Prospectus • Jun 17, 2014
Prospectus
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BASE PROSPECTUS
(incorporated with limited liability in the Kingdom of Sweden) as an Issuer and as Guarantor
ABN 60 003 771 373
(incorporated with limited liability in Australia) as an Issuer
This Base Prospectus has been approved by the United Kingdom Financial Conduct Authority (the "FCA"), which is the United Kingdom competent authority for the purposes of Directive 2003/71/EC, as amended (the "Prospectus Directive") and relevant implementing measures in the United Kingdom, as a base prospectus issued in compliance with the Prospectus Directive and relevant implementing measures in the United Kingdom for the purpose of giving information with regard to the issue of notes ("Notes") issued under the Euro Medium Term Note Programme (the "Programme") described in this Base Prospectus during the period of 12 months after the date hereof. Applications have been made for the whole class of such Notes to be admitted during the period of 12 months after the date hereof to listing on the Official List of the FCA and to trading on the Regulated Market of the London Stock Exchange plc (the "London Stock Exchange"). The Regulated Market of the London Stock Exchange is a regulated market for the purposes of Directive 2004/39/EC on markets in financial instruments.
As at the date of this Base Prospectus, the senior unsecured debt securities of Sandvik AB (publ) have been assigned a rating of "BBB+" by Standard & Poor's Credit Market Services Europe Limited ("S&P") and the Programme has been assigned a rating of "BBB+" by S&P. S&P is established in the EEA and is registered under the Regulation (EC) No. 1060/2009, as amended (the "CRA Regulation"). The Notes issued under the Programme may be rated or unrated. Where the Notes are rated, such rating will not necessarily be the same as the rating assigned to the Programme and may be specified in the applicable Final Terms.
A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. Investing in Notes issued under the Programme involves certain risks. The principal risk factors that may affect the ability of an Issuer to fulfil its obligations under the Notes and the ability of the Guarantor to fulfil its obligations under the Sandvik AB Guarantee (as defined herein) are discussed under "Risk Factors" below.
Arranger
Dealers
BARCLAYS CITIGROUP COMMONWEALTH BANK OF AUSTRALIA DANSKE BANK DEUTSCHE BANK GOLDMAN SACHS INTERNATIONAL HANDELSBANKEN CAPITAL MARKETS HSBC J.P. MORGAN MITSUBISHI UFJ SECURITIES NORDEA SEB SOCIÉTÉ GÉNÉRALE CORPORATE & INVESTMENT BANKING STANDARD CHARTERED BANK SWEDBANK AB (PUBL) THE ROYAL BANK OF SCOTLAND
17 July 2013
| IMPORTANT NOTICES 1 | |
|---|---|
| OVERVIEW 4 | |
| RISK FACTORS 9 | |
| INFORMATION INCORPORATED BY REFERENCE 22 | |
| FINANCIAL INFORMATION OF SANDVIK AUSTRALIA 23 | |
| FINAL TERMS AND DRAWDOWN PROSPECTUSES 24 | |
| FORMS OF THE NOTES 25 | |
| TERMS AND CONDITIONS OF THE NOTES 29 | |
| FORM OF FINAL TERMS 57 | |
| SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM 64 | |
| USE OF PROCEEDS 68 | |
| PRC CURRENCY CONTROLS 69 | |
| SANDVIK AB (PUBL) 71 | |
| SANDVIK AUSTRALIA HOLDINGS PTY LTD 86 | |
| TAXATION 87 | |
| SUBSCRIPTION AND SALE 94 | |
| GENERAL INFORMATION 99 | |
| APPENDIX 101 |
Each of Sandvik AB (publ) ("Sandvik"), Sandvik Australia Holdings Pty Ltd ABN 60 003 771 373 ("Sandvik Australia"), (each, an "Issuer" and together, the "Issuers") and Sandvik as Guarantor (the "Guarantor", together with the Issuers, the "Obligors" and each, an "Obligor") accepts responsibility for the information contained in this Base Prospectus and the relevant Final Terms (as defined below), and declares that, having taken all reasonable care to ensure that such is the case, the information contained in this Base Prospectus and the relevant Final Terms is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its import.
Each Tranche (as defined herein) of Notes will be issued on the terms set out herein under "Terms and Conditions of the Notes" (the "Conditions") as completed by a document specific to such Tranche called final terms (the "Final Terms") or in a separate prospectus specific to such Tranche (the "Drawdown Prospectus") as described under "Final Terms and Drawdown Prospectuses" below. In the case of a Tranche of Notes which is the subject of a Drawdown Prospectus, each reference in this Base Prospectus to information being specified or identified in the relevant Final Terms shall be read and construed as a reference to such information being specified or identified in the relevant Drawdown Prospectus unless the context requires otherwise. This Base Prospectus must be read and construed together with any amendments or supplements hereto and with any information incorporated by reference herein and, in relation to any Tranche of Notes which is the subject of Final Terms, must be read and construed together with the relevant Final Terms.
No person has been authorised to give any information or to make any representation not contained in or not consistent with this Base Prospectus or any other document entered into in relation to the Programme or any information supplied by the Obligors or such other information as is in the public domain and, if given or made, such information or representation should not be relied upon as having been authorised by the Obligors or any Dealer.
The information in this Base Prospectus is directed and available only to, if you are a person in Australia, (a) a person who is a sophisticated investor, (b) a person who is a professional investor or (c) a person in respect of whom disclosure is not required under Parts 6D.2 or 7.9 of the Corporations Act 2001 of the Commonwealth of Australia (the "Corporations Act (Cth)"). This Base Prospectus should not be distributed to, and is not intended for, any other person.
Neither the Dealers nor any of their respective affiliates have authorised the whole or any part of this Base Prospectus and none of them makes any representation or warranty or accepts any responsibility as to the accuracy or completeness of the information contained in this Base Prospectus. Neither the delivery of this Base Prospectus or any Final Terms nor the offering, sale or delivery of any Note shall, in any circumstances, create any implication that the information contained in this Base Prospectus is true subsequent to the date hereof or, if later, the date upon which this Base Prospectus has been most recently amended or supplemented or that there has been no adverse change, or any event reasonably likely to involve any adverse change, in the prospects or financial or trading position of any of the Obligors since the date thereof or, if later, the date upon which this Base Prospectus has been most recently amended or supplemented or that any other information supplied in connection with the Programme is correct at any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same.
The distribution of this Base Prospectus and any Final Terms and the offering, sale and delivery of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Base Prospectus or any Final Terms comes are required by the Obligors and the Dealers to inform themselves about and to observe any such restrictions. For a description of certain restrictions on offers, sales and deliveries of Notes and on the distribution of this Base Prospectus or any Final Terms and other offering material relating to the Notes, see "Subscription and Sale". In particular, Notes have not been and will not be registered under the United States Securities Act of 1933 (as amended) (the "Securities Act") and Bearer Notes are subject to U.S. tax law requirements. Subject to certain exceptions, Notes may not be offered, sold or, in the case of Bearer Notes, delivered within the United States or to U.S. persons. In addition, Bearer Notes are subject to Australian tax law requirements (see "Taxation").
Neither this Base Prospectus nor any Final Terms constitutes an offer or an invitation to subscribe for or purchase any Notes and should not be considered as a recommendation by the Obligors, the Dealers or any of them that any recipient of this Base Prospectus or any Final Terms should subscribe for or purchase any Notes. Each recipient of this Base Prospectus or any Final Terms or any other information supplied in connection with the Programme or the issue of any Notes shall be taken to have made its own investigation and appraisal of the condition (financial or otherwise) of the Obligors.
Each potential investor in the Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should: have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and risks of investing in the Notes and the information contained or incorporated by reference in this Base Prospectus or any applicable supplement; have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Notes and the impact the Notes will have on its overall investment portfolio; have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes, including Notes with principal or interest payable in one or more currencies, or where the currency for principal or interest payments is different from the potential investor's currency; understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevant indices and financial markets; and be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.
The maximum aggregate principal amount outstanding at any one time of Notes under the Programme and notes under Sandvik's SEK 15,000,000,000 Swedish medium term note programme is €3,000,000,000 (or its equivalent in other currencies). The maximum aggregate principal amount of Notes which may be outstanding at any one time under the Programme may be increased from time to time, subject to compliance with the relevant provisions of the Dealer Agreement as defined under "Subscription and Sale".
In this Base Prospectus, unless otherwise specified, references to an Issuer are to the relevant Issuer of Notes of the relevant Tranche or Series (as defined herein), references to a "Member State" are references to a Member State of the European Economic Area, references to "Sweden" are to the Kingdom of Sweden, references to "U.S.\$", "U.S. dollars" or "dollars" are to United States dollars, references to "€", "EUR" or "euro" are to the single currency introduced at the start of the third stage of European Economic and Monetary Union pursuant to the Treaty establishing the European Community, as amended, references to "SEK" or "Swedish kronor" are to the lawful currency of the Kingdom of Sweden, references to "Australian dollars", "AUD" or "A\$" are to the lawful currency of the Commonwealth of Australia and references to "Renminbi", "RMB", "Chinese Yuan Renminbi" or "CNY" means the lawful currency of the People's Republic of China (excluding the Hong Kong Special Administrative Region of the People's Republic of China, the Macau Special Administrative Region of the People's Republic of China and Taiwan) (the "PRC").
Certain figures included in this Base Prospectus have been subject to rounding adjustments; accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.
This Base Prospectus has been prepared on the basis that any offer of Notes in any Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State") will be made pursuant to an exemption under the Prospectus Directive, as implemented in that Relevant Member State, from the requirement to publish a prospectus for offers of Notes. Accordingly any person making or intending to make an offer in that Relevant Member State of Notes which are the subject of an offering contemplated in this Base Prospectus as completed by Final Terms or a Drawdown Prospectus in relation to the offer of those Notes may only do so in circumstances in which no obligation arises for any of the Obligors or the Dealers to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive, in each case, in relation to such offer. None of the Obligors or the Dealers have authorised, nor do they authorise, the making of any offer of Notes in circumstances in which an obligation arises for any of the Obligors or the Dealers to publish or supplement a prospectus for such offer. The expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and the expression "2010 PD Amending Directive" means Directive 2010/73/EC.
Sandvik is registered in Australia as a "Foreign Company (Overseas)". Sandvik Australia is incorporated in Australia as a company limited by shares.
Neither this Base Prospectus nor any other disclosure document in relation to the Notes has been, or will be, lodged with the Australian Securities and Investments Commission and is, or purports to be, a document containing disclosure to investors for the purposes of Part 6D.2 or Part 7.9 of the Corporations Act (Cth). This Base Prospectus is not intended to be used in connection with any offer for which such disclosure is required and does not contain all of the information that would be required by those provisions if they applied. It is not to be provided to any "retail client" as defined in section 761G of the Corporations Act (Cth) and does not take into account the individual objectives, financial or taxation situation or needs of any prospective investor.
Credit ratings are for distribution only to a person (a) who is not a "retail client" within the meaning of section 761G of the Corporations Act (Cth) and is also a sophisticated investor, professional investor or other investor in respect of whom disclosure is not required under Parts 6D.2 or 7.9 of the Corporations Act (Cth), and (b) who is otherwise permitted to receive credit ratings in accordance with applicable law in any jurisdiction in which the person may be located. Anyone who is not such a person is not entitled to receive this Base Prospectus and anyone who receives this Base Prospectus must not distribute it to any person who is not entitled to receive it.
In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) appointed as stabilising manager(s) (the "Stabilising Manager(s)") (or persons acting on behalf of any Stabilising Manager(s)) may over allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the relevant Stabilising Manager(s) (or person(s) acting on behalf of any Stabilising Manager(s)) only if such stabilisation action or over-allotment transactions occur outside Australia and have no relevant jurisdictional connection to Australia and are in accordance with all other applicable laws and rules.
This overview must be read as an introduction to this Base Prospectus and any decision to invest in the Notes should be based on a consideration of the Base Prospectus as a whole, including any information incorporated by reference.
Words and expressions defined in the "Terms and Conditions of the Notes" below or elsewhere in this Base Prospectus have the same meanings in this overview.
| Issuers: | Sandvik AB (publ) and Sandvik Australia Holdings Pty Ltd. | ||
|---|---|---|---|
| Group: | Sandvik AB (publ) and its subsidiaries. | ||
| Guarantor: | Sandvik AB (publ) (in the case of an issue of Notes issued by Sandvik Australia Holdings Pty Ltd). |
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| Risk Factors: | Investing in Notes issued under the Programme involves certain risks. The principal risk factors that may affect the ability of the Issuers to fulfil their respective obligations under the Notes and the ability of the Guarantor to fulfil its obligations under the Sandvik AB Guarantee are discussed under "Risk Factors" below. |
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| Arranger: | Deutsche Bank AG, London Branch. | ||
| Dealers: | Barclays Bank PLC, Citigroup Global Markets Limited, Commonwealth Bank of Australia, Danske Bank A/S, Deutsche Bank AG, London Branch, Goldman Sachs International, HSBC Bank plc, J.P. Morgan Securities plc, Mitsubishi UFJ Securities International plc, Nordea Bank Danmark A/S, Skandinaviska Enskilda Banken AB (publ), Société Générale, Standard Chartered Bank, Svenska Handelsbanken AB (publ), Swedbank AB (publ), The Royal Bank of Scotland plc and any other Dealer appointed from time to time by the Issuers either generally in respect of the Programme or in relation to a particular Tranche of Notes. |
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| Fiscal Agent: | Citibank N.A., London Branch. | ||
| Swedish Issuing and Paying Agent: |
For Swedish Registered Notes, an account operator specifically appointed by Sandvik to assist in connection with the issue of Swedish Registered Notes. |
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| Final Terms or Drawdown Prospectus: |
Notes issued under the Programme may be issued either (1) pursuant to this Base Prospectus and associated Final Terms or (2) pursuant to a Drawdown Prospectus. The terms and conditions applicable to any particular Tranche of Notes will be the Conditions as completed by the relevant Final Terms or, as the case may be, supplemented, amended and/or replaced to the extent described in the relevant Drawdown Prospectus. |
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| Listing and Trading: | Applications have been made for the whole class of the Notes to be admitted during the period of twelve months after the date hereof to listing on the Official List of the FCA and to trading on the Regulated Market of the London Stock Exchange. |
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| Clearing Systems: | Euroclear and/or Clearstream, Luxembourg (or in relation to Swedish Registered Notes, Euroclear Sweden) and/or, in relation to any Tranche of Notes, any other clearing system as may be specified in the relevant Final Terms. |
| Initial Programme Amount: | The maximum aggregate principal amount outstanding at any one |
|---|---|
| time of Notes under the Programme and notes under Sandvik's | |
| SEK 15,000,000,000 Swedish medium term note programme is | |
| €3,000,000,000 (or its equivalent in other currencies). |
Issuance in Series: Notes will be issued in Series. Each Series may comprise one or more Tranches issued on different issue dates. The Notes of each Series will all be subject to identical terms, except that the issue date and the amount of the first payment of interest may be different in respect of different Tranches. For the avoidance of doubt, Swedish Registered Notes can only be issued in one type of denomination for the same Series.
Forms of Notes: Notes may be issued in bearer form, in registered form or in Swedish registered form in accordance with the Swedish Financial Instruments Accounts Act (Sw. lag (1998:1479) om kontoföring av finansiella instrument) as amended (the "SFIA Act").
Each Tranche of Bearer Notes will initially be in the form of either a Temporary Global Note or a Permanent Global Note, in each case as specified in the relevant Final Terms. Each Global Note which is not intended to be issued in new global note form (a "Classic Global Note" or "CGN"), as specified in the relevant Final Terms, will be deposited on or around the relevant issue date with a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and each Global Note which is intended to be issued in new global note form (a "New Global Note" or "NGN"), as specified in the relevant Final Terms, will be deposited on or around the relevant issue date with a common safekeeper for Euroclear and/or Clearstream, Luxembourg. Each Temporary Global Note will be exchangeable for a Permanent Global Note or, if so specified in the relevant Final Terms, for Definitive Notes. If the TEFRA D Rules are specified in the relevant Final Terms as applicable, certification as to non-U.S. beneficial ownership will be a condition precedent to any exchange of an interest in a Temporary Global Note or receipt of any payment of interest in respect of a Temporary Global Note. Each Permanent Global Note will be exchangeable for Definitive Notes in accordance with its terms. Definitive Notes will, if interest-bearing, have Coupons attached and, if appropriate, a Talon for further Coupons.
Each Tranche of Registered Notes will be in the form of either Individual Note Certificates or a Global Registered Note, in each case as specified in the relevant Final Terms. Each Global Registered Note will be deposited on or around the relevant issue date with a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and registered in the name of a nominee for such depositary and will be exchangeable for Individual Note Certificates in accordance with its terms.
