Liability Management Exercise

RNS Number : 2093J

Royal Bank of Scotland Group PLC

25 March 2010

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION TO ANY PERSON LOCATED OR RESIDENT IN THE UNITED STATES, ITALY, JAPAN OR AUSTRALIA, OR TO US PERSONS

(SEE "OFFER RESTRICTIONS" BELOW)

25 March 2010

THE ROYAL BANK OF SCOTLAND GROUP PLC ANNOUNCES PROPOSED LIABILITY MANAGEMENT EXERCISE

The Royal Bank of Scotland Group plc ("RBSG" and, together with its subsidiaries, the "Group") announces that Group members intend to launch a liability management exercise consisting of (1) an invitation to holders of certain existing upper tier 2 debt securities of the Group to offer to exchange any or all of such securities for new senior unsecured notes of The Royal Bank of Scotland plc ("RBS") (the "Exchange Offer") and (2) invitations to holders of certain classes of existing preference shares, trust preferred securities and tier one notes of the Group to tender such securities for purchase by RBSG and National Westminster Bank Public Limited Company ("NatWest") for cash (the "Tender Offers"). The Exchange Offer will be made on the terms and subject to the conditions set out in an Exchange Offer Memorandum (the "Exchange Offer Memorandum") and the Tender Offers will be made on the terms and subject to the conditions set out in a Tender Offer Memorandum (the "Tender Offer Memorandum"), each to be published in due course and, when so published, available from the registered office of RBSG. RBSG expects to announce the Exchange Offer and the Tender Offers in early April and will seek shareholder approvals as required, at a general meeting of shareholders scheduled to take place on 28 April 2010 (the "GM").

RBSG and NatWest have also today announced their intention to launch a liability management exercise consisting of tender offers (the "U.S. Tender Offers") in respect of certain other classes of existing preference shares, trust preferred securities and capital and tier one securities which are being made in compliance with U.S. tender offer rules. Details of the U.S. Tender Offers are set out in a separate press release dated the date hereof.

THE EXCHANGE OFFERS

Subject to certain restrictions, as will be set out in the Exchange Offer Memorandum (certain of which are set out below), holders (the "Exchange Holders") of the securities listed below (the "Exchange Securities") will be invited by RBS to offer to exchange their Exchange Securities for new notes constituting senior unsecured debt of RBS (the "New Notes"). The New Notes will be issued by RBS under the £90,000,000,000 Euro Medium Term Note Programme of RBSG and RBS.

The Exchange Securities (which comprise upper tier 2 capital of the Group) and the Exchange Price for the New Notes are as follows (shown alpha-numerically by ISIN):

Exchange Securities				New Notes
			Amount outstanding	Exchange Price
ISIN	Issuer	Title of Existing Securities	(m)	(per cent.)
CA780097AR28	RBS	CAD700,000,000 5.37 per cent. Fixed/Floating Undated Subordinated Callable Step-Up Notes	CAD700.00	73.00
GB0006267073	NATWEST	U.S.$500,000,000 Primary Capital Floating Rate Notes Series A	U.S.$331.70	60.00
GB0006267180	NATWEST	U.S.$500,000,000 Primary Capital Floating Rate Notes Series B	U.S.$293.04	60.00
GB0007547507	RBSG	U.S.$350,000,000 Undated Floating Rate Primary Capital Notes	U.S.$163.30	60.00
LU0001547172	NATWEST	U.S.$500,000,000 Primary Capital Floating Rate Notes Series C	U.S.$311.64	60.00
XS0041078535/ GB0006210255	NATWEST	£200,000,000 11.5 per cent. Undated Subordinated Notes	£54.77	100.00
XS0045071932	RBS	£200,000,000 9.50 per cent. Undated Subordinated Bonds	£145.44	100.00
XS0102480786	NATWEST	€100,000,000 Floating Rate Undated Subordinated Notes	€100.00	80.00
XS0102480869	NATWEST	€400,000,000 Fixed/Floating Rate Undated Subordinated Notes	€400.00	80.00
XS0102493508	NATWEST	£325,000,000 7.625 per cent. Undated Subordinated Step-Up Notes	£161.73	81.00
XS0102493680	NATWEST	£200,000,000 7.125 per cent. Undated Subordinated Step-Up Notes	£126.80	85.00
XS0116447599	RBS	£175,000,000 7.375 per cent. Fixed Rate Undated Subordinated Notes	£95.77	81.00
XS0137784426	RBS	£350,000,000 6.25 per cent. Fixed Rate Undated Subordinated Notes	£117.40	80.00
XS0138939854	RBS	£350,000,000 5.625 per cent. Fixed Rate Undated Subordinated Notes	£200.53	78.00
XS0144810529	RBS	£500,000,000 6.20 per cent. Fixed Rate Undated Subordinated Notes	£173.84	82.00
XS0154144132	RBS	£300,000,000 5.625 per cent. Fixed Rate Undated Subordinated Notes	£283.45	78.00
XS0164828385	RBS	£500,000,000 5.125 per cent. Fixed Rate Undated Subordinated Notes	£178.12	80.00
XS0193721544	RBS	£500,000,000 6.0 per cent. Fixed Rate Undated Subordinated Notes	£137.69	80.00
XS0195230635	RBS	€500,000,000 5.125 per cent. Fixed/ Floating Rate Undated Subordinated Notes	€197.12	80.00
XS0195231526	RBS	€1,000,000,000 Floating Rate Undated Subordinated Notes	€242.56	68.00
XS0206633082	RBS	£600,000,000 5.50 per cent. Fixed Rate Undated Subordinated Notes	£260.02	78.00
XS0247645160	RBS	£400,000,000 5.0 per cent. Fixed/Floating Undated Subordinated Callable Step-Up Notes	£190.05	78.00

