IMPORTANT NOTICE NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES OR OTHERWISE EXCEPT TO PERSONS TO WHOM IT CAN LAWFULLY BE DISTRIBUTED.

Transcription

1 IMPORTANT NOTICE NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES OR OTHERWISE EXCEPT TO PERSONS TO WHOM IT CAN LAWFULLY BE DISTRIBUTED. IMPORTANT: You must read the following before continuing. The following applies to the Offering Circular following this page, and you are therefore advised to read this page carefully before reading, accessing or making any other use of the Offering Circular. In accessing the Offering Circular, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from Bank Audi s.a.l. (the Bank ) and Audi Investment Bank s.a.l. (the Placement Agent ), as a result of such access. NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE SUCH AN OFFER IS UNLAWFUL. NEITHER THE RIGHTS (AS DEFINED HEREIN) NOR THE SECURITIES (AS DEFINED HEREIN) HAVE BEEN OR WILL BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT ), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED OR SOLD, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS. THE BANK DOES NOT INTEND TO REGISTER ANY OFFERING OR CONDUCT ANY PUBLIC OFFERING IN THE UNITED STATES, AND NO OFFERING OF THE SECURITIES DESCRIBED HEREIN WILL BE MADE BY THE BANK OR ANY OTHER PERSON IN THE UNITED STATES. NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION NOR ANY OTHER REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE SECURITIES, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE TRANSACTION DESCRIBED HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES. THE ATTACHED OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER AND, IN PARTICULAR, MAY NOT BE FORWARDED TO ANY U.S. PERSON OR U.S. ADDRESS. ANY SUCH FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS RESTRICTION MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. To the extent that distribution of the Offering Circular is deemed to constitute an offer of Rights or Securities in any Member State of the European Economic Area (the EEA ) that has implemented Directive 2003/71/EC, as amended (together with any implementing measures, the Prospectus Directive ), such offer will only be addressed to and this document is intended for distribution only to Qualified Investors (within the meaning of Article 2(1)(e) of the Prospectus Directive) and/or will only be available to fewer than 100 or, if the relevant Member State has implemented the relevant provisions of Directive 2010/73/EU, 150 natural or legal persons (other than Qualified Investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, or will otherwise be made in circumstances that do not require the Bank to publish a prospectus pursuant to the Prospectus Directive. In the United Kingdom, the Offering Circular may be only distributed to and may be directed only at persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended. The Bank has not authorized any offer of the Securities to the public in the United Kingdom under the Financial Services and Markets Act 2000 ( FSMA ). The Securities may not lawfully be offered or sold to persons in the United Kingdom except in circumstances which do not result in an offer to the public in the United Kingdom within the meaning of FSMA or otherwise in compliance with the applicable provisions of FSMA. NEITHER BANQUE DU LIBAN, THE CENTRAL BANK OF LEBANON, NOR THE CAPITAL MARKETS AUTHORITY OF LEBANON HAS PASSED UPON OR TAKES ANY RESPONSIBILITY FOR THE INFORMATION CONTAINED IN THE OFFERING CIRCULAR OR FOR THE MERITS OF ANY ISSUE OR SALE OF RIGHTS OR SECURITIES HEREUNDER. The attached Offering Circular has been delivered to you on the basis that you are a person into whose possession this Offering Circular may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver this Offering Circular to any other person. The attached Offering Circular has been sent to you in electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of the Bank, the Placement Agent, any person who controls them or any director, officer, employee or agent of them or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the Offering Circular distributed to you in electronic format and the hard copy version available to you without charge on request from the Bank or the Placement Agent.

