<PAGE>
PROSPECTUS
TRUST UNITS EXCHANGEABLE FOR PREFERENCE SHARES SM
14,000,000 TRUEPRS SM
ANZ EXCHANGEABLE PREFERRED TRUST II
(EXCHANGEABLE FOR AMERICAN DEPOSITARY RECEIPTS REPRESENTING
ANZ PREFERENCE SHARES OR CASH)
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THE ISSUER:
. ANZ Exchangeable Preferred Trust II (the "Trust") is a Delaware business
trust. It will use the proceeds from the sale of the TrUEPrS to purchase and
hold 8.08% Mandatorily Redeemable Debt Securities due 2048 issued by
Aldobrandini (UK) Company. The Trust also will enter into a purchase contract
with Aldobrandini (Investments) Limited for the purchase of ADRs representing
ANZ Preference Shares.
WHAT YOU WILL RECEIVE BEFORE THE EXCHANGE DATE:
. On each Dividend Payment Date before the Exchange Date, if the Trust has
sufficient funds, the Trust will pay you a non-cumulative dividend
distribution at the rate of 8.08% per annum of the issue price of the
TrUEPrS. Accordingly, if the Trust has sufficient funds, on the first
Dividend Payment Date (January 15, 1999) the Trust will pay you $.3142 per
TrUEPrS and on each subsequent Dividend Payment Date (January 15, April 15,
July 15, and October 15 of each year) before the Exchange Date the Trust will
pay you $.505 per TrUEPrS.
WHAT YOU WILL RECEIVE ON THE EXCHANGE DATE:
. On the Exchange Date, for each TrUEPrS you own, the Trust will deliver to you
one ADR representing four ANZ Preference Shares or $25 in cash, depending on
the type of Exchange Event.
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IF THE EXCHANGE EVENT IS: FOR EACH TRUEPRS YOU WILL RECEIVE:
(a) Anything other than a redemption One ADR representing four ANZ Prefer-
or mandatory repurchase (known as a ence Shares
"Buy-Back" in Australia) of the ANZ
Preference Shares for cash
Cash equal to $25 plus the accrued
(b) The redemption or Buy-Back of the dividend distribution for the then
ANZ Preference Shares for cash current quarterly dividend period
</TABLE>
. On and after the Exchange Date, the ANZ Preference Shares represented by the
ADRs will accrue non-cumulative dividends at the same rate as the dividend
distribution rate on the TrUEPrS. If such dividends are declared by the board
of directors of ANZ, they will be paid on the same dates as the Dividend
Payment Dates for the TrUEPrS.
. The TrUEPrS have been approved for listing on the New York Stock Exchange
under the symbol "ANJ Pr," subject to official notice of issuance. The Trust
expects that trading on the New York Stock Exchange will commence within 30
days after delivery of the TrUEPrS.
INVESTING IN THE TRUEPRS INVOLVES CERTAIN RISKS WHICH ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 10 OF THIS PROSPECTUS.
---------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
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<TABLE>
<CAPTION>
PER TRUEPRS TOTAL
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<S> <C> <C>
Public offering price(1)...................... $25.00 $350,000,000
Sales load.................................... None(2) None(2)
Proceeds, before expenses, to Trust........... $25.00 $350,000,000
</TABLE>
(1) Purchasers will also be required to pay accrued
dividend distributions from November 19, 1998, if
settlement occurs after that date.
(2) Because the proceeds of the sale of the TrUEPrS will
ultimately be invested in the ANZ Preference Shares,
ANZ will pay the underwriters $.7875 per TrUEPrS (or
$.50 per TrUEPrS for sales of more than 10,000
TrUEPrS to a single purchaser).
The underwriters may also purchase up to an additional 2,096,000 TrUEPrS
at $25 per TrUEPrS, plus accrued dividends from November 19, 1998, within 30
days from the date of this prospectus to cover over-allotments.
The Trust expects that the TrUEPrS will be ready for delivery in book-
entry form only through the facilities of The Depository Trust Company on or
about November 19, 1998.
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MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY
---------------
The date of this prospectus is November 13, 1998.
"TrUEPrS" and "Trust Units Exchangeable for Preference Shares" are service
marks owned by Merrill Lynch & Co., Inc.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary Information--Q&A................................................... 3
Fee Table.................................................................. 8
Structural Diagram......................................................... 9
Risk Factors............................................................... 10
The Trust.................................................................. 12
Use of Proceeds and Collateral Arrangements................................ 12
Investment Objective and Policies.......................................... 13
Investment Restrictions.................................................... 19
Description of the TrUEPrS................................................. 20
Trustees................................................................... 23
Management Arrangements.................................................... 23
Dividends and Distributions................................................ 25
Net Asset Value............................................................ 26
Taxation................................................................... 26
Underwriting............................................................... 31
Legal Matters.............................................................. 34
Experts.................................................................... 34
Additional Information..................................................... 34
Independent Auditors' Report............................................... 35
Statement of Assets and Liabilities........................................ 36
</TABLE>
Prospectus relating to American Depositary Receipts representing ANZ Preference
Shares
2
<PAGE>
SUMMARY INFORMATION--Q&A
This summary includes questions and answers that highlight selected
information from the prospectus to help you understand the TrUEPrS. However,
this summary may not contain all the information that may be important to you.
Certain terms used in this section are defined elsewhere in this prospectus.
You should carefully read this prospectus to fully understand the terms of the
TrUEPrS, as well as the tax and other considerations that are important to you
in making a decision about whether to invest in the TrUEPrS. You should pay
special attention to the "Risk Factors" section to determine whether an
investment in the TrUEPrS is appropriate for you.
WHAT ARE TRUEPRS?
TrUEPrS are Trust Units Exchangeable for Preference Shares. Each TrUEPrS
represents a proportionate share of beneficial interest in the assets of the
Trust. Each TrUEPrS will entitle the holder to receive, before the Exchange
Date, non-cumulative quarterly dividend distributions at the rate of $.505 per
TrUEPrS per quarter if the Trust has sufficient funds.
HOW MANY TRUEPRS ARE BEING OFFERED?
The Trust is offering 14,000,000 TrUEPrS at a price of $25 per TrUEPrS.
The underwriters may also purchase up to an additional 2,096,000 TrUEPrS at the
price of $25 per TrUEPrS, plus accrued dividends from November 19, 1998, within
30 days of the date of this prospectus in order to cover over-allotments, if
any. You should refer to the section in this prospectus called "Underwriting."
WHO IS THE TRUST?
ANZ Exchangeable Preferred Trust II is a recently created Delaware
business trust. The Trust will be registered as a non-diversified closed-end
management investment company under the Investment Company Act of 1940. The
Trust will dissolve as soon as practicable after the Trust distributes ADRs or
cash to you upon the occurrence of an Exchange Event. Please review the
sections in this prospectus called "The Trust," "Investment Objective and
Policies--Trust Dissolution" and "Risk Factors--Limited Term" for more
information.
WHO IS ANZ?
ANZ is Australia and New Zealand Banking Group Limited, an Australian
bank. For more information about ANZ and the ANZ Preference Shares represented
by ADRs that you may receive due to the occurrence of an Exchange Event, see
the prospectus of ANZ. The Trust has attached the prospectus of ANZ to this
prospectus for your convenience only. The prospectus of ANZ is not a part of
this prospectus and is not incorporated by reference in this prospectus.