Upon pricing of the New Notes, the Exchange Price listed in the table above will be divided by the new issue price of the New Notes to determine the exchange ratio for each series of Exchange Securities. Holders whose offers are accepted by RBS will receive an aggregate principal amount of the relevant series of New Notes calculated by multiplying (i) the aggregate principal amount of the relevant series of Exchange Securities accepted for exchange by RBS and (ii) the exchange ratio for such series of Exchange Securities. Further details in relation to pricing of the New Notes will be set out in the Exchange Offer Memorandum.

The Exchange Offer will be subject to approval by the shareholders of RBSG of a resolution to approve repurchases of preference shares in the Tender Offers and U.S. Tender Offers. It is expected that the resolution will be voted on at the GM. If the shareholder resolution is not passed, the Exchange Offer will be terminated.

The Exchange Offer will be subject to minimum holding requirements.

Further details in relation to the proposed Exchange Offer will be published by RBSG in due course. Any decision by Exchange Holders to use the information contained in this announcement in the context of investment decisions ahead of any formal announcement of the commencement of any liability management transaction is done solely at the discretion of such Exchange Holders and at their own risk.

THE TENDER OFFERS

Subject to certain restrictions, as will be set out in the Tender Offer Memorandum (certain of which are set out below), holders (the "Tender Holders") of the securities listed below (the "Tender Securities") will be invited to tender their Tender Securities for purchase by RBSG and NatWest for cash at the purchase price set out in the table below.

The Tender Securities are set out below (shown alpha-numerically by ISIN). The Tender Securities, other than the securities issued by Argon Capital Public Limited Company, comprise tier 1 capital of the Group. The preference shares underlying the securities issued by Argon Public Limited Company and on which the obligations under such securities are secured comprise tier 1 capital of the Group:

