Exchange Offer Memorandum. Exchange Offer SGS SA. Bondholders of % Bonds of CHF 625,000,000 SGS SA

Transcription

1 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES OF AMERICA Exchange Offer Memorandum regarding the Exchange Offer by SGS SA to Bondholders of 1.875% Bonds of CHF 625,000,000 of SGS SA for Fixed Rate Bonds of up to CHF 400,000,000 of SGS SA Dealer Managers Credit Suisse The Royal Bank of Scotland UBS Investment Bank Zürcher Kantonalbank SGS SA 6 February /23

2 Table of Contents 1. Offer Restrictions Background and Rationale of the Exchange Offer The Terms of the Exchange Offer Indicative Timetable Information on the New 2022 Bonds Information on the Existing 2016 Bonds Certain Considerations in relation to the Exchange Offer Swiss Tax Consequences Selected Questions and Answers Contact Risks relating to the Exchange Offer...17 ANNEX Illustrative, Hypothetical Example of the exchange calculation on a CHF 5,000 holding of Existing 2016 Bonds...20 ANNEX Acknowledgements, Representations, Warranties and Undertakings...21 SGS SA 6 February /23

3 The Issuer accepts responsibility for the information contained in this Exchange Offer Memorandum. To the best of the knowledge and belief of the Issuer (which has taken all reasonable care to ensure that such is the case), the information contained in this Exchange Offer Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information. The Issuer has entered into a dealer manager and paying agency agreement dated 6February 2014 with the Dealer Managers which contains certain provisions regarding payment of fees, expense reimbursements relating to the Exchange Offer (as defined below) and the issuance of the New 2022 Bonds (as defined below). The Dealer Managers are entitled to hold positions in the Existing 2016 Bonds (as defined below) and the New 2022 Bonds. The Dealer Managers are entitled to continue to own or dispose of, in any manner they may elect, any Existing 2016 Bonds they may beneficially own as at the date of this Exchange Offer Memorandum or, from such date, to acquire further Existing 2016 Bonds, subject to applicable law. The Dealer Managers have no obligation to the Issuer to Offer to Exchange (as defined below) or refrain from Offering to Exchange Existing 2016 Bonds beneficially owned by them in connection with the Exchange Offer. For the avoidance of doubt, any references in this Exchange Offer Memorandum to the Exchange Offer being made to holders of Existing 2016 Bonds (as defined below), and related references, shall be deemed to be references to the Exchange Offer being made to those Bondholders who comply with the restrictions set out under "Offer Restrictions" below. 1. Offer Restrictions General The exchange offer described in this Exchange Offer Memorandum is not made, directly or indirectly in any country or jurisdiction in which such offer would be considered unlawful, or would in any way violate any applicable law or regulation, or which would require SGS SA to amend the terms and conditions of the Exchange Offer in any way, or would require doing any additional filing with, or taking any additional action in regard to any governmental, regulatory or legal authority. It is not intended to extend the exchange offer to any such country or jurisdiction. Documents relating to the Exchange Offer may neither be distributed in such countries or jurisdictions nor sent into such countries or jurisdictions. Such documents may not be used for purposes of soliciting the purchase of any securities of SGS SA by any person or entity in such countries or jurisdictions. United States of America The Exchange Offer described in this Exchange Offer Memorandum will not be made directly or indirectly in the United States of America or by use of the mail of, or by any means or instrumentality of interstate or foreign commerce of, or any facilities of a national securities exchange of, the United States of America, and may only be accepted outside the United States of America. This restriction includes, but is not limited to, facsimile transmission or telephones. This Exchange Offer Memorandum and any other offering materials (including but not limited to the issuance and listing prospectus for the New 2022 Bonds), with respect to the Exchange Offer described in this Exchange Offer Memorandum, may not be distributed in or sent to the United States of America, and may not be used for the purpose of soliciting the sale, or purchase, of any securities of SGS SA from anyone in the United States of America. SGS SA is not soliciting the exchange of securities of SGS SA by any holder of such SGS SA 6 February /23

4 securities in the United States of America. Securities of SGS SA will not be accepted from holders of such securities in the United States of America. Any purported acceptance of an offer that SGS SA or its agents believe has been made in or from the United States of America will be invalidated. SGS SA reserves the absolute right to reject any and all acceptances determined by them not to be in the proper form, or the acceptance of which may be unlawful. The securities to be issued pursuant to the Exchange Offer described in this Exchange Offer Memorandum have not been, and will not be registered, under the U.S. Securities Act of 1933, the act as amended (the "U.S. Securities Act"), nor under any law of any state of the United States of America, and may not be offered, sold, resold, or delivered, directly or indirectly, in or into the United States of America, except pursuant to an exemption from the registration requirements of the U.S. Securities Act and the applicable state securities laws. Neither this Exchange Offer Memorandum nor the Exchange Offer described in this Exchange Offer Memorandum does constitute an offer to sell or the solicitation of an offer to buy any securities in the United States of America, or in any other jurisdiction in which such an offer or solicitation would be unlawful. Securities may not be offered or sold in the United States of America absent registration or an exemption from registration. SGS SA will not register, or make a public offer of its securities, or otherwise conduct the exchange offer in the United States of America. European Economic Area In relation to each Member State of the European Area which has implemented the Directive 2003/71/EC, as amended by the Directive 2010/73/EC (the "Prospectus Directive"), an offer to the public of any securities which are subject of the Exchange Offer contemplated by this Exchange Offer Memorandum may not be made in that Member State, except that an offer to the public of such securities in that Member State can be made: (i) (ii) at any time to a legal entity which is a qualified investor as defined in the Prospectus Directive; or in any other circumstances falling within art.3(2) of the Prospectus Directive. For the purpose of this provision, the expression "an offer to the public" in relation to any securities which are subject of the Exchange Offer contemplated by this Exchange Offer Memorandum in any Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the same may be varied in that Member State by any measures implementing the Prospective Directive in that Member State. United Kingdom This communication is directed only at persons in the U.K. who (i) have professional experience in matters relating to investments, (ii) are persons falling within article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc.") of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or (iii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons"). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons. SGS SA 6 February /23

