AGL Energy Limited (“AGL”)
Various subsidiaries and associated companies of AGL
Medium Term Note Programme dated 28 October 2014
Dated 3 November 2014
Nature of the Bonds
Direct, unconditional,unsubordinated and unsecured obligations of the Issuer and will rank at least equally with all other unsubordinated and unsecured obligations of the Issuer, except for liabilities mandatorily preferred by law.
5.00% per annum, payable semi-annually (in two coupons of 2.50%) in arrears on 5 May and 5 November in each year, including the Maturity Date.
Repayment at Par on the Maturity Date
On the Maturity Date, bondholders are scheduled to receive the Face Value and the final Coupon Payment for the last Interest Period.
The value of an investment in AGL Bonds may fluctuate due to various factors, including investor perceptions, worldwide economic conditions, interest rates, debt market conditions and factors that may affect AGL’s financial performance. The following risks may also affect an investment in AGL Bonds:
- Credit risks - associated with the Issuer and any Guarantors;
- Lack of liquidity - in the secondary market for AGL Bonds;
- Interest rate risks – bondholders may suffer unforeseen losses due to fluctuations in interest rates;
- Regulatory risks - The energy industry in Australia is highly regulated, which can limit AGL’s flexibility and may adversely affect its financial performance;
- Litigation risks - Risks relating to litigation and regulatory actions;
- Operational risks - Network failures, equipment breakdowns, planned or unplanned outages, and natural disasters may cause losses to or harm AGL’s business and reputation;
Default risk - if an event of default occurs under the Bonds, or AGL fails to perform any obligation in relation to the Bonds, such event or failure may impact on the value of an investment in the Bonds, the transferability of the Bonds and the ability of a holder to recover amounts due under the Bonds. In assessing potential default risk, a bondholder should consider the periodic and continuous disclosures made by the Issuer.
Key benefits include:
- approximately 5.5 years remaining until Maturity Date;
- interest paid semi-annually in arrears;
- interest paid as 100% cash;
- interest is not deferrable nor are interest payments discretionary;
rank equally with all other senior and unsecured creditors of the Issuer.
The Issuer and any Guarantor will not create any Security on or over its respective assets, other than Permitted Securities.
Gearing Ratio (Consolidated Net Indebtedness: (Consolidated Net Indebtedness + Consolidated Net Worth)) must not be greater than 50%
Interest Cover Ratio (Funds from Operations: Interest Expense) must be at least 2.5 times
Early Redemption by Issuer
- Yes, for tax reasons
- Yes, at any time, and if earlier than 6 months prior to the Maturity Date, the Issuer will pay an Early Redemption Premium.
Early Redemption by Bondholders
Yes, Bondholders can request early redemption if a change of control occurs and the credit rating falls below a certain level.
Events of Default
Events of Default include:
- Failure to Pay: Applicable with a 5 day cure period;
- Breach of Financial Covenants: Applicable
- Breach of other obligations: Applicable, with a 20 day cure period;
- Insolvency: Applicable;
- Cross default: Applicable with Threshold Amount of A$ 50,000,000;
- Enforcement: Applicable with Threshold Amount of A$50,000,000;
- Cessation of Business: Applicable;
- Subsidiary Guarantee: The Bonds or the Guarantee cease to be binding on the Issuer or Guarantors.