WHAT IS THE TRUST'S INVESTMENT OBJECTIVE?
The Trust's investment objective is to distribute to you:
. Before the Exchange Date, non-cumulative quarterly cash dividend
distributions from the interest the Trust receives on the Debt Securities.
. On the Exchange Date, ADRs or cash depending on the type of Exchange Event.
The Exchange Events that may occur are described below and in the section
in this prospectus called "Investment Objectives and Policies--Exchange Event."
WHAT ARE THE ASSETS OF THE TRUST?
The assets of the Trust will be (i) $350,100,000 of Debt Securities
issued by the U.K. Company (or $402,500,000 if the underwriters exercise their
over-allotment option in full) and (ii) the ADRs Purchase Contract. See
"Investment Objective and Policies--Trust Assets."
WHAT IS THE ADRS PURCHASE CONTRACT?
The ADRs Purchase Contract is an agreement entered into between the Trust
and the Jersey Subsidiary for the purchase by the Trust of the ADRs on the
Exchange Date. Because the Trust will not own the ADRs before the Exchange
Date, if the Trust is required to deliver ADRs to you upon the occurrence of an
Exchange Event, the Trust will purchase the ADRs from the Jersey Subsidiary
pursuant to the ADRs Purchase Contract. See "Investment Objective and
Policies--Trust Assets."
3
<PAGE>
WHEN WILL YOU RECEIVE YOUR QUARTERLY DIVIDEND DISTRIBUTIONS?
On each Dividend Payment Date before the Exchange Date, if the Trust has
sufficient funds, you will receive a non-cumulative quarterly cash dividend
distribution from the Trust at the rate of 8.08% of the issue price of the
TrUEPrS per annum ($2.02 per TrUEPrS per annum or $.505 per TrUEPrS per
quarter). Before the Exchange Date, the Trust will make dividend distributions
to you on each Dividend Payment Date (January 15, April 15, July 15 and October
15) if you are registered on the register of the Trust as of the preceding
Record Date (January 1, April 1, July 1 and October 1). If the Dividend Payment
Date is not a Business Day, you will be paid on the following Business Day. You
will receive the first dividend distribution in the amount of $.3142 per
TrUEPrS for the period from November 19, 1998 until January 14, 1999 on January
15, 1999 if you are registered on the Trust's register as of January 1, 1999.
WHAT WILL YOU RECEIVE ON THE EXCHANGE DATE?
For each TrUEPrS you own, you will receive one ADR representing four ANZ
Preference Shares or $25 in cash, depending on the type of Exchange Event.
<TABLE>
<CAPTION>
IF THE EXCHANGE
EVENT IS: YOU WILL RECEIVE:
<C> <S>
(a) Anything other One ADR
than a redemption representing four
or Buy-Back of the ANZ Preference
ANZ Preference Shares
Shares for cash
(b) The redemption Cash equal to $25
or Buy-Back of the plus the accrued
ANZ Preference dividend
Shares for cash distribution for
the then current
quarterly dividend
period
</TABLE>
If ADRs are distributed, you will become the owner of the ADRs as of the
opening of business on the Exchange Date. The Trust will deliver the ADRs to
you through the facilities of The Depository Trust Company as soon as
practicable on or after the Exchange Date.
WHAT EVENTS WILL OCCUR ON THE ISSUE DATE OF THE TRUEPRS?
The Trust will use the proceeds from the sale of the TrUEPrS, including
the sale of 4,000 TrUEPrS to an affiliate of Merrill Lynch, Pierce, Fenner &
Smith Incorporated to satisfy the requirements of the Investment Company Act of
1940, to purchase from the U.K. Company Debt Securities in an amount equal to
such proceeds. The Debt Securities accrue interest at the rate per annum of
8.08%. The Interest Payment Dates for the Debt Securities are the same as the
Dividend Payment Dates for the TrUEPrS. The U.K. Company will use all the
proceeds from the sale of the Debt Securities to purchase the Jersey Preference
Shares issued by the Jersey Subsidiary. The Jersey Subsidiary will use all the
proceeds from the sale of the Jersey Preference Shares to pay the subscription
price to ANZ for the ANZ Preference Shares represented by the ADRs to be issued
to the Jersey Subsidiary.
ANZ will use all the proceeds it receives from the Jersey Subsidiary to
make a capital contribution to the Distribution Trust. The Distribution Trust
will use ANZ's capital contribution to make one or more ANZ Loans to one or
more ANZ Borrowers. See the sections in this prospectus called "Use of Proceeds
and Collateral Arrangements" and "Structural Diagram."
WHAT SECURITY ARRANGEMENTS APPLY TO THE TRUST'S ASSETS?
Under the ADRs Security and Pledge Agreement among the Trust, the U.K.
Company, the Jersey Subsidiary and the Collateral Agent, the Jersey Subsidiary
will pledge the ADRs to the holder of the Jersey Preference Shares (initially
the U.K. Company) to secure the Jersey Subsidiary's redemption obligations
under the Jersey Preference Shares and to the Trust to secure the Jersey
Subsidiary's obligation to deliver the ADRs under the ADRs Purchase Contract.
The U.K. Company will also assign its security interest in the ADRs to the
Trust to secure the U.K. Company's redemption obligations under the Debt
Securities.
Under the Jersey Preference Shares Security and Pledge Agreement among
the Trust, the U.K. Company and the Collateral Agent, the U.K. Company, as
holder of the Jersey Preference Shares, will pledge the Jersey Preference
Shares to the Trust to secure the U.K. Company's redemption obligations under
the Debt Securities.
4
<PAGE>
HOW WILL THE TRUST PAY FOR DIVIDEND DISTRIBUTIONS ON THE TRUEPRS?
The Trust will pay dividend distributions on the TrUEPrS from the interest
payments it receives on the Debt Securities. The U.K. Company will pay interest
on the Debt Securities if it receives sufficient funds from the Distribution
Trust. The U.K. Company's right to receive payments from the Distribution Trust
will not represent an absolute ownership interest in the Distribution Trust or
its income. The U.K. Company only has a right to receive payments if the
Distribution Trust actually distributes a payment to the U.K. Company. If the
Distribution Trust is not prohibited from making any payments as described in
the section in this prospectus called "Investment Objectives and Policies--
Intervening Vehicles--Distribution Trust," the Distribution Trust will pay the
U.K. Company the interest payments it receives on each ANZ Loan. If the
Distribution Trust does not make any such payment for any reason, the U.K
Company will have no right to receive such payments and will have insufficient
funds to pay interest on the Debt Securities and an Exchange Event will occur.
WHAT ARE THE EXCHANGE EVENTS?
The first of the following dates or events to occur will constitute an
"Exchange Event."
