed by a court or
otherwise in respect of any Relevant Entity or all or substantially all of
its property (unless such appointment is revoked or set aside within 21 days
of such appointment), in which case the Exchange Date will be the Business
Day immediately following the expiration of such 21-day period; or (D) the
Trust dissolves in accordance with the terms of the Declaration of Trust or
for any other reason, in which case the Exchange Date will be the Business
Day immediately preceding the effective date of such dissolution; and
(xi) the Collateral Agent fails, at any time, to have a valid first,
perfected and enforceable security interest in, and lien on, the Jersey
Preference Shares and the ADRs evidencing the ADSs representing the NAB
Preference Shares, and, in each case, any redemption proceeds from any of
the foregoing, and such failure is not remedied on or before ten Business
Days after written notice of such failure is given to the U.K. Company or
the Jersey Subsidiary, as the case may be, by the Collateral Agent as
contemplated by the Security and Pledge Agreements, in which case the
Exchange Date will be the Business Day immediately following the expiration
of such ten-Business Day period.
Notwithstanding the foregoing, (i) the USLLC or the NAB Borrower may, with the
consent of the Distribution Trust or the USLLC, respectively, assign all or any
portion of the Distribution Loan or its NAB Loan, respectively, and (ii) the
Distribution Trust or the USLLC may replace all or any portion of the
Distribution Loan or any NAB Loan, respectively, with another loan, in each case
under (i) and (ii), to NAB or to one or more directly or indirectly wholly-owned
subsidiaries or branches of NAB, in which case NAB or such other subsidiary or
branch will be deemed to be the USLLC or such NAB Borrower, as applicable, and
such loan will be deemed to be the Distribution Loan or such NAB Loan, as
applicable, and each such action will not constitute an Exchange Event.
Total Capital Adequacy Ratio means the total capital adequacy prescribed by
the applicable Regulatory Authority in its capital adequacy guidelines for
Australian banks, as modified from time to time. Tier 1 Capital Ratio means the
ratio of Tier 1 capital to risk weighted assets (on a consolidated group basis)
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prescribed by the applicable Regulatory Authority in its capital adequacy
guidelines for Australian banks, as modified from time to time. Tier 1 capital
means capital which is regarded as "tier 1 capital" for the purposes of the
capital adequacy guidelines of the applicable Regulatory Authority.
The redemption, Buy-Back or Capital Reduction component of the Exchange
Event in clause (i) above is a result of the terms of the NAB Preference Shares
which provide that, with the prior written consent of the applicable Regulatory
Authority (if required under the law or guidelines then applicable), NAB may, in
its absolute discretion, redeem, Buy-Back or reduce the capital of the NAB
Preference Shares for cash, in each case, (a) prior to the fifth anniversary of
the Issue Date, in whole, but only upon the occurrence of certain tax,
regulatory and securities registration events and (b) at any time on or after
the fifth anniversary of the Issue Date, in whole or, after an Exchange Date (in
the case of redemption only), in whole or in part.
If the Exchange Event is anything other than a redemption, Buy-Back or
Capital Reduction of the NAB Preference Shares for cash, then the Trust will
distribute to holders of TrUEPrS one ADS per TrUEPrS. If a redemption, Buy-Back
or Capital Reduction of the NAB Preference Shares for cash occurs, then the
Trust will distribute to holders of TrUEPrS cash in the amount of US$25 per
TrUEPrS, plus the accrued dividend distributions thereon for the current
quarterly dividend period. After the occurrence of any such Exchange Event, the
Collateral Agent will deliver the ADRs or the cash, as the case may be, to the
Administrator and the Administrator, on behalf of the Trust, will (i) in the
case of a redemption, Buy-Back or Capital Reduction of the NAB Preference Shares
for cash, distribute the proceeds to the holders of TrUEPrS at the rate of US$25
per TrUEPrS then outstanding together with an amount equal to the accrued but
unpaid interest on each US$25 principal amount of Debt Securities from and
including the Interest Payment Date immediately preceding the Exchange Date to
but excluding the Exchange Date, or (ii) in all other cases, distribute the ADSs
to the holders of TrUEPrS at the rate of one ADS per TrUEPrS then outstanding.
The distribution described in the preceding sentence will be made to holders of
record as of the close of business on the Exchange Date. The holders of the
TrUEPrS will thereafter have no further claims against the Trust and the
Administrator will wind up the Trust.
Dividend distributions on the TrUEPrS will cease to accrue on and after the
Exchange Date. In the case of any Exchange Event other than a redemption,
Buy-Back or Capital Reduction of the NAB Preference Shares for cash, no dividend
distributions will be payable on the TrUEPrS on the Exchange Date (even if such
Exchange Date is a Dividend Payment Date). Instead, non-cumulative dividends
will begin to accrue on the NAB Preference Shares from and including the last
Interest Payment Date in respect of which interest on the Debt Securities has
been paid or provided for in full. Accordingly, the dividends for any quarterly
dividend period ending on or after the Exchange Date will be payable as
dividends on the NAB Preference Shares and in accordance with the terms of the
NAB Preference Shares.
INTERVENING VEHICLES
THE U.K. COMPANY. The U.K. Company is a special purpose unlimited company
incorporated under the laws of England and Wales, and domiciled in the United
Kingdom. The U.K. Company is wholly-owned by a special purpose company
incorporated with limited liability 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,
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.
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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 rights of the holders of the TrUEPrS. There will be no annual shareholder
meetings. There will be not less than 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, to make
payments on the Debt Securities to the Trust and to meet the ongoing costs and
expenses of various entities as described below.
THE JERSEY SUBSIDIARY. The Jersey Subsidiary is a special purpose company
incorporated with limited liability under the laws of, and domiciled in, Jersey,
Channel Islands. The Jersey Holding Company and the U.K. Company will own 51%
and 49%, respectively, of the ordinary shares of the Jersey Subsidiary, unless
an Exchange Event occurs (other than an Exchange Event as a result of a
redemption, Buy-Back or Capital Reduction of the NAB Preference Shares for cash
when the Dollar Value on the Exchange Date is equal to or less than the Dollar
Value on any date on which NAB Preference Shares are originally issued), in
which case, the U.K. Company will sell all the ordinary shares it owns in the
Jersey Subsidiary to the Jersey Holding Company immediately prior to the
redemption of the Jersey Preference Shares. 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 treated as a partnership 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 rights of the holders of the
TrUEPrS. 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., the holder of the common securities of the
Distribution Trust) 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, NAB will use the proceeds from the issuance of the NAB
Preference Shares to make a capital contribution of US$400,100,000 (or
US$460,000,000 if the Underwriters exercise their over-allotment options in
full) to the Distribution Trust and the Distribution Trust will use the capital
contribution to make the Distribution Loan to the USLLC. The Distribution Loan
will mature five years after the maturity date of the Debt Securities on
December 31, 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 date on which such loan is made
and be due and payable on each Interest Payment Date at the rate of % per
annum. The interest paid on the Distribution Loan will be used by the
Distribution Trust to pay the Income Entitlements to the U.K. Company. The
interest rate represents the sum of % (the interest rate on the Debt
Securities, which equals the dividend rate on the TrUEPrS) and a spread of
0.25%. The spread is designed to enable the U.K. Company to pay (a) its ongoing
costs and expenses and those of the Jersey Subsidiary, (b) dividends to the
Jersey Holding Company in an amount sufficient to enable it to pay its expenses
and those of the Jersey Charitable Trust, the Collateral Agent and (pursuant to
the Trust Expense Agreement (as defined herein)) the Trust and (c) the indemnity
fee payable to National Australia Group Europe Limited, an affiliate of NAB (the
"NAB Affiliate").
