Issuer: SIGNUM FINANCE III PLC MAJOR

Transcription

1 24 August 2017 Issuer: SIGNUM FINANCE III PLC MAJOR Multi-Jurisdiction Repackaging Note Programme arranged by Goldman Sachs International PROSPECTUS Series: EUR 25,000,000 Callable Zero Coupon Notes due 2046 Goldman Sachs International 1

2 Prospectus: This Prospectus relates to an issue of Notes by the Issuer described in the Conditions set out below pursuant to the MAJOR Multi-Jurisdiction Repackaging Note Programme that the Issuer established on the Programme Date. This Prospectus has been approved by the Central Bank of Ireland, as competent authority under Directive 2003/71/EC and any amendments thereto (the Prospectus Directive ). The Central Bank of Ireland only approves this Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. This Prospectus constitutes a prospectus for the purposes of the Prospectus Directive and any amendments thereto. Listing: Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List and trading on its regulated market. There can be no assurance that such listing and admission to trading will be granted. Such market is a regulated market for the purposes of the Directive 2004/39/EC (as amended). TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, NOTEHOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF FEDERAL TAX ISSUES IN THIS PROSPECTUS IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY NOTEHOLDERS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON NOTEHOLDERS UNDER THE INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS INCLUDED HEREIN BY THE ISSUER IN CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN THE MEANING OF CIRCULAR 230) BY THE ISSUER OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) NOTEHOLDERS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISER. Responsibility: The Issuer accepts responsibility for the information contained in this Prospectus. To the best of the Issuer s knowledge and belief, the information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. Issuer Not Regulated: The Issuer is not, and will not be, regulated by the Central Bank of Ireland by virtue of issuing the Notes. An investment in the Notes does not have the status of a bank deposit and will not be within the scope of the deposit protection scheme operated by the Central Bank of Ireland. Representations: No person has been authorised to give any information or to make any representation in connection with the issue or sale of the Notes other than those contained in the Authorised Offering Material and, if given or made, such information or representation must not be relied upon as having been authorised by, or on behalf of, the Issuer or the Dealer. Change of Circumstances: The delivery of this Prospectus will not, under any circumstances, imply (i) the absence of a change in the affairs of the Issuer since the date hereof or (ii) that there has been no adverse change in the financial position of the Issuer since the date hereof or (iii) that any other information supplied in connection with the Programme is correct as of any date subsequent to the date hereof. No Offer: The Authorised Offering Material does not constitute an offer of, or an invitation by, or on behalf of, the Issuer or the Dealer to subscribe for, or purchase, any Notes. 2

3 Restriction on Distribution: The distribution of the Authorised Offering Material and the offering or sale of Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Prospectus comes are required by the Issuer and the Dealer to inform themselves about and to observe any such restriction. The Notes have not been and will not be registered under the Securities Act and may be in bearer form and therefore subject to U.S. tax law requirements. Subject to certain exceptions, Notes may not be offered, sold or delivered within the United States or to U.S. persons. Need for Independent Analysis: Prospective Noteholders should conduct such independent investigation and analysis regarding the Issuer, the security arrangements and the Notes, as they deem appropriate to evaluate the merits and risks of an investment in the Notes. Purchasers of Notes should have sufficient knowledge and experience in financial and business matters, and access to, and knowledge of, appropriate analytical resources, to evaluate the information contained in this Prospectus and the merits and risks of investing in the Notes in the context of their financial position and circumstances. Prospective Noteholders should have regard to the factors described under the section headed Risk Factors in this Prospectus. Neither this Prospectus nor any financial statements incorporated by reference herein are intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Issuer or the Dealer that any recipient of this Prospectus or any other financial statements should purchase the Notes. To the fullest extent permitted by law, the Dealer does not accept any responsibility for the contents of this Prospectus or for any other statement, made or purported to be made, by the Dealer or on its behalf in connection with the Issuer or the issue and the offering of the Notes. The Dealer accordingly disclaims all and any liability whether in tort or in contract or otherwise (save as referred to above) which it might otherwise have in respect of this Prospectus or any such statement. The Dealer does not undertake to review the financial condition or affairs of the Issuer or provide information in respect of the Assets during the life of the arrangements contemplated by this Prospectus nor to advise any investor or potential investor in the Notes of any information coming to the attention of the Dealer. Deemed Representation: Each purchaser, each subsequent transferee and each person directing such purchaser or subsequent transferee to acquire Notes, by its purchase or other acquisition of the Notes, is deemed to represent and warrant (which representation and warranty will be deemed to be repeated on each date on which the notes are held by such purchaser or subsequent transferee, as the case may be), that the funds the purchaser or subsequent transferee is using to acquire and hold the Notes are not the assets of an employee benefit or other plan subject to Part IV of Title I of the Employee Retirement Income Security Act of 1974, as amended ( ERISA ), a plan described in Section 4975 of the Internal Revenue Code of 1986 (the Code ), as amended, or an entity whose underlying assets include plan assets by reason of Department of Labor regulation section (as modified by Section 3(42) of ERISA) or otherwise, or a governmental, church or non-u.s. plan that is subject to any federal, state or local law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code. Suitability of Investment: The Notes are only suitable for sophisticated investors who are capable of understanding the risks involved. Prospective Noteholders must obtain such advice as they deem necessary from their own advisors as to the risks and merits of purchasing Notes and of any regulatory, accounting and/or tax consequences thereof. The Dealer is not providing investment, regulatory, accounting, or tax advice to any Noteholder or prospective Noteholder. 3