(i) January 15, 2048 or the date of any earlier redemption or Buy-Back
of the ANZ Preference Shares;
(ii) any date ANZ selects in its absolute discretion;
(iii) the Trust fails to receive in full the interest due on the Debt
Securities on any Dividend Payment Date within three Business Days after
such Dividend Payment Date (without any deductions or withholdings for
taxes, duties or other charges);
(iv) ANZ's Tier 1 Capital Ratio is below 4% or ANZ's Total Capital
Adequacy Ratio is below 8% (or, in either case, any lower percentage
prescribed for ANZ by the Australian Prudential Regulatory Authority at the
time) and ANZ fails to increase such ratio to at least 4% or 8% (or such
lower percentage), as the case may be, within 90 days;
(v) subject to certain exceptions, there is any change in:
(a) the legal ownership of the securities issued by
(b) the charter or other governing documents of, or
(c) the business purpose of
the U.K. Company, the Jersey Holding Company, the Jersey Charitable
Trust or the Jersey Subsidiary;
(vi) there is any change in the business purpose of the Distribution
Trust or ANZ ceases to own directly or indirectly all the common securities
of the Distribution Trust;
(vii) any ANZ Borrower ceases to be ANZ or one of its wholly owned
subsidiaries;
(viii) certain events of bankruptcy occur with respect to ANZ, the
U.K. Company, the Jersey Holding Company, the Jersey Charitable Trust, the
Jersey Subsidiary, the Distribution Trust or any ANZ Borrower;
(ix) the Trust dissolves; and
(x) 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 (and any proceeds from the redemption of
such securities) and such failure is not remedied on or before 10 Business
Days after the Collateral Agent gives written notice of such failure to the
U.K. Company or the Jersey Subsidiary.
For a more detailed description of each of the Exchange Events and the
corresponding Exchange Date, see the section in this prospectus called
"Investment Objective and Policies--Exchange Event."
WILL YOU CONTINUE TO RECEIVE DIVIDEND DISTRIBUTIONS ON THE TRUEPRS ON AND AFTER
THE EXCHANGE DATE?
No. The Trust will not pay you dividend distributions on the TrUEPrS on
and after the Exchange Date.
5
<PAGE>
. If the Exchange Event is an event other than a redemption or Buy-Back of the
ANZ Preference Shares for cash, the Trust will not pay you dividend
distributions on the TrUEPrS on the Exchange Date (even if the Exchange Date
is a Dividend Payment Date). Instead, dividends on the ANZ Preference Shares
will begin to accrue from and including the Dividend Payment Date
immediately preceding the Exchange Date.
. If the Exchange Event is the redemption or Buy-Back of the ANZ Preference
Shares for cash, on the Exchange Date, the Trust will pay you accrued
dividend distributions for the period from and including the Dividend
Payment Date immediately preceding the Exchange Date to but excluding the
Exchange Date.
WHAT ABOUT U.S. TAXES?
The Trust will be classified as a grantor trust for United States Federal
income tax purposes. The Debt Securities held by the Trust will be treated as
equity in ANZ. Accordingly, you will be treated for United States Federal
income tax purposes as owning equity of ANZ and will be required to include in
income, as dividends, your 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 ANZ.
Generally, your income will not include any ADRs you receive upon the
occurrence of an Exchange Event. However, your income will include any cash you
may receive if the Exchange Event is the redemption or Buy-Back of the ANZ
Preference Shares for cash. In that case, you would be required to recognize
gain or loss for the TrUEPrS. Please review the section in this prospectus
called "Taxation--Certain United States Federal Income Tax Considerations."
WHAT ABOUT AUSTRALIAN TAXES?
The Trust will not be treated as a resident of Australia for Australian
income tax purposes. Because it will not receive Australian source income, the
Trust will not be subject to Australian tax on income earned. If you are a non-
Australian resident holder of TrUEPrS, you will not be subject to Australian
tax whether by withholding or otherwise for the Trust's quarterly dividend
distributions.
There should be no Australian tax consequences to the Trust of the
distribution of the ADRs to you, as a holder of TrUEPrS, when an Exchange Event
occurs. The sale of TrUEPrS or the ANZ Preference Shares represented by the
ADRs may generate assessable income to you if you are a U.S. holder. The sale
of TrUEPrS or ADRs 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 interests in shares
representing 10% or more in value of the issued capital of an Australian listed
company, such as ANZ.
Subject to certain conditions, the terms of the ANZ Preference Shares
provide for holders to be grossed-up for Australian withholding tax on payments
paid on the ANZ Preference Shares being dividends or amounts deemed to be
dividends for Australian tax purposes. Please review the section in this
prospectus called "Taxation--Certain Australian Tax Considerations."
DO YOU HAVE VOTING RIGHTS?
You are entitled to one vote for each TrUEPrS you own. Except as
described in the section in this prospectus called "Description of TrUEPrS--
Voting Rights," as a holder of TrUEPrS, you will not be entitled to any voting
rights for the ANZ Preference Shares. However, while you are a TrUEPrS holder,
the Jersey Subsidiary, as holder of the ADRs, will, or will cause the
Collateral Agent to, direct the ADR depositary to vote ANZ Preference Shares
represented by the ADRs as directed by the holders of the TrUEPrS. You should
review the section in this prospectus called "Description of TrUEPrS--Voting
Rights."
WILL THE TRUEPRS BE LISTED ON A STOCK EXCHANGE?
The TrUEPrS have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance. The Trust expects that
trading on the New York Stock Exchange will commence within 30 days after
delivery of the TrUEPrS. You should be aware that the listing of
6
<PAGE>
the TrUEPrS on the New York Stock Exchange will not necessarily ensure that a
liquid trading market will be available for the TrUEPrS. You should review the
section in this prospectus called "Risk Factors--Uncertain Trading Market."
WHAT ARE THE RISKS ASSOCIATED WITH YOUR INVESTMENT?
The material risks associated with the TrUEPrS are described in the "Risk
Factors" section beginning on page 10 of this prospectus.
HOW WILL THE TRUST BE MANAGED?
The Trust will be internally managed and will not have an investment
adviser, which means that there will be no outside manager or adviser to manage
the Trust's portfolio. In addition, the Trust's portfolio will not be actively
managed; the assets of the Trust will not be traded but will be held as
required by the agreement that governs the Trust. The administration of the
Trust will be overseen by the Trustees. The Bank of New York will act as trust
administrator, custodian for the Trust's assets and paying agent, transfer
agent and registrar for the TrUEPrS. Except as mentioned above and except for
The Bank of New York's role as collateral agent and securities intermediary
under the ADRs Security and Pledge Agreement and the Jersey Preference Shares
Security and Pledge Agreement, as paying agent and transfer agent for the Debt
Securities and the ANZ Preference Shares and as ADR depositary, The Bank of New
York has no affiliation with, and is not engaged in any transaction with, the
Trust. For their services, the Jersey Holding Company will pay the fees of the
administrator, the custodian and the paying agent. Please see the section in
this prospectus called "Management Arrangements" for a more detailed
discussion.
7
<PAGE>
FEE TABLE
<TABLE>
<S> <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%
==============
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
EXAMPLE ------ -------
<S> <C> <C>
An investor would pay the following expenses on a $1,000
investment, including the maximum sales load of $0 and assuming
(1) no annual expenses and (2) a 5% annual return throughout
the periods.................................................... $ 0 $ 0
</TABLE>
- -------
(a) There is no sales load. Because the proceeds of the sale of the TrUEPrS
will ultimately be invested in the ANZ Preference Shares, ANZ has agreed
to pay the underwriters' compensation. See the cover page of this
prospectus and "Underwriting."
(b) See "Management Arrangements." The Trust will be internally managed;
consequently, the Trust will not pay any separate investment advisory fee.
The Bank of New York will act as the Administrator of the Trust.