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On and after an Exchange Date, the U.K. Company will cease to be the income
beneficiary of the Distribution Trust; PROVIDED, HOWEVER, if the Exchange Event
is the redemption, Buy-Back or Capital Reduction of the NAB Preference Shares
for cash, the U.K. Company will be entitled to receive an Income Entitlement
equal to the accrued but unpaid interest on the Debt Securities for the period
from and including the Interest Payment Date immediately preceding the Exchange
Date to but excluding the Exchange Date. In the event an Income Entitlement is
not paid to the U.K. Company for any reason, an Exchange Event will occur
because the U.K. Company will have insufficient funds to pay interest due on the
Debt Securities.
THE USLLC. The USLLC is a Delaware limited liability company that is a
wholly-owned subsidiary of NAB. The USLLC will elect to be disregarded as an
entity that is separate from its owner (I.E., NAB) 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. NAB 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 a
NAB Loan to each NAB Borrower. The NAB Loans will be the only assets, and
interest thereon will be the only source of revenue, of the USLLC. Each NAB Loan
will be perpetual or mature five years after the maturity date of the Debt
Securities on December 31, 2052. Interest on each NAB Loan will accrue from date
on which such loan is made and be due and payable on each Interest Payment Date
at a per annum rate sufficient to enable the USLLC to pay any interest due on
the Distribution Loan on such date, grossed up to provide for any deduction or
withholding for any taxes, duties or other charges.
Under the terms of the Distribution Trust, other than in connection with a
redemption, Buy-Back or Capital Reduction of the NAB Preference Shares for cash,
no Income Entitlement shall be paid or payable to the U.K. Company on any
Interest Payment Date if (i) an Exchange Event has occurred 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 NAB on any preference shares or
ordinary shares of NAB, would exceed NAB's earnings during the prior fiscal year
or (iii) such payment would be prohibited or limited by applicable law,
regulation or order or by any instrument or agreement to which NAB is subject
(collectively, the "Payment Prohibitions"). In the event a Payment Prohibition
exists or will exist on any Interest Payment Date, NAB will notify the
Administrator no later than the third Business Day prior to such date.
On each Interest Payment Date, (i) the NAB Borrower will make an interest
payment on the related NAB Loan to the USLLC; (ii) the USLLC will use such
payment to make an interest payment on the Distribution Loan to the Distribution
Trust; (iii) if no Payment Prohibition exists, the Distribution Trust will
distribute such payment as an Income Entitlement to the U.K. Company; and (iv)
the U.K. Company will use the entire proceeds of such Income Entitlement to pay
(a) interest on the Debt Securities to the Trust, (b) ongoing costs and expenses
of the U.K. Company and the Jersey Subsidiary, (c) quarterly dividend payments
on the U.K. Company's voting shares to the Jersey Holding Company which will be
used to pay ongoing expenses of the Jersey Holding Company, the Jersey
Charitable Trust, the Collateral Agent and (pursuant to an expense agreement
between the Jersey Holding Company and the Trust (the "Trust Expense
Agreement")) the Trust and (d) an indemnity fee to the NAB 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 TrUEPrS.
TRUST DISSOLUTION
The Trust will dissolve as soon as possible after the exchange of the
TrUEPrS for ADSs or cash, as the case may be, upon the occurrence of an Exchange
Event.
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INVESTMENT RESTRICTIONS
The Trust has adopted a fundamental policy that the Trust may not purchase
any securities or instruments other than (a) the Debt Securities, (b) the Jersey
Preference Shares, if applicable, and (c) if applicable, the ADSs to be
purchased pursuant to the ADSs Purchase Contract; issue any securities or
instruments except for the TrUEPrS; 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 (a) to invest 100% of its portfolio in
Debt Securities and any distributions thereon, and not to dispose of the Debt
Securities during the term of the Trust, other than in connection with a
mandatory redemption thereof as a result of an Exchange Event, and (b) to enter
into the ADSs Purchase Contract and not to dispose of the ADSs Purchase Contract
during the term of the Trust.
Because of the foregoing limitations, the Trust's investments will be
concentrated initially in the financial services industry, which is the industry
in which NAB currently operates. However, to the extent that in the future NAB
diversifies its operations into one or more other industries, the Trust's
investments will be less concentrated in the financial services industry.
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RISK FACTORS
NO ACTIVE PORTFOLIO MANAGEMENT
It is a fundamental policy of the Trust (a) 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, other than in connection with a
mandatory redemption thereof as a result of an Exchange Event and (b) to enter
into the ADSs Purchase Contract and not to dispose of the ADSs Purchase Contract
during the term of the Trust. The Trust will not be managed like a typical
closed-end investment company.
ABSENCE OF TRADING HISTORY; MARKETABILITY; POSSIBILITY OF THE TRUEPRS TRADING AT
A DISCOUNT FROM NET ASSET VALUE
The TrUEPrS have no trading history and it is not possible to predict how
they will trade in the secondary market. The trading price of the TrUEPrS 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 NAB's shares are traded and the market segment of which NAB is a part
and fluctuations in interest rates and rates of exchange between the Australian
dollar 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
NAB.
The TrUEPrS 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 TrUEPrS. 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 TrUEPrS with liquidity of investment or that it
will continue for the life of the TrUEPrS. The TrUEPrS have been approved for
listing on the NYSE, subject to official notice of issuance. Trading of the
TrUEPrS on the NYSE is expected to commence within a 30-day period after the
initial delivery of the TrUEPrS. See "Underwriting." There can be no assurance
that such application will be accepted or that, if accepted, the TrUEPrS will
not later be delisted or that trading in the TrUEPrS 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 TrUEPrS on another national
securities exchange or for quotation on another trading market. If the TrUEPrS
are not listed or traded on any securities exchange or trading market, or if
trading of the TrUEPrS is suspended, pricing information for the TrUEPrS may be
more difficult to obtain, and the price and liquidity of the TrUEPrS 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 TrUEPrS 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. TrUEPrS are not subject to redemption.
LIMITED TERM
The term of the Trust will expire as soon as possible after the exchange of
the TrUEPrS for ADSs or cash, as the case may be, upon the occurrence of an
Exchange Event.