5 Switzerland The contents of this Exchange Offer Memorandum have not been reviewed by any regulatory authority in Switzerland. Bondholders of Existing 2016 Bonds are advised to exercise caution in relation to the Exchange Offer. If a Bondholder of Existing 2016 Bonds is in any doubt about any of the contents of this Exchange Offer Memorandum, he should obtain independent professional advice. The New 2022 Bonds do not constitute a collective investment scheme or a structured product in the meaning of the Swiss Federal Act on Collective Investment Schemes of 23 June 2006, as amended (the "CISA"). Accordingly, holders of New 2022 Bonds (as defined below) do not benefit from the investor protection under the CISA or the approval or supervision by the Swiss Financial Market Supervisory Authority (the "FINMA"). Investors are exposed to the credit risk of the Issuer. The Exchange Offer Memorandum is neither a prospectus as that term is understood pursuant to article 652a or article 1156 of the Swiss Code of Obligations, the CISA or the listing rules of SIX Swiss Exchange Ltd. or any other exchange or regulated trading facility in Switzerland nor a simplified prospectus according to Article 5 paragraph 4 of the CISA. Bondholders should note that Chapter 5 of the Federal Act on Stock Exchanges and Securities Trading and the Ordinance of the Takeover Board on Public Takeover Offers are not applicable to the Exchange Offer. To ensure compliance with the Swiss Code of Obligations and all other applicable laws and regulations of Switzerland, only this Exchange Offer Memorandum and the preliminary issuance and listing prospectus for the New 2022 Bonds deemed incorporated by reference in this Exchange Offer Memorandum may be used in the context of any invitation to Bondholders to offer to exchange (the "Offer to Exchange") their Existing 2016 Bonds for the New 2022 Bonds pursuant to the Exchange Offer. 2. Background and Rationale of the Exchange Offer In 2010 and 2011, SGS SA, Switzerland ("SGS" or the "Issuer") issued CHF 625,000, % Bonds (security number: , ISIN: CH ) (the "Existing 2016 Bonds"). The Existing 2016 Bonds have a nominal value of CHF 5,000 each and will mature on 19 August SGS announced on 6 February 2014 the launch of a new 10 year benchmark bond maturing in 2024 and in addition an offer to holders of the Existing 2016 Bonds to exchange their Existing 2016 Bonds into bonds with a term of 8 years (security number: , ISIN: CH ) (the "New 2022 Bonds"). The New 2022 Bonds will have a nominal value of CHF 1,000 each. Through these two transactions SGS seeks to take advantage of favourable market conditions and optimize and extend its debt maturity profile. SGS therefore proposes to the bondholders of the Existing 2016 Bonds (the "Bondholders") to exchange their Existing 2016 Bonds for the New 2022 Bonds (the "Exchange Offer"). The Exchange Offer is being made in view of a cancellation of the Existing 2016 Bonds. The New 2022 Bonds will be priced at 11:00 CET on 20 February 2014 at a spread over 8-year CHF mid-swaps, subject to the right by SGS to modify the Exchange Offer. The spread at which the New 2022 Bonds will be priced at over 8-year CHF midswaps will be announced on 7 February 2014, subject to the right by SGS to modify the Exchange Offer. SGS SA 6 February /23

6 The Existing 2016 Bonds not instructed in the Exchange Offer will remain listed on the SIX Swiss Exchange Ltd. 3. The Terms of the Exchange Offer Exchange Offer The Issuer invites all Bondholders (subject to certain offer restrictions set out in "Offer Restrictions" above) to offer to exchange (the "Offer to Exchange") their outstanding Existing 2016 Bonds for the New 2022 Bonds. The Exchange Offer is being made upon the terms and subject to the conditions set out in this Exchange Offer Memorandum. The Exchange Offer will commence on 7 February 2014, subject to the right by SGS to modify the Exchange Offer, and will expire on 19 February 2014, 2:00 p.m. Zurich time, unless the Exchange Offer Period (as defined below) is extended or closed earlier by the Issuer as described herein. Existing 2016 Bonds tendered in the Exchange Offer will be cancelled in accordance with the terms and conditions of the Existing 2016 Bonds. Details of the Existing 2016 Bonds ISIN Valor Coupon Amount Outstanding Maturity Date Minimum Exchange Amount Maximum Exchange Amount Exchange Price CH % CHF 625,000, August 2016 CHF 100,000,000 CHF 400,000, % Details of the New 2022 Bonds and Exchange Ratio Some of the key terms of the New 2022 Bonds (security number: , ISIN: CH ) are as follows: Minimum Amount to be issued Maximum Amount to be Issued New 2022 Bond Yield New 2022 Bond Spread New 2022 Bond Coupon New 2022 Bond Price Exchange Ratio Maturity Date Approximately CHF 100,000,000 Approximately CHF 400,000,000 To be the sum of the New 2022 Bond Spread and the 8- year Swiss Franc Mid- Swap Rate to be determined at 11 a.m. on 20 February 2014 Expected to be between 23-28bps and announced on 7 February, 2014 Equal to the New 2022 Bond Yield rounded up or down to the nearest 0.125% Approximately 100 per cent., adjusted to allow for rounding up or down of the New 2022 Bonds coupon to the nearest per cent. in accordance with market convention Exchange Price of % divided by the New 2022 Bond Price (to be calculated to 6 decimal places). Expected on 25 February 2022 Acceptance of Offers to Exchange If the Issuer accepts any valid Offers to Exchange, it intends to accept all valid Offers to Exchange received by the Exchange Agent by the Exchange Expiration Deadline (as defined below), subject to a maximum of CHF 400,000,000 nominal (the "Maximum Exchange Amount"). If the aggregate nominal amount of Existing 2016 Bonds validly offered for exchange pursuant to the Exchange Offer is greater than the Maximum Exchange Amount, the Issuer intends to accept Existing 2016 Bonds for ex- SGS SA 6 February /23