2 NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES. (incorporated in Lebanon with limited liability) List of Banks 56. Commercial Registry: Beirut Offer of 50,000,000 common shares in Bank Audi S.A.L., together with three Warrants per newly-issued common share exercisable for common shares in Odea Bank A.Ş. Bank Audi S.A.L., a bank incorporated in Lebanon with limited liability (the Bank or Bank Audi ), is conducting a capital increase (the Capital Increase ) by way of an offer of 50,000,000 newly-issued common shares of the Bank (the New Shares ), which is expected to be comprised of (i) the issuance of New Shares, initially reserved to existing shareholders by way of an issue of rights (the Rights ), together with three warrants (the Warrants and, together with the New Shares, the Securities ) per New Share (the First Capital Increase ) and (ii) the issuance of 10,000,000 New Shares, together with three Warrants per New Share, to new investor(s) (the Second Capital Increase ). The issue price of the New Shares shall be U.S.$6.00 per New Share. In the First Capital Increase, each existing shareholder will be allocated Rights pro rata to the number of common shares held by such shareholder as at September 1, Securities relating to unexercised Rights will be allocated by the Bank in its sole discretion, although the Bank intends to grant priority in such allocation to existing shareholders. For a description of the rights attaching to the common shares of the Bank, see Description of the Share Capital of the Bank. The First Capital Increase and the Second Capital Increase are not conditional on each other; the Bank may proceed with the First Capital Increase, the Second Capital Increase, both or none. The Bank will issue the Warrants. Each Warrant will entitle the holder thereof, during the Warrant Exercise Period, to purchase one share (provided that the Reverse Stock Split (as defined below) has occurred and subject to adjustment) in the Bank s subsidiary, Odea Bank A.Ş. ( Odeabank ), from the Bank. The Warrant Exercise Period is expected to be a 30-day period commencing on May 15, Warrants will be exercisable at an exercise price of U.S.$0.95 per share of Odeabank (each, an Odeabank Share ) (provided that the Reverse Stock Split has occurred), subject to adjustment. See Summary and Terms and Conditions of the Warrants. The Capital Increase was authorized by the shareholders of the Bank at an Extraordinary General Meeting held on August 26, 2014 and approved by the Central Bank of Lebanon (the Central Bank ), acting through its Central Council, on August 27, The Securities are expected to be issued on or about September 23, 2014 (the Issue Date ), subject to the satisfaction of certain conditions precedent. See Summary for a description of these conditions precedent. Application will be made to list the New Shares on the Beirut Stock Exchange (the BSE ). The Warrants will not be listed. SEE RISK FACTORS FOR A DISCUSSION OF CERTAIN FACTORS TO BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SECURITIES. This offering circular (the Offering Circular ) does not constitute an offer to sell or an invitation to subscribe for, or the solicitation of an offer or invitation to buy or subscribe for, Securities in any jurisdiction where such an offer or solicitation is unlawful or would impose any unfulfilled registration, publication or approval requirements on the Bank. The Securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the Securities Act ), or the securities laws of any state or other jurisdiction of the United States or under applicable securities laws of Australia, Canada or Japan. Subject to certain exceptions, the New Shares and Warrants may not be, offered, sold, resold, transferred or distributed, directly or indirectly, within, into or in the United States or to or for the account or benefit of persons in the United States, Australia, Canada, Japan or any other jurisdiction where such offer or sale would violate the relevant securities laws of such jurisdiction. Certain other restrictions apply. See Placement of the New Shares and Warrants. The Warrants will only be exercisable by persons who represent, among other things, that they are outside the United States and not a U.S. person (as defined in Rule 902 promulgated under the Securities Act) or acting for the account or benefit of a U.S. person, and are acquiring shares in Odeabank upon exercise of the Warrants in reliance on an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Placement Agent The date of this Offering Circular is September 1, 2014.

3 IMPORTANT NOTICE This Offering Circular contains information provided by the Bank in connection with the Capital Increase. The Bank confirms that all information regarding the Bank and the Capital Increase contained in this Offering Circular is true and accurate in all material respects as at the date of this Offering Circular (or, if different, the date as at which such information is stated herein to be supplied) and does not omit any material facts the omission of which would make any statements of fact or opinion relating thereto and contained herein misleading. Audi Investment Bank S.A.L. ( Audi Investment Bank ) has acted as placement agent (the Placement Agent ) in connection with the Capital Increase. This Offering Circular relates to the Securities. As part of the Capital Increase, GDRs representing New Shares (together with Warrants) ( New GDRs ) will be offered to GDR Holders. GDR Holders should refer to the Notices to GDR Holders delivered through the clearing systems for details of the procedures for subscriptions for Securities for GDR Holders. No person has been authorized to give any information or to make any representations other than those contained in this Offering Circular and, if given or made, such information or representations must not be relied upon as having been authorized. The Placement Agent has not independently verified the accuracy or completeness of any information contained in this Offering Circular and, accordingly, makes no representation, warranty or undertaking (express or implied) with respect to, and does not accept any responsibility for (and hereby disclaims any liability for), the accuracy or completeness of this Offering Circular or any other information provided by the Bank or any other person, in connection with the Capital Increase. This Offering Circular should not be considered in itself as a recommendation by the Bank or the Placement Agent, or any of their respective officers, employees, agents or affiliates, that any recipient of this Offering Circular should participate in the Capital Increase. The Capital Increase involves substantial risks, including in respect of (i) emerging markets, the Lebanese Republic and the Turkish Republic in general; (ii) the Lebanese and Turkish banking sectors; and (iii) the financial condition, results of operations, business and prospects of the Bank and its corporate group. Each prospective purchaser is advised to consult its own counsel, accountant or business advisor regarding legal, tax, regulatory and related matters concerning the purchase, holding and sale of Securities by it. Neither the delivery of this Offering Circular nor the issue, offer, sale or delivery of any Securities shall imply that any information contained in this Offering Circular is correct as at any time subsequent to the date hereof or such other date as at which such information is stated to be given herein. This Offering Circular does not constitute an offer to sell or the solicitation of an offer to buy any Securities in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this Offering Circular and the offer or sale of Securities may be restricted by law in certain jurisdictions. No action has been taken by the Bank, the Placement Agent or any other person which would permit a public offering of any Securities or distribution of this document in any jurisdiction where action for that purpose is required. Accordingly, no Securities may be offered or sold, directly or indirectly, and neither this Offering Circular nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable securities laws and regulations. NEITHER THE CENTRAL BANK NOR THE CAPITAL MARKETS AUTHORITY OF LEBANON (THE CMA ) HAS PASSED UPON OR TAKES ANY RESPONSIBILITY FOR THE INFORMATION CONTAINED IN THIS OFFERING CIRCULAR OR FOR THE MERITS OF ANY OFFERING OF SECURITIES HEREUNDER. The Securities will only be offered to non-u.s. persons in offshore transactions outside the United States in reliance on Regulation S under the Securities Act, through Audi Investment Bank, as Placement Agent, on an as-and-if issued basis, subject to prior sale or withdrawal, cancellation or modification. An eligible investor is required to sign a Purchase Application, substantially in the form of Exhibit A hereto or an earlier version thereof as may have been previously made available to it by the Bank or the Placement Agent, as a condition to making an investment in the Securities. In accordance with applicable regulations, the Bank intends to list all of the New Shares on the BSE. It is expected that such listing will be effected in October The New Shares will not be listed on any international stock exchange. The Warrants will not be listed on any domestic or international stock exchange. i