4 Public Information: Information relating to the Swap Counterparty, the Assets and the Asset Issuer has been accurately reproduced from information published by the Swap Counterparty and the Asset Issuer. So far as the Issuer is aware and is able to ascertain from information published by the Swap Counterparty and the Asset Issuer, no facts have been omitted that would render the reproduced information inaccurate or misleading. Except where such information relates to itself, neither the Issuer nor any Transaction Counterparty has conducted any due diligence on this information, nor made any enquiries as to its own possession of non-publicly available information. Transaction Counterparties: The Transaction Counterparties and their affiliates may have access to non-publicly available information. None of the Transaction Counterparties makes any representation, recommendation or warranty, express or implied, regarding the accuracy, adequacy, reasonableness or completeness of the information contained herein or in any further information, notice or other document which may at any time be supplied in connection with the Notes. Governing Law: The Notes and the Swap Agreement are governed by English law. Subsequent judicial decisions or changes to English law after the Issue Date may alter Noteholders rights and obligations. Language: The language of this Prospectus is English. Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable law. Performance is Not Guaranteed: Many factors influence the Notes performance and none of the Transaction Counterparties guarantee that Noteholders will receive any principal or interest amount in respect of the Notes. The Notes performance may not compare favourably with interest rates on deposits prevailing between the Issue Date and maturity or redemption. The Notes market value may be influenced by factors including but not limited to (i) the price and volatility of the Assets; (ii) the Issuer s creditworthiness; (iii) interest rates; (iv) currency exchange rates; (v) time remaining to maturity; (vi) nature and liquidity of any hedge positions; (vii) nature and liquidity of any embedded derivatives; (viii) market perception; (ix) general economic and financial conditions; and (x) the occurrence of market disruption, among other factors. Neither Goldman Sachs International nor any of its affiliates make any representation or warranty, express or implied, to the owners of the Notes or any member of the public regarding the advisability of investing in securities generally or in the Notes. Defined Terms: Unless otherwise defined, capitalised terms have the same meanings as set out in the Base Conditions. Documents Incorporated by Reference: This Prospectus is to be read in conjunction with all documents which are deemed to be incorporated herein by reference (see the section headed Documents Incorporated by Reference ). 4

5 Table of Contents Risk Factors... 6 Description of the Issuer Programme Counterparties Calculation Agent and Swap Counterparty Documents Incorporated by Reference Terms and Conditions of the Notes Taxation Subscription and Sale Use of Proceeds General Information Annex 1 Base Conditions

6 Basic Risk Factors Risk Factors The Dealer disclaims any responsibility to advise prospective investors of any risks as they exist at the date of this Prospectus and the Issuer and the Dealer disclaim any responsibility to advise investors of risks as they change from time to time. Further, neither of the Issuer nor the Dealer makes any representations as to (i) the suitability of the Notes for any particular investor; (ii) the appropriate accounting treatment or possible tax consequences of an investment in the Notes; or (iii) the expected performance of the Notes, either in absolute terms or relative to competing investments. Prospective Noteholders should obtain their own independent accounting, tax and legal advice and should consult their own professional investment advisor to ascertain the suitability of the Notes as an investment and should conduct such independent investigation and analysis regarding the risks, security arrangements and cash-flows associated with the Notes as they deem appropriate to evaluate the merits and risks of an investment in the Notes. In particular, prospective Noteholders should note that an investment in the Notes is only suitable for persons who (i) have the knowledge and experience in financial and business matters necessary to enable them to evaluate the information contained in the Authorised Offering Material and the risks of the Notes in the context of their own financial, tax and regulatory circumstances and investment objectives; (ii) are able to bear the economic risk of an investment in the Notes for an indefinite period of time; (iii) are acquiring the Notes for their own account for investment, not with a view to resale; and (iv) recognise it may not be possible to transfer the Notes for a substantial period of time, if at all. Prospective Noteholders should note that the risks described below are not the only risks which are relevant to the Issuer or the Notes. The Issuer has described only those risks relating to the Issuer and the Notes that it considers to be material. There may be additional risks that it currently considers not to be material or of which it is not currently aware, and any of these risks could have a material adverse effect on the Issuer or the amount of principal which investors will receive in respect of the Notes. AS DESCRIBED BELOW, THE PERFORMANCE OF THE NOTES IS DEPENDANT ON THE PERFORMANCE OF THE ASSETS. PROSPECTIVE INVESTORS SHOULD REFER TO THE RISK FACTORS RELATING TO THE ASSETS WHICH ARE LISTED IN THE OFFERING MEMORANDUM SET OUT IN THE ANNEX TO THIS PROSPECTUS. Risks related to the Issuer The Issuer is a special purpose vehicle: The Issuer s sole business is the raising of money by issuing notes and entering into other Obligations for the purposes of purchasing assets and entering into related derivatives and other contracts. There is no day to day management of the business of the Issuer. Issuer not Regulated: Other than in connection with any public offer of Notes or the admission to trading of the Notes on a regulated market within the European Economic Area, the Issuer is not required to be licensed, registered or authorised in the Issuer s Jurisdiction and will operate without any regulatory supervision in any jurisdiction. Regulatory authorities in jurisdictions other than the Issuer s Jurisdiction may take a contrary view regarding the applicability of any such laws to the Issuer, which could have an adverse impact on the Issuer or the holders of the Notes. 6