(c) The Trust will pay the organization costs in the amount of $32,000 and the
costs associated with the initial registration and the offering of the
TrUEPrS, estimated to be approximately $518,000. The Trust will pay these
costs out of the facility fee to be paid on the issue date of the TrUEPrS
to the Trust by the U.K. Company in connection with the investment by the
Trust in the Debt Securities. The Jersey Holding Company will pay the
ongoing administrative and other expenses of the Trust pursuant to the
Trust Expense Agreement between the Jersey Holding Company and The Bank of
New York. Subject to the satisfaction of certain conditions, expenses of
the Trust not paid by the Trust's arrangements with the Jersey Holding
Company under the Trust Expense Agreement will be paid by the ANZ
Affiliate pursuant to the Expense and Indemnity Agreement. See "Management
Arrangements--Estimated Expenses." Absent such arrangements, the Trust's
"Other Expenses" and "Total Annual Expenses" are estimated to initially be
$248,000 in the aggregate or 0.071% of the Trust's net assets.
This table is intended to assist you in understanding the costs and
expenses that a holder of TrUEPrS will bear directly or indirectly. The
example utilizes a 5% annual rate of return, which is required 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.
8
<PAGE>
[STRUCTURAL DIAGRAM APPEARS HERE]
[Diagram or Transaction Structure Illustrating transaction parties, intervening
vehicles and investment and payment directions]
9
<PAGE>
RISK FACTORS
Your investment in the TrUEPrS will involve certain risks. You should
carefully consider the following discussion of risks before deciding whether an
investment in the TrUEPrS is suitable for you.
NO ACTIVE TRUST PORTFOLIO MANAGEMENT
The Trust will not be managed like a typical closed-end investment
company. The Trust has a fundamental policy (a) to invest 100% of its portfolio
in the Debt Securities issued by the U.K. Company and any distributions
thereon, and not to dispose of the Debt Securities during the term of the
Trust, and (b) to enter into the ADRs Purchase Contract and not to dispose of
the ADRs Purchase Contract during the term of the Trust. The Debt Securities
will be redeemed on the Exchange Date.
NON-DIVERSIFIED PORTFOLIO
Before the Exchange Date, the Trust's assets will consist of (a) the Debt
Securities and distributions thereon and (b) the ADRs Purchase Contract. As a
result, investments in the Trust may be subject to greater risk than would be
the case for a company with a more diversified portfolio of investments.
ABSENCE OF TRADING HISTORY
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 before an Exchange Event. This is due to factors such as
complex and interrelated political, economic, financial and other factors that
can affect the capital markets generally, the stock exchanges or quotation
systems on which ANZ's shares are traded and the market segment of which ANZ is
a part and fluctuations in interest rates and rates of exchange between the
Australian dollar and the U.S. dollar. These are factors that are difficult to
predict and beyond the Trust's control. Please review the accompanying
prospectus of ANZ.
POSSIBILITY OF THE TRUEPRS TRADING AT A DISCOUNT FROM NET ASSET VALUE
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 price that is lower than their net asset value. This 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 greater for investors who want to sell their investments
in a relatively short period of time after completion of the Trust's initial
public offering. 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 determined over time. The Trust cannot
redeem the TrUEPrS.
UNCERTAIN TRADING MARKET
The TrUEPrS are a new issue of securities and, accordingly, have no
established trading market. You cannot assume that a trading market will
develop. If such a trading market does develop, there can be no assurance that
there will be liquidity in the trading market. If the trading market for the
TrUEPrS is limited, there may be a limited number of buyers when you decide to
sell your TrUEPrS if you do not want to hold your investment until an Exchange
Event occurs. This may affect the price you receive. Although the underwriters
have no obligation to make a market in the TrUEPrS, they have advised the Trust
that they intend to make a market in the TrUEPrS. The underwriters may cease
these market making activities at any time.
The TrUEPrS have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance. The Trust expects that
trading on the New York Stock Exchange will commence within 30 days after
delivery of the TrUEPrS. 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. The price and liquidity of the TrUEPrS may
also be adversely affected.
LIMITED TERM OF THE TRUST
When an Exchange Event occurs, the term of the Trust will expire as soon
as possible after the distribution to you of ADRs or cash.
10
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LIMITED STOCKHOLDER RIGHTS
Except as described in the section in this prospectus called "Description
of TrUEPrS--Voting Rights," you, as a holder of the TrUEPrS, will not have any
rights with respect to the ADRs or the ANZ Preference Shares (including rights
to receive any dividends or other distributions on them) until the Trust
delivers the ADRs to you upon the occurrence of an Exchange Event (unless the
Exchange Event is the redemption or Buy-Back of the ANZ 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.
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, the Trust cannot assure you that its service
providers have anticipated every step necessary to avoid any adverse effect on
the Trust caused by the Year 2000 Problem.
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THE TRUST
ANZ Exchangeable Preferred Trust II (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 October 13, 1998
pursuant to a Certificate of Trust as filed with the Secretary of State of the
State of Delaware on October 13, 1998 and as restated and filed on November 5,
1998 and a Trust Agreement dated as of October 13, 1998, 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
ADRs or cash, as the case may be, upon the occurrence of an Exchange Event. The
Trust will be treated as a grantor trust for United States Federal income tax
purposes. The Trust's principal office is located at 850 Library Avenue, Suite
204, Newark, Delaware 19715, and its telephone number is (302) 738-6680.
USE OF PROCEEDS AND COLLATERAL ARRANGEMENTS
The proceeds of the offering of the TrUEPrS (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 $350,100,000 (or $402,500,000 if the Underwriters' (as defined
herein) 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 $350,100,000 aggregate principal
amount (or $402,500,000 aggregate principal amount if the Underwriters' over-
allotment option is exercised in full) of 8.08% Mandatorily Redeemable Debt
Securities due 2048 (the "Debt Securities") from Aldobrandini (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 8.08%, 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 January 15, 2048. 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 9 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 $25 per
share (the "Jersey Preference Shares"), issued by Aldobrandini (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 Australia and New Zealand Banking Group Limited ("ANZ") in
consideration for the issuance by the ADR (as defined herein) depositary to the
Jersey Subsidiary of American Depositary Receipts ("ADRs"), each representing
four fully paid non-cumulative 1998 Preference Shares (Series 2), liquidation
preference $6.25 per share (the "ANZ Preference Shares"), of ANZ, at a price
per ADR equal to $25 (i.e., the aggregate liquidation preference of the four
ANZ Preference Shares represented thereby). No dividends will accrue or be paid
on the ANZ Preference Shares represented by the ADRs unless an Exchange Event
(other than a redemption or mandatory repurchase (such mandatory repurchase
being a "Buy-Back") of the ANZ Preference Shares) occurs. On and after such an
Exchange Date, non-cumulative dividends will be payable, if and when declared
by the board of directors of ANZ out of profits legally available therefor, in
U.S. dollars in an amount equal to $.505 per ANZ Preference Share per annum,
payable quarterly in arrears in an amount equal to $.12625 per ANZ Preference
Share on each Dividend Payment Date (as defined herein) to holders of record as
of the immediately preceding Record Date (as defined herein).
ANZ will use the proceeds from the issue of the ANZ Preference Shares to
make a capital contribution to a business trust established under the laws of
the State of Delaware (the "Distribution Trust"). The
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Distribution Trust will use ANZ's capital contribution to make one or more
loans (each, an "ANZ Loan") to ANZ and/or one or more wholly-owned subsidiaries
or branches of ANZ (each, an "ANZ Borrower").