7 change on a pro rata basis such that the aggregate nominal amount of Existing 2016 Bonds accepted for exchange (if any) is no greater than the Maximum Exchange Amount. Bondholders holding Existing 2016 Bonds in the minimum nominal amount of CHF 5,000 are advised that SGS does not intend to accept their bonds into the exchange in the scenario that the (i) number of aggregate instructions submitted exceed the Maximum Exchange Amount and (ii) the Issuer decides not to waive that Condition to the Exchange Offer and proceeds on a pro rata basis. New Issue Amount In respect of the New 2022 Bonds, the principal amount of the New 2022 Bonds to be issued by the Issuer and delivered in exchange for the Existing 2016 Bonds pursuant to the Exchange Offer, will be determined by the Issuer following the expiration of the Exchange Offer Period in its sole and absolute discretion. The Issuer intends to announce an indication of the amount of the New 2022 Bonds to be issued ahead of pricing on or about 20 February 2014 and confirm the exact amounts in a further announcement as soon as reasonably practicable after the Exchange Pricing Time (as defined below). Exchange Ratio, Accrued Interest Payments and Cash Rounding Amounts Bondholders who validly offer to Exchange their Existing 2016 Bonds at or prior to the Exchange Expiration Deadline and whose Offers to Exchange are accepted will receive the New 2022 Bonds in an amount (rounded down to the nearest CHF 1,000) equal to the aggregate principal amount of such Existing 2016 Bonds accepted for exchange multiplied by the Exchange Ratio (as defined below), subject to the requirement for each Bondholder to Offer to Exchange at least the Minimum Existing Holding (set out below in paragraph "Minimum Existing Holding"). Each such Bondholder will also be entitled to receive an accrued interest payment on their Existing 2016 Bonds so accepted for exchange which will be subject to Swiss Withholding Tax (Verrechnungssteuer). The Exchange Ratio applicable will be calculated as the ratio (rounded to six decimal places) resulting from the division of the Exchange Price, being % by the New 2022 Bond Price. The New 2022 Bond Price and the New 2022 Bond coupon in respect of the New 2022 Bonds will be calculated in accordance with market convention by reference to the New 2022 Bond yield, which is the sum of the New 2022 Bond spread (which is expected to be between 23 and 28 basis points and confirmed on 7 February 2014) and the 8-year Swiss Francs Mid-swap rate (the sum of which will be expressed on an annualised basis). The 8-year Swiss Francs Mid-swap Rate will be determined by the Issuer with the assistance of the Dealer Managers at the Exchange Pricing Time based on GOTX screen reference GDCO 4721 quoted on Bloomberg or any successor provider. The New 2022 Bonds yield is intended to reflect the yield to the Maturity Date of the New 2022 Bonds on the Settlement Date. The New 2022 Bonds coupon will be equal to the New 2022 Bonds yield, annualised and then rounded up or down to the nearest per cent. in accordance with Swiss market practice. The New 2022 Bond Price shall be as close as possible to 100 per cent. of the nominal amount of the New 2022 Bonds, adjusted to allow for rounding up or down of the New 2022 Bonds coupon to the nearest per cent. SGS SA 6 February /23

8 If, as a result of the application of the Exchange Ratio, a Bondholder would be entitled to receive an aggregate principal amount of the New 2022 Bonds that is not an integral multiple of CHF 1,000, the Issuer will pay, or procure that there is paid, in Swiss Francs to that Bondholder on the Exchange Settlement Date, the Cash Rounding Amount, which is an amount equal to the fractional portion of such aggregate principal amount that is not such an integral multiple (rounded to the nearest CHF 0.01, with half a cent being rounded upwards), multiplied by the New 2022 Bond Price. See also Annex 1 for an illustrative, hypothetical example of the exchange calculation on a CHF 5,000 holding of Existing 2016 Bonds. Minimum Existing Holding No Offer to Exchange the Existing 2016 Bonds will be accepted unless such Offer to Exchange relates to a principal amount of such Existing 2016 Bonds (the "Minimum Existing Holding") which is at least equal to in respect of (i) invitations to Bondholders domiciled in Switzerland to Offer to Exchange their Existing 2016 Bonds for the New 2022 Bonds pursuant to the Exchange Offer, CHF 5,000; or (ii) all other circumstances CHF 150,000. Pricing and Results Announcement As soon as reasonably practicable after the Exchange Pricing Time, the Issuer intends to announce (i) the 8-year Swiss Francs Mid-swap rate, the New 2022 bond yield, the New 2022 Bond Price and the New 2022 Bond coupon, (ii) the Exchange Ratio, (iii) whether valid Offers to Exchange pursuant to the Exchange Offer are accepted by the Issuer (iv) the aggregate principal amounts the Issuer will be accepting for exchange and (v) the issue amount of the New 2022 Bonds. The Existing 2016 Bonds Details of the Existing 2016 Bonds are set out in the table entitled "Information on the Existing 2016 Bonds" on page 13 below. The New 2022 Bonds Details of the New 2022 Bonds are set out in the table entitled "Information on the New 2022 Bonds" on page 12 below and in the preliminary issuance and listing prospectus in English language dated 6 February 2014 which is incorporated in this Exchange Offer Memorandum by reference and can be obtained free of charge via e- mail (prospectus@zkb.ch) or telephone ( ). The terms and conditions of the New 2022 Bonds remain subject to the Issuer s general discretion to amend the terms of the Exchange Offer, as further described in "Amendment of Exchange Offer Terms, Termination" below. Applications will be made for the New 2022 Bonds to be admitted to the Standard for Bonds of the SIX Swiss Exchange. The New 2022 Bonds will be provisionally admitted to trading with effect from (or shortly before) the Settlement Date, with application for definitive listing to be made as soon as practicable thereafter. The New 2022 Bonds and all related contractual documentation are governed by, and shall be construed in accordance with, Swiss law. SGS SA 6 February /23