		Liquidation Preference Outstanding (in the case of Preference Shares) or Principal Amount		Purchase Price as a percentage of Liquidation Preference Outstanding (in the case of Preference Shares) or Principal Amount
		Outstanding (in the case of Debt Securities)	Title of Offer Securities	Outstanding (in the case of Debt Securities)
ISIN	Issuer	(m)		(per cent.)
CA780097AT83	RBSG	CAD600.00	CAD600,000,000 6.666 per cent. Fixed/Floating Rate Undated Callable Step-Up Tier 1 Notes	72.00
DE000A0E6C37	RBSG	€1,250.00	€1,250,000,000 5.25 per cent. Non-cumulative Preferred Securities Series 2	57.00
GB0006227051	NATWEST	£140.00	£140,000,000 9.00 per cent. Non-cumulative Preference Shares Series A	100.00
GB0007548026	RBSG	£0.40	£400,000 5.5 per cent. Cumulative Preference Shares	70.00
GB0007548133	RBSG	£0.50	£500,000 11.00 per cent. Cumulative Preference Shares	100.00
XS0121856859	RBSG	£200.00	£200,000,000 7.3870 per cent. Non-cumulative Convertible Preference Shares Series 1	100.00
XS0149161217	RBS CAPITAL TRUST A	£390.93	€1,250,000,000 6.467 per cent. Non-Cumulative Trust Preferred Securities	65.00
XS0159056208	RBS CAPITAL TRUST B	$485.86	U.S.$750,000,000 6.80 per cent. Non-Cumulative Trust Preferred Securities	61.00
XS0205935470	RBSG	€1,250.00	€1,250,000,000 5.50 per cent. Non-cumulative Preferred Securities Series 1	57.00
XS0237530497	RBS CAPITAL TRUST C	€166.38	€500,000,000 4.243 per cent. Fixed/Floating Rate Non-Cumulative Trust Preferred Securities	63.00
XS0277453774	RBS CAPITAL TRUST D	£92.55	£400,000,000 5.6457 per cent. Fixed/Floating Rate Non-Cumulative Trust Preferred Securities	65.00
XS0323734961	RBSG	€1,300.00	€1,300,000,000 7.0916 per cent. Non-cumulative Preference Shares Series 3	65.00
XS0323839042	ARGON CAPITAL PLC	£750.00	£750,000,000 8.1620 per cent. Perpetual Non-cumulative Securities Series 100	68.00

The Tender Offers will be subject to approval by the shareholders of RBSG of a resolution to approve repurchases of preference shares in the Tender Offers and U.S. Tender Offers and to approval by NatWest's shareholders. It is expected that the resolution of the shareholders of RBSG will be voted on at the GM. In addition, the tender offers for each of the €1,300,000,000 7.0916 per cent. Non-cumulative Preference Shares Series 3 issued by RBSG and the £200,000,000 7.3870 per cent. Non-cumulative Convertible Preference Shares Series 1 issued by RBSG (together, the "Relevant Securities") will be subject to approval of (i) special resolutions to be considered and, if thought fit, passed at the GM to amend the Articles of Association of RBSG to remove a pricing restriction applicable to purchases of Relevant Securities by RBSG (the "Amendment Resolutions"); and (ii) special resolutions to be considered and, if thought fit, passed by holders of the Relevant Securities sanctioning the variation of rights attaching to such Relevant Securities as a result of the relevant Amendment Resolution.

RBSG and NatWest (the "Tender Offerors") will accept valid tenders of Tender Securities in accordance with a waterfall to be published on launch of the Tender Offers until either: (i) the Tender Offerors have accepted all valid tenders of Tender Securities pursuant to the Tender Offers; or (ii) the aggregate liquidation preference/principal amount of all Tender Securities to be purchased by the Tender Offerors equals an aggregate offer limit to be published on the launch of the Tender Offers. Accordingly, holders of Tender Securities listed in the table above should be fully aware that this announcement in no way reflects a firm commitment by the Tender Offerors to purchase any of the Tender Securities, in whole or in part, as any future offer will be subject to a waterfall and cap on acceptances, which could prevent the Tender Offerors from accepting all validly tendered Tender Securities.

Further details in relation to the proposed Tender Offers will be published by RBSG in due course. Any decision by Tender Holders to use the information contained in this announcement in the context of investment decisions ahead of any formal announcement of the commencement of any liability management transaction is done solely at the discretion of such Tender Holders and at their own risk.

GENERAL

Exchange Holders and Tender Holders (together, the "Holders") are advised to read carefully the Exchange Offer Memorandum or Tender Offer Memorandum for full details of, and information on the procedures for participating in, the Exchange Offer and the Tender Offers.

Neither the Exchange Offer nor the Tender Offers will be made available in the United States or Italy or to any U.S. person or to any person located or resident in Italy, Japan or Australia and will also be restricted in other jurisdictions, as more fully described below and as will be more fully described in the Exchange Offer Memorandum and Tender Offer Memorandum.