The ADRs 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. Pursuant to
the terms of the ADRs Security and Pledge Agreement, the Jersey Subsidiary will
irrevocably and unconditionally deposit the ADRs with the Collateral Agent and
(i) the Jersey Subsidiary will irrevocably and unconditionally pledge its
interest in the ADRs to the holder of the Jersey Preference Shares (initially
the U.K. Company) to secure its redemption obligations under the Jersey
Preference Shares and to the Trust to secure its obligation to deliver ADRs
under the ADRs Purchase Contract (as defined herein), (ii) 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 (iii) 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 or Buy-Back of the ANZ 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, 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 ANZ Preference Shares
represented by the ADRs 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 ADR and the four ANZ Preference Shares represented thereby.
The Trust will also enter into the ADRs Purchase Contract between the
Trust and the Jersey Subsidiary (the "ADRs Purchase Contract") pursuant to
which the Jersey Subsidiary will deliver the ADRs to the Trust for distribution
to the holders of TrUEPrS after the occurrence of an Exchange Event (other than
a redemption or Buy-Back of the ANZ 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
ADRs Purchase Contract and (if applicable) the ADRs to be purchased pursuant to
the terms of the ADRs Purchase Contract will be held by the Custodian for the
Trust.
INVESTMENT OBJECTIVE AND POLICIES
GENERAL
The Trust will invest the proceeds of the Offering 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, 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 a redemption or Buy-Back of
the ANZ Preference Shares for cash, ADRs evidencing, for each TrUEPrS, four ANZ
Preference Shares, and (ii) if the Exchange Event is a redemption or Buy-Back
of the ANZ Preference Shares for cash, $25 per TrUEPrS plus an amount equal to
the accrued but unpaid interest on each $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 ANZ Preference Shares will accrue non-cumulative
dividends at the rate of $.505 per share per annum, payable quarterly in
arrears in an amount equal to $.12625 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
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The Wall Street Journal or another daily newspaper of national circulation
stating whether ADRs 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 other than in connection with a mandatory redemption thereof
as a result of an Exchange Event and (b) to enter into the ADRs Purchase
Contract and not to dispose of the ADRs 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)
$350,100,000 aggregate principal amount of Debt Securities ($402,500,000
aggregate principal amount of Debt Securities if the Underwriters' over-
allotment option is exercised in full), and any distributions thereon, and (b)
the ADRs Purchase Contract.
As described above under "--General," upon the occurrence of an Exchange
Event, each TrUEPrS will be exchanged for either (i) one ADR or (ii) $25 in
cash plus the accrued dividend distribution thereon for the current quarterly
dividend period. The procedure by which the Trust will obtain the ADRs or cash
to be distributed to the holders of TrUEPrS will vary depending upon the nature
of the Exchange Event and, in the case of an Exchange Event resulting from a
redemption or Buy-Back of the ANZ Preference Shares for cash, the value, for
purposes of calculating United Kingdom tax on capital gains, of one U.S. dollar
(or the equivalent thereof in any successor legal currency of the United
States) in terms of British pounds (or the equivalent thereof in any successor
legal currency of the United Kingdom) (the "Dollar Value") on the Exchange Date
(expressed as Pounds/$).
In the case of any Exchange Event other than a redemption or Buy-Back of
the ANZ Preference Shares for cash, the Trust will obtain the ADRs 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 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 ADRs Purchase Contract, the cash
redemption proceeds of the Jersey Preference Shares will be used by the Trust
to purchase the ADRs from the Jersey Subsidiary.
In the case of an Exchange Event resulting from a redemption or Buy-Back
of the ANZ 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 ANZ 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 or Buy-Back of the ANZ
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 or Buy-Back 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 every date on which the ANZ Preference Shares are originally
issued (i.e., if the British pound has remained the same or
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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 or Buy-Back of the ANZ 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 or
Buy-Back 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 $2.02 per TrUEPrS per
annum, payable quarterly in arrears in an amount equal to $.505 per TrUEPrS on
January 15, April 15, July 15 and October 15 of each year (each, a "Dividend
Payment Date"), to holders of record as of the immediately preceding January 1,
April 1, July 1 and October 1 (each, a "Record Date"), respectively. The first
dividend distribution in respect of the period from and including November 19,
1998 (the "Issue Date") to but excluding January 15, 1999 will equal $.3142 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, then the dividend
or interest payable on such date need not be made on such Dividend Payment Date
or Interest Payment Date, as applicable, but instead may be made on the next
succeeding Business Day with the same force and effect as if made on such
Dividend Payment Date or Interest Payment Date, as the case may be. As used
herein, "Business Day" means each Monday, Tuesday, Wednesday, Thursday or
Friday which is not a day on which banking institutions in Sydney, Australia,
New York, New York or any city or cities in which the principal place of
business of any ANZ Borrower outside of Australia is located from time to time
(initially Wellington, New Zealand) are authorized or obliged by law or
executive order to close.
ANZ
THIS PROSPECTUS RELATES ONLY TO THE TrUEPrS OFFERED HEREBY AND DOES NOT
RELATE TO ANZ, THE ADRs OR THE ANZ PREFERENCE SHARES. ANZ HAS FILED A
REGISTRATION STATEMENT ON FORM F-3 WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE "COMMISSION") WITH RESPECT TO THE ANZ PREFERENCE SHARES AND A REGISTRATION
STATEMENT ON FORM F-6 WITH RESPECT TO THE ADRs THAT MAY BE RECEIVED BY A HOLDER
OF TrUEPrS UPON THE OCCURRENCE OF AN EXCHANGE EVENT. THE PROSPECTUS OF ANZ
CONSTITUTING A PART OF SUCH REGISTRATION STATEMENT ON FORM F-3 INCLUDES
INFORMATION RELATING TO ANZ, THE ADRs AND THE ANZ PREFERENCE SHARES. THE
PROSPECTUS OF ANZ IS BEING ATTACHED HERETO AND DELIVERED TO PROSPECTIVE
PURCHASERS OF TrUEPrS TOGETHER WITH THIS PROSPECTUS FOR CONVENIENCE OF
REFERENCE ONLY. THE PROSPECTUS OF ANZ 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) January 15, 2048 or the date of any earlier redemption or Buy-
Back of the ANZ Preference Shares for cash, in which case the Exchange Date
will be the earlier of such dates;
(ii) any date selected by ANZ 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
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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 Tier 1 Capital Ratio or the Total Capital
Adequacy Ratio of ANZ (either as reported quarterly by ANZ to the
Australian Prudential Regulation Authority or any successor or replacement
body ("APRA") or as determined at any time by APRA in its absolute
discretion) is below 4% or 8%, respectively or, in each case, such lesser
percentage as may be prescribed by APRA for ANZ at the time (the applicable
percentage in each such case being the "Required Percentage"), and is not
increased by ANZ to at least the Required Percentage, within 90 days after
the date on which ANZ makes such quarterly report or receives notice from
APRA of such determination by APRA, as applicable, 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 the change
occurs;
(vi) any change in the business purpose (as specified in the
constituent documents) of the Distribution Trust, in which case the
Exchange Date will be the date on which the change occurs;
(vii) the common securities of the Distribution Trust cease to be
wholly-owned, directly or indirectly, by ANZ or a directly or indirectly
wholly-owned subsidiary or branch of ANZ, in which case the Exchange Date
will be the date on which the common securities of the Distribution Trust
cease to be wholly-owned, directly or indirectly, by ANZ or a direct or
indirect wholly-owned subsidiary or branch of ANZ;
(viii) any ANZ Borrower ceases to be ANZ or a direct or indirect
wholly-owned subsidiary or branch of ANZ, in which case the Exchange Date
will be the date on which such ANZ Borrower ceases to be ANZ or a direct or
indirect wholly-owned subsidiary or branch of ANZ;
(ix) (A) a proceeding is commenced by ANZ, the U.K. Company, the
Jersey Holding Company, the Jersey Charitable Trust, the Jersey
Subsidiary, the Distribution Trust or any ANZ Borrower (each, a
"Relevant Entity") or a person that controls the Relevant Entity for an
order that the Relevant Entity be wound up or for the appointment of a
provisional liquidator, liquidator, administrator, controller or
similar official in respect of the 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 whether 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),
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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
(x) 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, and 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, any ANZ Borrower may, with the consent of
the Distribution Trust, assign its ANZ Loan or the Distribution Trust may
replace any ANZ Loan with another loan, in each case, to ANZ or to one or more
directly or indirectly wholly-owned subsidiaries or branches of ANZ with
prospective payment terms identical to, and other terms substantially the same
as, those of such ANZ Loan, in which case ANZ or such other subsidiary or
branch and loan will be deemed to be such ANZ Borrower and such ANZ Loan,
respectively, and any such action will not constitute an Exchange Event.