9 Conditions to the Exchange Offer Notwithstanding any other provision of this Exchange Offer Memorandum, whether the Issuer accepts any or all Offers to Exchange from Bondholders is at its sole and absolute discretion and it may decide not to accept Offers to Exchange for any reason. Amendment of Exchange Offer Terms; Termination Subject as provided herein, the Issuer may, in its sole discretion, extend, re-open, amend, waive any condition of, terminate and/or withdraw the Exchange Offer (including, without limitation, by early closure of the Exchange Offer Period and amending the terms and conditions of the New 2022 Bonds or the Exchange Price) at any time up to and including when it announces whether it will accept valid Offers to Exchange pursuant to the Exchange Offer, which the Issuer expects to do in relation to the Existing 2016 Bonds as soon as reasonably practicable after the Exchange Pricing Time. Notice will be given to Bondholders if the terms and conditions or timing of the Exchange Offer are amended (see "Publication" on page 10 below). If any amendment to the terms of the Exchange Offer is made by the Issuer as set out above and, in the Issuer s opinion, such amendment is materially prejudicial to Bondholders that have already submitted Exchange Offers Notices (as defined below) to Exchange before the announcement of such amendment (which announcement shall include a statement that, in the Issuer s opinion, such amendment is materially prejudicial to such Bondholders), Bondholders that have already submitted Exchange Offer Notices to Exchange will have the right to withdraw their Offers to Exchange for a period of two Zurich business days from the date of such announcement or notification (for the avoidance of doubt, this right to withdraw shall not be triggered by an increase in the Exchange Price, decrease in the New 2022 bond price or increase in the New 2022 Bonds' spread). Procedures for Offering to Exchange the Existing 2016 Bonds Bondholders wishing to participate in the Exchange Offer must submit, or arrange to have submitted on their behalf, an exchange offer notice (the "Exchange Offer Notice") to the Exchange Agent not later than the Exchange Expiration Deadline (unless the Exchange Offer is closed earlier) and, in any event, before such earlier deadline as may be imposed by SIX SIS Notice (Bankenschreiben). An Exchange Offer Notice received by the Exchange Agent cannot be revoked. Bondholders should check with any bank, securities broker or other intermediary through which they hold their Existing 2016 Bonds whether such intermediary will apply different deadlines for participation to those set out in this Exchange Offer Memorandum and, if so, should factor in additional time, as necessary, to follow those deadlines. The receipt of such Exchange Offer Notice by the Exchange Agent will be acknowledged by the Direct Participant and will result in the blocking of the Existing 2016 Bonds. "Direct Participant" means each person who is shown in the records of SIX SIS AG as a holder of an interest in the Existing 2016 Bonds. Representations and Warranties of Bondholders By Offering to Exchange the Existing 2016 Bonds in the Exchange Offer, Bondholders and Direct Participants will, or will be deemed to, make a series of representations SGS SA 6 February /23

10 and warranties as per Annex 2 "Acknowledgements, Representations, Warranties and Undertakings". Conditions to the Exchange Offer The Exchange Offer is subject to the following conditions: The aggregate principal amount of the Existing 2016 Bonds exchanged during the Exchange Offer Period (as defined below) falls below CHF 100,000,000 (the "Minimum Exchange Amount") or exceeds CHF 400,000,000 (the "Maximum Exchange Amount") (please see "Acceptance of Offers to Exchange" above for details). SGS issues the New 2022 Bonds on the issue date, i.e. on 27 February No judgment, order or other authoritative measure has been issued which prohibits or declares the Exchange Offer or the consummation thereof illegal. SGS reserves the right to waive any or all of these conditions. Exchange Offer Period The Exchange Offer commences on 7 February 2014 and ends on 19 February 2014, 2:00 p.m. CET (the "Exchange Offer Period"), subject to the right by SGS to modify the Exchange Offer. Right to Modify the Exchange Offer SGS reserves the right in its sole discretion (i) to terminate the Exchange Offer at any time prior to the end of the Exchange Offer Period, (ii) to extend the Exchange Offer Period and/or (iii) to advance or postpone any of the other dates set forth in this Exchange Offer. Subject to mandatory Swiss law, SGS may further (i) at any time waive any provision or condition of the Exchange Offer or (ii) at any time amend any term of the Exchange Offer which SGS considers in its absolute discretion will not be less favorable to Bondholders. Any such modification of the Exchange Offer shall become effective with its publication on the website of SGS ( Publication All publications in connection with the Exchange Offer are published on the website of SGS: and, to the extent required, in accordance with the listing rules of SIX Swiss Exchange Ltd. They will also be provided to Bloomberg, Reuters and Telekurs/AWP News. Transfer Restrictions for Instructed Existing 2016 Bonds The Existing 2016 Bonds instructed pursuant to this Exchange Offer will be blocked in the relevant custody account until and including the earlier of (i) the Settlement Date or (ii) one day after the date of termination of the Exchange Offer. Exchange instructions submitted by Bondholders are irrevocable. SGS SA 6 February /23