Each Tranche of Swedish Registered Notes will be issued in uncertificated and dematerialised book entry form, with the legal title thereto being evidenced by book entries in the register for such Swedish Registered Notes kept by Euroclear Sweden on behalf of Sandvik. Title to Swedish Registered Notes will not be evidenced by any physical note or document of title. For the avoidance of doubt, the TEFRA C and TEFRA D Rules will not be applicable to Swedish Registered Notes. Definitive Notes will
| not be issued in respect of any Swedish Registered Notes. | |
|---|---|
| Currencies: | Notes may be denominated in euro, U.S. dollars, Swedish kronor, Australian dollars or Renminbi or in any other currency or currencies, subject to compliance with all applicable legal and/or regulatory and/or central bank requirements. |
| Status of the Notes: | The Notes constitute direct, unsubordinated and unconditional obligations of the relevant Issuer which will at all times rank pari passu among themselves and at least pari passu with all other present and future unsecured obligations of the relevant Issuer, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application. |
| Sandvik AB Guarantee: | Notes issued by Sandvik Australia Holdings Pty Ltd will be unconditionally and irrevocably guaranteed by the Guarantor. The obligations of the Guarantor under such guarantee will be direct, unsubordinated and unconditional obligations of the Guarantor and claims under the Sandvik AB Guarantee will at all times rank at least pari passu with all other present and future unsecured obligations of the Guarantor, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application. |
| Issue Price: | Notes may be issued at any price and on a fully paid basis only. The price and amount of Notes to be issued under the Programme will be determined by the relevant Issuer and the relevant Dealer(s) at the time of issue in accordance with prevailing market conditions. |
| Maturities: | Any maturity subject, in relation to specific currencies, to compliance with all applicable legal and/or regulatory and/or central bank requirements. |
| Where Notes have a maturity of less than one year and either (a) the issue proceeds are received by the relevant Issuer in the United Kingdom or (b) the activity of issuing the Notes is carried on from an establishment maintained by the relevant Issuer in the United Kingdom, such Notes must: (i) have a minimum redemption value of £100,000 (or its equivalent in other currencies) and be issued only to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses; or (ii) be issued in other circumstances which do not constitute a contravention of section 19 of the Financial Services and Markets Act 2000 (the "FSMA") by the relevant Issuer. |
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| Redemption: | The Notes will be redeemable at the Final Redemption Amount on their stated maturity. |
| Optional Redemption: | Notes may be redeemed before their stated maturity at the option of the relevant Issuer (either in whole or in part) and/or the Noteholders to the extent (if at all) specified in the relevant Final Terms. |
| Tax Redemption: | Except as described in "Optional Redemption" above, early redemption will only be permitted for tax reasons as described in Condition 10(b) (Redemption and Purchase – Redemption for tax |
reasons).
| Interest: | Notes may be interest-bearing or non-interest bearing. Interest (if any) may accrue at a fixed rate or a floating rate. |
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| Denominations: | No Notes may be issued under the Programme which (a) have a minimum denomination of less than €100,000 (or the equivalent in another currency), or (b) carry the right to acquire shares (or transferable securities equivalent to shares) issued by the relevant Issuer or by any entity to whose group the relevant Issuer belongs. Subject thereto, Notes will be issued in such denominations as may be specified in the relevant Final Terms, subject to compliance with all applicable legal and/or regulatory and/or central bank requirements. |
| Negative Pledge: | The Notes will have the benefit of a negative pledge as described in Condition 6 (Negative Pledge). |
| Cross Default: | The Notes will have the benefit of a cross default as described in Condition 14 (Events of Default). |
| Taxation: | All payments in respect of Notes will be made free and clear of withholding taxes of the relevant Tax Jurisdiction unless the withholding is required by law. In that event, the Issuer will (subject as provided in Condition 13 (Taxation)) pay such additional amounts as will result in the Noteholders receiving such amounts as they would have received in respect of such Notes had no such withholding been required. |
| Governing Law: | English law. Swedish Registered Notes must comply with the SFIA Act. |
| Enforcement of Notes in Global Form: |
In the case of Global Notes, individual investors' rights against the relevant Issuer will be governed by a Deed of Covenant dated 17 July 2013, a copy of which will be available for inspection at the specified office of the Fiscal Agent. |
| Ratings: | As at the date of this Base Prospectus, the senior unsecured debt securities of Sandvik AB (publ) have been assigned a rating of "BBB+" by S&P and the Programme has been assigned a rating of "BBB+" by S&P. |
| Tranches of Notes issued under the Programme will be rated or unrated. Where a Tranche of Notes is rated, such rating will not necessarily be the same as the rating(s) described above or the rating(s) assigned to Notes already issued. Where a Tranche of Notes is rated, the applicable rating(s) will be specified in the relevant Final Terms or Drawdown Prospectus (as the case may be). |
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| Credit ratings are for distribution only to a person (a) who is not a "retail client" within the meaning of section 761G of the Corporations Act (Cth) and is also a sophisticated investor, professional investor or other investor in respect of whom disclosure is not required under Parts 6D.2 or 7.9 of the Corporations Act (Cth), and (b) who is otherwise permitted to receive credit ratings in accordance with applicable law in any jurisdiction in which the person may be located. Anyone who is not such a person is not entitled to receive this Base Prospectus and anyone who receives this Base Prospectus must not distribute |
it to any person who is not entitled to receive it.
Selling Restrictions: For a description of certain restrictions on offers, sales and deliveries of Notes and on the distribution of offering material in the United States of America, the European Economic Area (including the United Kingdom and the Kingdom of Sweden), Australia, Japan, the PRC, Hong Kong and Singapore, see "Subscription and Sale" below.
The Obligors believe that the following factors may affect their ability to fulfil their respective obligations under Notes issued under the Programme. All of these factors are contingencies which may or may not occur and the Obligors are not in a position to express a view on the likelihood of any such contingency occurring.
In addition, factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme are also described below.
The Obligors believe that the factors described below represent the principal risks inherent in investing in Notes issued under the Programme and are not exhaustive, but the inability of the Obligors to pay interest, principal or other amounts on or in connection with any Notes may occur for other reasons which may not be considered significant risks by the Obligors based on information currently available to them or which they may not currently be able to anticipate. Prospective investors should also read the detailed information set out elsewhere in this Base Prospectus and reach their own views prior to making any investment decision.
The Group's long-term growth and profitability is dependent in part on the success of its new strategy. There is no certainty or guarantee that Sandvik's new strategy will be implemented successfully or that it would generate higher growth and profitability, any cost savings or increased quality, or strengthen any market position. Any failure in the Group's new strategy could have a material effect on the Group's business, results of operations and financial condition.
The Group's long-term growth and profitability is dependent on its ability to develop and successfully launch and market new products. The Group's revenues and market share may suffer if it is unable to introduce new products successfully in a timely fashion or if any new or enhanced products or services are introduced by its competitors that its customers find more advanced and/or better suitable for their needs. If the Group is not able to keep pace with global product development and technological advances, including also shifts in technology in the markets in which it operates, or to meet customer demands, this could have a material adverse effect on the Group's business, results of operations and financial condition.
The markets for the Group's products are highly competitive in terms of pricing, product design and service quality, the timing of development and introduction of new products, customer service and terms of financing. The Group faces intense competition from significant global competitors and to a lesser extent small regional companies. If it does not compete successfully in all its business areas and does not anticipate and respond to changes in evolving market demands, including the demand for new products, it will not be able to compete successfully in its markets, which could have a material adverse effect on the Group's business, results of operations and financial condition.
The planning and implementation of the Group's business operations seeks to take into account market opportunities and opportunities to acquire new businesses. Any failure in the Group's business development could have a material adverse effect on the Group's business, results of operations and financial condition.
The demand for the Group's products and services is affected by changes in customers' investment plans and production levels. Customers' investment plans could change materially if the economic situation in an industry, country or region changes. In addition, changes in the political situation in a region or country or political decisions affecting an industry or country could also materially impact on investments in equipment. Also, the replacement needs of existing production capacity, new competing technologies, competitive pressures and other economic factors in its customer industries could also have a material adverse effect on the Group's business, financial condition and results of operations. Although the Obligors believe that the Group's sales are well diversified with customers in many industries and operations in more than 130 countries, the Group may be affected by a downturn in the general economic situation in the markets in which it operates.
Recent developments in the Eurozone have exacerbated the global economic crisis. Financial markets and the supply of credit are likely to continue to be negatively impacted by ongoing fears surrounding the sovereign debts and/or fiscal deficits of several countries in Europe, the possibility of further credit rating downgrades of or defaults on sovereign debt, concerns about a slowdown in growth in certain economies and uncertainties regarding the stability and overall standing of the European Monetary Union (the "Eurozone debt crisis"). Governments and regulators have implemented austerity programmes and other remedial measures to respond to the Eurozone debt crisis and stabilise the financial system but the actual impact of such programmes and measures are difficult to predict.
If the Eurozone debt crisis is not resolved, it may be the case that one or more countries may default and/or leave the European Monetary Union and re-establish their own national currency or that the European Monetary Union collapses. In such an event, there could be significant, extended and generalised market dislocation with unpredictable and materially adverse effects on the Group's business, results of operations and financial condition. In addition, the departure of one or more countries from the European Monetary Union may result in the imposition of, amongst others, exchange control and mandatory payment laws. Any one or more of the factors outlined above could result in investors of Notes denominated in Euro receiving less interest or principal than expected and could also adversely affect the price of Notes on the secondary market.
The exact nature of the risks that the Group faces is difficult to predict and guard against in light of (i) the inter-related nature of the risks involved, (ii) difficulties in predicting the outcomes of austerity programmes and other remedial measures in Europe, (iii) the extent to which the Eurozone debt crisis, slowdown in growth or recession in Europe and elsewhere and loss of consumer confidence will impact on the global economy and (iv) the fact that the risks are outside of the Group's control.
The Group has a global manufacturing strategy based on manufacturing core components complemented with sourcing of other components from sub suppliers. The core component manufacturing is concentrated into few locations per region and if these facilities are destroyed or closed for any reason or the equipment in the facilities is significantly damaged, or there are severe interruptions in its productions, the Group is likely to face setbacks in its ability to manufacture and distribute its products. Such circumstances, to the extent it is unable to find an alternative manufacturing and production facility or repair the damaged facilities or damaged equipment in a timely and cost-efficient manner, could have a material adverse effect on the Group's business, results of operations and financial condition. In addition, the availability of non-core components is dependent on the sub suppliers and if they have interruptions or if they do not have enough capacity, this could have an adverse effect on the Group's business and results of operations.
Through its comprehensive international operations, the Obligors are exposed to currency, interest and financing risks.
Foreign-exchange movements affect the Obligors' earnings, shareholders' equity and competitive situation in different ways:
• Earnings are affected when sales and purchases are made in different currencies (transaction exposure). Sandvik's earnings are reported in Swedish kronor while sales and purchases are made in various currencies including in euros and U.S. dollars. Sandvik's transaction exposure (i.e. the Group's net flow of currencies, after full off-setting of the countervalue in the exporting companies' local currencies) amounted to SEK 13,400 million in 2012 (compared with SEK 10,900 million in 2011).
If exchange rates were to change by 5 per cent. in an unfavourable direction for the Group, the total operating profit over a 12-month period based on 2012 figures and structure would change by approximately SEK 1.1 billion. The net effect on other comprehensive income of a similar change to exchange rates would be approximately SEK 1.9 billion. This net effect primarily comprises translation exposure in equity.
Changes in market interest rates may affect the Group's net financial items adversely. The speed with which a change in interest rate affects net financial items depends on the fixed-interest period of the assets or loans. Interest risk arises in two ways:
Liquidity and financing risk is defined as the risk that costs will rise and financing possibilities will be limited when loans must be refinanced, and that payment commitments cannot be met as a result of insufficient liquidity. In Sandvik's finance policy, the liquidity and financing risks are regulated such that the sum of guaranteed credit facilities and cash and cash equivalents must exceed the total of all borrowings falling due within the next six months. As of 31 December 2012, cash and cash equivalents amounted to SEK 13,800 million and unutilised guaranteed credit facilities, maturing in 2017 (with a two-year extension option) of EUR 650 million and SEK5 billion, while the borrowings falling due within 6 months amounted to approximately SEK 2,700 million. If refinancing of short-term borrowings and the guaranteed credit facilities is not possible when they fall due this may have a material adverse effect on the Group's business, results of operations and financial condition.
The Group's financial transactions give rise to credit risk in relation to financial counterparties. Sandvik has entered into agreements with the banks that it has outstanding derivatives contract with on such matters as the right to offset receivables and liabilities that arise from these financial transactions, socalled ISDA agreements. As at 31 December 2012, the total hedged amount for transaction exposure was SEK 5,675 million (compared with SEK 6,337 million as at 31 December 2011). Sandvik has, on the other hand, a credit risk in the form of outstanding customer accounts receivable. If weak financial situations lead to customers not paying their payables to Sandvik this may have a material adverse effect on the Group's business, results of operations and financial condition.
The Group's operations give rise to risks due to changes in the price of market-quoted raw materials, mainly nickel, molybdenum and of electricity. The price can vary significantly during a year. If the market does not permit a transfer of the effects of changing raw-material prices into the end-price of the products this may have a material adverse effect on the Group's business, results of operations and financial condition.
The Group most often distributes its products and services directly to the end customers, but also through distributors. A significant part of physical distribution of products is concentrated to a number of distribution centres and the provision of services depends on the efficiency of the Group's aftermarket organisation. Should the Group's distribution centres, distributors or other aftermarket organisations be subjected to disruptions its sales may be affected, which in turn could have a material adverse effect on the Group's revenues and results of operations.
The success of the Group's business depends in large part on the ability to attract and retain key management and operating personnel. The Group's future growth and ultimately its success depends on its ability to hire and retain qualified personnel with the level of expertise, knowledge of its products or industry necessary to conduct its operations. Given that the Group constantly needs to introduce new or enhanced products, it is important that it is able to attract people with sufficient expertise in its product areas, particularly its research and development functions. In addition the Group continuously monitors its need for people or to outsource certain parts of its non-core manufacturing in order to make sure it can fulfil its customers' orders. If the Group fails to monitor its need for employees or if it fails to continue to attract and retain highly qualified management and other skilled employees on acceptable terms it may not be able to sustain or further develop parts of its business which may have a material adverse effect on the Group's business, results of operations and financial condition.
Changes in regulatory requirements, tariffs and other trade barriers, price or exchange controls or other governmental policies in the countries in which it conducts business may result in risks, such as (i) effective legal redress in the courts of such jurisdictions, whether in respect of a breach of law or regulation or in an ownership dispute, being more difficult to obtain, (ii) a higher degree of discretion on the part of governmental authorities, (iii) the lack of judicial or administrative guidance on interpreting applicable rules and regulations, (iv) inconsistencies or conflicts between and within various laws, regulations and decrees, or (v) relative inexperience of the judiciary and courts in such matters. Also, the protection of intellectual property rights may be less developed and less strictly enforced in these countries. There can be no assurance that the Group's licences, licence applications or other legal arrangements of the effectiveness of the enforcement thereof will not be adversely affected by the actions of government authorities or others. In addition, the uncertainty of the legal environment in certain regions could limit the Group's ability to enforce its rights under contracts or otherwise.
The Group also has extensive operations in emerging markets such as certain countries in South America, Africa and Asia. Its business operations in these countries may be subject to various political, economic and social conditions which include nationalisation of assets, social, political or economical instability, volatility in currency exchange rates and in gross domestic product or restrictions on repatriation of profits and transfers of cash which all could have a material adverse effect on the Group's business, results of operations and financial condition. Operations in emerging markets may present risks that are not encountered in countries with well-established economic and political systems, including economic instability, which could make it difficult for the Group to anticipate future business conditions in these markets, which may have a material adverse effect on the Group's business, results of operations and financial condition.
Like most industrial companies, the Group affects the environment in its production processes, through the use of natural resources, and the generation of emissions and wastes, in the distribution of, as well as in the use and final disposal of its products. Compliance with environmental requirements is a significant factor in its operations, and substantial resources are required to maintain compliance with applicable environmental laws and regulations and to manage environmental risks. The Group is subject to a variety of environmental laws and regulations, particularly in relation to air emissions, waste management and the protection of natural resources. These laws and regulations, the violations of which can lead to substantial fines, injunctions or criminal penalties, have generally become stricter in recent years and may in the future become more stringent and the cost of complying with future changes may be substantial. In addition, the Group could also become subject to liabilities and claims relating to personal injury (including exposure to substances used in its production), property damage or damage to natural resources.
Although the Obligors believe that the Group is in material compliance with applicable environmental laws, substantial environmental costs and liabilities are inherent in industrial operations and there can be no assurances that substantial costs and liabilities will not be incurred in the future or that the adoption of increasingly strict environmental laws, regulations and enforcement policies could not result in increased costs and liabilities in the future. Any such costs and/or liabilities could have a material adverse effect on the Group's business, results of operations and financial condition.
The Group's operations in research and development, production, distribution, marketing and administration are dependent on a large number of complex IT-systems and solutions. Routines and procedures are implemented to protect hardware, software and information from being damaged, manipulated, lost or misused. A major break-down of these systems with loss of information may have a material adverse effect on the Group's business, results of operations and financial condition.
In addition to organically growing the Group's business, the Group continuously evaluates potential value added acquisitions in the core areas of its business to complement its existing product portfolio, to gain access to new markets and to create synergies. The process of co-ordinating and integrating acquired businesses with the Group's own business will continue to require managerial and financial resources. In addition, the integration process could also cause the interruption to, or a loss of momentum in, the activities of its business, which could have a material adverse effect on the Group's business, financial condition and results of operations.
The management of integration of the businesses, systems and culture of any acquired business requires, among other things, the continued development of the acquired businesses financial and management controls, including the integration of information systems and structure, the integration of product offerings and customer base and the training of new personnel, all of which could disrupt and place a strain on the Group's management resources as well as require significant expenditure. Any significant diversion of Sandvik's executive management attention and other resources or any major difficulties encountered in the integration of an acquired business could have a material adverse effect on the Group's business, financial condition and results of operations.
In agreeing to acquire new businesses, the Obligors make certain assumptions and determinations on, among other things, future sales and need for capital expenditures, based on its investigation of the respective businesses and other information then available. While the Obligors believe they are well positioned to assess the opportunities and risks associated with these acquisitions, the Obligors cannot provide assurance that their assumptions and determinations will prove to be correct and liabilities, contingencies or losses, if realised, could have a material adverse effect on the Group's business, results of operations and financial condition.
The protection of the Group's intellectual property is important to its business. The Obligors cannot give any assurance that their competitors do not seek to utilise its patents, trademarks and logos when they market their products thereby infringing or challenging its intellectual property rights. In addition, existing laws of certain countries in which the Group conducts its business may offer only limited protection of its intellectual property rights, if at all. If the Group's intellectual property and in particular its registered patents and trademarks cannot be protected, for whatever reason, the Group's business could be materially and adversely affected.
Sandvik has the customary insurance programmes with respect to the Group's property and product liability risks. As a natural part of Sandvik's different activities, measures to limit the effects of damages are continually taken, often in co-operation with Sandvik's external insurance advisors. In such context, standards for desired safeguard levels are established in order to reduce the probability of material damages and to guarantee deliveries to the customers. While the Group holds property, including business interruption, and product liability insurance in amounts Sandvik believes to be appropriate, there can be no assurances that the Group will be able to fully recover such amounts or that recovered amounts will be sufficient to cover the Group's losses.
The Obligors are party to litigation related to its business operations in the ordinary course of business. The Obligors are also party to legal and administrative proceedings related to its responsibility for products, environment, health and safety. There is currently no litigation in relation to the Group which may have a significant effect on the financial position or profitability of the Group. However, there can be no assurance that the Group will not be subject to legal disputes in the future which may have an adverse effect on the Group's business, financial condition and results of operations.