7 Alternative Investment Fund Managers Directive: EU Directive 2011/61/EU on Alternative Investment Fund Managers ("AIFMD") was transposed into national laws in the EU prior to 22 July The AIFMD seeks to regulate the activities of alternative investment fund managers ( AIFMs ) who are (i) established in the EU and manage alternative investment funds ("AIFs") (whether the AIFs are established in the EU or not), or (ii) established outside the EU but who manage AIFs that are established in the EU, or (iii) AIFMs that are established outside the EU but who manage AIFs that are established outside the EU but which AIFs are marketed in the EU. If the Issuer is an AIF, it must have a designated AIFM with responsibility for portfolio and risk management, who would need to be appropriately regulated. In addition, if the Issuer is an AIF (which may be determined by reference to any transactions it has entered into) it will be classified as a "financial counterparty" under the European Markets and Infrastructure Regulation (Regulation 648/2012) and may be required to comply with clearing obligations or other risk mitigation techniques with respect to derivatives transactions including obligations to post margin to any central clearing counterparty or market counterparty. Risks related to the Notes Limited recourse: The Notes are limited recourse obligations and are payable solely out of the Secured Property. No person other than the Issuer will be obliged to make payments on the Notes. The Net Proceeds of realisation of the Secured Property may be insufficient to cover amounts that would otherwise be due under the Notes. Noteholders may not proceed directly against any Secured Property unless the Trustee, having become so bound, fails to do so within a reasonable time. Non-petition: Noteholders may not take any step towards the winding-up, examination or administration of the Issuer. Priority of Claims: The Noteholders right to be paid amounts due under the Notes will be subordinated to prior ranking claims in the manner specified in the Drawdown Deed. No gross-up: Noteholders will not receive grossed-up amounts to compensate for any withholding tax. Imposition of such a tax may constitute a Mandatory Redemption Event. Noteholder Meetings: The Notes contemplate meetings of Noteholders to consider matters affecting their interests. In such meetings, resolutions passed by defined majorities will bind all Noteholders, even if they have voted against those resolutions. Mandatory Redemption: A Mandatory Redemption Event may occur upon the occurrence of any of an Asset Event, a Tax Redemption Event, a FATCA Tax Event, a Swap Event, a MTM Trigger Event, an Illegality Event, an Arranger Insolvency Event, an Asset Redenomination Event, an Asset Restructuring Event, an Asset Repudiation Event, a Settlement/Custodial Event, a Change in Law Event, a Swap Regulatory Event, a Regulatory Change Event and any other event specified as an applicable Mandatory Redemption Event. Upon a Mandatory Redemption Event the Issuer may redeem all Notes before their scheduled maturity date at their Mandatory Redemption Amount on the Mandatory Redemption Date. Such Mandatory Redemption Amount may be lower than the Redemption Amount due at maturity. Event of Default: Upon an Event of Default the Issuer may redeem all Notes before their scheduled maturity date at their Mandatory Redemption Amount. Such Mandatory Redemption Amount may be lower than the Redemption Amount due at maturity. Directing Party: If, in respect of a Series, a Directing Party is specified in the Additional Conditions, then, prior to the Security becoming enforceable, the Issuer shall, if so directed by such Directing Party (i) take such action in relation to the Secured Property and (ii) exercise any 7