4 The New Shares will be issued in registered form, registered in the respective names of the purchasers thereof in the share registry maintained by Midclear s.a.l. ( Midclear ) in respect of the Bank s share capital. Interests in the New Shares will be shown only on, and transfers thereof may be effected (subject as provided herein) only through, the book-entry system maintained by Midclear and its participants, including the Bank. New Shares in definitive form will not be issued. The Warrants will be issued in registered form and, upon issue, will be evidenced by the Global Warrant. So long as the warrants are evidenced by the Global Warrant, interest in the warrants will be shown only on, and transfers thereof may be effected only through, the book-entry system maintained by Midclear. Warrants in definitive form may be issued in certain circumstances. See Description and Settlement Procedures Relating to the Warrants. NOTICE TO EEA AND UK INVESTORS This Offering Circular and any offer in connection with the Capital Increase are only addressed to and directed at persons in member states (each, a Member State ) of the European Economic Area (the EEA ), who are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive ( Qualified Investors ) and/or will only be available to fewer than 100 or, if the relevant Member State has implemented the relevant provisions of Directive 2010/73/EU (the 2010 PD Amending Directive ), 150 natural or legal persons (other than Qualified Investors as defined in Directive 2003/711EC, as amended (the Prospectus Directive )), as permitted under the Prospectus Directive, or will otherwise be made in circumstances that do not require the Bank to publish a prospectus pursuant to the Prospectus Directive. In addition, in the United Kingdom, this Offering Circular is only being distributed to and is only directed at (1) Qualified Investors who are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order ) or high net worth entities falling within Article 49(2)(a) to (d) of the Order or (2) persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as relevant persons ). The Securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, (i) in the United Kingdom, relevant persons and (ii) in any Member State other than the United Kingdom, Qualified Investors or fewer than 100 or 150 persons (as the case may be). This Offering Circular and its contents should not be acted upon or relied upon in the United Kingdom, by persons who are not relevant persons. In the case of any Securities being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, such financial intermediary will also be deemed to have represented, acknowledged and agreed that the Securities acquired by it in the offering of Securities have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than Qualified Investors, or in circumstances in which the prior consent of the Bank has been given to such offer or resale. The Bank and the Placement Agent and their respective affiliates will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements. Notwithstanding the above, a person who is not a Qualified Investor, and who has notified the Bank of such fact in writing, may, with the written consent of the Bank, be permitted to purchase Securities. The Bank may rely on the truth and accuracy of the foregoing representations, acknowledgements and agreements and will not be responsible for any loss occasioned by such reliance. To the extent that the Bank receives Purchase Applications for Securities from 100 (or 150 in respect of Member States that have implemented the 2010 PD Amending Directive) or more prospective purchasers resident in one Member State of the EEA that are not Qualified Investors, all prospective holders from that Member State will be excluded from participating in the Capital Increase. For the purposes of this section, the expression Prospectus Directive means Directive 2003/71/EC (and any amendments thereto, including Directive 2010/73/EU) and includes any relevant implementing measure in each Member State. FORWARD-LOOKING STATEMENTS Certain statements in this Offering Circular constitute forward-looking statements. These statements appear in a number of places in this Offering Circular and include statements regarding the Bank s intent, belief or current expectations or those of the Bank s Management (as defined below) with respect to, among other things: statements regarding the Bank s and Odeabank s results of operations, financial condition and future economic performance; ii