DISCLAIMER

This announcement contains, and once published the Exchange Offer Memorandum and the Tender Offer Memorandum will contain, important information which must be read carefully before any decision is made with respect to the Exchange Offer or the Tender Offers. If any Holder is in any doubt as to the action it should take, it is recommended to seek its own legal, tax and financial advice, including as to any tax consequences, from its stockbroker, bank manager, solicitor, accountant or other independent financial adviser. None of RBS, RBSG, NatWest, Argon Capital Trust Public Limited Company, RBS Capital Trust A, RBS Capital Trust B, RBS Capital Trust C, RBS Capital Trust D (together, the "RBS Entities") or any person who controls, or is a director, officer, employee or agent of such persons, or any affiliate of such persons, makes or will make any recommendation as to whether Holders should participate in the Exchange Offer or the Tender Offers.

This announcement does not reflect a firm commitment by RBSG, RBS or NatWest to exchange any Exchange Securities or purchase any Tender Securities. This announcement does not contain all material information required to make an informed assessment of the risks associated with the Exchange Offer or the Tender Offer. The Exchange Offer and Tender Offers will be subject to the further restrictions and conditions as more fully set out in the Exchange Offer Memorandum and the Tender Offer Memorandum, respectively.

No offer or invitation to acquire or exchange any securities is being made pursuant to this announcement. This announcement does not constitute an invitation to participate in the Exchange Offer or the Tender Offers.

The distribution of this announcement in certain jurisdictions may be restricted by law. Persons into whose possession this announcement comes are required by each of the RBS Entities to inform themselves about, and to observe, any such restrictions.

OFFER RESTRICTIONS

United States

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN THE UNITED STATES

These materials are not for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia). The Exchange Offer and the Tender Offers referenced herein will not be made, directly or indirectly, in or into the United States, or by use of the mails, or by any means or instrumentality (including, without limitation, e-mail, facsimile transmission, telephone and the internet) of interstate or foreign commerce, or of any facility of a national securities exchange, of the United States and neither the Exchange Offer nor the Tender Offers will be capable of acceptance by any such use, means, instrumentality or facility or from within the United States.

These materials do not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The securities mentioned herein have not been, or will not be, registered under the United States Securities Act of 1933 (the "Securities Act"). The securities may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act. There will be no public offer of securities in the United States.

Italy

This announcement, the Exchange Offer and the Tender Offers are not being and will not be made, directly or indirectly, in the Republic of Italy ("Italy"). The Exchange Offer and Exchange Offer Memorandum and the Tender Offers and Tender Offer Memorandum have not been, and will not be, submitted to the clearance procedures of the Commissione Nazionale per le Società e la Borsa ("CONSOB") pursuant to Italian laws and regulations. Accordingly, Holders are notified that, to the extent such holders are located or resident in Italy, the Exchange Offer and Tender Offers will not be available to them and they may not offer Exchange Securities for exchange pursuant to the Exchange Offer or tender Tender Securities pursuant to the Tender Offers nor may the New Notes be offered, sold or delivered in Italy and, as such, any exchange instruction or tender instruction received from or on behalf of such persons shall be ineffective and void, and neither the Exchange Offer Memorandum, the Tender Offer Memorandum nor any other documents or materials relating to the Exchange Offer, the Tender Offers, the Exchange Securities, the Tender Securities or the New Notes may be distributed or made available in Italy.

United Kingdom

The communication of this announcement, the Exchange Offer Memorandum, the Tender Offer Memorandum and any other documents or materials relating to the Exchange Offer or the Tender Offers is not being made and will not be made, and such documents and/or materials have not been approved, by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000. Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such documents and/or materials as a financial promotion is only being made to those persons in the United Kingdom falling within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Financial Promotion Order")) (and any persons who do not have professional experience in matters relating to investments should not rely on such documents and/or materials) or persons who are within Article 43 of the Financial Promotion Order or any other persons to whom it may otherwise lawfully be made in accordance with the Financial Promotion Order.

Other

The Exchange Offer and the Tender Offers are subject to further offer and distribution restrictions as will be more fully set out in the Exchange Offer Memorandum and the Tender Offer Memorandum. The distribution of this announcement in Australia, Canada, Austria, Belgium Denmark, France, Ireland, Italy, Portugal, Spain, Switzerland, Hong Kong, Andorra, Japan and Singapore is restricted by the laws of such jurisdictions. No action has been or will be taken in any jurisdiction in relation to the Exchange Offer that would permit a public offering of securities.

 

END

 

 

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