11 Costs and Expenses In connection with the Exchange Offer, neither SGS nor the Exchange Agent (as defined below) will impose any SIX Swiss Exchange fees, charges, costs or expenses on the Bondholders. Exchange Mechanics Bondholders holding their Existing 2016 Bonds in a custody account will be informed of the Exchange Offer by their depository bank. They are requested to follow the instructions provided by the depository bank. Exchange Agent Zürcher Kantonalbank has been appointed by SGS as the Exchange Agent for the Exchange Offer. Governing Law / Jurisdiction The Exchange Offer and all rights and obligations resulting therefrom are governed by substantive laws of Switzerland. The exclusive place of jurisdiction is Zurich, Switzerland. 4. Indicative Timetable Indicative Exchange Offer Timetable Exchange Offer Period New 2022 Bond Spread Announcement Time 7 February 2014 until 19 February February 2014, by 7:30 a.m. Zurich time Exchange Expiration Deadline 19 February 2014, 2:00 p.m. Zurich time Indicative Results Announcement 20 February 2014, by 7:30 a.m. Zurich time Exchange Pricing Time 20 February 2014, 11:00 a.m. Zurich time Final Results Announcement As soon as practicable following the Exchange Pricing Time Exchange Settlement Date 27 February 2014 Announcement of the New 2022 Bond Spread Expiration of the Exchange Offer period Announcement of the amount of existing 2016 Bonds electing to exchange Determination of the, Mid- Swap Rate, the New 2022 Bond Price and the Exchange Ratio Announcement of the Final Results of the Exchange Offer and confirmation by The Issuer of the Acceptance of the Offers SGS SA 6 February /23

12 5. Information on the New 2022 Bonds Issuer Issue Amount Coupon Price in the Primary Market New 2022 Bond Spread Term SGS SA CHF 100,000,000 up to approximately CHF 400,000,000 Equal to the New Bond Yield rounded up or down to the nearest 0.125% to provide a reoffer price as close to par as possible, in accordance with market convention Publication in the newspapers (NZZ and Finanz und Wirtschaft), on Bloomberg (Code: ZKBD1) or telephone inquiry to Expected to be between basis points and to be announced on 7 February years Issue Date 27 February 2014 Maturity Date / Redemption 25 February 2022 Reopening of the Issue Denomination Covenants Listing Governing Law / Jurisdiction Sales Restrictions Security Number/ISIN The Issuer reserves the right to increase the issue amount at any time without approval by the Bondholders through the issuance of additional bonds which will be fungible with the existing bonds. CHF 1,000 nominal and multiples thereof Negative pledge (with exemptions), pari passu, default including cross-default (with exemptions), change of control Listing will be applied for under the standard for bonds of the SIX Swiss Exchange Ltd. The New 2022 Bonds are expected to be provisionally admitted to trading on SIX Swiss Exchange Ltd as of 25 February The last trading day is expected to be on 22 February Swiss law / Zurich In particular U.S.A. and U.S. persons, European Economic Area, United Kingdom / CH For a detailed description of the New 2022 Bonds reference is made to the preliminary issuance and listing prospectus in English language dated 6 February 2014 which is incorporated in this document by reference and can be obtained free of charge from Zürcher Kantonalbank, Josefstrasse 222, P.O. Box, 8010 Zurich, Switzerland or via (prospectus@zkb.ch) or telephone ( ). SGS SA 6 February /23

13 6. Information on the Existing 2016 Bonds Issuer SGS SA Issue Amount CHF 625,000,000 Coupon Accrued Interest until 27 February 2014 to be paid to exchanging Bondholders 1.875% p.a. Maturity Date / Redemption 19 August 2016 Denomination Covenants Governing Law / Jurisdiction Security Number/ISIN/Ticker CHF (before withholding tax) for each Existing 2016 Bond CHF 5,000 nominal and multiples thereof Negative pledge (with exemptions), pari passu, default including cross-default (with exemptions), change of control Swiss law / Zurich / ISIN: CH / SGS10 For a detailed description of the Existing 2016 Bonds reference is made to the existing issuance and listing prospectus in English language which can be downloaded from the following website: 7. Certain Considerations in relation to the Exchange Offer The liquidity of the trading market for the Existing 2016 Bonds may be reduced as a result of the Exchange Offer In case the Exchange Offer is successful, the aggregate principal amount of the Existing 2016 Bonds will be reduced by up to CHF 400 million. This reduction of principal amount may significantly reduce the liquidity of the trading market for the Existing 2016 Bonds. Instructed Existing 2016 Bonds will be subject to transfer restrictions and exchange instructions submitted by Bondholders are irrevocable The Existing 2016 Bonds exchanged pursuant to this Exchange Offer will be blocked in the relevant custody account until and including the earlier of (i) the Settlement Date or (ii) one day after the date of termination of the Exchange Offer. Exchange instructions submitted by Bondholders are irrevocable. SGS may terminate the Exchange Offer in its sole discretion at any time SGS reserves the right to terminate the Exchange Offer in its sole discretion at any time prior to the end of the Exchange Offer Period without compensation of any kind. In addition, SGS has no obligation to accept Existing 2016 Bonds instructed to exchange if the aggregate principal amount of the Existing 2016 Bonds offered for exchange is less than CHF 100 million or if SGS does not issue the New 2022 Bonds on the issue date, i.e. on 27 February SGS SA 6 February /23