8 rights incidental to the ownership of the Secured Property (including voting rights), provided it will not cause the Issuer to breach any of its obligations. In the event that the Directing Party is the Noteholders, any such direction can only be given by way of Extraordinary Resolution or Written Resolution. No Deposit: Any Investment in the Notes does not have the status of a bank deposit and is not within the scope of any deposit protection scheme. Extraordinary Resolutions, Modification and Substitution: The Noteholders may, with the consent of a minimum of 75 per cent. in Principal Amount of the Notes outstanding, make certain determinations, including a determination to terminate the Swap Agreement upon the insolvency of the Swap Counterparty, which will impact the Notes. Such determinations will be binding on all Noteholders. Noteholders holding less than 75 per cent. of the Principal Amount of the Notes outstanding are exposed to the risk that their rights in respect of the Notes may change in a way not desired by such Noteholders. The Notes provide that the Trustee may, without the consent of Noteholders, agree to (i) formal, minor or technical modifications of the Notes or any modification to correct a manifest error or to comply with mandatory provisions of law, or where a Special Quorum Resolution is not required, that is not materially prejudicial to the Noteholders interests, or (ii) the substitution of another company as principal debtor under any Notes in place of the Issuer. The market value of the Notes may be influenced by many factors that are unpredictable: The market value of the Notes (the value that a Noteholder could receive for the Notes if the Noteholder chooses to sell them in the open market before the Maturity Date) will be affected by many factors that are unpredictable. Moreover, these factors interrelate in complex ways, and the effect of one factor on the market value of the Notes may offset or enhance the effect of another factor. Risks Related to The Goldman Sachs Group, Inc. Market making activities: Goldman Sachs is a global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-networth individuals. As such, it acts as an investor, investment banker, research provider, investment manager, investment advisor, market maker, trader, prime broker and lender. In those and other capacities, Goldman Sachs purchases, sells or holds a broad array of investments, actively trades securities, derivatives, loans, commodities, currencies, credit default swaps, indices, baskets and other financial instruments and products for its own account or for the accounts of its customers, and will have other direct or indirect interests, in the global fixed income, currency, commodity, equity, bank loan and other markets. Any of Goldman Sachs financial market activities may, individually or in the aggregate, have an adverse effect on the market for the Notes, and Noteholders should expect that the interests of Goldman Sachs or its clients or counterparties will at times be adverse to those of Noteholders. Goldman Sachs actively makes markets in and trades financial instruments for its own account and for the accounts of customers. These financial instruments include debt and equity securities, currencies, commodities, bank loans, indices, baskets and other products. Goldman Sachs activities include, among other things, executing large block trades and taking long and short positions directly and indirectly, through derivative instruments or otherwise. The securities and instruments in which Goldman Sachs takes positions, or expects to take positions, include the Assets, securities and instruments similar to the Notes or the Assets, and other securities and instruments. Market making is an activity where Goldman Sachs buys and sells on behalf of 8

9 customers, or for its own account, to satisfy the expected demand of customers. By its nature, market making involves facilitating transactions among market participants that have differing views of securities and instruments. As a result, Noteholders should expect that Goldman Sachs will take positions that are inconsistent with, or adverse to, the investment objectives of investors in the Notes. Research views: Goldman Sachs and its personnel, including its sales and trading, investment research and investment management personnel, regularly make investment recommendations, provide market colour or trading ideas, or publish or express independent views in respect of a wide range of markets, issuers, securities and instruments. They regularly implement, or recommend to clients that they implement, various investment strategies relating to these markets, issuers, securities and instruments. These strategies include, for example, buying or selling credit protection against a default or other event involving an issuer or financial instrument. Any of these recommendations and views may be negative with respect to the Issuer or the Notes or other securities or instruments similar to the Notes or result in trading strategies that have a negative impact on the market for any such securities or instruments, particularly in illiquid markets. In addition, Noteholders should expect that personnel in the trading and investing businesses of Goldman Sachs will have or develop independent views of the Issuer, the Issuer s industry or other market trends, which may not be aligned with the views and objectives of investors in the Notes. Competing Products: Goldman Sachs regularly offers a wide array of securities, financial instruments and other products into the marketplace, including existing or new products that are similar to the Notes and Assets. For example, Goldman Sachs may place or underwrite certain of the Assets and may underwrite securities similar to the Notes. Noteholders should expect that Goldman Sachs will offer securities, financial instruments, and other products that will compete with the Notes for liquidity, research coverage or otherwise. Relationships: The financial market activities and interests of Goldman Sachs may include financial advisory, investment advisory or transactional services and interests in securities, instruments and companies that are directly or indirectly related to the Issuer, the issuer(s) of the Assets and/or the Trustee. In providing these or other services to, or engaging in transactions with, the Issuer, the issuer(s) of the Assets and/or the Trustee, or other market participants, or in acting for its own account, Goldman Sachs may take actions that have a direct or indirect effects on the Issuer, the Notes and/or the Assets, which may be adverse to the interests of Noteholders. In particular, Goldman Sachs may provide investment banking services (including without limitation underwriting, merger advisory, other financial advisory, placement agency or selling agency services), foreign currency hedging, research, asset management services, brokerage services or other services to the Issuer, the issuer(s) of the Assets and/or the Trustee. Revenues to Goldman Sachs for providing these services generally have the potential to increase as the business and activities of the Issuer expand. Therefore, a successful offering of the Notes may result in additional revenues to Goldman Sachs and its personnel for the future provision of these other services. In any offering, as well as in all other circumstances in which Goldman Sachs receives any fees or other compensation in any form relating to services provided to or transactions with the Issuer, the issuer(s) of the Assets and/or the Trustee, no accounting, offset or payment in respect of the Notes will be required or made; Goldman Sachs will be entitled to retain all such fees and other amounts, and no fees or other compensation payable by the Issuer, the issuer(s) of the Assets and/or the Trustee or indirectly by holders of the Notes will be reduced by reason of receipt by Goldman Sachs of any such other fees or other amounts. 9

