Downer EDI Limited and certain subsidiaries
Downer Debt Issuance Programme dated 18 February 2015
Dated 9 March 2015
Nature of the Bonds
The Bonds are direct, unconditional, unsubordinated and unsecured obligations of the Issuer and rank equally amongst themselves and at least equally with all other unsubordinated and unsecured obligations of the Issuer, except for liabilities mandatorily preferred by law.
Interest Rate and Interest Payment Dates
4.50% per annum, payable semi-annually (in two coupons of 2.25%) in arrears, on 11 March and 11 September in each year, including the Maturity Date, subject to a higher interest rate of 5.50% per annum, payable semi-annually, should the credit rating of Downer EDI Limited fall below a certain level.
Early Redemption by Issuer
Yes, for taxation reasons, and also at any time 90 days prior to the Maturity Date.
Early Redemption by Holders
Change of Control: where Downer EDI becomes controlled by an entity, and there is a credit rating downgrade below a certain level or the credit rating is withdrawn, then bondholders may request the bonds to be bought back by the Issuer prior to the Maturity Date.
Key benefits include:
- 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 value of an investment in Downer Bonds may fluctuate due to various factors, including investor perceptions, worldwide economic conditions, interest rates, debt market conditions and factors that may affect Downer’s financial performance. The following risks may also affect an investment in Downer Bonds:
- Downer’s financial performance and rating: a change in Downer’s financial condition or rating may impact on the market value and the transferability of the Bonds;
- Liquidity Risk: An active secondary market in respect of the Bonds may never be established or may be illiquid and this would adversely affect the value at which an investor could sell the Bonds;
- Interest Rate Risk: The value of Fixed Rate Bonds may be adversely affected by movements in market interest rates;
- Litigation Risk: Risks relating to litigation and regulatory actions;
- Default Risk: if an event of default occurs under the Bonds, or the Issuer 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.
The Issuer will not create or allow to exist a Security Interest over its assets, other than certain Permitted Security Interests.
(a) Interest Service Coverage Ratio (EBIT: Interest Expense) to not be less than 3.5:1
(b) Debt-to-Capitalisation Ratio (Net Debt:Total Capitalisation) must not be greater than 50%
(c) EBIT of the Issuer and Guarantors must be at least 90% of EBIT of the Group
(d) Total Tangible Assets of the Issuer and Guarantors must be at least 90% of Total Tangible Assets of the Group
Events of Default
Events of Default include:
- Failure to pay: Applicable, with a cure period of 5 Business Days;
- Breach of Other Obligations: Applicable, with a cure period of 30 days;
- Illegality: it is or becomes unlawful for the Issuer or Guarantor to perform any of its obligations under the bond;
- Enforcement or Attachment: Applicable, with a Threshold Amount of A$15,000,000;
- Cross Default: Applicable, Threshold Amount is A$30,000,000;
- Insolvency: Applicable in respect of a Guarantor or the Issuer;
- Cessation of Business: the Group as a whole ceases to carry on all or a substantial part of its business;
- NZ statutory management: a Relevant Company incorporated in New Zealand is declared at risk pursuant to the New Zealand Corporations (Investigation and Management) Act 1989 (New Zealand), or a statutory manager is appointed or the
- New Zealand Financial Markets Authority makes a recommendation to the relevant Minister of the Crown (in New Zealand) to the effect that the Relevant Company be made subject to statutory management.