Sandvik has comprehensive pension plans for its employees in all countries in which it operates. The pension provisions vary depending on legislation and local agreements. The most comprehensive agreements are found in Finland, Germany, Sweden, the United Kingdom and the U.S. In 2012, the managed capital for pensions totalled SEK 13,900 million and the corresponding pension commitments amounted to SEK 17,300 million which is equal to a funding level of 80 per cent. (compared with 84 per cent. in 2011). Calculating pension and similar obligations require management to make assumptions on discount rates, expected return on plan assets and rate of compensation increase. Actual results could differ from the assumptions made. Sandvik may be required to contribute additional amounts to its pension schemes which could have a material adverse effect on the Group's business, results of operations and financial condition.
Many of the Group's employees are covered by collective bargaining agreements. The Obligors cannot provide any assurance that they will not encounter strikes or other disturbances occasioned by its unionised labour force, or that, upon the expiration of existing agreements; it will be able to reach new collective bargaining agreements on satisfactory terms or without work stoppages, strikes or similar industrial actions.
Non satisfactory terms on any bargaining agreements could cause the Group's labour costs to increase, which would affect its profit margins negatively. In addition, it is required to consult and seek the advice of its employee works' council in respect of a broad range of matters, which could delay or prevent the completion of certain corporate transactions. While the Group has not experienced any major work stoppages in recent years and expect its current process to proceed amicably, the Obligors cannot provide any assurance that they will not experience lengthier consultations or even strikes, work stoppages or other industrial actions in the future. Any industrial action could disrupt its operations, possibly for a significant period of time, and result in increased wages and benefits or otherwise have a material adverse effect on the Group's business, results of operations and financial condition.
Sandvik Australia is a holding entity in respect of certain Group controlled entities and acts as head entity of the Sandvik Australian tax-consolidated group. Sandvik Australia has no material trading operations of its own. Therefore, Sandvik Australia is subject to the material risks to which Sandvik is subject, to the extent that such risks could limit Sandvik's ability to satisfy in full and on a timely basis its obligations under the Sandvik AB Guarantee in respect of the Notes. See "Risk Factors - Factors that may affect the ability of the relevant Issuer and the Guarantor to fulfil their respective obligations under the Notes issued under the Programme" for a description of these risks. The Issuer may use the proceeds from the issue of the Notes to provide intragroup loans. To that extent, the Issuer would therefore be dependent upon such other members of the Group paying interest on and repaying their loans in a timely fashion. Should any Group member fail to pay interest on or repay any loan in a timely fashion this could have a material adverse effect on the ability of the Issuer to fulfil its obligations under the Notes. Further, the operations of Sandvik Australia's group is focussed on mining in Australia with no diversification of business. To the extent that the mining industry and/or Australia are adversely affected, this may have a material adverse effect on Sandvik Australia's business, results of operations and financial condition.
A wide range of Notes may be issued under the Programme. A number of these Notes may have features which contain particular risks for potential investors. Set out below is a description of the most common such features:
An optional redemption feature of Notes is likely to limit their market value. During any period when an Issuer may elect to redeem Notes, the market value of those Notes generally will not rise substantially above the price at which they can be redeemed. This also may be true prior to any redemption period.
An Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other investments available at that time.
The market values of securities issued at a substantial discount or premium from their principal amount tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing securities. Generally, the longer the remaining terms of the securities, the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities.
Set out below is a brief description of certain risks relating to the Notes generally:
The Conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority.
Under EC Council Directive 2003/48/EC on the taxation of savings income (the "EU Savings Tax Directive"), Member States are required to provide to the tax authorities of another Member State details of payments of interest (or similar income) paid by a person within its jurisdiction to or for the benefit of an individual resident in that other Member State or certain limited types of entities established in that other Member State. However, for a transitional period, Luxembourg and Austria are instead required (unless during that period they elect otherwise) to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). Luxembourg has recently announced that it will no longer apply the withholding tax. They intend to implement the EU Savings Tax Directive with effect from 1 January 2015 and will provide details of payments of interest (or similar income) as from this date. A number of non-EU countries and territories, including Switzerland, have agreed to adopt similar measures (a withholding system in the case of Switzerland).
The European Commission has proposed certain amendments to the EU Savings Tax Directive which may, if implemented, amend or broaden the scope of the requirements described above.
If a payment were to be made or collected through a Member State which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from that payment, neither the relevant Issuer nor any Paying Agent nor any other person would be obliged to pay additional amounts with respect to any Note as a result of the imposition of such withholding tax. The Issuers are required to maintain a Paying Agent in a Member State that is not obliged to withhold or deduct tax pursuant to the EU Savings Tax Directive.
The Conditions of the Notes are based on English law in effect as at the date of this Base Prospectus. No assurance can be given as to the impact of any possible judicial decision or change to English law or administrative practice after the date of this Base Prospectus and any such change could materially adversely impact the value of any Notes affected by it.
The U.S. has issued complex proposed regulations under the Foreign Account Tax Compliance ("FATCA") provisions of the Hiring Incentives to Restore Employment Act of 2010. In some circumstances these regulations may require withholding of U.S. tax at a rate of 30 per cent. on all, or a portion of, certain payments including, among others, payments on debt or equity securities or the proceeds of sale of such securities.
If the Notes are treated as debt for U.S. federal tax purposes and are issued on or before the date that is six months after the date on which final regulations that define "foreign passthru payments" are published, they should be "grandfathered" and FATCA withholding would not be required with respect to interest, principal or other payments on the Notes or the proceeds of sale of the Notes unless they are substantially modified.
If the Notes are not grandfathered it is possible that U.S tax regulations that might be issued in the future might require the Issuers, the Guarantor and potential non-U.S. financial institutions through which payments on the Notes are made to withhold U.S. tax at a rate of 30 per cent. on all, or a portion of, payments made in respect of the Notes after 31 December 2016. It is not clear if or when such regulations might be issued nor the requirements that might be set out in such regulations. If such future regulations require U.S. tax to be withheld from payments on the Notes, none of the Issuers, the Guarantor, the Paying Agents or any other person would, pursuant to the Terms and Conditions of the Notes, be required to pay additional amounts as a result of the deduction or withholding of such tax and Noteholders might receive less interest or principal than expected.
In relation to any issue of Notes which have denominations consisting of a minimum Specified Denomination plus one or more higher integral multiples of another smaller amount, it is possible that such Notes may be traded in amounts that are not integral multiples of such minimum Specified Denomination. In such a case a holder who, as a result of trading such amounts, holds an amount which is less than the minimum Specified Denomination in his account with the relevant clearing system at the relevant time may not receive a definitive Note in respect of such holding (should definitive Notes be printed) and would need to purchase a principal amount of Notes such that its holding amounts to a Specified Denomination.
If definitive Notes are issued, holders should be aware that definitive Notes which have a denomination that is not an integral multiple of the minimum Specified Denomination may be illiquid and difficult to trade.
Notes denominated in RMB ("RMB Notes") may be issued under the Programme. RMB Notes contain particular risks for potential investors.
Renminbi is not freely convertible at present. The government of the PRC (the "PRC Government") continues to regulate conversion between Renminbi and foreign currencies, including the euro, despite the significant reduction over the years by the PRC Government of control over routine foreign exchange transactions under current accounts. Participating banks outside of the PRC may engage in the settlement of Renminbi trade transactions between non-PRC enterprises and their Chinese counterparts, known as current account items, through RMB Clearing Banks (as defined below) in Hong Kong, Macau, Singapore and Taiwan or through cooperation with qualified commercial banks (as agent banks) in the PRC under certain pilot schemes.
However, remittance of Renminbi by foreign investors into the PRC for purposes such as capital contributions, known as capital account items, is generally only permitted upon obtaining specific approvals from the relevant authorities on a case-by-case basis and subject to a strict monitoring system. Regulations in the PRC on the remittance of Renminbi into the PRC for settlement of capital account items is developing gradually.
On 7 April 2011, the State Administration of Foreign Exchange of the PRC (國家外匯管理局) ("SAFE") promulgated the Circular on Issues Concerning the Capital Account Items in connection with Cross-Border Renminbi (國家外匯管理局綜合司關於規範跨境人民幣資本項目業務操作有關問題的通知) (the "SAFE Circular"), which became effective on 1 May 2011. According to the SAFE Circular, in the event that foreign investors intend to use cross-border Renminbi (including offshore Renminbi and onshore Renminbi held in the accounts of non-PRC residents) to make a contribution to an onshore enterprise or make a payment for the transfer of an equity interest of an onshore enterprise by a PRC resident, such onshore enterprise shall be required to submit the relevant prior written consent from the Ministry of Commerce of the PRC (商務部) (the "MOFCOM") to the relevant local branches of SAFE of such onshore enterprise and register for a foreign invested enterprise status. Further, the SAFE Circular clarifies that the foreign debts borrowed, and the external guarantee provided, by an onshore entity (including a financial institution) in RMB shall, in principle, be regulated under the current PRC foreign debt and external guarantee regime.
On 12 October 2011, the MOFCOM promulgated the Circular on Issues in relation to Cross-border RMB Foreign Direct Investment (商務部關於跨境人民幣直接投資有關問題的通知) (the "MOFCOM RMB FDI Circular"). Pursuant to the MOFCOM RMB FDI Circular, the MOFCOM and its local counterparts are authorised to approve RMB foreign direct investments ("RMB FDI") in accordance with existing PRC laws and regulations regarding foreign investment, with certain exceptions which require the preliminary approval by the provincial counterpart of the MOFCOM and the consent of the MOFCOM. The MOFCOM RMB FDI Circular also states that the proceeds of RMB FDI may not be used towards investment in securities, financial derivatives or entrustment loans in the PRC, except for investments in PRC domestic listed companies through private placements or share transfers by agreement under the PRC strategic investment regime.
On 13 October 2011, the People's Bank of China, the central bank of the PRC (中國人民銀行) (the "PBOC") issued the Measures on Administration of the RMB Settlement in relation to Foreign Direct Investment (外商直接投資人民幣結算業務管理辦法),which was further interpreted by the PBOC on 14 June 2012 through the PBOC Circular Specifying Operational Guidelines on the RMB Settlement in relation to Foreign Direct Investment (中國人民銀行關於明確外商直接投資人民幣結算業務操作細則 的通知) (collectively, the "PBOC RMB FDI Measures"), to commence the PBOC's detailed RMB FDI administration system, which covers almost all aspects of RMB FDI, including capital injection, payment of purchase price in the acquisition of PRC domestic enterprises, repatriation of dividends and distribution, as well as RMB denominated cross-border loans. Under the PBOC RMB FDI Measures, special approval for RMB FDI and shareholder loans from the PBOC which was previously required by the PBOC Notice (as defined in "PRC Currency Controls") is no longer necessary. In some cases however, post-event filing with the PBOC is still necessary. The MOFCOM RMB FDI Circular and the PBOC RMB FDI Measures, which are new regulations, will be subject to interpretation and application by the relevant PRC authorities. See "PRC Currency Controls".
There is no assurance that the PRC Government will continue to gradually liberalise the control over cross-border Renminbi remittances in the future, that the cross-border Renminbi trade settlement pilot schemes will not be discontinued or that new PRC regulations will not be promulgated in the future which have the effect of restricting or eliminating the remittance of Renminbi into or outside the PRC. In the event that funds cannot be repatriated outside the PRC in Renminbi, this may affect the overall availability of Renminbi outside the PRC and the ability of the relevant Issuer to source Renminbi to finance its obligations under Notes denominated in Renminbi.
Holders of beneficial interests in the Notes denominated in Renminbi may be required to provide certifications and other information (including Renminbi account information) in order to allow such holder to receive payments in Renminbi in accordance with the Central Moneymarkets Unit.
The current size of Renminbi-denominated financial assets outside the PRC is limited. As of 31 March 2013, the total amount of Renminbi deposits held by institutions authorised to engage in Renminbi banking business in Hong Kong amounted to approximately RMB 668,100 million. As of 15 May 2013, the total amount of Renminbi deposits held by Taiwan foreign exchange banks and offshore banking units amounted to approximately RMB 60.26 billion.
While the PBOC has established Renminbi clearing and settlement mechanisms for participating banks through settlement agreements on the clearing of Renminbi business (the "Settlement Agreements") with Bank of China (Hong Kong) Limited in Hong Kong, Bank of China (Macau) Limited in Macau, Industrial and Commercial Bank of China, Singapore Branch in Singapore and Bank of China, Taipei Branch in Taiwan (each, a "Renminbi Clearing Bank") respectively, the current size of Renminbi denominated financial assets outside the PRC is limited.
There are restrictions imposed by the PBOC on Renminbi business participating banks in respect of crossborder Renminbi settlement, such as those relating to direct transactions with PRC enterprises. Furthermore, Renminbi business participating banks do not have direct Renminbi liquidity support from the PBOC. The Renminbi Clearing Banks only have access to onshore liquidity support from the PBOC to square open positions of participating banks for limited types of transactions and are not obliged to square for participating banks any open positions resulting from other foreign exchange transactions or conversion services and the participating banks will need to source Renminbi from the offshore market to square such open positions.
Although it is expected that the offshore Renminbi market will continue to grow in depth and size, its growth is subject to many constraints as a result of PRC laws and regulations on foreign exchange. There is no assurance that new PRC regulations will not be promulgated or the Settlement Agreements will not be terminated or amended in the future which will have the effect of restricting availability of Renminbi offshore. The limited availability of Renminbi outside the PRC may affect the liquidity of its RMB Notes. To the extent an Issuer is required to source Renminbi in the offshore market to service its RMB Notes, there is no assurance that such Issuer will be able to source such Renminbi on satisfactory terms, if at all.
If an Issuer cannot obtain Reminbi to satisfy its obligation to pay interest and principal on its RMB Notes as a result of Inconvertibility, Non-transferability or Illiquidity (each, as defined in the Terms and Conditions), such Issuer shall be entitled, on giving not less than five or more than 30 days' irrevocable notice to the Noteholders prior to the due date for payment, to settle any such payment (in whole or in part) in U.S. dollars on the due date at the U.S. Dollar Equivalent (as defined in the Conditions) of any such interest or principal, as the case may be.
The value of the Renminbi against the euro and other foreign currencies fluctuates and is affected by changes in the PRC and international political and economic conditions and by many other factors. An Issuer will make all payments of interest and principal with respect to the RMB Notes in Renminbi. As a result, the value of these Renminbi payments in euro or other applicable foreign currency terms may vary with the prevailing exchange rates in the marketplace. If the value of Renminbi depreciates against the euro or other applicable foreign currency between then and when the Issuer pays back the principal of the RMB Notes in Renminbi at maturity, the value of a Noteholder's investment in euro or other applicable foreign currency terms will have declined.
If the Issuer is not able, or it is impracticable for it, to satisfy its obligation to pay interest and principal on the RMB Notes as a result of Inconvertibility, Non-transferability or Illiquidity (each, as defined in the Conditions), the Issuer or the Guarantor (if applicable) shall be entitled, on giving not less than five or more than 30 calendar days' irrevocable notice to the investors prior to the due date for payment, to settle any such payment in U.S. dollars on the due date at the U.S. Dollar Equivalent (as defined in the Conditions) of any such interest or principal, as the case may be.
All payments to investors in respect of the RMB Notes will be made solely (i) for so long as the RMB Notes are represented by global certificates held with the common depositary or common safekeeper, as the case may be, for Euroclear Bank SA/NV and Clearsteam Banking société anonyme or any alternative clearing system, by transfer to a Renminbi bank account maintained in Hong Kong or (ii) for so long as the RMB Notes are in definitive form, by transfer to a Renminbi bank account maintained in Hong Kong in accordance with prevailing rules and regulations. The Issuer cannot be required to make payment by any other means (including in any other currency or by transfer to a bank account in the PRC).
Under the PRC Enterprise Income Tax Law (中華人民共和國企業所得稅法) and its implementation rules (collectively, the "PRC Enterprise Income Tax Law") which took effect on 1 January 2008, any gain realised on the transfer of RMB Notes by non-resident enterprise Holders may be subject to enterprise income tax if such gain is income derived from sources within the PRC. However, uncertainty remains as to whether the gain realised from the transfer of the RMB Notes would be treated as income derived from sources within the PRC and be subject to PRC tax. This will depend on how the PRC tax authorities interpret, apply or enforce the PRC Enterprise Income Tax Regulations. According to the arrangement between the PRC and Hong Kong, residents of Hong Kong, including enterprise holders and individual holders, will not be subject to PRC tax on any capital gains derived from a sale or exchange of the RMB Notes.
Therefore, if non-resident enterprise Holders are required to pay PRC income tax on gains on the transfer of the RMB Notes (such enterprise income tax is currently levied at the rate of 10 per cent. of gains realised, unless there is an applicable tax treaty between PRC and the jurisdiction in which such non-resident enterprise holders of RMB Notes reside that reduces or exempts the relevant tax), the value of their investment in the RMB Notes may be materially and adversely affected.
In the event that an Issuer decides to remit some or all of the proceeds into the PRC in Renminbi, its ability to do so will be subject to obtaining all necessary approvals from, and registration with, the relevant PRC government authorities. However, there is no assurance that the necessary approvals from, and registration with, the relevant PRC government authorities will be obtained at all or, if obtained, they will not be revoked or amended in the future.
There is no assurance that the PRC Government will continue to gradually liberalise the control over cross-border Renminbi remittances in the future, that the pilot schemes introduced in July 2009 (as extended) will not be discontinued or that new PRC regulations will not be promulgated in the future which have the effect of restricting or eliminating the remittance of Renminbi into or outside the PRC. In the event that an Issuer does remit some or all of the proceeds into the PRC in Renminbi and such Issuer subsequently is not able to repatriate funds outside the PRC in Renminbi, it will need to source Renminbi outside the PRC to repay its obligations under the RMB Notes in Renminbi, and its ability to do so will be subject to the overall availability of Renminbi outside the PRC.
Notes denominated in Australian dollars (the "AUD Notes") may be issued under the Programme. AUD Notes contain particular risks for potential investors.
The AUD Notes will be governed by English law, rather than the law of one of the States or Territories of Australia. As a result, the AUD Notes will be ineligible to be included in certain fixed income bond indices which may be relied upon by, or which may be required under the investment mandates of, sophisticated investors and professional investors in Australia. As a result, investors in the AUD Notes might find that there is less secondary market liquidity in the AUD Notes with sophisticated investors and professional investors in Australia than if the AUD Notes had been governed by the law of one of the States or Territories of Australia.
Set out below is a brief description of the principal market risks, including liquidity risk, exchange rate risk, interest rate risk and credit risk:
Notes may have no established trading market when issued, and one may never develop. If a market does develop, it may not be very liquid. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. This is particularly the case for Notes that are especially sensitive to interest rate, currency or market risks, are designed for specific investment objectives or strategies or have been structured to meet the investment requirements of limited categories of investors. These types of Notes generally would have a more limited secondary market and more price volatility than conventional debt securities. Illiquidity may have a severely adverse effect on the market value of Notes.