10 Goldman Sachs, including its personnel or business units involved in the management, sales, activities, business operations or distribution of the Issuer or the Notes, regularly provides advice and services to the Issuer and its affiliates and has interests other than those relating to the Notes. These activities may cause the interests of Goldman Sachs or the Issuer or its affiliates to be adverse to the interests of investors in the Notes. Related Transactions: In connection with the Notes or otherwise, Goldman Sachs may enter into transactions to, among other things, (i) hedge Goldman Sachs exposure to the Notes, the Assets or similar securities or products, (ii) take short positions or enter into other derivative transactions relating to the Notes, the Assets or similar securities or products, or (iii) securitise Goldman Sachs credit or market risk relating to the Notes, the Assets or similar securities or products through the creation of investment vehicles to be sold to other investors. In addition to entering into such transactions itself, Goldman Sachs may structure such transactions for its clients or counterparties, or otherwise advise or assist clients or counterparties in entering into such transactions. These transactions may cause Goldman Sachs or its clients or counterparties to have economic interests and incentives that do not align with, and that may be directly contrary to, those of the Noteholders. In addition, these transactions or actions taken to maintain, adjust or unwind any positions in the future, may, individually or in the aggregate, have a material effect on the market for the Notes (if any), including adversely affecting the value of the Notes, particularly in illiquid markets. Goldman Sachs will have no obligation to take, refrain from taking or cease taking any action with respect to these transactions based on the potential effect on an investor in the Notes, and may receive substantial returns on hedging or other activities while the value of the Notes declines. These activities may be undertaken to achieve a variety of objectives, including: permitting purchasers of the Notes to hedge their investment in the Notes in whole or in part; facilitating transactions for other clients or counterparties that may have business or investment objectives that are contrary to those of investors in the Notes; hedging of the exposure of Goldman Sachs to the Notes or Assets, including any interest in the Notes or Assets that it reacquires or retains as part of any offering process, through its marketmaking activities or otherwise; enabling Goldman Sachs to comply with its internal risk limits or otherwise manage firmwide, business unit or product risk; and/or enabling Goldman Sachs to take directional views as to relevant markets on behalf of itself or its clients or counterparties that are inconsistent with or contrary to the views and objectives of the investors in the Notes. Swap Counterparty: In connection with the sale of the Notes, Goldman Sachs (acting for its own account) expects to engage in related transactions with the Issuer. These transactions may include extensions of credit, purchases and sales of securities, currencies, commodities, loans, indices, baskets or derivatives (including swaps, forwards and options of all types) or other transactions. Goldman Sachs, in turn, may engage in hedging or other activities as a result of these counterparty transactions. These activities may directly or indirectly adversely affect the market for the Notes (if any), including adversely affecting the value of the Notes. 10

11 Determinations as Swap Counterparty and Calculation Agent: One or more members of Goldman Sachs intends to serve as Calculation Agent and Swap Counterparty for the Notes and in that capacity will calculate amounts payable and make other determinations that may be material to investors in the Notes. The manner in which such member of Goldman Sachs makes such determinations or otherwise exercises its discretion may adversely affect investors in the Notes and, conversely, may positively affect the Issuer or other participants in the transaction. One particular discretion that the Calculation Agent has is to determine in its sole discretion if the particular occurrence of a Mandatory Redemption Event that is an Asset Event, Asset Redenomination Event, Asset Restructuring or Asset Repudiation Event constitutes an Asset Credit Trigger Event. The consequence of determining that a particular Mandatory Redemption Event constitutes an Asset Credit Trigger Event is that the swap replacement price is zero, so where an amount might otherwise be payable to the Issuer as a result of the termination of the Swap, no such amount shall be payable to the Issuer, which may result in the amount available to Noteholders on early redemption of the Notes being less than it would have been if the relevant event were not an Asset Credit Trigger Event. Conversely, where an amount might otherwise be payable to the Swap Counterparty upon termination of the Swap, the Calculation Agent has discretion to determine that a particular Mandatory Redemption Event does not constitute an Asset Credit Trigger Event, which may result in the amount available to Noteholders on early redemption of the Notes being less than it would have been if the relevant event were an Asset Credit Trigger Event. Accordingly, the Calculation Agent may make such determinations without taking into account the interests of the Noteholders or any other person. In addition, such member of Goldman Sachs has the right to cease serving in this capacity or to delegate certain responsibilities to third parties, who may have interests and incentives that differ from those of investors in the Notes. In its capacity as Calculation Agent and Swap Counterparty, Goldman Sachs may receive compensation for its participation in the form of fees. These fees will be paid out of the assets of the Issuer and available amounts will be applied to pay these fees before they are applied to make payments to Noteholders. The fees may not be contingent on the performance or trading value of the Notes, and Goldman Sachs, in this capacity, may consequently still receive significant compensation even if Noteholders lose money. Market making in relation to the Notes: To the extent that Goldman Sachs makes a market in the Notes (which it is under no obligation to do), it would expect to receive income from the spreads between its bid and offer prices for the Notes. The price at which Goldman Sachs may be willing to purchase Notes, if it makes a market, will depend on market conditions and other relevant factors and may be significantly lower than the issue price for the Notes and may be significantly lower than the price at which it may be willing to sell Notes. If Goldman Sachs becomes a holder of any Notes, through market-making activity or otherwise, any actions that it takes in its capacity as securityholder, including voting or provision of consents or requests to the Trustee relating to the Assets, will not necessarily be aligned with the interests of other securityholders of the same class or other classes of Notes. The original issue price for the Notes, the price at which Goldman Sachs would initially buy or sell the Notes (if Goldman Sachs makes a market) and the value that Goldman Sachs will initially use for account statements and otherwise may significantly exceed the value of the Notes using Goldman Sachs pricing models. The amount of such excess will decline on a straight line basis 11