5 statements regarding the Bank s and Odeabank s competitive position and the effect of such competition on its results of operations; statements regarding trends affecting the Bank s and Odeabank s financial condition or results of operations; statements of the Bank s and Odeabank s business plans, including those related to new products or services and anticipated customer demand for these products or services and potential acquisitions; statements regarding the Bank s and Odeabank s growth and investment programs and related anticipated capital expenditure; statements regarding the Bank s intentions to contain costs, increase operating efficiency and promote best practices; statements of assumptions; statements regarding the impact of the on-going global financial and market crisis; statements regarding the potential impact of regulatory actions on the Bank s and Odeabank s business, competitive position, financial condition and results of operations; statements regarding the future issuance of securities by the Bank, including, inter alia, the issuance of the Securities; and statements regarding the possible effects of adverse determinations in litigation, investigations, contested regulatory proceedings and other disputes. These forward-looking statements can be identified by the use of forward-looking terminology such as believes, expects, may, is expected to, will, will continue, should, approximately, would be, seeks, or anticipates or similar expressions or comparable terminology, or the negatives thereof. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results, performance or achievements of the Bank or Odeabank may differ materially from those expressed or implied in the forward-looking statements as a result of various factors. The information contained in this Offering Circular, including, without limitation, the information under Risk Factors, Overview of Bank Audi., Overview of Odeabank and The Banking Sector and Banking Regulation in Lebanon, identifies important factors that could cause such differences. In addition, many other factors could affect the Bank s and Odeabank s actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. The Bank does not undertake to update any forward-looking statements made herein. PRESENTATION OF INFORMATION Information in this Offering Circular relates to the Bank and its consolidated subsidiaries (including Odeabank), as listed in Note 53 to the Bank s Annual Financial Statements (as defined below). References to the Group shall mean, unless otherwise specified, the Bank and its consolidated subsidiaries. References to Management are to the Bank s senior management team. Financial information included in this Offering Circular has, unless otherwise indicated, been derived from (i) the Bank s audited consolidated financial statements as at, and for the years ended, December 31, 2013, 2012 and 2011 (the Annual Financial Statements ), (ii) the Bank s unaudited consolidated financial statements as at, and for the six months ended, June 30, 2014 and 2013 (the Interim Financial Statements ) (iii) Odeabank s audited unconsolidated financial statements as at, and for the years ended, December 31, 2013 and 2012 (the Odeabank Annual Financial Statements ) and (iv) Odeabank s reviewed unconsolidated financial statements as at, and for the six months ended, June 30, 2014 and 2013 (the Odeabank Interim Financial Statements ). The Bank s Annual Financial Statements and Interim Financial Statements have been prepared in accordance with standards issued or adopted by the International Accounting Standards Board and interpretations issued by the International Financial Reporting Interpretations Committee and the general accounting plan for banks in Lebanon and the regulations of the Central Bank and the Banking Control Commission of Lebanon (the Banking Control Commission ) and include the results of the Bank and its consolidated subsidiaries as listed in Note 14 to the Bank s Interim Financial Statements. Ernst & Young p.c.c. and BDO, Semaan, Gholam & Co. have audited the Annual Financial Statements. The Interim Financial Statements have not been audited or reviewed, are subject to year-end audit adjustments and may not be representative of year-end results. iii

6 The Odeabank Annual Financial Statements and Odeabank Interim Financial Statements have been prepared in accordance with Turkish Accounting Standards and Turkish Financial Reporting Standards. Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş., a member firm of Ernst & Young Global Limited, have audited the Odeabank Financial Statements and reviewed the Odeabank Interim Financial Statements. As used in this Offering Circular, references to IFRS are to International Financial Reporting Standards. The Bank maintains its accounts in Lebanese Pounds. Accordingly, U.S. Dollar amounts stated in this Offering Circular have been translated from Lebanese Pounds at the rate of exchange prevailing at the relevant balance sheet date, in the case of balance sheet data, and at the average rate of exchange for the relevant period, in the case of income statement data, and are provided for convenience only. No such translation should be construed, however, as a representation that the relevant foreign currency amount actually represents such U.S. Dollar amount or could be converted into U.S. Dollars at the rate indicated or at any other rate. In each case, the relevant rate for both balance sheet data and income statement data was LL 1,507.5 per U.S.$1.00, as, throughout the periods covered by this Offering Circular, the Central Bank has maintained its policy of pegging the value of the Lebanese Pound to the U.S. Dollar at a fixed rate of LL 1,507.5 per U.S.$1.00. Other currency translations are calculated at the relevant rate of exchange published by the Central Bank as at June 30, In this Offering Circular: references to CHF are to the Swiss Franc, the lawful currency of the Swiss Confederation; references to EGP are to the Egyptian Pound, the lawful currency of the Arab Republic of Egypt; references to or Euros are to the currency established for participating member states of the European Union as at the beginning of stage three of the European Monetary Union on January 1, 1999; references to JOD are to the Jordanian Dinar, the lawful currency of the Hashemite Kingdom of Jordan; references to LL or Lebanese Pounds are to the Lebanese Pound, the lawful currency of the Lebanese Republic; references to QAR are to the Qatari Riyal, the lawful currency of the State of Qatar; references to TL or TRY are to the Turkish Lira, the lawful currency of the Republic of Turkey; and references to U.S.$ or U.S. Dollars are to the U.S. Dollar, the lawful currency of the United States of America. Certain figures included in this Offering Circular have been subject to rounding adjustments and substantially all figures herein are approximations of the actual figures. Accordingly, figures shown as totals in certain tables may not represent an exact arithmetic aggregation of the figures that precede them. Restatements The comparative statement of financial position as at December 31, 2012 and other primary statements for the year ended December 31, 2012 presented in the Bank s audited consolidated financial statements as at, and for the year ended, December 31, 2013 have been restated to reflect the effect of the adoption of IAS 19R. The adoption of IAS 19R affects the opening equity balance as at January 1, 2012, as presented in the Statement of Changes in Equity and the balance sheet as at December 31, 2013, and the comparative figures as at December 31, 2012 have been presented as if IAS 19R had always been applied. See Note 2.3 to the Bank s audited consolidated financial statements as at, and for the year ended, December 31, 2013 for a description of the effect of the adoption of IAS 19R on the assets, liabilities and equity of the Bank. INFORMATION FROM PUBLIC SOURCES Certain information included in this Offering Circular has been extracted from information and data publicly released by official sources and other sources that are believed to be reliable, including the Central Bank, Bankdata (as defined below) and the Turkish Banking Regulation and Supervisory Authority (the BRSA ) figures. Throughout this Offering Circular, the Bank has also set forth certain statistics, including market shares, from official sources and other sources it believes to be reliable, including its own sources and estimates. Such information, data and statistics may be approximations or estimates or use rounded numbers. The Bank has not independently verified such information, data iv