An Issuer will pay principal and interest on the Notes in the Specified Currency. This presents certain risks relating to currency conversions if an investor's financial activities are denominated principally in a currency or currency unit (the "Investor's Currency") other than the Specified Currency. These include the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Currency or revaluation of the Investor's Currency) and the risk that authorities with jurisdiction over the Specified Currency or the Investor's Currency may impose or modify exchange controls. An appreciation in the value of the Investor's Currency relative to the Specified Currency would decrease (1) the Investor's Currency-equivalent yield on the Notes, (2) the Investor's Currency equivalent value of the principal payable on the Notes and (3) the Investor's Currency equivalent market value of the Notes.
Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal.
Investment in Fixed Rate Notes involves the risk that subsequent changes in market interest rates may adversely affect the value of the Fixed Rate Notes.
One or more independent credit rating agencies may assign credit ratings to the Notes. The ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed above, and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time. In general, European regulated investors are restricted from using a rating for regulatory purposes if such rating is not issued by a credit rating agency established in the EEA and registered under the CRA Regulation (and such registration has not been withdrawn or suspended). Such general restriction will also apply in the case of credit ratings issued by non-EU credit rating agencies unless the relevant credit ratings are endorsed by an EU-registered credit rating agency or the relevant non-EU rating agency is certified in accordance with the CRA Regulation (and such endorsement action or certification, as the case may be, has not been withdrawn or suspended). Certain information with respect of credit rating agencies and ratings is disclosed on the front cover of this Base Prospectus and if a Tranche of Notes is rated such rating will be disclosed in the Final Terms or Drawdown Prospectus.
The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (1) Notes are legal investments for it, (2) Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of any Notes. Financial institutions should consult their legal advisors or the appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-based capital or similar rules.
The following information shall be deemed to be incorporated in, and to form part of, this Base Prospectus:
Copies of the documents specified above as containing information incorporated by reference in this Base Prospectus may be inspected, free of charge, at www.sandvik.com or http://www.morningstar.co.uk/uk/NSM. Any information contained in any of the documents specified above which is not incorporated by reference in this Base Prospectus is either not relevant to investors or is covered elsewhere in this Base Prospectus. Any documents themselves incorporated by reference in the documents incorporated by reference in this Base Prospectus shall not form part of this Base Prospectus.
The annual report 2012 of Sandvik Australia containing the audited consolidated financial statements (including the auditors' report thereon and notes thereto) in respect of the years ended 31 December 2012 and 31 December 2011 are set out in the Appendix to this Base Prospectus.
In this section the expression "necessary information" means, in relation to any Tranche of Notes, the information necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the relevant Issuer and of the rights attaching to the Notes. In relation to the different types of Notes which may be issued under the Programme the Issuers have endeavoured to include in this Base Prospectus all of the necessary information except for information relating to the Notes which is not known at the date of this Base Prospectus and which can only be determined at the time of an individual issue of a Tranche of Notes.
Any information relating to the Notes which is not included in this Base Prospectus and which is required in order to complete the necessary information in relation to a Tranche of Notes will be contained either in the relevant Final Terms or in a Drawdown Prospectus. Such information will be contained in the relevant Final Terms unless any of such information constitutes a significant new factor relating to the information contained in this Base Prospectus in which case such information, together with all of the other necessary information in relation to the relevant series of Notes, may be contained in a Drawdown Prospectus.
For a Tranche of Notes which is the subject of Final Terms, those Final Terms will, for the purposes of that Tranche only, complete this Base Prospectus and must be read in conjunction with this Base Prospectus. The terms and conditions applicable to any particular Tranche of Notes which is the subject of Final Terms are the Conditions as completed by the relevant Final Terms.
The terms and conditions applicable to any particular Tranche of Notes which is the subject of a Drawdown Prospectus will be the Conditions as supplemented, amended and/or replaced to the extent described in the relevant Drawdown Prospectus. In the case of a Tranche of Notes that is the subject of a Drawdown Prospectus, each reference in this Base Prospectus to information being specified or identified in the relevant Final Terms shall be read and construed as a reference to such information being specified or identified in the relevant Drawdown Prospectus unless the context requires otherwise. Each Drawdown Prospectus will be constituted either (a) by a single document or (b) by a registration document, a securities note and, if applicable, a summary, containing the necessary information relating to the relevant Issuer and the relevant Notes.
Each Tranche of Notes in bearer form ("Bearer Notes") will initially be in the form of either a temporary global note in bearer form (the "Temporary Global Note"), without interest coupons, or a permanent global note in bearer form (the "Permanent Global Note"), without interest coupons, in each case as specified in the relevant Final Terms. Each Temporary Global Note or, as the case may be, Permanent Global Note (each, a "Global Note") which is not intended to be issued in NGN form, as specified in the relevant Final Terms, will be deposited on or around the issue date of the relevant Tranche of the Notes with a depositary or a common depositary for Euroclear Bank SA/NV ("Euroclear") and/or Clearstream Banking, société anonyme ("Clearstream, Luxembourg") and/or any other relevant clearing system and each Global Note which is intended to be issued in NGN form, as specified in the relevant Final Terms, will be deposited on or around the issue date of the relevant Tranche of the Notes with a common safekeeper for Euroclear and/or Clearstream, Luxembourg.
On 13 June 2006 the European Central Bank (the "ECB") announced that Notes in NGN form are in compliance with the "Standards for the use of EU securities settlement systems in ESCB credit operations" of the central banking system for the euro (the "Eurosystem"), provided that certain other criteria are fulfilled. At the same time the ECB also announced that arrangements for Notes in NGN form will be offered by Euroclear and Clearstream, Luxembourg as of 30 June 2006 and that debt securities in global bearer form issued through Euroclear and Clearstream, Luxembourg after 31 December 2006 will only be eligible as collateral for Eurosystem operations if the NGN form is used. Even if the Notes are intended to be held in a manner which would allow for Eurosystem eligibility, the Notes may not be recognised as eligible collateral for Eurosystem monetary policy and intra day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met. If the Notes are recognised as eligible as collateral for Eurosystem operations, the Notes will be deposited initially upon issue with one of the ICSD's acting as common safekeeper.
Where the Global Notes issued in respect of any Tranche are in NGN form, Euroclear and Clearstream, Luxembourg will be notified by or on behalf of the Issuer whether or not such Global Notes are intended to be held in a manner which would allow Eurosystem eligibility. Any indication that the Global Notes are to be so held does not necessarily mean that the Notes of the relevant Tranche will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any time during their life as such recognition depends upon the ECB being satisfied that the Eurosystem eligibility criteria have been met. Furthermore, any indication that the Global Notes are not intended to be so held may be the case at the date of the relevant Final Terms. However, should the Eurosystem eligibility criteria be amended in the future such that the Notes are capable of meeting them, the Notes may then be deposited with one of Euroclear or Clearstream, Luxembourg as common safekeeper. Similarly, this would not necessarily mean that the Notes will then be recognised as eligible collateral for Eurosystem monetary policy and intra day credit operations by the Eurosystem at any time during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.
In the case of each Tranche of Bearer Notes, the relevant Final Terms will also specify whether United States Treasury Regulation §1.163-5(c)(2)(i)(C) (the "TEFRA C Rules") or United States Treasury Regulation §1.163-5(c)(2)(i)(D) (the "TEFRA D Rules") are applicable in relation to the Notes or, if the Notes do not have a maturity of more than 365 days, that neither the TEFRA C Rules nor the TEFRA D Rules are applicable.
If the relevant Final Terms specifies the form of Notes as being "Temporary Global Note exchangeable for a Permanent Global Note", then the Notes will initially be in the form of a Temporary Global Note which will be exchangeable, in whole or in part, for interests in a Permanent Global Note, without interest coupons, not earlier than 40 days after the issue date of the relevant Tranche of the Notes (the "Exchange Date") upon certification as to non-U.S. beneficial ownership. No payments will be made under the Temporary Global Note unless exchange for interests in the Permanent Global Note is improperly withheld or refused. In addition, interest payments in respect of the Notes cannot be collected without such certification of non-U.S. beneficial ownership.
Whenever any interest in the Temporary Global Note is to be exchanged for an interest in a Permanent Global Note, the Issuer shall procure (in the case of first exchange) the prompt delivery (free of charge to the bearer) of such Permanent Global Note to the bearer of the Temporary Global Note or (in the case of any subsequent exchange) an increase in the principal amount of the Permanent Global Note in accordance with its terms against:
The principal amount of the Permanent Global Note shall be equal to the aggregate of the principal amounts specified in the certificates of non-U.S. beneficial ownership; provided, however, that in no circumstances shall the principal amount of the Permanent Global Note exceed the initial principal amount of the Temporary Global Note.
The Permanent Global Note will be exchangeable in whole, but not in part, for Bearer Notes in definitive form ("Definitive Notes"):
The exchange upon notice or at any time described above should not be expressed to be applicable if the relevant Notes have denominations consisting of a minimum specified denomination plus one or more integral multiples of another smaller amount in excess thereof.
Whenever the Permanent Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Permanent Global Note to the bearer of the Permanent Global Note against the surrender of the Permanent Global Note to or to the order of the Fiscal Agent within 30 days of the bearer requesting such exchange.
If the relevant Final Terms specifies the form of Notes as being "Temporary Global Note exchangeable for Definitive Notes" and also specifies that the TEFRA C Rules are applicable or that neither the TEFRA C Rules or the TEFRA D Rules are applicable, then the Notes will initially be in the form of a Temporary Global Note which will be exchangeable, in whole but not in part, for Definitive Notes not earlier than 40 days after the issue date of the relevant Tranche of the Notes.
If the relevant Final Terms specifies the form of Notes as being "Temporary Global Note exchangeable for Definitive Notes" and also specifies that the TEFRA D Rules are applicable, then the Notes will initially be in the form of a Temporary Global Note which will be exchangeable, in whole or in part, for Definitive Notes not earlier than 40 days after the issue date of the relevant Tranche of the Notes upon certification as to non-U.S. beneficial ownership. Interest payments in respect of the Notes cannot be collected without such certification of non-U.S. beneficial ownership.
Whenever the Temporary Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Temporary Global Note to the bearer of the Temporary Global Note against the surrender of the Temporary Global Note to or to the order of the Fiscal Agent within 30 days of the bearer requesting such exchange.
If the relevant Final Terms specifies the form of Notes as being "Permanent Global Note exchangeable for Definitive Notes", then the Notes will initially be in the form of a Permanent Global Note which will be exchangeable in whole, but not in part, for Definitive Notes:
The exchange upon notice or at any time described above should not be expressed to be applicable if the relevant Notes have denominations consisting of a minimum specified denomination plus one or more integral multiples of another smaller amount in excess thereof.
Whenever the Permanent Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Permanent Global Note to the bearer of the Permanent Global Note against the surrender of the Permanent Global Note to or to the order of the Fiscal Agent within 30 days of the bearer requesting such exchange.
The terms and conditions applicable to any Definitive Note will be endorsed on that Note and will consist of the terms and conditions set out under "Terms and Conditions of the Notes" below and the provisions of the relevant Final Terms which complete those terms and conditions.
The terms and conditions applicable to any Note in global form will differ from those terms and conditions which would apply to the Note were it in definitive form to the extent described under "Summary of Provisions Relating to the Notes while in Global Form" below.
In the case of any Tranche of Bearer Notes having a maturity of more than 365 days, the Notes in global form, the Notes in definitive form and any Coupons and Talons appertaining thereto will bear a legend to the following effect:
"Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code."
Each Tranche of Registered Notes will be in the form of either individual Note Certificates in registered form ("Individual Note Certificates") or a global Note in registered form (a "Global Registered Note"), in each case as specified in the relevant Final Terms. Each Global Registered Note will be deposited on or around the relevant issue date with a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and registered in the name of a nominee for such depositary and will be exchangeable for Individual Note Certificates in accordance with its terms.
If the relevant Final Terms specifies the form of Notes as being "Individual Note Certificates", then the Notes will at all times be in the form of Individual Note Certificates issued to each Noteholder in respect of their respective holdings.
If the relevant Final Terms specifies the form of Notes as being "Global Registered Note exchangeable for Individual Note Certificates", then the Notes will initially be in the form of a Global Registered Note which will be exchangeable in whole, but not in part, for Individual Note Certificates:
Whenever the Global Registered Note is to be exchanged for Individual Note Certificates, the Issuer shall procure that Individual Note Certificates will be issued in an aggregate principal amount equal to the principal amount of the Global Registered Note within 15 days of the delivery, by or on behalf of the registered holder of the Global Registered Note to the Registrar of such information as is required to complete and deliver such Individual Note Certificates (including, without limitation, the names and addresses of the persons in whose names the Individual Note Certificates are to be registered and the principal amount of each such person's holding) against the surrender of the Global Registered Note at the specified office of the Registrar.
Such exchange will be effected in accordance with the provisions of the Agency Agreement and the regulations concerning the transfer and registration of Notes scheduled thereto and, in particular, shall be effected without charge to any holder, but against such indemnity as the Registrar may require in respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such exchange.
The terms and conditions applicable to any Individual Note Certificate will be endorsed on that Individual Note Certificate and will consist of the terms and conditions set out under "Terms and Conditions of the Notes" below and the provisions of the relevant Final Terms which complete those terms and conditions.
The terms and conditions applicable to any Global Registered Note will differ from those terms and conditions which would apply to the Note were it in definitive form to the extent described under "Summary of Provisions Relating to the Notes while in Global Form" below.
Each Tranche of Swedish Registered Notes will be issued in uncertificated and dematerialised book entry form in accordance with the SFIA Act. No global or definitive Notes will be issued in respect thereof. The holder of a Swedish Registered Note will be the person evidenced as such by the register for such Note maintained by Euroclear Sweden on behalf of the Issuer. Where a nominee (Sw. förvaltare) in accordance with the SFIA Act is so evidenced it shall be treated by the Issuer as the holder of the relevant Swedish Registered Note.
Title to Swedish Registered Notes will pass by transfer between accountholders of Euroclear Sweden, perfected in accordance with the legislation (including the SFIA Act), rules and regulations applicable to and/or issued by Euroclear Sweden that are in force and effect from time to time.
The following is the text of the terms and conditions which, as completed by the relevant Final Terms, will be endorsed on each Note in definitive form issued under the Programme. The terms and conditions applicable to any Note in global form will differ from those terms and conditions which would apply to the Note were it in definitive form to the extent described under "Summary of Provisions Relating to the Notes while in Global Form" below.
provisions. The holders of the Notes (the "Noteholders") and the holders of the related interest coupons, if any, (the "Couponholders" and the "Coupons", respectively) are bound by, and are deemed to have notice of, all the provisions of the Agency Agreement, the Swedish Agency Agreement and the Deed of Covenant applicable to them. Copies of the Agency Agreement and the Deed of Covenant are available for inspection by Noteholders during normal business hours at the Specified Offices of each of the Paying Agents, the initial Specified Offices of which are set out below. A copy of the Swedish Agency Agreement will be available for inspection by Noteholders during normal business hours at the Specified Office of the Swedish Issuing and Paying Agent.