12 over a period to be specified in the applicable pricing supplement for the relevant notes, after which period, the price at which Goldman Sachs would buy or sell notes will reflect the value determined by reference to the pricing models, plus Goldman Sachs bid and ask spread. In addition to the factors discussed above, the value or quoted price of the Notes at any time, however, will reflect many factors and cannot be predicted. If Goldman Sachs makes a market in the Notes, the price quoted by Goldman Sachs would reflect changes in market conditions and other relevant factors, including a deterioration in Goldman Sachs creditworthiness or perceived creditworthiness whether measured by Goldman Sachs credit ratings or other credit measures. These changes may adversely affect the market price of the Notes, including the price Noteholders may receive for the Notes in any market making transaction. Selection of participants: Goldman Sachs may select the Issuer, the Assets, the Trustee and the Agents. Goldman Sachs may receive various benefits, including compensation, commissions, payments, rebates, remuneration and business opportunities, in connection with or as a result of an offering of Notes pursuant to the Programme and any interests in and relationship with the Issuer, the Assets, the Trustee and/or the Agents. The benefits to Goldman Sachs (including benefits relating to investments by and business relationships of Goldman Sachs) arising from a decision to select the specific Issuer, Assets, Trustee and/or Agents in relation to an offering of Notes pursuant to the Programme may be greater than they would have been had another issuer and/or other assets been selected. In addition, the fees, allocations, compensation, remuneration, and other benefits to Goldman Sachs arising from its business relationships with the specific Issuer, Trustee and Assets selected for an offering of Notes pursuant to the Programme may be greater as a result of the selection of such Issuer and/or Trustee, and the portfolio, investment, service provider or other decisions made by Goldman Sachs for such Issuer than they would have been had other decisions been made, which also might have been appropriate for such Issuer. Benefits: Goldman Sachs has structured the Programme and it may derive various benefits from the Programme, including those listed below: Goldman Sachs expects that an offering of Notes will enhance its ability to assist clients and counterparties in the transaction or in related transactions (including assisting clients in additional purchases and sales of the Notes and hedging transactions). Goldman Sachs expects to derive fees and other revenues from these transactions. In addition, participating in a successful offering and providing related services to clients may enhance Goldman Sachs relationships with various parties, facilitate additional business development, and enable Goldman Sachs to obtain additional business and generate additional revenue. Goldman Sachs may benefit from this offering of Notes because any offering may establish a market precedent and a valuation data point for securities similar to the Notes, thus enhancing Goldman Sachs ability to conduct similar offerings in the future and permitting Goldman Sachs to adjust the fair value of the Assets or other similar positions held on its balance sheet, including increasing the carrying value or avoiding decreasing the carrying value of some or all of such similar positions. A completed offering of Notes may reduce Goldman Sachs existing exposure to the Assets. Goldman Sachs incurred this exposure with a view towards distributing the exposure by means of an offering pursuant to the Programme. An offering may effectively transfer/distribute a significant portion of Goldman Sachs exposure to investors in the Notes. The proceeds received by the Issuer on an offering of Notes may be used to repay obligations of the Issuer to Goldman Sachs. 12

13 Goldman Sachs may enter into an agreement with the Issuer whereby it agrees, subject to certain conditions, to acquire a portion of the Notes or to provide financing to the Issuer if less than a specified amount is raised by the Issuer on an offering of Notes. A successful offering of Notes may benefit Goldman Sachs by relieving it from or reducing this obligation. It is expected that Goldman Sachs will receive a funding benefit from the completion of an offering of Notes. In particular, the Issuer expects to use some or all of the proceeds of an offering of Notes to enter into repurchase agreements with Goldman Sachs and/or other parties relating to the Assets, which will have the effect of providing funding for Goldman Sachs at a rate agreed between Goldman Sachs and the Issuer. Investors in the Notes will not receive any portion of this funding benefit received by Goldman Sachs. In addition, the presence of this funding benefit may reduce the price at which Goldman Sachs is willing to repurchase the Notes, if it does so at all, and may make Goldman Sachs less likely to an early termination of the Notes, which may adversely impact the secondary trading market for the Notes. Goldman Sachs is selling the Notes as principal and will generate revenues as well as a profit or loss from its own account from any offering, depending on the price obtained and other factors. Third Parties: The Trustee and/or Swap Counterparty may receive compensation in connection with its participation in this offering in the form of fees. These fees will be paid out of the assets of the Issuer and available amounts will be applied to pay these fees before they are applied to make payments to investors in the Notes. These fees are not contingent on the performance or trading value of the Notes, and the Trustee and/or Swap Counterparty would still receive significant compensation even if investors lose money. For information on existing or potential relationships or transactions between Goldman Sachs and the Swap Counterparty see the paragraph titled Swap Counterparty above. Non-public Information: The Disposal Agent, the Dealer, the Calculation Agent, the Process Agent and/or Swap Counterparty may, by virtue of its status or activities, possess or have access to non-publicly available information relating to Notes, the Assets, any derivative instruments referencing them and/or any of the issuer(s) thereof, as applicable. Such parties shall be under no obligation to disclose such status, activities or any public or non-public information. Risks related to the Assets No investigations: No investigations, searches or other enquiries have been made and no express or implied representations or warranties are made by or on behalf of the Issuer, the Dealer, the Trustee or any other person on their behalf in respect of the Assets. Asset values: The market price of the Assets will generally fluctuate. The Issuer may have to fund payments due in connection with the Notes by selling Assets at their market value. Confidential Information and Conflicts of Interest: The Custodian, the Disposal Agent and/or a Dealer may have confidential information concerning Assets which they will not be obliged to disclose to any Noteholder. Such parties may also be active participants on both sides of the market and may have long or short positions in, or buy and sell, securities or other derivatives identical or related to the Notes ( Relevant Instruments ). A Dealer s hedging and trading activities with respect to the Notes may affect the value of other Relevant Instruments and vice versa. The Custodian, the Disposal Agent and/or a Dealer may be calculation agent or sponsor of any Relevant Instrument and as such may make determinations affecting the value of the Notes. 13