7 or statistics, does not guarantee their accuracy and completeness and accepts no responsibility in respect of such information, data and statistics, other than that this information has been accurately reproduced and that, as far as the Bank is aware and is able to ascertain from information published, no facts have been omitted that would render the reproduced information inaccurate or misleading. Certain statistical and other information relating to the Lebanese banking sector generally and to the Bank s competitive position in its market and the relative positions of its primary competitors in the sector in particular are generally based on information made available from Bankdata Financial Services WLL ( Bankdata ), Central Bank statistics and the Bank s internal sources. Bankdata numbers may differ in certain respects from the Bank s own financial statements. Dr. Freddie C. Baz, an executive director of the Bank, is also a General Director of Bankdata and the editor of Bilanbanques, which is published by Bankdata. v

8 TABLE OF CONTENTS IMPORTANT NOTICE... i NOTICE TO EEA AND UK INVESTORS... ii FORWARD-LOOKING STATEMENTS... ii PRESENTATION OF INFORMATION... iii INFORMATION FROM PUBLIC SOURCES... iv GLOSSARY OF DEFINED TERMS... vii SUMMARY... 1 SUBSCRIPTION TIMETABLE AND PROCEDURES... 4 REPRESENTATIONS AND WARRANTIES OF PURCHASERS... 9 RISK FACTORS USE OF PROCEEDS DIVIDEND POLICY STATEMENT OF CAPITAL, RESERVES AND SUBORDINATED LOANS OF THE BANK SELECTED FINANCIAL INFORMATION OF THE BANK MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW OF BANK AUDI DIRECTORS, MANAGEMENT AND EMPLOYEES OVERVIEW OF ODEABANK THE BANKING SECTOR AND BANKING REGULATION IN LEBANON DESCRIPTION OF THE SHARE CAPITAL OF THE BANK TERMS AND CONDITIONS OF THE WARRANTS DESCRIPTION AND SETTLEMENT PROCEDURES RELATING TO THE WARRANTS TAXATION PLACEMENT OF THE NEW SHARES AND WARRANTS GENERAL INFORMATION EXHIBIT A FORM OF PURCHASE APPLICATION... A-1 INDEX TO THE FINANCIAL STATEMENTS...F-1 vi

9 GLOSSARY OF DEFINED TERMS For the purposes of this Offering Circular, the following terms shall have the meanings set forth below: Annual Financial Statements means the Bank s audited consolidated financial statements as at, and for the years ended, December 31, 2013, 2012 and Audi Capital means Audi Capital (KSA). Audi Investment Bank means Audi Investment Bank S.A.L. Audi Private Bank means Audi Private Bank S.A.L. Bank and Bank Audi means Bank Audi S.A.L., a bank incorporated in Lebanon with limited liability. Bank Audi Egypt means Bank Audi S.A.E. Bank Audi Jordan means Bank Audi S.A.L. Jordan Branch. Bank Audi Monaco means Banque Audi S.A.M. Bank Audi Qatar means Bank Audi LLC. Bank Audi France means Bank Audi France S.A. Banque Audi Suisse means Banque Audi (Suisse) S.A. Bank Audi Syria means Bank Audi Syria S.A. Banking Control Commission means the Banking Control Commission of Lebanon. Basel Accords means the guidelines of the Committee on Banking Regulation and Supervisory Practices of the Bank for International Settlements, as in effect from time to time, including the Basel I Accord, the Basel II Accord, and the Basel III Accord. Board of Directors means the Board of Directors of the Bank. BSE means the Beirut Stock Exchange. By-laws means the by-laws of the Bank as amended to reflect the resolutions adopted by the shareholders of the Bank at the Extraordinary General Meeting held on August 26, 2014 and as further amended or supplemented from time to time. Capital Increase means the issuance of 50,000,000 New Shares (together with three Warrants per New Share) to be comprised of the First Capital Increase and the Second Capital Increase. Central Bank means Banque du Liban, the Central Bank of Lebanon. CMA means the Capital Markets Authority of Lebanon. Conditions means the terms and conditions of the Warrants. Confirmation EGM means the Extraordinary General Meeting of Shareholders of the Bank held to confirm and verify the issuance of the New Shares, which is expected to be held on September 23, Custodian means Midclear, as custodian of the warrants. Custody and Agency Agreement means the custody and agency agreement to be entered into by the Bank and the Custodian, expected to be dated on or about the Issue Date. Definitive Warrants means warrants in definitive form. vii