(a) Definitions: In these Conditions the following expressions have the following meanings:
"Accrual Yield" has the meaning given in the relevant Final Terms;
"Additional Business Centre(s)" means the city or cities specified as such in the relevant Final Terms;
"Additional Financial Centre(s)" means the city or cities specified as such in the relevant Final Terms;
"AUD Notes" means Notes denominated in Australian dollars;
"Bank Bill Rate" if specified in the applicable Final Terms, shall mean the average mid-rate for Bills (having the meaning that term has in the Bills of Exchange Act 1909 of the Commonwealth of Australia) having a tenor closest to the Interest Period as displayed on the "BBSW" page (or any replacement page) of the Reuters Monitor System on the first day of that Interest Period as determined by the Calculation Agent. However, if the average mid-rate is not displayed by 10.30 a.m. (Sydney time) on that day, or if it is displayed but the Calculation Agent determines that there is an obvious error in that rate, Bank Bill Rate means the rate determined by the Calculation Agent in good faith at approximately 10.30 a.m. (Sydney time) on that day, having regard, to the extent possible, to the mid-rate of rates otherwise bid and offered for bank accepted Bills (as defined above) of that tenor at or around that time (including any displayed on the "BBSY" page of the Reuters Monitor System);
"Business Day" means:
"Business Day Convention", in relation to any particular date, has the meaning given in the relevant Final Terms and, if so specified in the relevant Final Terms, may have different meanings in relation to different dates and, in this context, the following expressions shall have the following meanings:
(i) "Following Business Day Convention" means that the relevant date shall be postponed to the first following day that is a Business Day;
"Calculation Agent" means the Fiscal Agent or such other Person specified in the relevant Final Terms as the party responsible for calculating the Rate(s) of Interest and Interest Amount(s);
"Calculation Amount" has the meaning given in the relevant Final Terms;
"CNY Dealer" means an independent foreign exchange dealer of international repute active in the Renminbi exchange market in Hong Kong;
"Coupon Sheet" means, in respect of a Note, a coupon sheet relating to the Note;
"Day Count Fraction" means, in respect of the calculation of an amount for any period of time (the "Calculation Period"), such day count fraction as may be specified in these Conditions or the relevant Final Terms and:
in such Regular Period and (2) the number of Regular Periods in any year;
Day Count Fraction =
$$
\frac{[360 \times (Y_2 - Y_1)] + [30 \times (M_2 - M_1)] + (D_2 - D_1)}{360}
$$
where:
"Y1" is the year, expressed as a number, in which the first day of the Calculation Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
"M2" is the calendar month, expressed as number, in which the day immediately following the last day included in the Calculation Period falls;
"D1" is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30;
(vi) if "30E/360" or "Eurobond Basis" is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:
Day Count Fraction = [360 x (Y2 -Y1)] + [30 x (M2 -M1)]+ (D2 -D1) 360
where:
"Y1" is the year, expressed as a number, in which the first day of the Calculation Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
"M2" is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
"D1" is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31, in which case D2 will be 30; and
(vii) if "30E/360 (ISDA)" is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:
Day Count Fraction = [360 x (Y2 -Y1)] + [30 x (M2 -M1)]+ (D2 -D1) 360
where:
"Y1" is the year, expressed as a number, in which the first day of the Calculation Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;
"M2" is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;
"D1" is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D2 will be 30,
provided, however, that in each such case the number of days in the Calculation Period is calculated from and including the first day of the Calculation Period to but excluding the last day of the Calculation Period;
"Early Redemption Amount (Tax)" means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Final Terms;
"Early Termination Amount" means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Final Terms, or determined in accordance with these Conditions;
"EURIBOR" means Eurozone interbank offered rate;
"Euroclear Sweden" means the Swedish Central Securities Depositary and Clearing Organisation Euroclear Sweden AB, incorporated in Sweden with Reg. No. 556112-8074;
"Euroclear Sweden Register" means in respect of Swedish Registered Notes the computerised register maintained by Euroclear Sweden for the Issuer consisting of accounts for the holders of financial instruments registered pursuant to the SFIA Act;
"Extraordinary Resolution" has the meaning given in the Agency Agreement;
"Final Redemption Amount" means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Final Terms;
"First Interest Payment Date" means the date specified in the relevant Final Terms;
"Fixed Coupon Amount" has the meaning given in the relevant Final Terms;
"Guarantee" means, in relation to any Indebtedness of any Person, any obligation of another Person to pay such Indebtedness including (without limitation):
"Governmental Authority" means any de facto or de jure government (or any agency or instrumentality thereof), court, tribunal, administrative or other governmental authority or any other entity (private or public) charged with the regulation of the financial markets (including the central bank) of Hong Kong;
"Holder", in the case of Bearer Notes, has the meaning given in Condition 3(b) (Form, Denomination, Title and Transfer - Title to Bearer Notes), in the case of Registered Notes, has the meaning given in Condition 3(d) (Form, Denomination, Title and Transfer - Title to Registered Notes) and, in the case of Swedish Registered Notes, has the meaning given in Condition 3 (Form, Denomination, Title and Transfer - Title to Swedish Registered Notes);
"Illiquidity" means where the general Renminbi exchange market in Hong Kong becomes illiquid and, as a result of which, the Issuer cannot obtain sufficient Renminbi in order to satisfy its obligation to pay interest and principal (in whole or in part) in respect of the Notes as determined by the Issuer in good faith and in a commercially reasonable manner following consultation with two CNY Dealers;
"Inconvertibility" means the occurrence of any event that makes it impossible for the Issuer to convert any amount due in respect of the Notes in the general Renminbi exchange market in Hong Kong, other than where such impossibility is due solely to the failure of the Issuer to comply with any law, rule or regulation enacted by any Governmental Authority (unless such law, rule or regulation is enacted after 17 July 2013 and it is impossible for the Issuer, due to an event beyond its control, to comply with such law, rule or regulation);
"Indebtedness" means any indebtedness of any Person for money borrowed or raised including (without limitation) any indebtedness for or in respect of:
"Interest Amount" means, in relation to a Note and an Interest Period, the amount of interest payable in respect of that Note for that Interest Period;
"Interest Commencement Date" means the Issue Date of the Notes or such other date as may be specified as the Interest Commencement Date in the relevant Final Terms;
"Interest Determination Date" has the meaning given in the relevant Final Terms;
"Interest Payment Date" means the First Interest Payment Date and any other date or dates specified as such in, or determined in accordance with the provisions of, the relevant Final Terms and, if a Business Day Convention is specified in the relevant Final Terms:
"Interest Period" means each period beginning on (and including) the Interest Commencement Date or any Interest Payment Date and ending on (but excluding) the next Interest Payment Date;
"ISDA Definitions" means the 2006 ISDA Definitions (as amended and updated as at the date of issue of the first Tranche of the Notes of the relevant Series (as specified in the relevant Final Terms) as published by the International Swaps and Derivatives Association, Inc.);
"Issue Date" has the meaning given in the relevant Final Terms;
"Margin" has the meaning given in the relevant Final Terms;
"Maturity Date" has the meaning given in the relevant Final Terms;
"Maximum Redemption Amount" has the meaning given in the relevant Final Terms;
"Minimum Redemption Amount" has the meaning given in the relevant Final Terms;
"Non-transferability" means the occurrence of any event that makes it impossible for the Issuer to deliver Renminbi between accounts inside Hong Kong or from an account inside Hong Kong to an account outside Hong Kong, other than where such impossibility is due solely to the failure of the Issuer to comply with any law, rule or regulation enacted by any Governmental Authority (unless such law, rule or regulation is enacted after 17 July 2013 and it is impossible for the Issuer, due to an event beyond its control, to comply with such law, rule or regulation);
"Noteholder", in the case of Bearer Notes, has the meaning given in Condition 3(b) (Form, Denomination, Title and Transfer - Title to Bearer Notes) and, in the case of Registered Notes, has the meaning given in Condition 3 (Form, Denomination, Title and Transfer - Title to Registered Notes);
"Optional Redemption Amount (Call)" means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Final Terms;
"Optional Redemption Amount (Put)" means, in respect of any Note, its principal amount or such other amount as may be specified in the relevant Final Terms;
"Optional Redemption Date (Call)" has the meaning given in the relevant Final Terms;
"Optional Redemption Date (Put)" has the meaning given in the relevant Final Terms;
"Participating Member State" means a Member State of the European Communities which adopts the euro as its lawful currency in accordance with the Treaty;
"Person" means any individual, company, corporation, firm, partnership, joint venture, association, organisation, state or agency of a state or other entity, whether or not having separate legal personality;
"Principal Financial Centre" means, in relation to any currency, the principal financial centre for that currency provided, however, that:
"Principal Subsidiary" means at any time, any Subsidiary whose total assets, consolidated in the case of a Subsidiary which itself has subsidiaries (to the extent attributable to the consolidated total assets of the Group), as shown by its latest audited balance sheet, represent ten per cent. or more of the consolidated total assets of the Group, as shown by the latest published audited consolidated balance sheet of the Group;
"Put Option Notice" means a notice which must be delivered to a Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;
"Put Option Receipt" means a receipt issued by a Paying Agent to a depositing Noteholder upon deposit of a Note with such Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;
"Rate Calculation Business Day" means a day (other than a Saturday, Sunday or public holiday) on which commercial banks are open for general business (including dealings in foreign exchange) in Hong Kong and in New York City;
"Rate Calculation Date" means the day which is two Rate Calculation Business Days before the due date of the relevant amount under these Conditions;
"Rate of Interest" means the rate or rates (expressed as a percentage per annum) of interest payable in respect of the Notes specified in the relevant Final Terms or calculated or determined in accordance with the provisions of these Conditions as completed by the relevant Final Terms;
"Redemption Amount" means, as appropriate, the Final Redemption Amount, the Early Redemption Amount (Tax), the Optional Redemption Amount (Call), the Optional Redemption Amount (Put), the Early Termination Amount as may be specified in the relevant Final Terms;
"Reference Banks" has the meaning given in the relevant Final Terms or, if none, four major banks selected by the Calculation Agent in the market that is most closely connected with the Reference Rate;
"Reference Price" has the meaning given in the relevant Final Terms;
"Reference Rate" shall mean (i) LIBOR, (ii) EURIBOR, (iii) STIBOR or (iv) Bank Bill Rate in each case for the relevant period, as specified in the relevant Final Terms;
"Registrar" means, in relation to any series of Registered Notes, Citibank N.A., London Branch (which includes any successor registrar appointed from time to time in connection with the Registered Notes) or in respect of any Series of Swedish Registered Notes, Euroclear Sweden in accordance with the SFIA Act;
"Regular Period" means:
"Relevant Date" means, in relation to any payment, whichever is the later of (a) the date on which the payment in question first becomes due and (b) if the full amount payable has not been received in the Principal Financial Centre of the currency of payment by the Fiscal Agent or in respect of Swedish Registered Notes, by the Swedish Issuing and Paying Agent, on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Noteholders;
"Relevant Financial Centre" has the meaning given in the relevant Final Terms;
"Relevant Indebtedness" means any Indebtedness which is in the form of or represented by any bond, note, debenture, debenture stock, loan stock, certificate or other debt securities which is, or is capable of being, listed, quoted or traded on any stock exchange or in any securities market (including, without limitation, any over-the-counter market);
"Relevant Screen Page" means the page, section or other part of a particular information service (including, without limitation, Reuters) specified as the Relevant Screen Page in the relevant Final Terms, or such other page, section or other part as may replace it on that information service or such other information service, in each case, as may be nominated by the Person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Reference Rate;
"Relevant Time" has the meaning given in the relevant Final Terms;
"Reserved Matter" means any proposal to change any date fixed for payment of principal or interest in respect of the Notes, to reduce the amount of principal or interest payable on any date in respect of the Notes, to alter the method of calculating the amount of any payment in respect of the Notes or the date for any such payment, to change the currency of any payment under the Notes or to change the quorum requirements relating to meetings or the majority required to pass an Extraordinary Resolution;
"Security Interest" means any mortgage, charge, pledge, lien or other security interest including, without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction;
"SFIA Act" means the Swedish Financial Instruments Accounts Act (Sw. lag (1998:1479) om kontoföring av finansiella instrument) as amended;
"Specified Currency" has the meaning given in the relevant Final Terms;
"Specified Denomination(s)" has the meaning given in the relevant Final Terms;
"Specified Office" has the meaning given in the Agency Agreement or in relation to Swedish Registered Notes, the Swedish Agency Agreement;
"Specified Period" has the meaning given in the relevant Final Terms;
"Spot Rate" means the spot/U.S. dollar exchange rate for the purchase of U.S. dollars with Renminbi in the over-the-counter Renminbi exchange market in Hong Kong for settlement in two Rate Calculation Business Days, as determined by the Fiscal Agent at or around 11.00 a.m. (Hong Kong time) on the Rate Calculation Date, on a deliverable basis by reference to Reuters Screen Page TRADCNY3, or if no such rate is available, on a non-deliverable basis by reference to Reuters Screen Page TRADNDF. If neither rate is available, the Fiscal Agent will determine the Spot Rate at or around 11.00 a.m. (Hong Kong time) on the Rate Calculation Date as the most recently available Renminbi/U.S. dollar official fixing rate for settlement in two Rate Calculation Business Days reported by The State Administration of Foreign Exchange of the PRC, which is reported on the Reuters Screen Page CNY=SAEC. Reference to a page on the Reuters Screen means the display page so designated on the Reuter Monitor Money Rates Service (or any successor service) or such other page as may replace that page for the purpose of displaying a comparable currency exchange rate;
"STIBOR" means Stockholm interbank offered rate;
"Subsidiary" means a subsidiary company or corporation (the "First Company") of another company or corporation (the "Holding Company"), where
and, for the purpose of this definition, a company or corporation shall be treated as being controlled by another if that other company or corporation is able to direct its affairs and/or to control the composition of its board of directors or equivalent body;
"Talon" means a talon for further Coupons;
"TARGET2" means the Trans-European Automated Real-Time Gross Settlement Express Transfer payment system which utilises a single shared platform and which was launched on 19 November 2007;
"TARGET Settlement Day" means any day on which TARGET2 is open for the settlement of payments in euro;
"Tax Jurisdiction" means (i) the Kingdom of Sweden or any political subdivision or any authority thereof or therein having power to tax (in the case of Sandvik AB (publ) as Issuer or Guarantor); or (ii) Australia or any political subdivision or any authority thereof or therein having power to tax (in the case of Sandvik Australia Holdings Pty Ltd as Issuer); or (iii) any jurisdiction under the laws of which the Issuer or the Guarantor, or any successor to the Issuer or the Guarantor, is organised or in which it is resident for tax purposes;
"Treaty" means the Treaty establishing the European Communities, as amended;
"Zero Coupon Note" means a Note specified as such in the relevant Final Terms; and
"U.S. Dollar Equivalent" means the Renminbi amount converted into U.S. dollars using the Spot Rate for the relevant Rate Calculation Date.
(i) Transfers of Notes relating to Australia: Notes may only be transferred if:
(i) in the case of any offer or invitation or issue made in, into or from Australia (including an offer, invitation or issue to a person in Australia or an issue entered in a Register in Australia):
The Notes constitute direct, unsubordinated and unconditional obligations of the Issuer which will at all times rank pari passu among themselves and at least pari passu with all other present and future unsecured obligations of the Issuer, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.
The obligations of the Guarantor under the Sandvik AB Guarantee constitute direct unsubordinated and unconditional obligations of the Guarantor and claims under the Sandivk AB Guarantee will at all times rank at least pari passu with all other present and future unsecured obligations of the Guarantor, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.
So long as any Note remains outstanding, each Issuer shall not, and shall procure that none of its Principal Subsidiaries will, create or permit to subsist any Security Interest upon the whole or any part of its present or future undertaking, assets or revenues (including uncalled capital) to secure any Relevant Indebtedness of the Issuer or any of its Principal Subsidiaries or Guarantee of Relevant Indebtedness of the Issuer or any of its Principal Subsidiaries without (a) at the same time or prior thereto securing the Notes equally and rateably therewith or (b) providing such other security for the Notes as may be approved by an Extraordinary Resolution of Noteholders provided that for the purposes of this Condition 6 (Negative Pledge) (i) Principal Subsidiaries shall not include Seco Tools AB and (ii) any Relevant Indebtedness, or Guarantee of Relevant Indebtedness, of Sandvik Australia Holdings Pty Ltd or its Principal Subsidiaries, in each case, not guaranteed by Sandvik AB (publ) shall be excluded.
and the Rate of Interest for such Interest Period shall be the sum of the Margin and the rate or (as the case may be) the arithmetic mean so determined; provided, however, that if the Calculation Agent is unable to determine a rate or (as the case may be) an arithmetic mean in accordance with the above provisions in relation to any Interest Period, the Rate of Interest applicable to the Notes during such Interest Period will be the sum of the Margin and the rate or (as the case may be) the arithmetic mean last determined in relation to the Notes in respect of a preceding Interest Period.
(d) ISDA Determination: If ISDA Determination is specified in the relevant Final Terms as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be the sum of the Margin and the relevant ISDA Rate where "ISDA Rate" in relation to any Interest Period means a rate equal to the Floating Rate (as defined in the ISDA Definitions) that would be determined by the Calculation Agent under an interest rate swap transaction if the Calculation Agent were acting as Calculation Agent for that interest rate swap transaction under the terms of an agreement incorporating the ISDA Definitions and under which:
on giving not less than 30 nor more than 60 days' notice to the Noteholders (which notice shall be irrevocable), at their Early Redemption Amount (Tax), together with interest accrued (if any) to the date fixed for redemption, if:
provided, however, that no such notice of redemption shall be given earlier than:
would be obliged to pay such additional amounts if a payment in respect of the Notes were then due.
Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer or, if applicable, the Guarantor shall deliver to the Fiscal Agent (or in the case of Swedish Registered Notes to the Swedish Issuing and Paying Agent) (A) a certificate signed by two directors of the Issuer or, if applicable, two directors of the Guarantor stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred of and (B) an opinion of independent legal advisers of recognised standing to the effect that the Issuer or, if applicable, the Guarantor has or will become obliged to pay such additional amounts as a result of such change or amendment. Upon the expiry of any such notice as is referred to in this Condition 10(b) (Redemption for tax reasons), the Issuer shall be bound to redeem the Notes in accordance with this Condition 10(b) (Redemption for tax reasons).
collection by the depositing Noteholder against surrender of the relevant Put Option Receipt. For so long as any outstanding Note is held by a Paying Agent in accordance with this Condition 10(e) (Redemption at the option of Noteholders) the depositor of such Note and not such Paying Agent shall be deemed to be the holder of such Note for all purposes.
Notwithstanding the above, in the case of Swedish Registered Notes, the right to require redemption of such Notes in accordance with this Condition 10(e) (Redemption at the option of Noteholders) must be exercised in accordance with the rules and procedures of Euroclear Sweden and where there is any inconsistency between the foregoing and the rules and procedures of Euroclear Sweden, the rules and procedures of Euroclear Sweden shall prevail.
Where such calculation is to be made for a period which is not a whole number of years, the calculation in respect of the period of less than a full year shall be made on the basis of such Day Count Fraction as may be specified in the Final Terms for the purposes of this Condition 10(g) (Early redemption of Zero Coupon Notes) or, if none is so specified, a Day Count Fraction of 30E/360.
This Condition 11 (Payments – Bearer Notes) is only applicable to Bearer Notes.
payment of the full amount of the interest on the Notes in the currency in which the payment is due when due, (ii) payment of the full amount of such interest at the offices of all such Paying Agents is illegal or effectively precluded by exchange controls or other similar restrictions and (iii) payment is permitted by applicable United States law.
Each sum of principal so deducted shall be paid in the manner provided in Condition 11(a) (Principal) above against presentation and (provided that payment is made in full) surrender of the relevant missing Coupons.
Business Day in such place and shall not be entitled to any further interest or other payment in respect of any such delay.
All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 11(k) (Payment of U.S. Dollar Equivalent) by the Calculation Agent, will (in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, the Guarantor, the Agents and all Holders.
Conditions 12(a) (Principal) to 12(g) (Payment of U.S. Dollar Equivalent) are only applicable to Registered Notes. Condition 12(h) (Payment - Swedish Registered Notes) is only applicable to Swedish Registered Notes.
(b) Interest: Payments of interest shall be made by cheque drawn in the currency in which the payment is due drawn on, or, upon application by a Holder of a Registered Note to the Specified Office of the Fiscal Agent not later than the fifteenth day before the due date for any such payment, by transfer to an account denominated in that currency (or, if that currency is euro, any other account to which euro may be credited or transferred) and maintained by the payee with, a bank in the Principal Financial Centre of that currency (in the case of a sterling cheque, a town clearing branch of a bank in the City of London) and (in the case of interest payable on redemption) upon surrender (or, in the case of part payment only, endorsement) of the relevant Note Certificates at the Specified Office of any Paying Agent.
(c) Payments subject to fiscal laws: All payments in respect of the Registered Notes are subject in all cases to (i) any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to the provisions of Condition 13 (Taxation) and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, official interpretations thereof, or any law implementing an intergovernmental approach thereto. No commissions or expenses shall be charged to the Noteholders in respect of such payments.
In such event, payments of the U.S. Dollar Equivalent of the relevant principal or interest in respect of Registered Notes represented by Note Certificates shall be made by a U.S. dollar denominated cheque drawn on a bank in New York City and mailed to the Holder of such Note Certificates at its address appearing in the Register, or, upon application by the Holder to the specified office of the Registrar or any Transfer Agent before the Record Date, by transfer to a U.S. dollar denominated account with a bank in New York City.
All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 12(g) (Payment of U.S. Dollar Equivalent) by the Calculation Agent, will (in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, the Guarantor, the Agents and all Holders.