14 Bondholders of Existing 2016 Bonds are advised to consult their own advisors before participating in the Exchange Offer Neither SGS nor Zürcher Kantonalbank (in its function as Exchange Agent) nor the Dealer Managers makes any recommendation whether Bondholders should instruct the Existing 2016 Bonds in the Exchange Offer. Bondholders of Existing 2016 Bonds should consult their own tax, accounting, financial, legal and professional advisors as they may deem appropriate regarding the participation in the Exchange Offer. 8. Swiss Tax Consequences Swiss withholding tax (Verrechnungssteuer) The exchange of the nominal value of the Existing 2016 Bonds with the nominal value of the New 2022 Bonds is not subject to Swiss withholding tax. The Cash Rounding Amount is not subject to Swiss withholding tax. The payment of Accrued Interest is subject to Swiss withholding tax at the current rate of 35 per cent and SGS will be required to withhold such tax from the payment of Accrued Interest on the Existing 2016 Bonds exchanged pursuant to this Exchange Offer. Swiss federal stamp tax (Stempelabgaben) The exchange of the Existing 2016 Bonds with the New 2022 Bonds pursuant to this Offer is neither subject to Swiss federal securities transfer tax (Umsatzabgabe) nor Swiss federal issuance stamp tax (Emissionsabgabe). Swiss income tax (Einkommenssteuern) for Swiss resident individual Bondholders For Swiss resident individual Bondholders holding the Existing 2016 Bonds as private asset (as opposed to business assets) the exchange of the nominal value of the Existing 2016 Bonds with the nominal value of the New 2022 Bonds is not subject to Swiss income tax (repayment of nominal value). The Cash Rounding Amount for such Bondholders is not subject to Swiss income tax (tax free capital gain). However, the payment of Accrued Interest is for Swiss resident individual Bondholders holding the Existing 2016 Bonds as private asset subject to Swiss income tax. 9. Selected Questions and Answers Who can participate in the Exchange Offer and is there an obligation to participate? Subject to applicable offer restrictions, every Bondholder of the Existing 2016 Bonds is entitled to participate in the Exchange Offer during the Exchange Offer Period. The participation in the Exchange Offer is voluntary and, accordingly, there is no obligation for Bondholders to participate. Is there a guarantee that every Bondholder can participate with the entire nominal amount of his/her Existing 2016 Bonds? The Exchange Offer is subject to the conditions that the Existing 2016 Bonds with an aggregate principal amount of at least CHF 100 million are exchanged, that SGS issues the New 2022 Bonds on the issue date, i.e. on 27 February 2014 and that no judgment, order or other authoritative measure has been issued which prohibits or declares the Exchange Offer or the consummation thereof illegal. In addition, if the aggregate number of the Existing 2016 Bonds instructed for exchange exceeds SGS SA 6 February /23

15 80,000 (corresponding to an aggregate principal amount instructed for exchange of CHF 400 million), the number of the Existing 2016 Bonds instructed for exchange will be reduced pro rata. Accordingly, there is no guarantee for Bondholders that the Exchange Offer will be declared successful or that all Existing 2016 Bonds offered for exchange will be accepted for exchange in the Exchange Offer. Moreover, SGS reserves the right to terminate the Exchange Offer in its sole discretion at any time prior to the end of the Exchange Offer Period. What are the consequences if a Bondholder accepts the Exchange Offer? Bondholders not subject to offer restrictions who timely instruct their Existing 2016 Bonds until 19 February 2014, 2:00 p.m. CET, subject to a shortened Exchange Offer Period, receive for each instructed and accepted Existing 2016 Bond on the Settlement Date (expected to be 27 February 2014): An amount of New 2022 Bonds equal in value to the their holding of Existing 2016 Bonds at the Exchange Price of %, subject to that amount of New 2022 Bonds being a multiple of CHF 1,000; accrued interest for the 1.875% coupon of the Existing 2016 Bond until (27 February 2014) in the amount of CHF (before withholding tax) for each Existing 2016 Bond, subject to Swiss withholding tax; and a Cash Rounding Amount in CHF (if applicable). What are the consequences if Bondholders do not participate in the Offer? The Existing 2016 Bonds remain listed on the SIX Swiss Exchange Ltd until maturity of the Existing 2016 Bonds on 19 August In case the Exchange Offer is successful, the aggregate principal amount of the Existing 2016 Bonds could be reduced by up to CHF 400 million. This reduction of principal amount may significantly reduce the liquidity of the trading market for the Existing 2016 Bonds. What arguments have to be considered regarding the Exchange Offer and what are the alternatives for Bondholders? Among other things, Bondholders should consider the following arguments regarding the Exchange Offer. If the Existing 2016 Bonds are exchanged The New 2022 Bonds to be received in exchange for the Existing 2016 Bonds are traded on the primary market as of 25 February 2014 and their market value can be assessed accordingly. For Swiss resident individual Bondholders holding the Existing 2016 Bonds as private asset, the Cash Rounding Amount in CHF is not subject to Swiss income tax (tax free capital gain) and Swiss withholding tax. Exchanging Bondholders receive Accrued Interest for the Existing 2016 Bonds until the Settlement Date (27 February 2014) in the net amount of CHF for each Existing 2016 Bond after deduction of Swiss Withholding Tax of CHF SGS SA 6 February /23

16 For Swiss resident individual Bondholders holding the Existing 2016 Bonds as private asset, Accrued Interest for the Existing 2016 Bonds is, however, subject to Swiss income tax and Swiss withholding tax at the current rate of 35 per cent. If the Existing 2016 Bonds are held to maturity Bondholders will receive an interest payment of 1.875% on 19 August 2014, 19 August 2015 and on 19 August 2016 and the nominal amount will be redeemed on 19 August Interest payments for Swiss resident individual Bondholders holding the Existing 2016 Bonds as private asset are subject to Swiss income tax and Swiss withholding tax. What costs are related to the Exchange Offer for instructing to exchange Existing 2016 Bonds? In connection with the Exchange Offer, neither SGS nor the Exchange Agent will impose any charges, costs or expenses on the Bondholders. How can Bondholders participate in the Exchange Offer? Bondholders holding their Existing 2016 Bonds in a custody account will be informed of the Exchange Offer by their depository bank. They are requested to follow the instructions provided by the depository bank. 10. Contact For any questions with regard to the Exchange Offer please contact: Exchange Agent: Zürcher Kantonalbank Phone vincenzo.pisano@zkb.ch; urs.frischknecht@zkb.ch Dealer Managers: Credit Suisse AG Phone / liability.management@credit-suisse.com; alexander.hoffmann.2@credit-suisse.com The Royal Bank of Scotland plc Phone / andrew.burton@rbs.com; clemens.durkop@rbs.com UBS Investment Bank Phone mark-t.watkins@ubs.com SGS SA 6 February /23