10 Deposit Agreement means the depositary agreement entered into between the Bank and Deutsche Bank Trust Company Americas (acting as depositary) on October 23, 1997, as amended by a supplemental deposit agreement dated September 6, 2007, and as further amended and restated by an amended and restated deposit agreement dated May 10, 2010, and as it may be further amended or supplemented from time to time thereafter. Depositary means Deutsche Bank Trust Company Americas, or any successor depositary. Deposited Shares means the shares underlying the GDRs. Egypt means the Arab Republic of Egypt. First Capital Increase means the issuance of New Shares, initially reserved to existing shareholders by way of an issue of Rights, together with three Warrants per New Share. Formal Offering Period, in respect of the Capital Increase, means September 1, 2014 to September 12, FSMA means the Financial Services and Markets Act 2000 of the United Kingdom. GDR Program means the GDR program established under the Deposit Agreement and pursuant to which holders of Common Shares (initially Class B Common Shares) are given the option to deposit their shares, against the issuance of GDRs. GDRs means global depositary receipts evidencing Common Shares of the Bank. Global Warrant means the global warrant evidencing the Warrants. Government means the government of Lebanon. Group means the Bank and its principal subsidiaries and affiliates whose accounts are consolidated with the Bank s accounts in accordance with the relevant laws and regulations in Lebanon as at June 30, IAS means the International Accounting Standards. IFRS means the International Financial Reporting Standards. Interim Financial Statements means the Bank s unaudited consolidated financial statements as at and for the six months ended June 30, 2014 and Issue Date means the date on which the Securities will be issued. Subject to the satisfaction of the Conditions Precedent, as applicable, the Securities are expected to be issued on or before November 30, Issue Price means U.S.$6.00 per New Share. Issuer means Bank Audi S.A.L. Jordan means the Hashemite Kingdom of Jordan. Law 308 means Law 308 of Lebanon, dated April 3, 2001, relating to the issuance by banks of shares and dealings therein, the issuance by banks of bonds and the ownership by banks of real property. Lebanon means the Lebanese Republic. LIA Insurance means LIA Insurance S.A.L. LSE means the London Stock Exchange. Midclear means Midclear S.A.L., a joint stock company organised under the laws of Lebanon, which is 99%- owned by the Central Bank and which acts as the central depositary and clearing house in Lebanon. New Shares means newly-issued common shares of the Bank. Odeabank means Odea Bank Anonim Şirketi. viii

11 Odeabank Annual Financial Statements means Odeabank s audited unconsolidated financial statements as at and for the years ended December 31, 2013 and Odeabank Interim Financial Statements means Odeabank s reviewed unconsolidated financial statements as at and for the six months ended June 30, 2014 and Odeabank Share means a common share in Odeabank, which have a nominal value of TL 0.10 and, following the Reverse Stock Split, will have a nominal value of TL Offering Circular means this offering circular, as may be supplemented or amended. Placement Agent means Audi Investment Bank, in its capacity as placement agent for the offering of the Securities. Purchase Application means a Purchase Application, in the prescribed form, for the subscription of Securities, a copy of which is attached to this Offering Circular as Exhibit A. Qatar means the State of Qatar. Regulation S means Regulation S under the Securities Act. Reverse Stock Split means the 10:1 reverse stock split of the Odeabank Shares that the Bank intends to conduct prior to the beginning of the Warrant Exercise Period. Rescission Rights means the rights of prospective investors who have submitted an executed Purchase Application and transferred subscription funds to the Escrow Account to rescind their offers to purchase Securities during the Rescission Period. Rescission Period begins on the first business day in the Formal Offering Period and ends at the close of business, Beirut time, on the date that is three business days later. Rights means the issue of rights to acquire New Shares and Warrants. Second Capital Increase means the issuance of 10,000,000 New Shares, together with three Warrants per New Share, to new investor(s). Securities Act means the U.S.) Securities Act of 1933, as amended. Series E Preferred Shares means the U.S.$6.00 Non-Cumulative Redeemable Series E Preferred Shares of the Bank issued by the Bank in May 2010, each with a par value of LL 1,225, which was increased to LL 1,254 in October 2010 and was further increased to LL 1,299 in April 2013, effective upon actions approved by the Board of Directors. Series F Preferred Shares means the U.S.$6.00 Non-Cumulative Redeemable Series F Preferred Shares of the Bank issued by the Bank in May 2012, each with a par value of LL 1,254, which was increased to LL 1,299 in April 2013, effective upon actions approved by the Board of Directors. Series G Preferred Shares means the U.S.$6.00 Non-Cumulative Redeemable Series G Preferred Shares of the Bank, issued by the Bank in May 2013, each with a par value of LL 1,299. Series H Preferred Shares means the U.S.$6.50 Non-Cumulative Redeemable Series H Preferred Shares of the Bank, issued by the Bank in May 2013, each with a par value of LL 1,299. Switzerland means the Swiss Confederation. Tier I Capital means the Bank s Tier I capital, as determined in accordance with International Financial Reporting Standards and applicable rules and regulations of the Central Bank, which are based generally on the Basel Accords, being paid-up share capital, issue premium, shareholders cash contributions to capital (effectively a pre-payment of capital booked in a foreign currency until such time as it is converted into local currency share capital), legal and statutory reserves (including reserves for unspecified banking risks, but excluding reserves allocated for liquidation of real properties), retained earnings non-cumulative perpetual preferred shares, funds allocated for investment in real properties and financial instruments that (i) are issued and ix