NON-DIVERSIFIED PORTFOLIO
Prior to the Exchange Date, the Trust's assets will consist entirely of (a)
the Debt Securities and distributions thereon and (b) the ADSs Purchase
Contract. As a result, investments in the Trust may be
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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 TrUEPrS will not be entitled to
any rights with respect to the ADSs or the NAB 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 TrUEPrS upon the occurrence of an Exchange Event (unless
the Exchange Event is the redemption, Buy-Back or Capital Reduction of the NAB
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 TrUEPrS will entitle the holder thereof to direct the exercise of the
voting rights attaching to one ADS and the two NAB Preference Shares represented
thereby. The holders of the NAB Preference Shares will be entitled to vote
together with the holders of ordinary shares of NAB (to the extent such holders
are entitled to vote), on the basis of one vote per NAB Preference Share on any
poll, (a) in all cases, with respect to certain matters specified herein and (b)
during a Special Voting Period (as defined herein), with respect to all matters
on which the holders of the ordinary shares of NAB are entitled to vote. A
"Special Voting Period" is the period from and including (i) any Dividend
Payment Date on which NAB fails to pay in full the dividends accrued in respect
of the quarterly dividend period then ended or (ii) the fourth Business Day
after the Exchange Date occurring as a result of any failure by the Trust to
receive in full the interest payable on the Debt Securities unless, prior to
such date, NAB has paid in full an optional dividend on the NAB Preference
Shares in an aggregate amount equal to the amount of interest not so received
(an "Optional Dividend"), in each case to but excluding the first Dividend
Payment Date thereafter as of which NAB has paid in full four consecutive
quarterly dividends on the NAB Preference Shares. In addition, the holders of
the NAB Preference Shares will have the right to vote separately as a class in
certain circumstances involving a variation of the rights of holders of the NAB
Preference Shares. Pursuant to the ADRs Security and Pledge Agreement, as long
as the ADRs are owned by the Jersey Subsidiary, the Jersey Subsidiary will, or
will cause the Collateral Agent to, direct the ADR depositary to vote the ADSs
and the NAB Preference Shares represented thereby as directed by the holders of
the TrUEPrS.
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 or 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 TRUEPRS
Each TrUEPrS represents a proportionate share of beneficial interest in the
assets of the Trust, and a total of 16,000,000 TrUEPrS will be issued in the
Offerings, assuming no exercise of the Underwriters' over-allotment options and
excluding 4,000 TrUEPrS issued to ML IBK Positions, Inc. on September 10, 1998
in accordance with the requirements of the Investment Company Act. Upon
liquidation of the Trust, holders of TrUEPrS are entitled to share PRO RATA
based on the number of TrUEPrS outstanding in the net
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assets of the Trust available for distribution. Holders of TrUEPrS have no
preemptive, redemption or conversion rights. The TrUEPrS, when issued and
outstanding, will be fully paid and nonassessable.
VOTING RIGHTS
Holders are entitled to one vote for each TrUEPrS 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 TrUEPrS, 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 TrUEPrS or to vote on
other matters upon the written request of the record holders of more than 50% of
the TrUEPrS (unless substantially the same matter was voted on during the
preceding 12 months).
Pursuant to the ADRs Security and Pledge Agreement and the ADR deposit
agreement, each TrUEPrS will entitle the holder thereof to direct the exercise
of the voting rights attaching to one ADS and two NAB Preference Shares
represented thereby. The holders of the NAB Preference Shares will be entitled
to vote together with the holders of ordinary shares of NAB (and to the extent
such holders are entitled to vote), on the basis of one vote per NAB Preference
Share on any poll, (a) in all cases with respect to certain matters specified
below and (b) during a Special Voting Period, with respect to all matters on
which the holders of the ordinary shares of NAB are entitled to vote. The
matters referred to in clause (a) of the preceding sentence upon which the
holders of NAB Preference Shares will have a right to vote, together with the
holders of ordinary shares of NAB, are: any proposal to reduce the share capital
of NAB (other than a Capital Reduction of the NAB Preference Shares in
accordance with their terms); any resolution to approve the terms of a share
buy-back arrangement (other than a Buy-Back); any proposal that affects the
rights attached to the NAB Preference Shares; any proposal to wind up NAB; any
proposal for the disposal of the whole of the property, business and undertaking
of NAB; and any matter during the winding up of NAB. 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 NAB Preference Shares.
Pursuant to the ADRs Security and Pledge Agreement, as long as the ADRs are held
by the Jersey Subsidiary, the Jersey Subsidiary will, or will cause the
Collateral Agent to, direct the ADR depositary to vote the NAB Preference Shares
as directed by the holders of the TrUEPrS.
Merrill Lynch, Pierce, Fenner & Smith Incorporated has applied to the
Commission for an exemptive order that would, if issued, among other things,
permit other investment companies and companies excepted from the definition of
investment company under Sections 3(c)(1) and 3(c)(7) of the Investment Company
Act to own more than 3% of the total outstanding TrUEPrS. Under the Declaration
of Trust, however, any such company owning TrUEPrS in excess of the limits
imposed by Sections 12(d)(1)(A)(i) and 12(d)(1)(C) of the Investment Company Act
must vote their TrUEPrS in proportion to the vote of all other holders of
TrUEPrS that are not such companies. There is no assurance that the application
for an exemptive order will be granted by the Commission.
Modifications and amendments of the terms of the TrUEPrS, the Debt
Securities, the Jersey Preference Shares and the ADSs Purchase Contract may be
made with the consent of not less than a majority of the holders of the TrUEPrS;
PROVIDED that, no such modification or amendment may, without the consent of
100% of the holders of the TrUEPrS, change the amount or timing of any dividend
on the TrUEPrS, 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, the
purchase price for or the number of ADSs deliverable pursuant to the ADSs
Purchase Contract or otherwise adversely affect the foregoing terms or cause an
Exchange Event to occur. Modifications and amendments may be made without the
consent of any holder of the TrUEPrS to cure any ambiguity, defect or
inconsistency in the Declaration of Trust or any instrument defining the terms
of the TrUEPrS, the Debt Securities, the Jersey Preference Shares and the ADSs
Purchase Contract, PROVIDED that, such action will
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not adversely affect in any material respect the rights of the holders of the
TrUEPrS or cause an Exchange Event to occur.
RESTRICTIONS ON OWNERSHIP AND TRANSFER
Generally, under the Australian Corporations Law, the concept of voting
share does not include certain types of preference shares with limited voting
rights. Because holders of the NAB Preference Shares have been conferred a right
to vote following a missed non-cumulative dividend, the NAB Preference Shares
will be treated as voting shares for relevant purposes. Therefore, a person with
an entitlement to NAB Preference Shares, including holders of TrUEPrS, should
consider this entitlement with any entitlement to other voting shares in NAB in
the context of the regulatory thresholds summarized below and seek appropriate
legal advice.
In summary, under the Australian 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 NAB 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 Australian public company. The Australian 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 Australian Stock Exchange Limited, such as NAB.
BOOK-ENTRY SYSTEM
The TrUEPrS 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 Securities Exchange
Act of 1934, as amended. 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 TrUEPrS 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 TrUEPrS.
Except as set forth below, owners of beneficial interests in such Global
Securities will not
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be entitled to have the TrUEPrS registered in their names and will not receive
or be entitled to receive physical delivery of the TrUEPrS in definitive form
and will not be considered the owners or holders thereof.