14 Foreign Exchange Risk No investigations: None of the Issuer, the Transaction Counterparties or any of their affiliates (a) will provide any information or advice, (b) is under any obligation to review or (c) has conducted or will conduct any investigation or due diligence in relation to the foreign exchange market or any applicable foreign exchange rates. Foreign Exchange Rates: Foreign exchange rates may be affected by complex political and economic factors, including relative rates of inflation, interest rate levels, the balance of payments and the extent of any governmental surplus or deficit, and the monetary, fiscal and trade policies pursued by the governments of the relevant currencies. Previous foreign exchange rates are not necessarily indicative of future foreign exchange rates. Potential Withholding Tax and Redemptions under FATCA Pursuant to certain provisions of the U.S. Internal Revenue Code (the Code ), commonly known as FATCA, withholding may be required on, among other things, (i) certain payments made by foreign financial institutions ( foreign passthru payments ) (ii) certain U.S. source payments (including dividend equivalent payments, as described below under Potential U.S. Withholding on Dividend Equivalent Payments ) and (iii) payments of gross proceeds from the disposition of assets that can produce U.S. source interest or dividends (including assets that generate dividend equivalent payments), in each case, to persons that fail to meet certain certification, reporting, or related requirements. Each of the Issuers expects to be a foreign financial institution for these purposes. A number of jurisdictions (including the Cayman Islands, Ireland, Luxembourg and the Netherlands) have entered into, or have agreed in substance to, intergovernmental agreements with the United States to implement FATCA ( IGAs ), which modify the way in which FATCA applies in their jurisdictions. Certain aspects of the application of FATCA and IGAs to instruments or agreements such as the Assets, Swap Agreement and Notes, including whether withholding would ever be required pursuant to FATCA or an IGA with respect to payments on instruments or agreements such as the Assets, Swap Agreement and Notes, are uncertain and may be subject to change. If withholding is required pursuant to FATCA or an IGA with respect to payments on the Notes, Assets or the Swap Agreement, such withholding in respect of foreign passthru payments and payments of gross proceeds from the disposition of assets that generate dividend equivalent payments would not apply prior to 1 January Withholding on dividend equivalent payments pursuant to FATCA would not apply prior to 1 July 2017, at the earliest. The Issuer intends to treat the Notes as equity for U.S. federal income tax purposes (and pursuant to the terms and conditions, Noteholders agree to do the same) and accordingly, the Notes will not be eligible for grandfathering under FATCA. If the Issuer fails to comply with its obligations under FATCA (including the Cayman Islands, Ireland, Luxembourg or the Netherlands IGA, as applicable, and any IGA legislation thereunder), it may be subject to FATCA withholding on all, or a portion of, payments it receives with respect to the Assets and under the Swap Agreement (if any). Any such withholding would, in turn, result in the Issuer having insufficient funds from which to make payments that would otherwise have become due in respect of the Notes or under the Swap Agreement, if any. No other funds will be available to the Issuer to make up any shortfall and, as a result, the Issuer may not have sufficient funds to satisfy its payment obligations to Noteholders. Additionally, if payments to the Issuer in respect of its assets are, or will become, subject to FATCA withholding, a FATCA Tax Event will occur, in which case the Notes generally would be subject to early redemption. See Mandatory Redemption above. 14