12 fully paid, (ii) are eligible to cover the Bank s losses on a going concern basis, (iii) have non-cumulative revenues and (iv) are permanent, subject to early redemption at the Bank s discretion after five years from their issue date and by the exchange of such instruments for equivalent financial instruments. Tier II Capital means the Bank s Tier II capital, as determined in accordance with International Financial Reporting Standards and applicable rules and regulations of the Central Bank, which are based generally on the Basel Accords, being preferred shares (other than preferred shares, which are both perpetual and noncumulative), certain subordinated loans and any favourable change in fair value of available-for-sale securities, the revaluation surplus of the bank s properties, subject to the Central Bank s approval, and general provisions for unspecified risks. Turkey means the Republic of Turkey. United States and U.S. persons have the meanings assigned to such terms in Regulation S under the Securities Act. Warrant Deed Poll means the deed poll relating to the Warrants to be signed by the Bank, expected to be dated on or about September 23, Warrant Exercise Price is U.S.$0.95 per Odeabank Share (provided that the Reverse Stock Split has occurred), subject to adjustment (i) as set out in the Conditions and (ii) in the event that the Reverse Stock Split has not occurred. Warrant Exercise Period means the period expected to be a 30-day period commencing on May 15, Warrantholder means a holder of warrants. Warrants means warrants to entitle the holder, during the Warrant Exercise Period, to purchase share(s) in the Bank s subsidiary, Odeabank. x

13 SUMMARY The following is a summary of certain information pertaining to the offering of the Securities, including the principal terms thereof. This summary is indicative only, does not purport to be complete and is qualified in its entirety by the more detailed information appearing elsewhere in this Offering Circular, as well as by reference to the resolutions of the shareholders authorising the First Capital Increase and the Second Capital Increase, a copy of each of which is available, in Arabic, for review by potential purchasers at the offices of the Bank and the Placement Agent currently located at the respective addresses indicated on the back cover of this Offering Circular. Issuer... Capital Increase... Bank Audi S.A.L. The Capital Increase is expected to be comprised of the First Capital Increase and the Second Capital Increase. 50,000,000 New Shares are expected to be issued in the Capital Increase, together with three Warrants (as defined below) per New Share. The First Capital Increase is initially reserved to existing shareholders by way of an issue of Rights, together with three Warrants per New Share. Each existing shareholder shall be allocated Rights pro rata to the number of shares held by such shareholder. The Second Capital Increase is expected to be comprised of the issuance of 10,000,000 New Shares, together with three Warrants per New Share, reserved to new investor(s). The Capital Increase is subject to the Conditions Precedent set out below. The First Capital Increase and the Second Capital Increase are not conditional on each other. The Bank may proceed with the First Capital Increase, the Second Capital Increase, both or none. Unexercised Rights... Issue Price... Securities relating to unexercised Rights (the Residual Securities ) will be allocated by the Bank in its sole discretion. Existing shareholders may request an allocation of Residual Securities and the Bank intends to grant priority to such existing shareholders in the allocation of any Residual Securities. There is, however, no assurance that any such Residual Securities will be allocated to such shareholders. U.S.$6.00 per New Share. The Warrants will be issued at no additional consideration. The nominal value of the common shares is LL 1,299 per common share. Issue Date... Use of Proceeds... Warrants... Warrant Exercise Price... Subject to the satisfaction of the Conditions Precedent, the Securities are expected to be issued on or before September 30, The net proceeds of the Capital Increase will be used to strengthen the Bank s regulatory capital and to fund the Bank s expansion within and outside Lebanon. Each Warrant will entitle the holder, during the Warrant Exercise Period, to purchase an Odeabank Share (provided that the Reverse Stock Split has occurred). U.S.$0.95 per Odeabank Share (provided that the Reverse Stock Split has occurred, subject to adjustment (i) as set out in the Conditions and (ii) in the event that the Reverse Stock Split has not occurred. Warrant Exercise Period... Expected to be a 30-day period commencing on May 15, Settlement of Warrants... The Warrants are expected to settle through the facilities of Midclear. 1