Delivery of ADRs or payment of amounts or delivery of other consideration
deliverable on exchange of, and any quarterly distributions on, TrUEPrS
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 TrUEPrS 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 TrUEPrS in
definitive registered form in exchange for the Global Security representing such
TrUEPrS. In addition, the Trust may at any time and in its sole discretion
determine not to have any TrUEPrS represented by one or more Global Securities
and, in such extent, will issue TrUEPrS in definitive form in exchange for all
of the Global Securities representing the TrUEPrS. Further, if the Trust so
specifies with respect to the TrUEPrS, an owner of a beneficial interest in a
Global Security representing TrUEPrS may, on terms acceptable to the Trust and
the Depository for such Global Security, receive TrUEPrS 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 TrUEPrS represented by
such Global Security equal in number to that represented by such beneficial
interest and to have such TrUEPrS 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.
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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, 53............... Managing Trustee Professor of Finance
Department of Finance University of Delaware
University of Delaware
Newark, DE 19716
William R. Latham III, 54........... Trustee Professor of Economics University of
Department of Economics Delaware
University of Delaware
Newark, DE 19716
James B. O'Neill, 59................ Trustee Professor of Economics University of
Center for Economic 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 paid by
the Jersey Holding Company pursuant to the Trust Expense Agreement. 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. Prior to the Exchange Date, the Trust's portfolio will consist only of
(a) US$400,100,000 aggregate principal amount of Debt Securities (US$460,000,000
aggregate principal amount of Debt Securities if the Underwriters' over-
allotment option is exercised in full), and any distributions thereon, and (b)
the ADSs Purchase Contract. The Trust's portfolio 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,
other than in connection with a mandatory redemption thereof as a result of an
Exchange Event and that the ADSs Purchase Contract not be disposed of during the
term of the Trust.
The Trust will pay all expenses incurred in the Trust's formation and other
initial expenses and expenses relating to the Offerings out of the facility fee
to be paid on the Issue Date to the Trust by the U.K. Company in connection with
the investment by the Trust in the Debt Securities. The ongoing administrative
and other 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, fees and expenses of Trustees, accounting costs,
brokerage costs, litigation, mailing and other expenses properly payable by the
Trust will be paid by the Jersey Holding Company pursuant to the Trust Expense
Agreement. Subject to the satisfaction of certain conditions, any operating
expenses of the Trust not covered by the Trust's arrangements with the Jersey
Holding Company will be paid by the NAB Affiliate if covered by the terms of an
expense and indemnity agreement (the "Expense and Indemnity Agreement") among
the Trust, the U.K.
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Company, the Jersey Holding Company, the Jersey Subsidiary and the Jersey
Charitable Trust. 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) with the approval of the Trustees, engage
legal and other professional advisors (other than the independent public
accountants for the Trust); (iii) instruct the Paying Agent to pay distributions
on TrUEPrS as described herein; (iv) 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; (v) 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 (vi) make, or
cause to be made, all necessary arrangements with respect to meetings of
Trustees and any meetings of holders of TrUEPrS. 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 and securities intermediary
under the Security and Pledge Agreements, as paying and transfer agent for the
Debt Securities and the NAB Preference Shares 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 Agreements, under which it
will hold a perfected security interest in the ADRs, the Jersey Preference
Shares or other assets consistent with the terms of the securities pledged
thereunder on behalf of the Trust, and as depositary for the ADRs.
PAYING AGENT
The paying agent, transfer agent and registrar (the "Paying Agent") for the
TrUEPrS 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
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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,
pursuant to the Expense and Indemnity Agreement, the NAB 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 $32,000 and estimated costs
of the Trust in connection with the initial registration of the TrUEPrS and the
Offerings in the amount of approximately $600,000 will be paid by the Trust out
of the facility fee to be paid on the Issue Date to the Trust by the U.K.
Company in connection with the investment by the Trust in the Debt Securities.
The ongoing administrative and other expenses of the Trust will be paid by the
Jersey Holding Company pursuant to the Trust Expense Agreement. Subject to the
satisfaction of certain conditions, any operating expenses of the Trust not
covered by the Trust's arrangements with the Jersey Holding Company will be paid
by the NAB Affiliate if covered by the terms of the Expense and Indemnity
Agreement.
DIVIDENDS AND DISTRIBUTIONS
The Trust intends to distribute to holders dividend distributions in an
amount equal to US$ per TrUEPrS per annum, payable quarterly in arrears in an
amount equal to US$ per TrUEPrS 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
December 31, 1998 will equal US$ per TrUEPrS.
Dividend payments on the TrUEPrS will be made from the interest payments
received by the Trust on the Debt Securities. Interest payments on the Debt
Securities will be made by the U.K. Company only to the extent that it receives
Income Entitlements as the income beneficiary of 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 Income Entitlements 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
and the U.K. Company will have no right to require such payment. See "Investment
Objective and Policies--Intervening Vehicles." In the event an Income
Entitlement is not paid for any reason, an Exchange Event will occur because the
U.K. Company will have insufficient funds to pay interest on the Debt
Securities.
On and after the Exchange Date, the U.K. Company will cease to be the income
beneficiary of the Distribution Trust; PROVIDED, HOWEVER, if the Exchange Event
is the redemption, Buy-Back or Capital Reduction of the NAB Preference Shares
for cash, the U.K. Company will be entitled to receive an Income Entitlement
equal to the accrued but unpaid interest on the Debt Securities for the period
from and including the Interest Payment Date immediately preceding the Exchange
Date to but excluding the Exchange Date.
On each Interest Payment Date, (i) the NAB Borrower will make an interest
payment on the NAB Loan to the USLLC; (ii) the USLLC will use such payment to
make an interest payment on the Distribution Loan to the Distribution Trust;
(iii) if no Payment Prohibition exists, the Distribution Trust will distribute
such payment as an Income Entitlement to the U.K. Company; and (iv) the U.K.
Company will use the entire proceeds of such Income Entitlement to pay (a)
interest on the Debt Securities to the Trust, (b) ongoing costs and expenses of
the U.K. Company and the Jersey Subsidiary, (c) quarterly dividend payments on
the U.K. Company's voting shares to the Jersey Holding Company, which will be
used to pay ongoing expenses of the Jersey Holding Company, the Jersey
Charitable Trust, the Collateral
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Agent and (pursuant to the Trust Expense Agreement) the Trust and (d) an
indemnity fee to the NAB 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 TrUEPrS.
Dividend distributions on the TrUEPrS will cease to accrue on and after the
Exchange Date. In the case of any Exchange Event other than a redemption,
Buy-Back or Capital Reduction of the NAB Preference Shares for cash, no dividend
distributions will be payable on the TrUEPrS on the Exchange Date (even if such
Exchange Date is a Dividend Payment Date). Instead, on the Exchange Date, each
NAB Preference Share will convert into a dividend-paying NAB Preference Share
which will begin to accrue non-cumulative dividends from and including the last
Interest Payment Date prior to an Exchange Date. Accordingly, the dividends for
any quarterly dividend periods ending on or after the Exchange Date will be
payable as dividends on the NAB Preference Shares and in accordance with the
terms of the NAB Preference Shares.