(h) Payment - Swedish Registered Notes: Payments of principal and/or interest in respect of Swedish Registered Notes shall be made to the persons shown as the Holders of Swedish Registered Notes on the fifth Business Day (or in accordance with the rules and procedure applied by Euroclear Sweden from time to time) before the due date for such payment, or such other Business Day falling closer to the due date as may be stipulated in the current rules and procedures of Euroclear Sweden. Such day will be the "Record Date" in respect of Swedish Registered Notes.
If any of the following events occurs and is continuing:
provided that no event referred to in this Condition 14(c) (Cross-default of Issuer or Principal Subsidiary) shall constitute an Event of Default, first, unless the relative Indebtedness either alone or when aggregated with other Indebtedness relative to all (if any) other such events which shall have occurred shall amount to at least €50,000,000 (or its equivalent in any other currency); or
then any Note may, by written notice addressed by the holder thereof to the Issuer and delivered to the Issuer or to the Specified Office of the Fiscal Agent, be declared immediately (or, in the case of Swedish Registered Notes, such later date on which the relevant Swedish Registered Notes have been transferred to the account designated by the Swedish Issuing and Paying Agent and blocked for further transfer by such Swedish Issuing and Paying Agent) due and payable, whereupon it shall become immediately due and payable at its Early Termination Amount together with accrued interest (if any) without further action or formality.
Claims for principal in respect of Bearer Notes shall become void unless the relevant Bearer Notes are presented for payment within ten years of the appropriate Relevant Date. Claims for interest in respect of Bearer Notes shall become void unless the relevant Coupons are presented for payment within five years of the appropriate Relevant Date. Claims for principal and interest on redemption in respect of Registered Notes shall become void unless the relevant Note Certificates are surrendered for payment within ten years of the appropriate Relevant Date.
If any Note, Coupon or Note Certificate is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the Specified Office of the Fiscal Agent, in the case of Bearer Notes, or the Registrar, in the case of Registered Notes (and, if the Notes are then admitted to listing, trading and/or quotation by any competent authority, stock exchange and/or quotation system which requires the appointment of a Paying Agent or Transfer Agent in any particular place, the Paying Agent or Transfer Agent having its Specified Office in the place required by such competent authority, stock exchange and/or quotation system), subject to all applicable laws and competent authority, stock exchange and/or quotation system requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer may reasonably require. Mutilated or defaced Notes, Coupons or Note Certificates must be surrendered before replacements will be issued. For the avoidance of doubt, this Condition 16 (Replacement of Notes and Coupons) shall not apply to the Swedish Registered Notes.
In acting under the Agency Agreement and in connection with the Notes and the Coupons, the Agents act solely as agents of the Issuer and the Guarantor (if applicable) and do not assume any obligations towards or relationship of agency or trust for or with any of the Noteholders or Couponholders.
The initial Agents and their initial Specified Offices are listed below. The initial Calculation Agent (if any) is specified in the relevant Final Terms. The Issuer and the Guarantor (if applicable) reserve the right at any time to vary or terminate the appointment of any Agent and to appoint a successor fiscal agent or registrar or Calculation Agent and additional or successor paying agents; provided, however, that:
(e) if and for so long as the Notes are admitted to listing, trading and/or quotation by any competent authority, stock exchange and/or quotation system which requires the appointment of a Paying Agent and/or a Transfer Agent in any particular place, the Issuer and the Guarantor (if applicable) shall maintain a Paying Agent and/or a Transfer Agent having its Specified Office in the place required by such competent authority, stock exchange and/or quotation system.
Notice of any change in any of the Agents or in their Specified Offices shall promptly be given to the Noteholders.
(a) Meetings of Noteholders other than in respect of Swedish Registered Notes: The Agency Agreement contains provisions for convening meetings of Noteholders to consider matters relating to the Notes, including the modification of any provision of these Conditions. Any such modification may be made if sanctioned by an Extraordinary Resolution. Such a meeting may be convened by the Issuer or the Guarantor (if applicable) and shall be convened by them upon the request in writing of Noteholders holding not less than one-tenth of the aggregate principal amount of the outstanding Notes. The quorum at any meeting convened to vote on an Extraordinary Resolution will be two or more Persons holding or representing more than half of the aggregate principal amount of the outstanding Notes or, at any adjourned meeting, two or more Persons being or representing Noteholders whatever the principal amount of the Notes held or represented; provided, however, that Reserved Matters may only be sanctioned by an Extraordinary Resolution passed at a meeting of Noteholders at which two or more Persons holding or representing not less than two-thirds or, at any adjourned meeting, one quarter of the aggregate principal amount of the outstanding Notes form a quorum. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders and Couponholders, whether present or not.
In addition, a resolution in writing signed by or on behalf of all Noteholders who for the time being are entitled to receive notice of a meeting of Noteholders will take effect as if it were an Extraordinary Resolution. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders.
The Swedish Agency Agreement will contain provisions regarding meetings of Noteholders of Swedish Registered Notes.
(b) Modification: The Notes, these Conditions and the Deed of Covenant may be amended without the consent of the Noteholders or the Couponholders to correct a manifest error. In addition, the parties to the Agency Agreement may agree to modify any provision thereof, but the Issuer shall not agree, without the consent of the Noteholders, to any such modification unless it is of a formal, minor or technical nature, it is made to correct a manifest error or it is, in the opinion of such parties, not materially prejudicial to the interests of the Noteholders.
The Issuer may from time to time, without the consent of the Noteholders or the Couponholders, create and issue further notes having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest) so as to form a single series with the Notes.
(a) Bearer Notes: Notices to the Holders of Bearer Notes shall be valid if published in a leading English language daily newspaper published in London (which is expected to be the Financial Times) or if such publication is not practicable, in a leading English language daily newspaper having general circulation in Europe. Any such notice shall be deemed to have been given on the date of first publication (or if required to be published in more than one newspaper, on the first date on which publication shall have been made in all the required newspapers). Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the Holders of Bearer Notes.
If any sum due from the Issuer in respect of the Notes or the Coupons or any order or judgment given or made in relation thereto has to be converted from the currency (the "first currency") in which the same is payable under these Conditions or such order or judgment into another currency (the "second currency") for the purpose of (a) making or filing a claim or proof against the Issuer, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation to the Notes, the Issuer (or, failing which, the Guarantor (if applicable)) shall indemnify each Noteholder, on the written demand of such Noteholder addressed to the Issuer and delivered to the Issuer or to the Specified Office of the Fiscal Agent, against any loss suffered as a result of any discrepancy between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at which such Noteholder may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof.
This indemnity constitutes a separate and independent obligation of the Issuer and shall give rise to a separate and independent cause of action.
For the purposes of any calculations referred to in these Conditions (unless otherwise specified in these Conditions), (a) all percentages resulting from such calculations will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with 0.000005 per cent. being rounded up to 0.00001 per cent.), (b) all United States dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one half cent being rounded up), (c) all Japanese Yen amounts used in or resulting from such calculations will be rounded downwards to the next lower whole Japanese Yen amount, and (d) all amounts denominated in any other currency used in or resulting from such calculations will be rounded to the nearest two decimal places in such currency, with 0.005 being rounded upwards.
(d) Rights of the Noteholders to take proceedings outside England: Condition 23(b) (English courts) is for the benefit of the Noteholders only. As a result, save in respect of the limited exception set out in Condition 23(e) (Proceedings in respect of Swedish Registered Notes), nothing in this Condition 23 (Governing law and jurisdiction) prevents any Noteholder from taking proceedings relating to a Dispute ("Proceedings") in any other courts with jurisdiction. To the extent allowed by law, Noteholders may take concurrent Proceedings in any number of jurisdictions.
(e) Proceedings in respect of Swedish Registered Notes: Notwithstanding that, under the SFIA Act or the operating procedures, rules and regulations of Euroclear Sweden (together, the "Swedish Remedies"), Holders of Swedish Registered Notes may have remedies against the Issuer for nonpayment or non-performance under the Conditions applicable to such Swedish Registered Notes, a Swedish Registered Note Holder must first exhaust all available remedies under English law for non-payment or non-performance before any Proceedings may be brought against the Issuer in Sweden in respect of the Swedish Remedies. Notwithstanding Condition 23(d) (Rights of the Noteholders to take proceedings outside England), and in this limited respect only, a Registered Holder of Swedish Registered Notes may therefore not take concurrent Proceedings in Sweden.
The Final Terms in respect of each Tranche of Notes will be substantially in the following form and completed to reflect the particular terms of the relevant Notes and their issue.
Final Terms dated [•]
Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes]
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the "Conditions") set forth in the base prospectus dated 17 July 2013 [and supplement(s) to it dated [•] which [together] constitute[s] a base prospectus (the "Base Prospectus") for the purposes of Directive 2003/71/EC, as amended (the "Prospectus Directive"). This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the Prospectus Directive and must be read in conjunction with the Base Prospectus.
Full information on the Issuer[, the Guarantor] and the offer of the Notes described herein is only available on the basis of the combination of these Final Terms and the Base Prospectus. The Base Prospectus has been published on http://www.londonstockexchange.com/exchange/news/marketnews/market-news-home.html.
[Terms used herein shall be deemed to be defined as such for the purposes of the [Insert relevant date of the Conditions] Conditions (the "Conditions") incorporated by reference in the base prospectus dated17 July 2013. These Final Terms contain the final terms of the Notes and must be read in conjunction with the base prospectus dated 17 July 2013 [and the supplement(s) to it dated [date]] which [together] constitute[s] a base prospectus (the "Base Prospectus") for the purposes of Directive 2003/71/EC, as amended (the "Prospectus Directive"), save in respect of the Conditions which are set forth in the base prospectus dated [original date] and are incorporated by reference in the Base Prospectus. This document constitutes the Final Terms relating to the issue of Notes described herein for the purposes of Article 5.4 of the Prospectus Directive.]
Full information on the Issuer[, the Guarantor] and the offer of the Notes is only available on the basis of the combination of these Final Terms, the base prospectus dated 17 July 2013 [and the supplement[s]) dated [•] [and [•]]]. The Base Prospectus has been published on http://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.
form a single series and be interchangeable for trading purposes with [•] on [•/the Issue Date/Exchange of the Temporary Global Note for interests in the Permanent Global Note, as referred to in paragraph [24][which is expected to occur on
| or about [•]]].] | |||
|---|---|---|---|
| 3. | Specified Currency or Currencies: | [•] | |
| 4. | Aggregate Nominal Amount: | [•] | |
| [(i)] | [Series]: | [•] | |
| [(ii) | Tranche: | [•]] | |
| 5. | Issue Price: | [•] per cent. of the Aggregate Nominal Amount [plus accrued interest from [•]] |
|
| 6. | (i) | Specified Denominations: | [•] |
| (ii) | Calculation Amount: | [•] | |
| 7. | (i) | Issue Date: | [•] |
| (ii) | Interest Commencement Date: |
[•/Issue Date/Not Applicable] | |
| 8. | Maturity Date: | [•] | |
| 9. | Interest Basis: | [[•] per cent. Fixed Rate] [[•] +/- [•] per cent. Floating Rate] [Zero Coupon] |
|
| 10. | Redemption/Payment Basis: | Subject to any purchase and cancellation or early redemption, the Notes will be redeemed on the Maturity Date at the Final Redemption Amount. |
|
| 11. | Put/Call Options: | [Not Applicable] [Investor Put] [Issuer Call] [(further particulars specified below)] |
|
| 12. | Sandvik AB Guarantee | [Applicable/Not Applicable] |
| 13. | Fixed Rate Note Provisions | [Applicable/Not Applicable] | ||
|---|---|---|---|---|
| (i) | Rate[(s)] of Interest: | [•] per cent. per annum payable in arrear on each Interest Payment Date |
||
| (ii) | Interest Payment Date(s): | [[•] [and [•]] in each year [adjusted in accordance with [•]/not adjusted]] |
||
| (iii) | Fixed Coupon Amount[(s)]: | [[•] per Calculation Amount/Each Fixed Coupon Amount shall be calculated by multiplying the product of the Rate of Interest and the Calculation Amount by the Day Count Fraction and rounding the relevant figure to the nearest CNY 0.01, 0.005 being rounded upwards.] |
||
| (iv) | Broken Amount(s): | [Not Applicable/[•] per Calculation Amount, payable on the Interest Payment Date falling [in/on] [•]] |
||
| (v) | Day Count Fraction: | [30/360 / Actual/Actual (ICMA/ISDA) / other] |
| (vi) [Determination Dates: |
[•] [and [•]] in each year] | ||||
|---|---|---|---|---|---|
| 14. | Floating Rate Note Provisions | [Applicable/Not Applicable] | |||
| (i) | Interest Period(s): | [•] | |||
| (ii) Specified Period: (iii) Specified Interest Payment Dates: |
[[•]/Not Applicable] | ||||
| [[•] in each year, subject to adjustment in accordance with the Business Day Convention set out in (v) below/Not Applicable] |
|||||
| (iv) | First Interest Payment Date: | [•] | |||
| (v) | Business Day Convention: | [Floating Rate Convention/Following Business Day Convention/ Modified Following Business Day Convention/ Preceding Business Day Convention] |
|||
| (vi) | Additional Business Centre(s): |
[Not Applicable/[•]] | |||
| (vii) | Manner in which the Rate(s) of Interest is/are to be determined: |
[Screen Rate Determination/ISDA Determination] | |||
| (viii) Party responsible for calculating the Rate(s) of Interest and/or Interest Amount(s) (if not the [Fiscal Agent]): |
[[•] shall be the Calculation Agent/Not Applicable] | ||||
| (ix) | Screen Rate Determination: | [Applicable/Not Applicable] | |||
| • Reference Rate: |
[[•] month] [LIBOR/EURIBOR/STIBOR/Bank Bill Rate] |
||||
| • Interest Determination Date(s): |
[•] | ||||
| • Relevant Screen Page: |
[•] | ||||
| • Relevant Time: |
[•] | ||||
| • Relevant Financial Centre: |
[•] | ||||
| (x) | ISDA Determination: | [Applicable/Not Applicable] | |||
| • Floating Rate Option: |
[•] | ||||
| • Designated Maturity: |
[•] | ||||
| • Reset Date: |
[•] | ||||
(xi) Margin(s): [+/-][•] per cent. per annum
| (xii) | Minimum Rate of Interest: | [Not Applicable/[•] per cent. per annum] | |
|---|---|---|---|
| (xiii) | Maximum Rate of Interest: | [Not Applicable/[•] per cent. per annum] | |
| (xiv) | Day Count Fraction: | [•] [Actual/Actual (ICMA) Actual/Actual (ISDA) Actual/365 (Fixed) |
|
| Actual/360 30/360 30E/360 30E/360 (ISDA) Other] |
|||
| 15. | (i) | Zero Coupon Note Provisions [Amortisation/Accrual] Yield: |
[Applicable/Not Applicable] [•] per cent. per annum |
| (ii) | Reference Price: | [•] | |
| PROVISIONS RELATING TO REDEMPTION |
| 16. | (i) | Call Option Date(s): |
Optional Redemption | [Applicable/Not Applicable] [•] |
|---|---|---|---|---|
| (ii) | Optional Redemption Amount(s) of each Note: |
[•] per Calculation Amount | ||
| (iii) | If redeemable in part: | [Applicable/Not Applicable] | ||
| (a) | Minimum Redemption Amount: |
[•] per Calculation Amount | ||
| (b) | Maximum Redemption Amount: |
[•] per Calculation Amount | ||
| (iv) | Notice period: | [•] | ||
| 17. | Put Option (i) |
Date(s): | Optional Redemption | [Applicable/Not Applicable] [•] |
| (ii) | Optional Redemption Amount(s) of each Note: |
[•] per Calculation Amount | ||
| (iii) | Notice period: | [•] | ||
| 18. | Note | Final Redemption Amount of each | [•] per Calculation Amount | |
| 19. | Early Redemption Amount | |||
| redemption: | Early Redemption Amount(s) per Calculation Amount payable on redemption for taxation reasons or on event of default or other early |
[[•] per Calculation Amount] |
| 20. | Form of Notes: | [Bearer Notes: | ||
|---|---|---|---|---|
| [Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes on [60] days' notice/at any time/in the limited circumstances specified in the Permanent Global Note] |
||||
| [Temporary Global Note exchangeable for Definitive Notes on or after the Exchange Date] |
||||
| [Permanent Global Note exchangeable for Definitive Notes on [60] days' notice/at any time/in the limited circumstances specified in the Permanent Global Note]] |
||||
| [Registered Notes] | ||||
| [Swedish Registered Notes | ||||
| Registrar: Euroclear Sweden | ||||
| Swedish Issuing and Paying Agent: [•]] | ||||
| 21. | New Global Note: | [Yes] [No] | ||
| 22. | Additional Financial Centre(s) or other special provisions relating to payment dates: |
[Not Applicable/[•]] | ||
| 23. | Talons for future Coupons or Receipts to be attached to Definitive Notes (and dates on which such Talons mature): |
[Yes/No.][As the Notes have more than 27 coupon payments, talons may be required if, on exchange into definitive form, more than 27 coupon payments are left.] |
[[•] has been extracted from [•]. [Each of the] [The] Issuer [and the Guarantor] confirms that such information has been accurately reproduced and that, so far as it is aware, and is able to ascertain from information published by [•], no facts have been omitted which would render the reproduced information inaccurate or misleading.]
Signed on behalf of [name of Issuer]: [Signed on behalf of [name of Guarantor]:
By:.............................................................................. By: ……………………………………………… Duly authorised Duly authorised]
Listing and admission to trading: [Application has been made by the Issuer (or on its behalf) for the Notes to be admitted to trading on the London Stock Exchange's regulated market and listing on the Official list of the UK Listing Authority with effect from [•].] [Application is expected to be made by the Issuer (or on its behalf) for the Notes to be admitted to trading on the London Stock Exchange's regulated market and listing on the Official list of the UK Listing Authority with effect from [•].]
[]
Estimate of total expenses related to admission to trading:
Ratings: The Notes to be issued [have been/are expected to be rated:
[[Standard & Poor's Credit Market Services Europe Limited]: [•]]
[[Moody's Investors Service Ltd.]: [•]]
[[Fitch Ratings Ltd.]: [•]]
[•]
Indication of yield: [•]
Calculated as [•] on the Issue Date.
As set out above, the yield is calculated at the Issue Date on the basis of the Issue Price. It is not an indication of future yield.]