17 Zürcher Kantonalbank Phone Risks relating to the Exchange Offer Differences between the Existing 2016 Bonds and the New 2022 Bonds The Terms of the Bonds of the Existing 2016 Bonds may be substantially different from those of the New 2022 Bonds. Bondholders should consider the differences (which include, inter alia, the payment dates, the maturity dates and the coupon) closely. The full terms and conditions of the New 2022 Bonds are set out in the Terms of the Bonds included in the preliminary Issuance and Listing Prospectus in English language dated 6 February 2014 which is incorporated in this document by reference and can be obtained free of charge via (prospectus@zkb.ch) or telephone ( ). Future actions in respect of the Existing 2016 Bonds Whether or not any Offer to Exchange is accepted, the Dealer Managers and the Issuer and their respective affiliates may, to the extent permitted by applicable law, continue to acquire, from time to time during or after the Exchange Offer, the Existing 2016 Bonds other than pursuant to the Exchange Offer, including through open market purchases, privately negotiated transactions, exchange offers, exchange offers or otherwise, upon such terms and at such prices as they may determine, which may be more or less than the prices to be paid pursuant to the Exchange Offer and could be for cash or other consideration or otherwise on terms more or less favourable than those contemplated in the Exchange Offer. No obligation to accept Offers to Exchange The Issuer is under no obligation to accept Offers to Exchange. Offers to Exchange may be rejected in the sole discretion of the Issuer for any reason and the Issuer is under no obligation to Bondholders to furnish any reason or justification for refusing to accept an Offer to Exchange. For example, the Existing 2016 Bonds Offered for Exchange may be rejected if the Exchange Offer is terminated, if the Exchange Offer does not comply with the relevant requirements of a particular jurisdiction, if the Minimum Existing Holding condition is not satisfied or for other reasons. Responsibility for complying with the procedures of the Exchange Offer Bondholders are responsible for complying with all of the procedures for exchanging the Existing 2016 Bonds pursuant to the terms of this Exchange Offer Memorandum. None of the Issuer, the Dealer Managers or the Exchange Agent assumes any responsibility for informing Bondholders of irregularities with respect to Offers to Exchange from the Bondholders. Completion, termination and amendment No assurance can be given that the Exchange Offer will be completed. Completion of the Exchange Offer is conditional upon the satisfaction or waiver (if permitted) of the conditions to the Exchange Offer set out herein. In addition, subject as provided herein, the Issuer may, in its sole discretion, extend, re-open, amend, waive any condition of, terminate and/or withdraw the Exchange Offer (including, but not limited to, the terms and conditions of the New 2022 Bonds) at any time prior to its announcement of whether it will accept valid Offers to Exchange pursuant to the Exchange Offer, which the Issuer expects to make as soon as reasonably practicable after the Pricing Time, and may, in its sole discretion, waive conditions to the Exchange Offer after this date. SGS SA 6 February /23

18 Compliance with Offer Restrictions Bondholders and Direct Participants are referred to the offer restrictions on pages 3 to 5 and the deemed representations and warranties on page 9 et seq. of this Exchange Offer Memorandum. Non-compliance with the offer restrictions by a Bondholder or a Direct Participant could result in, among other things, an inability to validly Offer to Exchange the Existing 2016 Bonds, the unwinding of trades and/or heavy penalties. Responsibility to consult advisers Bondholders should consult their own tax, accounting, financial and legal advisers regarding the suitability to themselves of the tax or accounting consequences of participating or declining to participate in the Exchange Offer and an investment in the New 2022 Bonds. None of the Issuer, the Dealer Managers, the Exchange Agent or any director, officer, employee, agent or affiliate of any such person is acting for any Bondholder or will be responsible to any Bondholder for providing any protections which would be afforded to its clients or for providing advice in relation to the Exchange Offer, and accordingly none of the Issuer, the Dealer Managers, the Exchange Agent or any director, officer, employee, agent or affiliate of any such person makes any recommendation as to whether Bondholders should Offer to Exchange their Existing 2016 Bonds or refrain from taking any action in the Exchange Offer with respect to such Bondholder's Existing 2016 Bonds, and none of them has authorised any person to make any such recommendation. BONDHOLDERS ARE ADVISED TO CHECK WITH ANY BANK, SECURITIES BROKER, CLEARING SYSTEM OR OTHER INTERMEDIARY THROUGH WHICH THEY HOLD THEIR EXISTING 2016 BONDS WHETHER SUCH INTERMEDIARY APPLIES DIFFERENT DEADLINES FOR ANY OF THE EVENTS SPECIFIED IN THIS EXCHANGE OFFER MEMORANDUM, AND THEN TO ALLOW FOR SUCH DEADLINES IF DEADLINES SET BY SUCH PERSONS ARE PRIOR TO THE DEADLINES SET OUT IN THIS EXCHANGE OFFER MEMORANDUM. Risks relating to the New 2022 Bonds Bondholders should consider carefully the following risk factors: The Exchange Ratio may not reflect the market value of the corresponding New 2022 Bonds The New 2022 Bonds will be provisionally admitted to trading with effect from (or shortly before) the Settlement Date, with application for definitive listing to be made as soon as practicable thereafter while the Existing 2016 Bonds will be blocked at the date a Bondholder submits its Offer to Exchange, therefore, a exercising Bondholder is not in the position for a longer period to neither trade or settle its Existing 2016 Bonds nor the New 2022 Bonds on the SIX Swiss Exchange. The New 2022 Bonds are securities for which there is currently no trading market and there can be no assurance as to the development of liquidity of any trading market for the New 2022 Bonds. To the extent that the New 2022 Bonds are traded on SIX Swiss Exchange, prices of the New 2022 Bonds will fluctuate greatly, depending on the trading volume and the balance between buy and sell orders. Bondholders are urged to contact their brokers to obtain the best available information as to the potential market price of the New 2022 Bonds and for advice concerning the effect of the Exchange Ratio. Uncertainty as to the trading market for the New 2022 Bonds The New 2022 Bonds will be provisionally admitted to trading with effect from (or shortly following) the Settlement Date, with application for definitive listing to be made as soon as practicable thereafter. The New 2022 Bonds are securities for which there SGS SA 6 February /23