NET ASSET VALUE
The net asset value of the TrUEPrS 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 TrUEPrS
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 (a) the Debt Securities and (b) the ADSs
Purchase Contract held by the Trust will be determined in good faith by the
Board of Trustees pursuant to procedures adopted by them.
TAXATION
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of TrUEPrS is based upon
the advice of Sullivan & Cromwell, counsel to NAB. The summary addresses only
the tax consequences to persons that acquire TrUEPrS in connection with the
Offerings and hold the TrUEPrS as a capital asset. It does not address all tax
consequences of the ownership of TrUEPrS 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
TrUEPrS 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 Australia (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 TrUEPrS, 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 TrUEPrS 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 have 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.
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CLASSIFICATION OF THE TRUST AND THE DEBT SECURITIES AND DISTRIBUTIONS ON
TRUEPRS. 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 NAB. Accordingly, for United States Federal income tax purposes, each U.S.
Holder generally will be treated as owning equity of NAB 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 NAB. 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 other items of "passive income" (or in
the case of certain holders, "financial services income").
SALE OF THE TRUEPRS. Upon a sale or other disposition of the TrUEPrS
(including generally the receipt of a distribution of cash in redemption of all
of a U.S. Holder's TrUEPrS), 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 limitation purposes.
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 TrUEPrS in exchange for their TrUEPrS and in liquidation of the
Trust. A U.S. Holder's exchange of TrUEPrS 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, holders of the TrUEPrS may
receive cash. For U.S. Federal income tax purposes such receipt of cash would
constitute a taxable disposition of the TrUEPrS 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 TrUEPrS" above. Amounts
representing accrued but unpaid interest on the Debt Securities will be treated
as a distribution on TrUEPrS as discussed under "--Classification of the Trust
and the Debt Securities and Distributions on TrUEPrS" 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 NAB), if any, before reduction for
Australian withholding taxes by NAB, 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.
Subject to certain limitations, the Australian tax withheld, if any, in
accordance with the Treaty and paid over to Australia 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 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
32
<PAGE>
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
limitation purposes.
PFIC CONSIDERATIONS
NAB 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 TrUEPrS will be treated as owning an equity interest in
NAB for United States Federal income tax purposes, if NAB were a PFIC a U.S.
Holder of TrUEPrS as well as a holder of ADSs would be subject to certain
adverse tax consequences.
NON-U.S. HOLDERS
DISTRIBUTIONS ON THE TRUEPRS 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 TrUEPrS 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 TRUEPRS 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 TrUEPrS 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 TrUEPrS 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 TrUEPrS 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 TrUEPrS 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 TrUEPrS 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 TrUEPrS or ADSs through an office
outside the United States of
33
<PAGE>
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 or 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.
CERTAIN AUSTRALIAN TAX CONSIDERATIONS
The taxation discussion below of certain Australian tax consequences is
based on the advice of PricewaterhouseCoopers Securities Limited, Australia and
outlines certain Australian tax considerations for U.S. holders in relation to
the purchase, ownership and disposition of the TrUEPrS and the acquisition,
ownership and disposition of the NAB Preference Shares represented by the ADSs.
The discussion is intended only as a descriptive summary and does not purport to
be complete technical analysis or listing of all potential Australian tax
effects. This discussion is based upon laws, regulations, rulings and decisions
now in effect and is subject to changes in Australian law, including in any
double taxation convention between Australia and the United States (the
"Treaty"), including retroactive changes in effective dates, or possible
differing interpretations.
Persons considering the purchase of the TrUEPrS should consult their own tax
advisors concerning the application of Australia's tax laws to their particular
situations as well as any consequences of the purchase, ownership and
disposition of TrUEPrS or the NAB Preference Shares represented by the ADSs
arising under the laws of any other taxing jurisdiction.
The Trust will not be treated as a resident of Australia for Australian
income tax purposes. As it is not in receipt of Australian source income it will
not be subject to Australian tax on income earned. Therefore, quarterly
distributions by the Trust to non-Australian resident holders of TrUEPrS will
not be subject to Australian tax whether by withholding or otherwise.
Upon an Exchange Event (other than a redemption, Buy-Back or Capital
Reduction of the NAB Preference Shares for cash), the Trust will acquire ADSs
and then immediately deliver the ADSs to the holders of TrUEPrS. There should be
no Australian tax consequences to the Trust of the delivery of the ADSs to
holders of TrUEPrS.
Alternatively, upon an Exchange Event, the Trust may receive cash repayment
of principal and interest due on the Debt Securities. No Australian tax will be
payable by the Trust on such receipt.
The sale of TrUEPrS or the NAB Preference Shares represented by the ADSs may
generate assessable income to certain U.S. holders, such as banks, insurance
companies and other persons or institutions in the business of investment. The
provisions of the Treaty, however, are designed to ensure that this income, less
all allowable deductions, is subject to Australian tax only if the U.S. holder
who is a U.S. resident carries on business in Australia through a permanent
establishment and the income earned is effectively connected with that permanent
establishment.
The sale of TrUEPrS or ADSs by a U.S. holder will not generate a net capital
gain and therefore will not be subject to Australian capital gains tax unless:
34
<PAGE>
- the NAB Preference Shares are held by U.S. citizens or U.S. corporations
who are residents of Australia;
- the U.S. holder is a non-Australian resident but the U.S. holder and the
U.S. holder's associates together beneficially hold or at any time during
the five years prior to the sale held shares or interests in shares
representing ten percent or more in value of the issued capital of NAB; or
- the U.S. holder is a non-Australian resident but has at any time used the
TrUEPrS or ADSs in carrying on trade or business through a permanent
establishment in Australia.
and the consideration received for the TrUEPrS or the ADSs (or their market
value, if the disposition is not at arm's length or for no consideration)
exceeds the U.S. holder's cost base in the TrUEPrS or the ADSs after that cost
base is adjusted, where appropriate, for the effect of inflation.
The Australian income tax rate on capital gains is the same as the ordinary
income tax rate applicable to the relevant taxpayer, subject to capital gains
tax averaging where applicable. In the case of companies this rate is presently
36%.
An individual who is a U.S. holder will be resident of Australia if, for
example, that person:
- is domiciled in Australia, unless the person's permanent place of abode is
outside Australia; or
- has been in Australia for 183 days or more in a year of income unless that
person has a usual place of abode outside Australia and does not intend to
take up residence in Australia.
However, if that individual would be a resident of the United States for the
purposes of U.S. law, the Treaty allocates residence for the purposes of the
Treaty solely to the country in which the person maintains a permanent home (or
habitual abode) or with which the person has closer personal and economic ties.
A corporation who is a U.S. holder will be a resident of Australia if it is
incorporated in Australia or if it carries on business in Australia and has
either its central management and control in Australia or its voting power
controlled by shareholders who are residents of Australia.
