Issuers description

A convertible bond is an issue giving the bondholder the right to exchange the bond for a specified amount of shares (equity) in the issuing company. This feature allows the investor to take advantage of favourable movements in the price of the issuer s shares. Exhibit 1.7 shows a Bloomberg Security Description screen of a convertible bond issued by Siemens Finance BV that matures in June 2010. This bond is convertible into 1,780.37 shares as can be seen in the upper left-hand corner of the screen in the box labeled Convertible Information. ... 

The offering circular, also referred to as the offering memorandum or prospectus, contains a description of the conditions of the bond and the issuer. It is usually the most important document for the investor (or at least the first he will ask for), as it is the document on which the investor will base its investment decision. The offering circular contains provisions on the following matters ... 

Terms and Conditions of the bonds (the Ts Cs ) which are the most negotiated terms are usually those dealing with the negative pledge, which is a commitment by the issuer not to create a security interest senior to the bond over any collateral or not to issue debt senior to the bond, in the case of unsecured bonds description of the interest payable and redemption amount early redemptions (e.g., for tax reasons, puts and calls) withholding taxes and events of default. If the bond is part of a repackaging or a structured bond, the Ts Cs will also include a summary of the terms under which the security created for the benefit of the noteholders will be realised. 

Description of the issuer, which will include a description of the history of the issuer, it share capital, business strategy, current activities, management, and recent developments. 

A statement indicating what the issuer is going to use proceeds for. Taxation language, this will usually include a description of the taxation environment in the jurisdiction of the issuer and could also include a description of the taxation environment in the main jurisdictions where the bonds are to be sold. 

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