19 is currently no trading market and there can be no assurance as to the development of liquidity of any trading market for the New 2022 Bonds. SGS SA 6 February /23

20 ANNEX1 Illustrative, Hypothetical Example of the exchange calculation on a CHF 5,000 holding of Existing 2016 Bonds. Hypothetical Illustrative Example for Exchange of SGS 1.875% 2016 Bonds into New 2022 Bonds Launch Date 6th February 2014 Pricing Date 20th February 2014 Settlement Date 27th February 2014 Existing 2016 Bond Holding SFr. 5' Existing 2016 Bond Coupon 1.875% Last Existing 2016 Bond Coupon Date 19 August 2013 Expected Maturity 19 August 2016 Existing 2016 Bond Exchange Price on Pricing Date (%) Existing 2016 Bond Exchange Value on Pricing Date (per CHF 5,000 Bond) SFr. 5' New 2022 Bond Reference Benchmark 8yr CHF Mid-swaps New 2022 Bond Reference Benchmark Source GOTX Bloomberg Page Illustrative New 2022 Bond Reference Benchmark Rate (to be fixed at 11am CET on Pricing Date) 1.075% Illustrative New 2022 Bond Spread 27 bps Illustrative New 2022 Bond Yield (annual) (8yr Mid-swap rate plus New 2022 Bond Spread) 1.345% Illustrative New 2022 Bond Coupon (annual) 1.375% Illustrative New 2022 Bond Price % New 2022 Bond Minimum Denomination Illustrative New 2022 Bond Value on Pricing Date (per CHF 1,000 Bond) SFr. 1' SFr. 1' Illustrative Exchange Ratio (Existing 2016 Bond Price / New 2022 Bond Price to 6 decimal places) Accrued Interest (188 days per CHF 5,000 Bond) SFr Swiss Withholding Tax (Verrechnungssteuer) deducted at 35% SFr Accrued Interest (188 days per CHF 5,000 Bond) net of Swiss Withholding Tax SFr Total Consideration Received Number of New 2022 Bonds received 5 Value of New 2022 Bonds received SFr. 5' Payable in Cash Cash Rounding Amount (Value of Existing 2016 Bonds less Value of New 2022 Bonds) SFr Accrued Interest received net of Swiss Withholding Tax (Verrechnungssteuer) SFr Total payable in cash SFr Swiss Withholding Tax Amount (Verrechnungssteuer) deducted SFr SGS SA 6 February /23

21 ANNEX 2 Acknowledgements, Representations, Warranties and Undertakings By submitting a valid Exchange Offer Notice to the Exchange Agent in accordance with the standard procedures of the Exchange Agent, (i) Bondholders and Direct Participants shall and (ii) the entity submitting such Exchange Offer Notice shall on behalf of the Bondholders, and Direct Participants be deemed to make the acknowledgements, representations, warranties and undertakings set out below to the Issuer, the Dealer Managers and the Exchange Agent at the time of such submission, and on the Expiration Date and the Settlement Date (and if the Bondholder or Direct Participant is unable to give such acknowledgements, representations, warranties and undertakings, such Bondholder or the Direct Participant on its behalf should contact the Dealer Managers immediately): (a) (b) (c) (d) (e) (f) (g) It has received, reviewed and accepts the terms of this Exchange Offer Memorandum. It is assuming all the risks inherent in participating in the Exchange Offer and has undertaken all the appropriate analysis of the implications of the Exchange Offer without reliance on the Issuer, Upon the terms and subject to the conditions of the Exchange Offer, it thereby Offers to Exchange the principal amount of the Existing 2016 Bonds in its account blocked in the account with the Direct Participant and acknowledges that it may only participate in the Exchange Offer if its Offer to Exchange the Existing 2016 Bonds relates to a principal amount equal to or greater than the Minimum New Holding applicable to it. It agrees to ratify and confirm each and every act or thing that may be done or effected by the Issuer, any of its directors or any person nominated by the Issuer in the proper exercise of his or her powers and/or authority hereunder. It agrees to do all such acts and things as shall be necessary and execute any additional documents deemed by the Issuer to be desirable, in each case to complete the transfer of the Existing 2016 Bonds to the Issuer or its nominee in exchange for the New 2022 Bonds and/or to perfect any of the authorities expressed to be given hereunder. It has observed the laws of all relevant jurisdictions, obtained all requisite governmental exchange control or other required consents, complied with all requisite formalities and paid any issue, transfer or other taxes or requisite payments due from it in each respect in connection with any offer or acceptance in any jurisdiction and it has not taken or omitted to take any action in breach of the terms of the Exchange Offer or which will or may result in the Issuer, the Dealer Managers, the Exchange Agent or any other person acting in breach of the legal or regulatory requirements of any such jurisdiction in connection with the Exchange Offer or invitation for Bondholders to Offer to Exchange the Existing 2016 Bonds in connection therewith. All authority conferred or agreed to be conferred pursuant to its representations, warranties and undertakings and all of its obligations shall be binding upon its succes- SGS SA 6 February /23