Where the U.S. holder acquires ADSs on the Exchange Date, there may be
Australian tax consequences in relation to dividends paid by that Australian
listed corporation. Dividends paid by NAB may be paid as franked or unfranked
dividends. Australian corporations are required to provide shareholders with
notices detailing the extent to which the dividend is franked or unfranked and
the deductions (if any) of dividend withholding tax. Broadly, to the extent to
which those dividends are paid out of profits which have been subject to
Australian company income tax, they will be franked dividends. Fully franked
dividends paid to a non-resident will be exempt from Australian dividend
withholding tax. Unfranked or partially franked dividends will be subject to
Australian dividend withholding tax to the extent to which the dividend is
unfranked, unless a specific exemption is available.
The interaction of Australian income tax law and the Treaty limits the
Australian dividend withholding tax on unfranked or partially franked dividends
paid to a U.S. resident who is beneficially entitled to the dividends to 15
percent of the unfranked part of the gross dividend. However, where the U.S.
resident carries on business in Australia through a permanent establishment or
performs independent personal services from a fixed base in Australia and the
holding is effectively connected with the permanent establishment or fixed base,
the 15 percent limit should not apply and a dividend withholding tax at the rate
of 30 percent should apply in respect of such dividends in such circumstances.
However, under Australian law an Australian payer of dividends to a U.S.
resident in such circumstances is only obliged to withhold at the rate of 15
percent and, as a matter of policy, the Australian Taxation Office does not seek
to collect any further withholding tax.
35
<PAGE>
Subject to certain conditions, the terms of the NAB Preference Shares
provide for holders to be grossed-up for Australian withholding tax on payments
on the NAB Preference Shares being dividends or amounts deemed to be dividends
for Australian tax purposes.
No stamp, issue, registration or similar taxes are payable in Australia in
connection with the issue of TrUEPrS by the Trust or of ADSs. Transfers of NAB
Preference Shares by U.S. holders would be subject to stamp duty.
There are no specific estate, inheritance or gift taxes or duties imposed in
Australia. In practice, no Revenue Authority in any State or Territory of
Australia should seek to recover stamp duty on any transfer of or agreement to
transfer ADSs provided that the instruments are not executed and the purchaser
of the ADSs is not resident in Australia.
36
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement"), the Trust has agreed to sell to each of the underwriters
named below (the "Underwriters"), and each of the Underwriters, for whom Merrill
Lynch, Pierce, Fenner & Smith Incorporated, A.G. Edwards & Sons, Inc., Morgan
Stanley & Co. Incorporated, PaineWebber Incorporated, Prudential Securities
Incorporated and Salomon Smith Barney Inc. are acting as representatives (the
"Representatives"), has severally agreed to purchase, the aggregate number of
TrUEPrS set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER TRUEPRS
- ---------------------------------------------------------------------------------- -----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................................
A.G. Edwards & Sons, Inc..........................................................
Morgan Stanley & Co. Incorporated.................................................
PaineWebber Incorporated..........................................................
Prudential Securities Incorporated................................................
Salomon Smith Barney Inc..........................................................
-----------
Total...................................................................
-----------
-----------
</TABLE>
In the Purchase Agreement, the Underwriters named therein have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
TrUEPrS being sold pursuant to such Purchase Agreement if any of the TrUEPrS
being sold pursuant to such Purchase Agreement are purchased. Under certain
circumstances, under the Purchase Agreement, the commitments of non-defaulting
Underwriters may be increased. 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 Representatives have advised the Trust that the Underwriters propose to
offer the TrUEPrS offered hereby in the 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
TrUEPrS; provided that such concession for sales of more than 10,000 TrUEPrS to
any single purchaser will be $ per TrUEPrS. The Underwriters may allow,
and such dealers may reallow, a discount not in excess of $ per TrUEPrS
to certain other dealers. After the initial public offering, the public offering
price, concession and discount may be changed. Investors must pay for any
TrUEPrS purchased in the initial public offering on or before ,
1998.
The Trust has granted the Underwriters an option to purchase up to an
additional 2,396,000 TrUEPrS at the initial public offering price, less the
underwriting discount. Such option, 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 option, 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 16,000,000 TrUEPrS
initially purchased by the Underwriters.
In view of the fact that the proceeds of the sale of the TrUEPrS will
ultimately be invested in ADSs representing the NAB Preference Shares, the
Purchase Agreement provides that the Trust and NAB will pay, as compensation to
the Underwriters (the "Underwriter's Compensation"), an amount in immediately
available funds of $ per TrUEPrS or $ in the aggregate (or
$ in the aggregate if the Underwriters' over-allotment option is
exercised in full) for the accounts of several Underwriters; provided that such
compensation for sales of more than 10,000 TrUEPrS to any single purchaser will
be $ per TrUEPrS and to the extent of such sales, the actual amount of
Underwriters' Compensation will be less than the aggregate amounts specified
herein.
37
<PAGE>
The Underwriters do not intend to confirm sales of TrUEPrS offered hereby to
any accounts over which they exercise discretionary authority.
Prior to the Offering, there has been no public market for the TrUEPrS. The
TrUEPrs have been approved for listing on the NYSE, subject to official notice
of issuance. In connection with the listing, the Underwriters will undertake
that sales of TrUEPrS will meet the NYSE's minimum distribution standards.
Trading of the the TrUEPrS on the NYSE is expected to commence within a 30-day
period after the initial delivery of the TrUEPrS. The Representatives have
advised the Trust that they intend to make a market in the TrUEPrS prior to the
commencement of trading on the NYSE. The Representatives will have no obligation
to make a market in the TrUEPrS, however, and may cease market making
activities, if commenced, at any time.
In view of the fact that the proceeds of the sale of the TrUEPrS will
ultimately be invested in ADSs representing the NAB Preference Shares, the Trust
and NAB have agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or to
contribute to payments the Underwriters may be required to make in respect
thereof.
In connection with the formation of the Trust, ML IBK Positions, Inc., an
affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, subscribed for
and purchased 4,000 TrUEPrS for a purchase price of $100,000.
Until the distribution of the TrUEPrS is completed, rules of the Commission
may limit the ability of the Underwriters and any selling group members to bid
for and purchase the TrUEPrS. As an exception to these rules, the
Representatives are permitted to engage in certain transactions that stabilize
the price of the TrUEPrS. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the TrUEPrS.
If the Underwriters create a short position in the TrUEPrS in connection
with the Offering, i.e., if they sell more TrUEPrS than are set forth on the
cover page of this Prospectus, the Representatives may reduce that short
position by purchasing TrUEPrS in the open market. The Representatives may also
elect to reduce any short position by exercising all or part of the
over-allotment option described above.
The Representatives may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
TrUEPrS in the open market to reduce the Underwriters' short position or to
stabilize the price of the TrUEPrS, they may reclaim the amount of the selling
concession from the Underwriters and any selling group members who sold those
TrUEPrS as part of the Offering.