15 No assurance can be given that the Issuer can or will comply with its obligations under FATCA or that the Issuer will not be subject to FATCA withholding. In the event that any withholding would be required pursuant to FATCA (including any IGA) with respect to payments on the Notes, no person would be required to pay additional amounts as a result of such withholding. FATCA is particularly complex and its application to the Issuers, the Notes and the Noteholders is subject to change. Potential investors should consult their own tax advisors regarding how these rules may apply to their investment in the Notes. U.S. Internal Revenue Code The U.S. Treasury Department has issued final regulations under Section 871(m) of the U.S. Internal Revenue Code (the "Code") which impose U.S. federal withholding tax on "dividend equivalent" payments made on certain financial instruments linked to U.S. corporations (which the regulations refer to as "specified ELIs") that are owned by non-u.s. holders. However, the final regulations do not apply to "specified ELIs" issued prior to 1 January 2017 (the "Grandfather Date"); accordingly we anticipate that non-u.s. holders of the Notes will not be subject to tax under Section 871(m) of the Code unless the Notes are deemed to be wholly or partially reissued for U.S. federal income tax purposes on or after the Grandfather Date. Notes that directly or indirectly reference shares of a U.S. corporation may be treated as "specified ELIs" for this purpose. It is therefore possible that a holder that acquires Notes that reference "specified ELIs" before the Grandfather Date, could nevertheless be subject to such withholding tax in the future if the Notes are deemed to be wholly or partially reissued for U.S. federal income tax purposes on or after such date. We will not pay any additional amounts in respect of this withholding tax, so if this withholding applies, you will receive less than the amount that you would have otherwise received. Information Reporting Obligations Information relating to the Notes and Coupons, their holders and beneficial owners may be required to be provided to tax authorities in certain circumstances pursuant to domestic or international reporting and transparency regimes. This may include (but is not limited to) information relating to the value of the Notes and Coupons, amounts paid or credited with respect to the Notes and Coupons, details of the holders or beneficial owners of the Notes and Coupons, and information and documents in connection with transactions relating to the Notes and Coupons. In certain circumstances, the information obtained by a tax authority may be provided to tax authorities in other countries. Some jurisdictions operate a withholding system in place of, or in addition to, such provision of information requirements. Pursuant to the Base Conditions and subject to certain limitations, a holder or beneficial owner of Notes or Coupons is required to provide information requested by the Issuer and/or any agent acting on its behalf for purposes of the Issuer s compliance with applicable information reporting regimes. Proposed Financial Transactions Tax ( FTT ) On 14 February 2013, the European Commission published a proposal for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia. In December 2015, Estonia withdrew from the group of states willing to introduce the FTT (the Participating Member States ). The proposed FTT has very broad scope and could, if introduced, apply to certain dealings in the Notes (including secondary market transactions) in certain circumstances. Primary market transactions referred to in Article 5(c) of Regulation (EC) No 1287/2006 are expected to be exempt. 15

16 Under the current proposals, the FTT could apply in certain circumstances to persons both within and outside of the Participating Member States. Generally, it would apply to certain dealings in the Notes where at least one party is a financial institution, and at least one party is established in a Participating Member State. A financial institution may be, or be deemed to be, "established" in a Participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a Participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a Participating Member State. However, the proposed FTT remains subject to negotiation between the Participating Member States and the scope of such tax is uncertain. Additional EU Member States may decide to participate. Prospective Noteholders are advised to seek their own professional advice in relation to the FTT. Counterparty Risk Reliance on creditworthiness of other parties: The Issuer s ability to make payments under the Notes will depend on performance by the Transaction Counterparties of their respective obligations under the Transaction Agreements. In particular, the ability of the Issuer to make payments on the Notes will depend on the performance by the Swap Counterparty of its obligations under the Swap Agreement. That in turn is dependent on performance by the Issuer of its obligations under the Swap Agreement. The Issuer s ability to perform its obligations under the Swap Agreement and the Notes depends on receipt of payments under the Assets. Those Assets will be held by the Custodian. The Custodian will be responsible for receiving payments on the Secured Property and remitting them to the relevant Transaction Counterparties in discharge of the Issuer s obligations under the Transaction Documents so the Issuer is exposed to the credit risk of, and reliant on the performance of its obligations by, the Custodian. The Issuer may, from time to time, deposit cash into one or more cash accounts with the Custodian or Sub-Custodian (as applicable). Any cash so deposited and any cash received by the Custodian or the Sub-Custodian for the account of the Issuer in relation to the Notes will be held by the Custodian or the Sub-Custodian (as applicable) as banker and not as trustee and will be a bank deposit. As a result, the cash will not be held in accordance with the client money rules as set out in the FCA rules and the Issuer will rank as a general unsecured creditor of the Custodian or the Sub-Custodian (as applicable). The Custodian and the Sub-Custodian will not segregate the Issuer s money from its own and shall not be liable to account to the Issuer for any profits made by the Custodian s or the Sub-Custodian s use as banker of such cash. The Issuer relies on Transaction Counterparties such as the Paying Agents to effect payments on the Notes on its behalf and the Disposal Agent to effect disposals of Assets. As such, any failure to perform by any such Transaction Counterparty may result in an inability by the Issuer to meet its obligations under the Notes. A failure to perform by a Transaction Counterparty may arise as a result of insolvency of such Transaction Counterparty and consequently Noteholders are subject to the insolvency risk of each such Transaction Counterparty. Regulatory Bail-Ins: The EU Directive establishing a framework for the recovery and resolution of credit institutions and investment firms (the Bank Recovery and Resolution Directive or BRRD ) was published in the EU Official Journal on 12 June The BRRD was implemented with effect in all European Member States on 1 January 2015, with the exception of the bail-in powers which were implemented on 1 January The aim of the BRRD is to provide national supervisory authorities with tools and powers to pre-emptively address potential banking crises in order to promote financial stability and minimise taxpayers exposure to losses. 16