Total Capital Adequacy Ratio means the total capital adequacy ratio as
prescribed by APRA 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) prescribed by
APRA 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 APRA.
The redemption or Buy-Back component of the Exchange Event set forth in
clause (i) above is a result of the terms of issue of the ANZ Preference
Shares, which provide that, with the prior consent of APRA (if required) or in
the case of a Buy-Back, if no consent is required, with the confirmation that
APRA has no objection, and in accordance with the terms of issue of the ANZ
Preference Shares, ANZ may, in its absolute discretion, redeem or Buy-Back the
ANZ Preference Shares for cash (a) prior to the fifth anniversary of the Issue
Date, in whole, but only upon the occurrence of certain tax, regulatory or
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 whole or in part.
If the Exchange Event is anything other than a redemption or Buy-Back of
the ANZ Preference Shares for cash, then the Trust will distribute to holders
of the TrUEPrS one ADR per TrUEPrS. If a redemption or Buy-Back of the ANZ
Preference Shares for cash occurs, then the Trust will distribute to holders of
the TrUEPrS cash in the amount of $25 per TrUEPrS, plus the accrued dividends
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 or Buy-Back of the ANZ Preference
Shares for cash, distribute the proceeds to the holders of TrUEPrS at the rate
of $25 per TrUEPrS then outstanding together with an amount equal to the
accrued but unpaid interest on each $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 ADRs to the holders of TrUEPrS at the rate of one ADR per TrUEPrS then
outstanding. The distribution described in the preceding sentence will be made
to holders of record as of the opening 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 or
Buy-Back of the ANZ 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 ANZ 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
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Exchange Date will be payable as dividends on the ANZ Preference Shares and in
accordance with the terms of the ANZ 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.
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 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 (other than a redemption or Buy-Back of
the ANZ Preference Shares for cash if the Dollar Value on the Exchange Date is
equal to or less than the Dollar Value on every date on which the ANZ
Preference Shares are originally issued) occurs, 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 and investing the
proceeds thereof in the ADRs. 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.
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On the Issue Date, ANZ will use the proceeds from the issuance of the ANZ
Preference Shares to make a capital contribution of $350,100,000 (or
$402,500,000 if the Underwriters exercise their over-allotment option in full)
to the Distribution Trust and the Distribution Trust will use the capital
contribution to make one or more ANZ Loans to one or more ANZ Borrowers. Each
ANZ Loan will mature five years after the maturity date of the Debt Securities
on January 15, 2053. The ANZ Loans will be the only asset, and interest thereon
will be the only source of revenue, of the Distribution Trust. Interest on the
ANZ Loans 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 8.33% per annum. The
interest paid on the ANZ Loans will be used by the Distribution Trust to pay
the Income Entitlements to the U.K. Company. The interest rate represents the
sum of 8.08% (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 ANZMB Limited,
an affiliate of ANZ (the "ANZ Affiliate").
On and after an Exchange Date, the U.K. Company will cease to be an
income beneficiary of the Distribution Trust and ANZ Funds Pty Ltd, an
affiliate of ANZ, will receive all the Income Entitlements of the Distribution
Trust thereafter; provided, however, if the Exchange Event is the cash
redemption or Buy-Back of the ANZ Preference Shares, 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 for any reason,
an Exchange Event will occur because the U.K. Company will have insufficient
funds to pay interest on the Debt Securities.
Under the terms of the Distribution Trust, other than in connection with
a redemption or Buy-Back of ANZ 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 on or 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 ANZ on any preference shares
or ordinary shares of ANZ, would exceed ANZ's earnings during the
prior fiscal year; or
(iii) the payment of such Income Entitlement would be prohibited or
limited by applicable law, regulation or order or by any
instrument or agreement to which ANZ is subject (collectively, the
"Payment Prohibitions").
In the event a Payment Prohibition exists or will exist on any Interest Payment
Date, ANZ will notify the Administrator no later than the third Business Day
prior to such date.
TRUST DISSOLUTION
The Trust will dissolve as soon as possible after the exchange of the
TrUEPrS for ADRs or cash, as the case may be, upon the occurrence of an
Exchange Event.
INVESTMENT RESTRICTIONS
The Trust has adopted a fundamental policy that the Trust may not
purchase any securities or instruments other than (a) the Debt Securities and
any distributions thereon, (b) the Jersey Preference Shares, if applicable, and
(c) if applicable, the ADRs to be purchased pursuant to the ADRs 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 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
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(b) to enter into the ADRs Purchase Contract and not to dispose of the ADRs
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 ANZ currently operates. However, to the extent that in the
future ANZ diversifies its operations into one or more other industries, the
Trust's investments will be less concentrated in the financial services
industry.
DESCRIPTION OF THE TRUEPRS
Each TrUEPrS represents a proportionate share of beneficial interest in
the assets of the Trust. A total of 14,000,000 TrUEPrS will be issued in the
Offering, assuming no exercise of the Underwriters' over-allotment option, and
excluding 4,000 TrUEPrS issued to ML IBK Positions, Inc. 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 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 ADR and four ANZ Preference Shares. The
holders of the ANZ Preference Shares will be entitled to vote together with the
holders of ordinary shares of ANZ, on the basis of one vote per ANZ 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 ANZ are entitled to vote. The
matters referred to in clause (a) of the preceding sentence upon which the
holders of ANZ Preference Shares will have a right to vote, together with the
holders of ordinary shares of ANZ, are: any proposal to reduce the share
capital of ANZ; any resolution to approve the terms of a share buy-back
arrangement; any proposal that affects the rights attached to the ANZ
Preference Shares; any proposal to wind up ANZ; any proposal for the disposal
of the whole of the property, business and undertaking of ANZ; and any matter
during the winding up of ANZ. In addition, the holders of the ANZ 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 ANZ
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 ANZ
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 ADRs Purchase Contract and the Jersey Preference Shares 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
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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 ADRs
deliverable pursuant to the ADRs 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 and the
Jersey Preference Shares or the ADRs Purchase Contract, provided that, such
action will 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 ANZ Preference Shares have been conferred a
right to vote following a missed dividend, the ANZ Preference Shares will be
treated as voting shares for relevant purposes. Therefore, a person with an
entitlement to ANZ Preference Shares, including holders of TrUEPrS, should
consider this entitlement with any entitlement to other voting shares in ANZ 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 ANZ 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, such as ANZ.