14 Listing of Warrants... The Warrants will not be listed. However, the Bank is expected to appoint one or more Lebanese financial institutions to make a market in the Warrants, although no assurance can be made that the market for the Warrants will be liquid or that a market will develop at all. The Warrants will be in registered form. Once issued, the Warrants will be detachable and freely tradable (subject to restrictions under applicable law). Formal Offering Period... Rescission Rights... In accordance with Lebanese law, there will be a Formal Offering Period in respect of the Capital Increase, in which holders of GDRs representing common shares of the Bank may also participate (subject to any restrictions under applicable law). The Formal Offering Period is expected to begin on September 1, 2014 and end on September 12, Prospective investors who have submitted an executed Purchase Application and transferred subscription funds to the Escrow Account will have the right to rescind their offers to purchase Securities (the Rescission Rights ) during the Rescission Period. The Rescission Period begins on the first business day in the Formal Offering Period and ends at the close of business, Beirut time, on the date that is three business days later. Escrow and Subscription Accounts. Listings... Conditions Precedent... The Bank has opened accounts to receive funds in respect of the Capital Increase, as more fully detailed in the Purchase Application. See Subscription Timetable and Procedures Procedures for Subscription. Application shall be made to list the New Shares on the Beirut Stock Exchange. GDRs representing New Shares shall be listed on the London Stock Exchange under the Bank s existing block listing, and will also be listed on the Beirut Stock Exchange. The Conditions Precedent to the Securities being issued include: (i) (ii) approval of the Central Bank of Lebanon and the CMA, as applicable; confirmation by an Extraordinary General Meeting of Shareholders of the issuance of the New Shares; and (iii) satisfaction of any further legal or regulatory requirements in connection with the issuance of the Securities. In the event that the Conditions Precedent are not met with respect to the First Capital Increase or the Second Capital Increase, the Bank shall return to prospective investors the relevant funds in the Escrow Account, as described above. Ranking of the New Shares... Offer and Transfer Restrictions... Upon issue, the New Shares shall rank pari passu with all other issued and outstanding common shares of the Bank. The New Shares shall rank junior to all issued and outstanding Preferred Shares of the Bank in respect of the right to receive distributions of assets payable in respect of the net profits the Bank and the right to receive payments out of assets of the Bank upon a voluntary or involuntary liquidation or winding up of the Bank. The New Shares will also rank junior to debt and other similar obligations of the Bank, such that, in the event of the liquidation, dissolution or winding up of the Bank, the holders of debt instruments and other similar obligations of the Bank would be entitled to be repaid prior to the payment of any amounts of holders of the New Shares. The Securities will be subject to restrictions on the offer, transfer and resale in certain jurisdictions. 2

15 Governing Law... Risk Factors... The Capital Increase shall be conducted pursuant to the laws of the Lebanese Republic. The Warrants will be issued under, and governed by, the laws of England and Wales. Participating in the Capital Increase involves substantial risks. See Risk Factors. 3

16 Timetable and Authorizations SUBSCRIPTION TIMETABLE AND PROCEDURES The following is a summary timetable and schedule of authorizations relating to the offering of the Securities. Prospective purchasers should note that this timetable is tentative and subject to change. Nevertheless, to the extent that prospective purchasers have submitted a Purchase Application, subject only to the right of subscribers to rescind their Purchase Application by giving written notice to the Bank within the Rescission Period and to acceptance by, or on behalf of, the Bank, each such Purchase Application is final and irrevocable under all circumstances, regardless of delays in the closing of the transaction (subject to the cut-off date of December 15, 2014). August 6, August 6, August 7, Receipt of the Court Expert Valuation Report in connection with the Capital Increase. The CMA approved the circulation of the term sheet relating to the Capital Increase. A meeting of the Board of Directors was held, inter alia, to approve the Capital Increase and convene an Extraordinary General Meeting of Shareholders (the First Extraordinary General Meeting ) for the purpose of considering and approving: (i) (ii) (iii) the First Capital Increase and the Second Capital Increase and the respective terms thereof; the waiver of shareholders pre-emptive rights in respect of (i) up to 10,000,000 New Shares to be allocated to new investor(s); and (ii) Residual Securities, provided that under this sub-clause (ii), shareholders have pre-emptive rights in respect of the initial allocation of New Shares pro rata to the number of Common Shares held by each shareholder; the issuance of the Warrants; and August 8, August 20, 2014 August 29, August 26, (iv) the making of consequential amendments to the Bank s By-laws. Publication of the date of the First Extraordinary General Meeting was made by the Bank in Al Nahar and Al Safir, two Lebanese newspapers. Notice of the date of the Extraordinary General Meeting of Shareholders was sent to GDR holders. The informal marketing period was held and certain subscribers delivered their Purchase Applications to the Bank. The First Extraordinary General Meeting was held to approve: (i) (ii) (iii) (iv) the First Capital Increase and the Second Capital Increase and the respective terms thereof; the waiver of shareholders pre-emptive rights in respect of (i) up to 10,000,000 New Shares to be allocated to new investor(s); and (ii) Residual Securities, provided that under this sub-clause (ii), shareholders have pre-emptive rights in respect of the initial allocation of New Shares pro rata to the number of Common Shares held by each shareholder; the issuance of the Warrants; and the making of consequential amendments to the Bank s By-laws. 4