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 TrUEPrS. In addition, neither the
Trust nor any of the Underwriters makes any representation that the
Representatives will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The Trust has not authorized, or taken any action to cause, the issue or
distribution in the Commonwealth of Australia, any of its States, territories or
possessions or any political subdivision thereof ("Australia"), or to any
resident of Australia, of this Prospectus or any other document inviting
applications or offers to subscribe for or purchase the TrUEPrS offered hereby
or offering such TrUEPrS for subscription or purchase and, accordingly, neither
this Prospectus (whether in draft or definitive form) nor
38
<PAGE>
any such other document may be issued or distributed in Australia or to any
resident of Australia for the purpose of inviting applications or offers to
subscribe for or purchase the TrUEPrS offered hereby.
No prospectus in relation to the TrUEPrS has been lodged with or registered
by the Australian Securities and Investments Commission. In connection with
distribution of the TrUEPrS, each of the several Underwriters will represent and
agree that it: (a) has not (directly or indirectly) offered for subscription or
purchase or issued invitations to subscribe for or purchase nor has it sold the
TrUEPrS; (b) will not (directly or indirectly) offer for subscription or
purchase or issue invitations to subscribe for or purchase or sell the TrUEPrS;
and (c) has not distributed and will not distribute any draft or definitive
prospectus, advertisement or other offering material, in each case in Australia
or to any resident of Australia (including corporations and other entities
organized under the laws of Australia but not including a permanent
establishment of such corporations or other entities located outside Australia).
Each Underwriter has also in the Purchase Agreement represented and agreed
that:
(a) it has not offered or sold and prior to the date six months after
the date of issue of the TrUEPrS will not offer or sell any TrUEPrS to
persons in the United Kingdom 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;
(b) it has complied and will comply with all applicable provisions of
the Financial Services Act
1986 with respect to anything done by it in relation to the TrUEPrS in, from
or otherwise involving the United Kingdom; and
(c) 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 TrUEPrS to a person who is of a kind described in Article 11(3) of
the Financial Services Act 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 NAB 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. See also
"Taxation."
EXPERTS
The statement of assets and liabilities included in this Prospectus has been
audited by Deloitte & Touche LLP, 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.
39
<PAGE>
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
TrUEPrS offered hereby. Further information concerning the TrUEPrS 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.
40
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholder of NAB Exchangeable Preferred
Trust:
We have audited the accompanying statement of assets and liabilities of NAB
Exchangeable Preferred Trust as of September 10, 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 financial statement 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 provides a reasonable basis for our
opinion.
In our opinion, such statement of assets and liabilities presents fairly, in
all material respects, the financial position of NAB Exchangeable Preferred
Trust, as of September 10, 1998 in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Princeton, New Jersey
September 10, 1998
41
<PAGE>
NAB EXCHANGEABLE PREFERRED TRUST
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 10, 1998
<TABLE>
<S> <C>
ASSETS
Cash.............................................................................. $ 100,000
---------
Total Assets...................................................................... $ 100,000
---------
---------
LIABILITIES
Total Liabilities................................................................. $ 0
---------
NET ASSETS........................................................................ $ 100,000
---------
---------
NET ASSET VALUE PER TRUEPRS
4,000 TrUEPrS issued and outstanding (Note 3)..................................... $ 25
---------
---------
</TABLE>
- ------------------------
(1) The Trust was created as a Delaware business trust on July 28, 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 out
of 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 ongoing
administrative and other expenses of the Trust will be paid by the Jersey
Holding Company pursuant to the Trust Expense Agreement. Subject to the
satisfaction of certain conditions, operating expenses of the Trust not paid
by the Jersey Holding Company under the Trust Expense Agreement will be paid
by the NAB Affiliate if covered by the terms of the Expense and Indemnity
Agreement.
(2) Offering expenses will be payable upon completion of the Offerings and such
expenses (including a portion of the Underwriter's compensation) will be
paid by the Trust out of the facility fee to be paid to the Trust by the
U.K. Company in connection with the investment by the Trust in the Debt
Securities.
(3) On September 10, 1998, the Trust issued 4,000 TrUEPrS to ML IBK Positions,
Inc., an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, in
consideration for a purchase price of $100,000.
42
<PAGE>
THE FOLLOWING PROSPECTUS OF NATIONAL AUSTRALIA BANK LIMITED IS ATTACHED AND
DELIVERED FOR CONVENIENCE OF REFERENCE ONLY. THE PROSPECTUS OF NATIONAL
AUSTRALIA BANK LIMITED DOES NOT CONSTITUTE A PART OF THE FOREGOING PROSPECTUS OF
NAB EXCHANGEABLE PREFERRED TRUST, NOR IS IT INCORPORATED BY REFERENCE THEREIN.
<PAGE>
[NAB PROSPECTUS]
[To be provided.]
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 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
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, 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.
--------------------------
TABLE OF CONTENTS
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PAGE
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<S> <C>
Prospectus Summary............................... 4
Fee Table........................................ 11
Structural Diagram............................... 12
The Trust........................................ 13
Use of Proceeds and Collateral Arrangements...... 13
Investment Objective and Policies................ 15
Investment Restrictions.......................... 22
Risk Factors..................................... 23
Description of the TrUEPrS....................... 24
Trustees......................................... 27
Management Arrangements.......................... 28
Dividends and Distributions...................... 30
Net Asset Value.................................. 31
Taxation......................................... 31
Underwriting..................................... 37
Legal Matters.................................... 39
Experts.......................................... 39
Additional Information........................... 40
Independent Auditors' Report..................... 41
Statement of Assets and Liabilities.............. 42
</TABLE>
Prospectus relating to Preference Shares
of National Australia Bank Limited
--------------------------
UNTIL , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE TRUEPRS, 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.
16,000,000 TRUEPRS-SM-
NAB EXCHANGEABLE
PREFERRED TRUST
---------------------
PROSPECTUS
---------------------
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
A.G. EDWARDS & CO., INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
, 1998
- -SM-Service mark of Merrill Lynch & Co., Inc.
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<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<CAPTION>
1. FINANCIAL STATEMENTS
<S> <C> <C>
Independent Auditors' Report
Statement of Assets and Liabilities as of September 10, 1998
2. EXHIBITS
(a)(1) Trust Agreement*
(2) Form of Amended and Restated Trust Agreement**
(3) Restated Certificate of Trust***
(b) Not applicable
(c) Not applicable
(d)(1) Form of Specimen certificate for TrUEPrS (included in Exhibit 2(a)(2))**
(2) Portions of the Amended and Restated Trust Agreement of the Registrant defining
the rights of Holders of TrUEPrS+**
(e) Not applicable
(f) Not applicable
(g) Not applicable
(h)(1) Form of 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 ADRs Security and Pledge Agreement**
(5) Form of Jersey Preference Shares Security and Pledge Agreement**
(6) Form of Trust Reimbursement Agreement**
(7) Form of Trust Expense Agreement**
(8) Form of Expense and Indemnity Agreement**
(9) Form of Debt Securities Subscription Agreement**
(10) Form of ADSs Purchase Contract**
(11) Form of Distribution Trust Agreement**
(l) Opinion and Consent of Brown & Wood LLP, counsel to the Trust**
(m) Not applicable
(n)(1) Tax Opinion and Consent of Sullivan & Cromwell**
(2) Tax Opinion and Consent of PricewaterhouseCoopers Securities Limited,
Australian tax adviser to the Trust***
(3) Consent of Deloitte & Touche LLP, independent auditors for the Trust***
(o) Not applicable
(p) Form of TrUEPrS Subscription Agreement**
(q) Not applicable
(r) Not applicable
</TABLE>
- ------------------------
+ Reference is made to Article III (Section 3.2), Article IV, Article V and
Article VII (Section 7.1 and 7.6) of the Trust's Amended and Restated Trust
Agreement filed as Exhibit (a)(2) to this Registration Statement
* Previously filed.