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.
The Depository has further advised the Trust that management of the
Depository is aware that some computer applications, systems, and the like for
processing data ("Systems") that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter "Year 2000
problems." The Depository has informed its participants and other members of
the financial community (the "Industry") that it has developed and is
implementing a program so that its Systems, as the same relate to the timely
payment of distributions (including principal and income payments) to
securityholders, book-entry deliveries, and settlement of trades within the
Depository, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, the Depository's plan includes a testing phase, which is expected
to be completed within appropriate time frames.
However, the Depository's ability to perform properly its services is
also dependent upon other parties, including but not limited to issuers and
their agents, as well as the Depository's direct and indirect participants and
third party vendors from whom the Depository licenses software and hardware,
and third party vendors on whom the Depository relies for information or the
provision of services, including telecommunication and
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electrical utility service providers, among others. The Depository has informed
the Industry that it is contacting (and will continue to contact) third party
vendors from whom the Depository acquires services to: (i) impress upon them
the importance of such services being Year 2000 compliant; and (ii) determine
the extent of their efforts for Year 2000 remediation (and, as appropriate,
testing) of their services. In addition, the Depository is in the process of
developing such contingency plans as it deems appropriate.
According to the Depository, the foregoing information with respect to
the Depository has been provided to the Industry for informational purposes
only and is not intended to serve as a representation, warranty, or contract
modification of any kind.
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 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.
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TRUSTEES
The Trustees of the Trust consist of three individuals, none of whom is
an "interested person" of the Trust as defined in the Investment Company Act.
The Trustees of the Trust are responsible for the overall supervision of the
operations of the Trust and perform the various duties imposed on the trustees
of management investment companies by the Investment Company Act.
The Trustees of the Trust are:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS TITLE DURING PAST FIVE YEARS
- --------------------- ---------------- ----------------------
<S> <C> <C>
Donald J. Puglisi, 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
Department of Economics University of Delaware
University of Delaware
Newark, DE 19716
James B. O'Neill, 59.................... Trustee Professor of Economics
Center for Economic University of Delaware
Education & Entrepreneurship
University of Delaware
Newark, DE 19716
</TABLE>
COMPENSATION OF TRUSTEES
The annual fees and anticipated out-of-pocket expenses of each
unaffiliated Trustee and any additional fees of the Trust's Managing Trustee
will be paid by the Jersey Holding Company pursuant to an expense agreement
(the "Trust Expense Agreement") between it and The Bank of New York, as the
Administrator, Custodian and Paying Agent of the Trust. 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) $350,100,000 aggregate principal amount of Debt Securities ($402,500,000
aggregate principal amount of Debt Securities if the Underwriters' over-
allotment option is exercised in full), and any distributions thereon, and (b)
the ADRs 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 ADRs 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 Offering 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
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operating expenses of the Trust not covered by the Trust's arrangements with
the Jersey Holding Company will be paid by the ANZ Affiliate pursuant to an
expense and indemnity agreement (the "Expense and Indemnity Agreement") among
it, the U.K. Company, the Trust, 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 ANZ 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 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 ANZ 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.
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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 Offering in the amount of approximately $518,000 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 ANZ Affiliate pursuant to the Expense and Indemnity
Agreement.
DIVIDENDS AND DISTRIBUTIONS
The Trust intends to distribute to holders dividend distributions in an
amount equal to $2.02 per TrUEPrS per annum, payable quarterly in arrears in an
amount equal to $.505 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
January 15, 1999 will equal $.3142 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 and ANZ Funds Pty Ltd, an
affiliate of ANZ, will receive all the Income Entitlements of the Distribution
Trust thereafter; provided, however, if the Exchange Event is the cash
redemption or Buy-Back of the ANZ Preference Shares, 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) each ANZ Borrower will make an interest payment on the applicable
ANZ Loan to the Distribution Trust; (ii) if no Payment Prohibition exists,
the Distribution Trust will distribute such interest payment as an Income
Entitlement to the U.K. Company; and (iii) the U.K. Company will 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 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 the Trust Expense Agreement) the Trust, and
(d) an indemnity fee payable to the ANZ Affiliate.
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On any 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 or
Buy-Back of the ANZ 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 ANZ 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 periods
ending on or after the Exchange Date will be payable only as dividends on the
ANZ Preference Shares and only in accordance with the terms of the ANZ
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 ADRs 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 UNITED STATES 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 ANZ. The summary addresses
only the tax consequences to persons that acquire TrUEPrS in connection with
the Offering 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.
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
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<PAGE>
corporation, and the Debt Securities held by the Trust will be treated as
equity in ANZ. Accordingly, for United States Federal income tax purposes, each
U.S. Holder generally will be treated as owning equity of ANZ 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 ANZ. For foreign tax credit limitation
purposes the payments will be income from sources without the United States,
but generally will be treated separately, together with the other items of
"passive income" (or in the case of certain holders, "financial services
income").
Sale of the 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 ADRs 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 ADRs generally will not be a
taxable event for United States Federal income tax purposes. A U.S. Holder's
basis in the ADRs 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 ADRs 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.
ADRs Received in an Exchange Event
Distributions on the ADRs. 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 ANZ), if any, before reduction for
Australian withholding taxes by ANZ, 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 the other items of "passive income" (or in the case of certain
holders "financial services income").
Sale or Other Disposition of ADRs. A U.S. Holder will recognize gain or
loss for U.S. Federal income tax purposes upon the sale or other disposition of
ADRs 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 ADRs. Generally, such gain will be capital gain or loss, will
be long-term capital gain or loss if the U.S. Holder's holding period for the
ADRs exceeds one year and any such gain will be income from sources within the
United States for foreign tax credit limitation purposes.
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<PAGE>
PFIC Considerations
ANZ 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 ANZ for United States Federal income tax purposes, if ANZ were a
PFIC a U.S. Holder of TrUEPrS as well as a holder of ADRs would be subject to
certain adverse tax consequences.
Non-U.S. Holders
Distributions on the TrUEPrS and ADRs. 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 ADRs), 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 ADRs. 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 ADRs 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 ADRs) 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 ADRs, by a U.S. paying agent or other
U.S. intermediary and "backup withholding" at a rate of 31% will apply to such
payments 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 backup withholding provided that certain certification requirements
are satisfied.
Payment of the proceeds from the disposition of TrUEPrS or ADRs 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 ADRs 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 ADRs through an office
outside the United States of a broker (i) that is a United States person, (ii)
that derives 50% or more of its gross income for a specified three year period
from the conduct of a trade or business in the United States, (iii) that is a
"controlled foreign corporation" as to the United States, or (iv) with respect
to payments made after December 31, 1999, that is a foreign partnership if, at
any time during its tax year, one or more of its partners are U.S. persons (as
defined in U.S. Treasury Regulations) who in the
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<PAGE>
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 ANZ Preference Shares represented by the ADRs.