[Not Applicable/•]
[Euroclear Sweden Identification number:]
(iv) Delivery: Delivery [against/free of] payment
| (vi) | Names and addresses of additional Paying Agent(s) (if any): |
[[•]/Not Applicable] | |
|---|---|---|---|
| (vii) | Name of Swedish Issuing and Paying Agent (if any): |
[[•]/Not Applicable] | |
| (viii) | New Global Note intended to be | [Yes./ | |
| held in a manner which would allow Eurosystem eligibility: |
No | ||
| 6. | DISTRIBUTION | ||
| U.S. Selling Restrictions: | [Reg. S Compliance 2/Not Applicable] | ||
| [TEFRA C/TEFRA D/TEFRA not applicable] |
In relation to any Tranche of Notes represented by a Global Note in bearer form, references in the Conditions to "Noteholder" are references to the bearer of the relevant Global Note which, for so long as the Global Note is held by a depositary or a common depositary, in the case of a CGN, or a common safekeeper, in the case of an NGN for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system, will be that depositary or common depositary or, as the case may be, common safekeeper.
In relation to any Tranche of Notes represented by a Global Registered Note, references in the Conditions to "Noteholder" are references to the person in whose name such Global Registered Note is for the time being registered in the Register which, for so long as the Global Registered Note is held by or on behalf of a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system, will be that depositary or common depositary or a nominee for that depositary or common depositary.
Each of the persons shown in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system as being entitled to an interest in a Global Note or a Global Registered Note (each, an "Accountholder") must look solely to Euroclear and/or Clearstream, Luxembourg and/or such other relevant clearing system (as the case may be) for such Accountholder's share of each payment made by the Issuer or the Guarantor to the holder of such Global Note or Global Registered Note and in relation to all other rights arising under such Global Note or Global Registered Note. The extent to which, and the manner in which, Accountholders may exercise any rights arising under the Global Note or Global Registered Note will be determined by the respective rules and procedures of Euroclear and Clearstream, Luxembourg and any other relevant clearing system from time to time. For so long as the relevant Notes are represented by a Global Note or Global Registered Note, Accountholders shall have no claim directly against the Issuer or the Guarantor (if applicable) in respect of payments due under the Notes and such obligations of the Issuer and the Guarantor (if applicable) will be discharged by payment to the holder of such Global Note or Global Registered Note.
Whenever any interest in a Temporary Global Note is to be exchanged for an interest in a Permanent Global Note, the Issuer shall procure:
in each case in an aggregate principal amount equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and received by the Fiscal Agent against presentation and (in the case of final exchange) surrender of the Temporary Global Note to or to the order of the Fiscal Agent within 7 days of the bearer requesting such exchange.
Whenever a Temporary Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Temporary Global Note to the bearer of the Temporary Global Note against the surrender of the Temporary Global Note to or to the order of the Fiscal Agent within 30 days of the bearer requesting such exchange.
If:
(a) a Permanent Global Note has not been delivered or the principal amount thereof increased by 5.00 p.m. (London time) on the seventh day after the bearer of a Temporary Global Note has
64
requested exchange of an interest in the Temporary Global Note for an interest in a Permanent Global Note; or
then the Temporary Global Note (including the obligation to deliver a Permanent Global Note or increase the principal amount thereof or deliver Definitive Notes, as the case may be) will become void at 5.00 p.m. (London time) on such seventh day (in the case of (a) above) or at 5.00 p.m. (London time) on such thirtieth day (in the case of (b) above) or at 5.00 p.m. (London time) on such due date (in the case of (c) above) and the bearer of the Temporary Global Note will have no further rights thereunder (but without prejudice to the rights which the bearer of the Temporary Global Note or others may have under the Deed of Covenant). Under the Deed of Covenant, persons shown in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system as being entitled to an interest in a Temporary Global Note will acquire directly against the Issuer all those rights to which they would have been entitled if, immediately before the Temporary Global Note became void, they had been the holders of Definitive Notes in an aggregate principal amount equal to the principal amount of Notes they were shown as holding in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system.
Whenever a Permanent Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Permanent Global Note to the bearer of the Permanent Global Note against the surrender of the Permanent Global Note to or to the order of the Fiscal Agent within 30 days of the bearer requesting such exchange.
If:
then the Permanent Global Note (including the obligation to deliver Definitive Notes) will become void at 5.00 p.m. (London time) on such thirtieth day (in the case of (a) above) or at 5.00 p.m. (London time) on such due date (in the case of (b) above) and the bearer of the Permanent Global Note will have no further rights thereunder (but without prejudice to the rights which the bearer of the Permanent Global Note or others may have under the Deed of Covenant). Under the Deed of Covenant, persons shown in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system as being entitled to an interest in a Permanent Global Note will acquire directly against the Issuer all those rights to which they would have been entitled if, immediately before the Permanent Global Note became void, they had been the holders of Definitive Notes in an aggregate principal amount equal to the principal amount of Notes they were shown as holding in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system.
Whenever a Global Registered Note is to be exchanged for Individual Note Certificates, the Issuer shall procure that Individual Note Certificates will be issued in an aggregate principal amount equal to the principal amount of the Global Registered Note within 15 days of the delivery, by or on behalf of the holder of the Global Registered Note to the Registrar of such information as is required to complete and deliver such Individual Note Certificates (including, without limitation, the names and addresses of the persons in whose names the Individual Note Certificates are to be registered and the principal amount of each such person's holding) against the surrender of the Global Registered Note at the specified office of the Registrar. Such exchange will be effected in accordance with the provisions of the Agency Agreement and the regulations concerning the transfer and registration of Notes scheduled thereto and, in particular, shall be effected without charge to any holder, but against such indemnity as the Registrar may require in respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such exchange.
then the Global Registered Note (including the obligation to deliver Individual Note Certificates) will become void at 5.00 p.m. (London time) on such thirtieth day (in the case of (a) above) or at 5.00 p.m. (London time) on such due date (in the case of (b) above) and the holder of the Global Registered Note will have no further rights thereunder (but without prejudice to the rights which the holder of the Global Registered Note or others may have under the Deed of Covenant). Under the Deed of Covenant, persons shown in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system as being entitled to an interest in a Global Registered Note will acquire directly against the Issuer all those rights to which they would have been entitled if, immediately before the Global Registered Note became void, they had been the holders of Individual Note Certificates in an aggregate principal amount equal to the principal amount of Notes they were shown as holding in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system.
Each Global Note and Global Registered Note will contain provisions which modify the Conditions as they apply to the Global Note or Global Registered Note. The following is a summary of certain of those provisions:
Payments: All payments in respect of the Global Note or Global Registered Note which, according to the Conditions, require presentation and/or surrender of a Note, Note Certificate or Coupon, will be made against presentation and (in the case of payment of principal in full with all interest accrued thereon) surrender of the Global Note or Global Registered Note to or to the order of any Paying Agent and will be effective to satisfy and discharge the corresponding liabilities of the Issuer in respect of the Notes. On each occasion on which a payment of principal or interest is made in respect of the Global Note, the Issuer shall procure that in respect of a CGN the payment is noted in a schedule thereto and in respect of an NGN the payment is entered pro rata in the records of Euroclear and Clearstream, Luxembourg.
Exercise of put option: In order to exercise the option contained in Condition 10(e) (Redemption at the option of Noteholders) the bearer of the Permanent Global Note must, within the period specified in the Conditions for the deposit of the relevant Note and put notice, give written notice of such exercise to the Fiscal Agent specifying the principal amount of Notes in respect of which such option is being exercised. Any such notice will be irrevocable and may not be withdrawn.
Partial exercise of call option: In connection with an exercise of the option contained in Condition 10(c) (Redemption at the option of the Issuer) in relation to some only of the Notes, the Permanent Global Note or Global Registered Note may be redeemed in part in the principal amount specified by the Issuer in accordance with the Conditions and the Notes to be redeemed will not be selected as provided in the Conditions but in accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg (to be reflected in the records of Euroclear and Clearstream, Luxembourg as either a pool factor or a reduction in principal amount, at their discretion).
Notices: Notwithstanding Condition 20 (Notices), while all the Notes are represented by a Permanent Global Note (or by a Permanent Global Note and/or a Temporary Global Note) or Global Registered Note and the Permanent Global Note is (or the Permanent Global Note and/or the Temporary Global Note are), or the Global Registered Note is, deposited with a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system or a common safekeeper, notices to Noteholders may be given by delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and, in any case, such notices shall be deemed to have been given to the Noteholders in accordance with Condition 20 (Notices) on the date of delivery to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system.
Record Date: Each payment in respect of a Global Registered Note will be made to the person shown as the Holder in the Register at the close of business (in the relevant clearing system) on the Clearing System Business Day before the due date for such payment (the "Record Date") where "Clearing System Business Day" means a day on which each clearing system for which the Global Registered Note is being held is open for business.
Payment Business Day: Notwithstanding the definition of "Payment Business Day" in Condition 2(a) (Definitions), while all the Notes are represented by a Permanent Global Note (or by a Permanent Global Note and/or a Temporary Global Note) or a Global Registered Note and the Permanent Global Note is (or the Permanent Global Note and/or the Temporary Global Note are), or the Global Registered Note is deposited with a depositary or a common depositary or a common safekeeper for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system, "Payment Business Day" means:
The net proceeds from the issue of each Series of Notes issued by any Issuer will be used for the relevant Issuer's general corporate purposes.
The following is a general description of certain currency controls in the PRC and is based on the law and relevant interpretations thereof in effect as at the date of this Base Prospectus, all of which are subject to change, and does not constitute legal advice. It does not purport to be a complete analysis of all applicable currency controls in the PRC relating to the Notes. Prospective holders of Notes who are in any doubt as to PRC currency controls are advised to consult their own professional advisers.
Renminbi is not a freely convertible currency. The remittance of Renminbi into and outside the PRC is subject to control imposed under PRC law.
Under the applicable PRC foreign exchange control regulations, current account items refer to any transaction for international receipts and payments involving goods, services, earnings and other frequent transfers.
Since July 2009, the PRC has commenced a pilot scheme pursuant to which Renminbi may be used for settlement of imports and exports of goods between approved pilot enterprises in five designated cities in the PRC including Shanghai, Guangzhou, Dongguan, Shenzhen and Zhuhai and enterprises in designated offshore jurisdictions including Hong Kong and Macau. On 17 June 2010, the PRC Government promulgated the Circular on Issues concerning the Expansion of the Scope of the Pilot Programme of Renminbi Settlement of Cross-Border Trades (Yin Fa (2010) No. 186) (關於擴大跨境貿易 人民幣結算試點有關問題的通知) (the "Pilot Programme of Renminbi Settlement Circular"), pursuant to which (i) Renminbi settlement of imports and exports of goods and of services and other current account items became permissible, (ii) the list of designated pilot districts were expanded to cover 20 provinces and cities, and (iii) the restriction on designated offshore districts has been uplifted. Accordingly, any enterprises in the designated pilot districts are entitled to use Renminbi to settle imports of goods, crossborder trade of services and other current account items with their offshore counterparties. Renminbi remittance for exports of goods from the PRC may only be effected by approved pilot enterprises in designated pilot districts in the PRC. In August 2011, the PRC Government further expanded Renminbi cross-border trade settlement nationwide.
As a new regulation, the Pilot Programme of Renminbi Settlement Circular will be subject to interpretation and application by the relevant PRC authorities. Local authorities may adopt different practices in applying the Pilot Programme of Renminbi Settlement Circular and impose conditions for settlement of current account items.
Under the applicable PRC foreign exchange control regulations, capital account items include crossborder transfers of capital, direct investments, securities investments, derivative products and loans. Capital account payments are generally subject to approval of the relevant PRC authorities.
Settlements for capital account items are generally required to be made in foreign currencies. For instance, foreign investors (including any Hong Kong investors) are required to make any capital contribution to foreign invested enterprises in a foreign currency in accordance with the terms set out in the relevant joint venture contracts and/or articles of association as approved by the relevant authorities. Foreign invested enterprises or relevant PRC parties are also generally required to make capital item payments including proceeds from liquidation, transfer of shares, reduction of capital, interest and principal repayment to foreign investors in a foreign currency. That said, the relevant PRC authorities may grant approval for a foreign entity to make a capital contribution or a shareholder's loan to a foreign invested enterprise with Renminbi lawfully obtained by it outside the PRC and for the foreign invested enterprise to service interest and principal repayment to its foreign investor outside the PRC in Renminbi on a trial basis. The foreign invested enterprise may be required to complete registration and verification process with the relevant PRC authorities before such Renminbi remittances.
On 7 April 2011, SAFE promulgated the SAFE Circular, which became effective on 1 May 2011. According to the SAFE Circular, in the event that foreign investors intend to use cross-border Renminbi (including offshore Renminbi and onshore Renminbi held in the capital accounts of non-PRC residents) to make contribution to an onshore enterprise or make payment for the transfer of equity interest of an onshore enterprise by a PRC resident, such onshore enterprise shall be required to submit the relevant prior written consent of the MOFCOM to the relevant local branches of SAFE of such onshore enterprise and register for foreign invested enterprise status. Further, the SAFE Circular clarifies that the foreign debts borrowed, and the foreign guarantee provided, by an onshore entity (including a financial institution) in Renminbi shall, in principle, be regulated under the current PRC foreign debt and foreign guarantee regime.
On 12 October 2011, the MOFCOM promulgated the MOFCOM RMB FDI Circular. In accordance with the MOFCOM RMB FDI Circular, the MOFCOM and its local counterparts are authorised to approve RMB FDI in accordance with existing PRC laws and regulations regarding foreign investment, with the following exceptions which require the preliminary approval by the provincial counterpart of the MOFCOM and the consent of the MOFCOM: (i) RMB FDI with the capital contribution in Renminbi of RMB300 million or more; (ii) RMB FDI in financing guarantee, financing lease, micro financing or auction industries; (iii) RMB FDI in foreign invested investment companies, venture capital or equity investment enterprises; or (iv) RMB FDI in cement, iron & steel, electrolytic aluminium, shipbuilding or other policy sensitive sectors. In addition, RMB FDI in real estate sector is allowed following the existing rules and regulations of foreign investment in real estate, although Renminbi foreign debt remains unavailable to foreign invested real estate enterprises. The proceeds of RMB FDI may not be used towards investment in securities, financial derivatives or entrustment loans in the PRC, except for investments in PRC domestic listed companies through private placements or share transfers by agreement under the PRC strategic investment regime.
Respectively in October 2011 and June 2012, PBOC promulgated the PBOC RMB FDI Measures, pursuant to which, PBOC special approval for RMB FDI and shareholder loans which is required by the PBOC Notice concerning Clarification of Certain Issues on Cross-border RMB Settlement (《中國人民 銀行關於明確跨境人民幣業務相關問題的通知》) (the "PBOC Notice") promulgated on 3 June 2011 is no longer necessary. The PBOC RMB FDI Measures provide that, among others, foreign invested enterprises are required to conduct registrations with the local branch of the PBOC within 10 working days after obtaining the business licenses for the purpose of Renminbi settlement. A foreign investor is allowed to open only one Renminbi expense account (人民幣前期費用專用存款賬戶) to reimburse some expenses before the establishment of a foreign invested enterprise and the balance in such an account can be transferred to the Renminbi capital account (人民幣資本金專用存款賬戶) of such foreign invested enterprise when it is established, commercial banks can remit a foreign investor's Renminbi proceeds from distribution (dividends or otherwise) by its PRC subsidiaries out of the PRC after reviewing certain requisite documents, if a foreign investor intends to use its Renminbi proceeds from distribution (dividends or otherwise) by its PRC subsidiaries, the foreign investor may open a Renminbi re-investment account (人民幣再投資專用賬戶) to pool the Renminbi proceeds. PRC shareholders of a domestic enterprise which is merged or acquired by foreign investors in Renminbi whereby setting up a foreign-invested enterprise can open Renminbi mergers and acquisitions special accounts (人民幣併購專用存款帳戶) to receive Renminbi funds paid by the foreign investors for the mergers and acquisitions. PRC shareholders selling their equity interests in foreign invested enterprises to foreign investors can open Renminbi equity transfer special accounts (人民幣股權轉讓專用存款賬戶 ) and receive the purchase price in Renminbi paid by foreign investors. The opening of a Renminbi capital account, Renminbi mergers and acquisition special account and a Renminbi equity transfer special account shall all be based on approvals from the competent local counterparts of MOFCOM approving the establishment of the foreign invested enterprise, the mergers and acquisitions and the equity transfer. The PBOC RMB FDI Measures also state that Renminbi debt and foreign currency debt of a foreign invested enterprise from its offshore shareholders, offshore affiliates and offshore financial institutions constitute its foreign debt quota, and a foreign invested enterprise may open a Renminbi account (人民幣 一般存款賬戶) to receive its Renminbi proceeds borrowed offshore by submitting the Renminbi loan contract to the commercial bank and make repayments of principal of and interest on such debt in Renminbi by submitting certain documents as required to the commercial bank.
As new regulations, the SAFE Circular, the PBOC Notice, the MOFCOM RMB FDI Circular and the PBOC RMB FDI Measures will be subject to interpretation and application by the relevant PRC authorities. Further, if any new PRC regulations are promulgated in the future which have the effect of permitting or restricting (as the case may be) the remittance of Renminbi for payment of transactions categorised as capital account items, then such remittances will need to be made subject to the specific requirements or restrictions set out in such rules.
Sandvik Aktiebolag (publ) was established in 1862 and incorporated in 1897 under the laws of Sweden as a public company (Aktiebolag). Sandvik is registered at the Swedish Companies Registration Office with registration number 556000-3468. Sandvik's principal place of business is at Kungsbron 1, Uppgång G, Plan 6, Box 510, Stockholm SE-101 30, Sweden and the telephone number is +46 (0) 26 26 00 00.
Sandvik is the ultimate parent company of approximately 370 subsidiaries (as at 31 December 2012) which are situated in Sweden as well as internationally and is dependent on the performance of the Group for the satisfaction of its obligations. References in this business description to the "Group" are to Sandvik and its subsidiaries.
Sandvik was founded in 1862 by Göran Fredrik Göransson, who was first in the world to succeed in using the Bessemer method for steel production on an industrial scale. Sandvik is a high-technology, engineering group with advanced products within selected areas. Sandvik's business concept is based on specialist competence and expertise in materials technology. Sandvik operates in three core areas:
Sandvik's business concept is to develop, manufacture and market high-technology products and services that facilitate higher customer productivity and profitability.