** To be filed by amendment.
*** Filed herewith
ITEM 25. MARKETING ARRANGEMENTS
See Exhibits (h)(1) to this Registration Statement.
<PAGE>
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 from the facility fee to
be 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 TrUEPrS as of the effective date of
this Registration Statement.
ITEM 29. INDEMNIFICATION
Section 6.06 of the Amended and Restated Trust Agreement and Section 6 of
the Purchase 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 Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Newark, State of Delaware, on the 15th
day of September, 1998.
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<S> <C> <C>
NAB EXCHANGEABLE PREFERRED TRUST
By: /s/ DONALD J. PUGLISI
-----------------------------------------
Donald J. Puglisi
Managing Trustee
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, 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
- ------------------------------ September 15, 1998
Donald J. Puglisi
/s/ WILLIAM R. LATHAM III* Trustee
- ------------------------------ September 15, 1998
William R. Latham III
/s/ JAMES B. O'NEILL* Trustee
- ------------------------------ September 15, 1998
James B. O'Neill
*/s/ DONALD J. PUGLISI
- ------------------------------
Donald J. Puglisi
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
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<S> <C> <C> <C>
(a) (1) Trust Agreement*..............................................................................
(2) Form of Amended and Restated Trust Agreement**................................................
(3) Restated Certificate of Trust***..............................................................
(b) Not applicable................................................................................
(c) Not applicable................................................................................
(d) (1) Form of Specimen certificate for TrUEPrS (included in Exhibit 2(a)(2))**......................
(2) Portions of the Declaration of Trust of the Registrant defining the rights of Holders of
TrUEPrS+**....................................................................................
(e) Not applicable................................................................................
(f) Not applicable................................................................................
(g) Not applicable................................................................................
(h) (1) Form of 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 ADRs Security and Pledge Agreement**..................................................
(5) Form of Jersey Preference Shares Security and Pledge**........................................
(6) Form of Trust Reimbursement Agreement**.......................................................
(7) Form of Trust Expense Agreement**.............................................................
(8) Form of Expense and Indemnity Agreement**.....................................................
(9) Form of Debt Securities Subscription Agreement**..............................................
(10) Form of ADSs Purchase Contract**..............................................................
(11) Form of Distribution Trust Agreement**........................................................
(l) Opinion and Consent of Brown & Wood LLP, counsel to the Trust**...............................
(m) Not applicable................................................................................
(n) (1) Tax Opinion and Consent of Sullivan & Cromwell**..............................................
(2) Tax Opinion and Consent of PricewaterhouseCoopers Securities Limited, Australian tax adviser
to the Trust***...............................................................................
(3) Consent of Deloitte & Touche LLP independent auditors for the Trust***........................
(o) Not applicable................................................................................
(p) Form of TrUEPrS Subscription Agreement**......................................................
(q) Not applicable................................................................................
(r) Not applicable................................................................................
</TABLE>
- ------------------------
+ Reference is made to Article III (Section 3.2), Article IV, Article V and
Article VII (Section 7.1 and 7.6) of the Trust's Amended and Restated Trust
Agreement filed as Exhibit (a)(2) to this Registration Statement
* Previously filed.
** To be filed be amendment.
*** Filed herewith.
<PAGE>
EXHIBIT (a)(3)
RESTATED CERTIFICATE OF TRUST OF
XYZ EXCHANGEABLE PREFERRED TRUST
This Restated Certificate of Trust of XYZ Exchangeable Preferred Trust
(the "Trust"), dated as of September 10, 1998, is being duly executed and
filed by the undersigned, as the only trustees of the Trust, to amend and
restate the original Certificate of Trust of the Trust which was filed on
July 28, 1998 with the Secretary of State of the State of Delaware (the
"Secretary of State") under the Delaware Business Trust Act
(12 Del. C. ss3801 et seq.) (the "Original Certificate of Trust").
The Original Certificate of Trust is hereby restated in its entirety to
read as follows:
1. NAME. The name of the business trust formed hereby is NAB
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, 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 Restated Certificate of Trust shall be
effective as of its filing with the Secretary of State.
4. OTHER MATTERS. The Trust will be a registered investment company
under the Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust,
have duly executed this Restated Certificate of Trust in accordance with
Section 3811(a) of the Delaware Business Trust Act as of the date 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
<PAGE>
EXHIBIT (n)(2)
[LETTERHEAD OF PRICEWATERHOUSECOOPERS]
NAB Exchangeable Preferred Trust
c/o Puglisi & Associates
850 Library Avenue, Suite 204
Newark, Delaware 19715
U.S.A.
15 September 1998
Ladies and Gentlemen
REGISTRATION STATEMENT ON FORM N-2
FILE NOS. 333-60719 AND 811-08939
We have acted as tax counsel to the NAB Exchangeable Preferred Trust (the
"Trust") in connection with the registration of its Trust Units Exchangeable
for Preference Shares-SM- (TrUEPrS-SM-). In connection therewith, we have
prepared the discussion set forth under the captions "Prospectus
Summary--Certain United States Federal Income Tax Considerations--Australia"
and "Taxation--Certain Australian Tax Considerations" (the "Discussion") in
the Prospectus (the "Prospectus") that is part of Pre-Effective Amendment No
1 to the Registration Statement on Form N-2 (File Nos. 333-60719 and
811-08939) (the "Registration Statement") filed by the Trust with the
Securities and Exchange Commission on September 15, 1998.
We hereby confirm our opinion as set forth in the Discussion. In rendering
our opinion, we have examined the Amended and Restated Trust Agreement of the
Trust and those transaction documents we considered relevant to our opinion,
each in the form filed as an exhibit to the Registration Statement, and have
assumed that the obligations contemplated thereunder will be performed in
accordance with their terms.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption
"Taxation--Certain Australian Tax Considerations" in the Prospectus. The
issuance of such consent does not concede that we are an "expert" for the
purposes of the Securities Act of 1933.
Very truly yours
/s/ AE Clemens
- ------------------------
- -SM- Service mark of Merrill Lynch & Co., Inc.
<PAGE>
EXHIBIT (n)(3)
INDEPENDENT AUDITORS' CONSENT
NAB Exchangeable Preferred Trust:
We consent to the inclusion in this Pre-Effective Amendment No. 1 to
Registration Statement Nos. 333-60719 and 811-08939 of NAB Exchangeable
Preferred Trust (the "Trust") on Form N-2 of our report dated September 10,
1998 relating to the audit of the statement of assets and liabilities of the
Trust and to the reference to us under the heading "Experts" in the
Prospectus, which is a part of this Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Princeton, New Jersey
September 14, 1998