The discussion is intended only as a descriptive summary and does not purport
to be a 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 Australian tax laws to their
particular situations as well as any consequences of the purchase, ownership
and disposition of TrUEPrS or the ANZ Preference Shares represented by the ADRs
arising under the laws of any other taxing jurisdiction.
The Trust would 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 the occurrence of certain Exchange Events, the Trust will acquire
ADRs and then immediately deliver the ADRs to the holders of TrUEPrS. There
should be no Australian tax consequences to the Trust of the delivery of the
ADRs 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 receipts.
The sale of TrUEPrS or the ANZ Preference Shares represented by the ADRs
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 ADRs by a U.S. holder will not be subject to
Australian capital gains tax unless:
. the ANZ 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 ANZ; or
. the U.S. holder is a non-Australian resident but has at any time
used the TrUEPrS or ADRs in carrying on trade or business through a
permanent establishment in Australia.
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<PAGE>
and the consideration received for the TrUEPrS or the ADRs, (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 ADRs 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 a 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 ADRs on the Exchange Date, there may be
Australian tax consequences in relation to dividends paid by that Australian
listed corporation. Dividends paid by ANZ 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 dividend 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.
Subject to certain conditions, the terms of the ANZ Preference Shares
provide for holders to be grossed-up for Australian withholding tax on payments
on the ANZ 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 ADRs. Transfers of
ANZ 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 ADRs provided that the instruments are not executed and the purchaser
of the ADRs is not resident in Australia.
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<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, 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............................................... 2,030,000
Morgan Stanley & Co. Incorporated............................... 2,030,000
PaineWebber Incorporated........................................ 2,030,000
Prudential Securities Incorporated.............................. 2,030,000
Salomon Smith Barney Inc........................................ 2,030,000
ABN AMRO Incorporated........................................... 140,000
Robert W. Baird & Co. Incorporated.............................. 140,000
Bear, Stearns & Co. Inc. ....................................... 140,000
CIBC Oppenheimer Corp. ......................................... 140,000
Dain Rauscher Incorporated...................................... 140,000
Donaldson, Lufkin & Jenrette Securities Corporation............. 140,000
A.G. Edwards & Sons, Inc. ...................................... 140,000
EVEREN Securities, Inc. ........................................ 140,000
Legg Mason Wood Walker, Incorporated............................ 140,000
NationsBanc Montgomery Securities LLC........................... 140,000
Piper Jaffray Inc. ............................................. 140,000
Raymond James & Associates, Inc. ............................... 140,000
SG Cowen Securities Corporation................................. 140,000
Tucker Anthony Incorporated..................................... 140,000
Warburg Dillon Read LLC......................................... 140,000
Wheat First Securities, Inc. ................................... 140,000
Advest, Inc. ................................................... 70,000
J.C. Bradford & Co. ............................................ 70,000
Crowell, Weedon & Co. .......................................... 70,000
D.A. Davidson & Co. ............................................ 70,000
Fahnestock & Co. Inc. .......................................... 70,000
Fidelity Capital Markets A division of National Financial Serv-
ices Corp. .................................................... 70,000
Fifth Third/The Ohio Company.................................... 70,000
First Albany Corporation........................................ 70,000
Gibraltar Securities Co. ....................................... 70,000
Gruntal & Co., L.L.C. .......................................... 70,000
J.J.B. Hilliard, W.L. Lyons, Inc. .............................. 70,000
Wayne Hummer Investments LLC.................................... 70,000
Janney Montgomery Scott Inc. ................................... 70,000
McDonald & Company Securities, Inc. ............................ 70,000
McGinn, Smith & Co., Inc. ...................................... 70,000
Mesirow Financial, Inc. ........................................ 70,000
Parker/Hunter Incorporated...................................... 70,000
The Robinson-Humphrey Company, LLC.............................. 70,000
Roney Capital Markets A division of First Chicago Capital Mar-
kets, Inc. .................................................... 70,000
Scott & Stringfellow, Inc. ..................................... 70,000
Stephens Inc. .................................................. 70,000
Stone & Youngberg............................................... 70,000
Utendahl Capital Partners, LP................................... 70,000
----------
Total...................................................... 14,000,000
==========
</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 the Purchase Agreement if any of such TrUEPrS
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
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<PAGE>
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 $.50 per
TrUEPrS; provided that such concession for sales of more than 10,000 TrUEPrS to
any single purchaser will be $.30 per TrUEPrS. The Underwriters may allow, and
such dealers may reallow, a discount not in excess of $.40 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 November 19,
1998.
The Trust has granted the Underwriters an option to purchase up to an
additional 2,096,000 TrUEPrS at the initial public offering price. 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 14,000,000 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 ADRs representing the ANZ Preference Shares, the
Purchase Agreement provides that ANZ will pay, as compensation (the
"Underwriters' Compensation") to the Underwriters, an amount in immediately
available funds of $.7875 per TrUEPrS or $11,025,000 in the aggregate (or
$12,675,600 in the aggregate if the Underwriters' over-allotment option is
exercised in full) for the accounts of the several Underwriters; provided that
such compensation for sales of more than 10,000 TrUEPrS to any single purchaser
will be $.50 per TrUEPrS and to the extent such sales are made, the actual
amount of Underwriters' Compensation will be less than the aggregate amounts
specified above.
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. Trading of the TrUEPrS on the NYSE is expected to commence
within the 30-day period after the Issue Date. 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 connection with the listing,
the Underwriters will undertake that sales of TrUEPrS will meet the NYSE's
minimum distribution standards.
In view of the fact that the proceeds of the sale of the TrUEPrS will
ultimately be invested in ADRs representing the ANZ Preference Shares, the
Trust and ANZ 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
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<PAGE>
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 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 the 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).
This Prospectus does not constitute an offer or, or an invitation to
purchase or subscribe for, the TrUEPrS in Australia. The TrUEPrS may not be
offered, sold or delivered in or to any resident of the Australia or any of its
states or territories.
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
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<PAGE>
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 ANZ 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.
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.
34
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholder of ANZ Exchangeable Preferred Trust
II:
We have audited the accompanying statement of assets and liabilities of ANZ
Exchangeable Preferred Trust II as of November 6, 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 ANZ Exchangeable Preferred
Trust II as of November 6, 1998 in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
November 6, 1998
35
<PAGE>
ANZ EXCHANGEABLE PREFERRED TRUST II
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 6, 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 October 13, 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. Any expenses of
the Trust not covered by the Trust's arrangements with the Jersey Holding
Company under the Trust Expense Agreement will be paid by the ANZ Affiliate
pursuant to the Expense and Indemnity Agreement.
(2) Offering expenses will be payable upon completion of the Offering and 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 November 6, 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.
36
<PAGE>
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Through and including December 8, 1998 (the 25th day after the date of
this prospectus), all dealers effecting transactions in the TrUEPrS, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
ANZ EXCHANGEABLE PREFERRED TRUST II
14,000,000 TRUEPRSSM
(EXCHANGEABLE FOR AMERICAN DEPOSITARY RECEIPTS
REPRESENTING ANZ PREFERENCE SHARES OR CASH)
-----------------
PROSPECTUS
-----------------
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY
NOVEMBER 13, 1998
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