Worldwide business activities are conducted in more than 130 countries. As at 31 December 2012 the Group had about 49,000 employees and annual sales of approximately SEK 99 billion compared with about 50,000 employees and annual sales of approximately SEK 94 billion as at 31 December 2011.
Sandvik develops, manufactures and markets products and services with a high-technology content that contribute to enhancing the productivity and profitability of Sandvik's customers. This is Sandvik's business concept. All industrial companies must enhance efficiency in production so that rising costs for raw materials, wages, energy and other items are balanced with the gains provided through higher prices. For many products the possibility of increasing prices is limited. Sandvik helps to close this productivity gap in customer operations by offering products that result in cost savings and reliable and cost-efficient processes for its customers.
Sandvik creates customer value through a strong global presence; customers worldwide are offered solutions that encompass products, services and technical support.
Sandvik's strategy is to achieve world class performance in value creation through higher growth and profitability and thereby make Sandvik an even more attractive company for customers, employees and shareholders. The strategy is focused on increasing profitability, strengthening position in attractive markets and segments and being more active in portfolio management. The strategy is based on four cornerstones:
• become truly GLOBAL in mindset and organisation but with strong LOCAL adaptations.
The strategy entails a stronger and more enhanced focus on growth in strategically important, fast growing and profitable markets. Furthermore the strategy aims to shorten decision making in order to faster adapt to changing market conditions. Capital allocation is more strictly directed towards areas of high returns and value creation and there is a model for performance management to secure continued improvements. Alternative structural solutions are evaluated on a regular basis for units that are of lower strategic importance or do not reach acceptable returns.
The Sandvik business model is founded on unique knowledge in excavation, development and shaping of metals and other materials. The strategy ensures better pre-conditions for every core business to develop and optimises product offering as well as production, distribution and market channels.
Conducting core operations, such as manufacturing, on a proprietary basis, ensures that Sandvik's products adhere to the Group's high and globally standardised performance and quality parameters. Sandvik's production organisation is strongly integrated with research and development ("R&D"). This creates favourable conditions for the ongoing development of new products and is a key competitive advantage for the Group.
Comprehensive and goal-oriented research and development is a prerequisite for the Group's growth. R&D activities are customer-oriented and projects are managed in close co-operation with the customer. To ensure maximum customer value, the Group's R&D is based on leading, unique technology and active patent work. R&D also enhances manufacturing processes and facilitates more efficient production lines. Sandvik invests more than SEK 3 billion in R&D and has approximately 2,700 employees working within R&D.
In order to create maximum leverage within each core business and to optimise the organisation for growth and profitability including new and smaller adjacent businesses, the operation has been organised into the following five business areas:
Sandvik Mining is focused on global leadership on products, solutions and services for high-performing hard rock and soft rock underground and surface mining operations. Its medium term targets are:
Sandvik Machining Solutions holds a clear global leadership by offering productivity enhancing products and solutions for advanced industrial metal cutting. Its medium term targets are:
Sandvik Materials Technology offers high value-added advanced metal products for demanding applications in selected niches. Its medium term targets are:
• to achieve higher profitability; and
• to subsequently evaluate alternatives for growth and expansion.
Sandvik Construction offers high-performing products, solutions and services within selected niches of the global construction industry. Its medium term targets are:
Unless a credible path to acceptable profitability is visible in the medium term, this business area will be evaluated for full or partial divestment.
Sandvik Venture is a business area aiming to create the best possible environment for growth and profitability in attractive and fast-growing operations. It will primarily be focussing on product areas with limited connections to other business areas or closely linked to several other business areas.
The different product areas within Sandvik Venture will be evaluated on a regular basis from structural, strategic and value creation aspects. The following product areas are included in Sandvik Venture: Sandvik Process Systems, Sandvik Hard Materials, Diamond Innovations, Wolfram and Dormer.
In March 2013, Sandvik signed an agreement with Canadian Cubex Limited ("Cubex") to acquire its drilling solutions business and operations. Cubex is an industry-leading drilling solutions provider focused on the design and manufacture of a wide range of underground in-the-hole and geotechnical drilling equipment. In 2012, the acquired business of Cubex had invoiced sales of about SEK 270 million and about 110 employees. The head office and manufacturing facility is based in Winnipeg, Canada. The acquisition was completed on 1 April 2013.
In March 2013, Sandvik Mining secured major materials handling contracts in South America and Australia. The combined value exceeds SEK 950 million and the contracts will be executed between 2013 and 2015 and will contribute to Sandvik Mining's business during these years. The orders include design and supply of conveying systems for a surface mine in South America. In Australia, the orders include design, supply and delivery of materials handling equipment.
In April 2013, Sandvik launched a new delivery model for global finance transactions. Parts of the transactional processes will be transferred to and delivered by an external business process outsourcing service provider, Capgemini. The ambition is to better utilise Sandvik's shared resources and to develop a more efficient finance organisation. As a result, Sandvik will adopt more flexible and scalable processes and maintain consistent quality and strong internal financial control.
In June 2013, a decision has been made that Sandvik Materials Technology will adjust capacity and order backlog for steam generator tubing to reflect the current market conditions in the nuclear power industry. The order backlog will be written down by SEK 1.1 billion, negatively affecting the order intake in the second quarter by the corresponding amount. The capacity adjustment of steam generator tubing will be implemented by phasing out the older installed steam generator tubing mill in Sandviken, Sweden, and concentrating all the production to the new steam generator tubing mill in Sandviken. The adjustment of steam generator tubing capacity will result in redundancies affecting around 110 full time employee equivalents in Sandviken. The redundancy is expected to be handled through reducing third party workforce, natural employee turnover and voluntary agreements. In conjunction with the capacity adjustment, Sandvik Materials Technology will close currency and nickel contracts relating to existing hedges of the orders that will be written down. This is estimated to generate a positive effect on the operating profit of approximately SEK 300 million, of which about SEK 200 million will impact cash flow. The net effect on the operating profit from closed hedges, impairment charges and restructuring costs is estimated to be slightly positive.
In June 2013, Sandvik received a ruling from the Sundsvall Administrative Court of Appeal in relation to a reorganisation of ownership and management of intellectual property rights conducted in 2005 whereby all Swedish-owned patents and trademarks were transferred to Sandvik Intellectual Property AB (the "IP Company"). The Court of Appeal's decision is that Sandvik will be taxed for a capital gain in 2005 totalling SEK 18,063 million at the same time as it approves the amortisation of the intellectual property rights in the IP Company. However, this is not expected to affect the Group's earnings because the additional tax cost of approximately SEK 5 billion would largely correspond to the tax value of the increased amortisation for tax purposes in the IP Company which according to IFRS policies, would have been recognised as income. However, Sandvik will be required to pay approximately SEK 5,800 million in tax and interest relating to 2005, a significant part of which would be recovered through reduced tax payments related to increased amortisation in the IP Company. The primary effect of the ruling is a reallocation of tax payments over time. Sandvik is considering the ruling and may appeal to the Supreme Administrative Court.
For parts of the Group's customer segments, demand in the first quarter of 2013 improved compared with the weaker level of the second half of 2012. Order intake increased to SEK 22.3 billion, thereby exceeding invoiced sales, which amounted to SEK 22.1 billion. The Group's business areas generally reported stable or slightly improved market conditions, apart from Sandvik Mining, which continued to be affected by weaker demand and uncertainty from the mining industry. As a result, the Group continues to carefully manage production rates, workforce and investment levels. Inventories were reduced by SEK 400 million, marking the third consecutive quarter in which the production rate was maintained below sales. The lower production levels, combined with significant adverse currency effects and non-recurring charges, negatively impacted first-quarter earnings of the Group. This was particularly evident for Sandvik Machining Solutions. Adjusted operating profit totalled SEK 2.7 billion, or 12.2% of invoiced sales.
In line with the Group's strategy, efforts to continuously rationalise its supply chain, manufacturing footprint and supporting functions will continue throughout the Group over the course of the coming years. Simplified and more efficient ways of working will provide required long term improvement. The Group has also taken a decision to consolidate production units in Diamond Innovations to build stronger and more customer-focused operations.
Global demand for the Group's products displayed a mixed trend during the first quarter of 2013. Some segments showed signs of an improvement in demand, most notably the oil and gas sector and construction, while business conditions in the aerospace and process industries remained favourable with further weakening of the mining industry. Order intake amounted to SEK 22.3 billion, an increase of 9% compared with the preceding quarter at fixed exchange rates. Invoiced sales for the quarter totalled SEK 22.1 billion, a decline of 7% compared with the preceding quarter at fixed exchange rates for comparable units.
Earnings were negatively impacted by exchange rates and continued low production levels, and operating profit thus amounted to SEK 2,557 million or 11.6% of invoiced sales. Return on capital employed was 17.6% for the most recent 12-month period (compared with 16.6% for the preceding 12 month period).
The business climate in which Sandvik operates varied among customer segments and regions. North America continued to perform favourably driven by generally strong demand. The southern hemisphere, which is an increasingly important region in terms of the Group's success, was negatively affected by the current weak demand in the mining industry. While demand in Asia improved somewhat in the general engineering, construction and automotive segments, this was more than offset by lower demand from predominantly the coal and iron ore mining business. Business conditions improved fairly for Sandvik Machining Solutions, with continued high activity in the aerospace industry. Having experienced challenging market conditions for many quarters, Sandvik Materials Technology and Sandvik Construction noted an improvement in demand, mainly in Asia and North America. The book-to-bill ratio returned to positive in the first quarter for all business areas except for Sandvik Mining. Changes in exchange rates impacted order intake and invoiced sales by -6%, respectively.
Earnings were significantly impacted in the amount of -SEK 350 million due to changes in exchange rates, the bulk of which was attributable to the SEK strengthening against the EUR, USD and ZAR. An unfavourable metal price trend and non-recurring items had an impact of -SEK 36 million and -SEK 140 million, respectively, on operating profit, which amounted to SEK 2,557 million or 11.6% of invoiced sales. The improvement measures announced earlier are being implemented according to plan, while their financial effects will be mainly noticeable as the year progresses. In April 2013, it was decided to consolidate Diamond Innovations' two production facilities into one. The consolidation will entail nonrecurring charges in Sandvik Venture of about SEK 200 million to be charged to the second quarter of 2013.
Net financial items amounted to -SEK 479 million (compared with -SEK 448 million for the same period in 2012) and earnings per share totalled SEK 1.18 for the quarter (compared with SEK 2.05 for the same quarter in 2012). Local tax provisions resulted in a temporarily elevated tax rate of 28.9% for the first quarter (compared with 25.7% for the same period in 2012).
Production rates were maintained at a subdued level in order to further reduce inventories. Accounts receivable increased as a result of higher sales towards the end of the quarter which, in combination with a reduction in other liabilities, negatively impacted working capital. The consistent generation of cash flow from operations combined with a temporary decrease in investments further reduced net debt, which amounted to SEK 19.9 billion (compared with SEK 21.1 billion in the preceding quarter). Sandvik successfully repurchased two outstanding bonds and the favourable conditions in the credit market continued in the first quarter of 2013. Production rates were maintained below the level of invoiced sales for the third consecutive quarter, resulting in a reduction in inventories. However, this release of working capital was offset by a rise in accounts receivable as sales increased over the course of the quarter. Meanwhile, the weak business conditions for Mining Systems resulted in a decrease in prepayments. Net working capital as a percentage of invoiced sales thus increased to 28%, compared with 27% in both the year-earlier period and in the preceding quarter. Cash flow from operations amounted to SEK 2,207 million (compared with SEK 1,099 million for the same period in 2012).
The slight decrease in total assets compared with the preceding quarter was largely attributable to changes in exchange rates. A sizeable loan maturing in February 2014 was moved from non-current to current interest-bearing liabilities, which accordingly increased by SEK 4.5 billion.
Capital expenditure amounted to SEK 898 million in the first quarter compared with SEK 1,429 million in the preceding quarter. This lower level is due to the timing of investments.
All business areas reduced their workforce during the quarter and the Group currently employs about 700 people fewer than in the fourth quarter of 2012. Additionally, Sandvik has reduced the number of staff hired via third-party contractors compared with the preceding year.
The consistent generation of cash flow further reduced net debt to SEK 19.9 billion (compared with SEK 24.4 billion for the same period in 2012), the lowest level recorded since 2007. Accordingly, the net debt/equity ratio declined to 0.5 compared with 0.6 in the preceding quarter and 0.7 in the year-earlier period. Currently, Sandvik has unutilised and committed long-term credit facilities of EUR 650 million and SEK 5 billion, respectively. During the quarter, Sandvik decided to capitalise on its strong cash position by repurchasing two outstanding bonds totalling about SEK 1.4 billion. The breakdown of total interest-bearing debt maturities at the end of the first quarter of 2013 was 78% with a long-term maturity and 22% with a short-term maturity. The credit market remained favourable for a company of Sandvik's size, credit rating and reputation. Sandvik takes advantage of this by obtaining loans with very long maturities at historically low interest rates.
The weak activity in the mining industry noted in the second half of 2012 continued in the first quarter of 2013. Demand remained stable for rock tools, parts and services, while orders for new equipment and systems weakened as an effect of lower metal prices. Order intake increased by 3% to SEK 7.7 billion at fixed exchange rates compared with the preceding quarter, but declined excluding major orders. As the order backlog declined, invoiced sales decreased by 13% at fixed exchange rates and amounted to SEK 8.3 billion (compared with SEK 9.8 billion in the preceding quarter). Operating profit amounted to SEK 1,211 million (compared with SEK 1,494 million for the same period of 2012), yielding an operating margin of 14.6% (compared with17.3% for the same period in 2012).
The programme to improve the long-term performance of Sandvik Mining and to align costs with the weak market conditions progressed according to plan.
Although the long-term prospects for the mining industry remain sound, the reduced investment ambitions of several customers in combination with lower metal prices characterised the first quarter of 2013. Activity in Africa declined somewhat from high levels due to lower prices for gold and copper. Demand in Australia from coal and iron ore mines remained particularly weak. Demand for rock tools, parts and services remained unchanged compared with preceding quarters, while demand for new equipment declined slightly. Tendering activity remained low for Mining Systems, but a strong backlog provided support for invoiced sales. During the quarter, Sandvik Mining secured major material handling orders in excess of SEK 950 million from customers in Australia and South America. The anticipated cancellation of a major mining systems order announced earlier did not materialise. The number of order cancellations during the quarter was very limited and bad debt losses were negligible. The conditions in the exploration business remained unchanged at a low level compared with preceding quarters. Deliveries of equipment declined as the quarter progressed and consequently invoiced sales fell 13% at fixed exchange rates compared with the preceding quarter. The book-to-bill ratio was 92%.
Operating profit amounted to SEK 1,211 million or 14.6% of invoiced sales despite declining sales volumes and low production rates. Changed exchange rates impacted earnings significantly by -SEK 140 million compared with the preceding year and -SEK 50 million compared with the preceding quarter.
In respect of invoiced sales, rock tools and consumables accounted for 11% (compared with 11% for the same period in 2012), customer services and spare parts for 34% (compared with 35% for the same period in 2012), equipment systems for 35% (compared with 36% for the same period in 2012) and mining systems for 20% (compared with 18% for the same period in 2012). Production rates were lowered resulting in further inventory reductions. Working capital declined in value, but increased as a percentage of invoiced sales. Return on capital employed for the most recent 12-month period was 36.4% (compared with 39.4% for the same period in 2012).
Market conditions improved slightly for Sandvik Machining Solutions compared with the less favourable situation in the preceeding quarter. Order intake and invoiced sales thus increased by 3% and 1%, respectively, at fixed exchange rates compared with the preceding quarter and amounted to SEK 7.1 billion and SEK 7.0 billion, respectively. However, compared with the preceding year, order intake, invoiced sales and production rates were lower. Demand remained favourable in North America, while the important Asian and European markets noted unchanged demand compared with preceding quarters. Operating profit was significantly impacted by non-recurring charges (approximately -SEK 140 million) and changed exchange rates (approximately -SEK 125 million) and amounted to SEK 1,141 million (compared with SEK 1,911 million for the same period in 2012).
Overall demand improved during the first quarter as the conditions in the aerospace industry remained highly favourable. Weak conditions for the automotive industry in Europe and parts of Asia were offset by strong performance in North America. Because of the generally favourable demand trend prevailing in the U.S. in recent quarters, its role as Sandvik Machining Solutions' largest market has been further strengthened. Business conditions in Europe continued to be affected by the economic difficulties faced by many countries on the continent. Continued strong demand from the oil and gas sector in Southeast Asia was offset by weak demand in India and Japan. The scenario of low business activity in South America continued, although development differed amongst segments.
The slight improvement in overall demand was partly offset by fewer working days and low demand at the beginning of the quarter. Production rates were maintained below the sales level thus making a positive contribution to reducing inventory, but this was more than offset by the increase in accounts receivable.
The Dormer product area was transferred from Sandvik Venture as of 1 January 2013. In 2012, Dormer sales amounted to SEK 1,231 million with an operating profit of SEK 115 million.
Non-recurring charges adversely affected earnings by approximately SEK 140 million. Furthermore, operating profit was significantly impacted by exchange rate effects (-SEK 125 million compared with the preceding year and approximately -SEK 70 million compared with the preceding quarter), low demand and production rates and thus amounted to SEK 1,141 million (compared with SEK 1,911 million for the same period in 2012), or 16.4% (compared with 24.0% for the same period in 2012) of invoiced sales. Return on capital employed for the most recent 12-month period was 27.5% (compared with 33.8% for the preceeding 12-month period).
The strong performance of Sandvik Materials Technology was once again evident in the first quarter of 2013 as its Step Change turnaround programme1 continued to progress according to plan.
While market activity remained generally low, conditions improved slightly for parts of the business area's product programme. Demand from the oil and gas sector improved, contributing to an increase in order intake of 17% compared with the preceding quarter. Invoiced sales decreased by 2% at fixed exchange rates compared with the preceding quarter and amounted to SEK 3.5 billion. Adjusted for metal price effects (-SEK 36 million), operating profit totalled SEK 373 million (compared with SEK 401 million for the same period in 2012), or 10.7% (compared with 9.8% for the same period in 2012) of invoiced sales.
Although business conditions generally remained challenging for most of Sandvik Materials Technology's customer segments, higher demand from the oil and gas sector resulted in order intake exceeding invoiced sales for the first time in recent quarters. Conditions for the standard assortment offering in Europe remained difficult. Discussions with customers in the nuclear power industry in China intensified during the quarter. While a number of projects at coastal sites have been approved, it is evident that the expansion rate will be considerably lower than anticipated prior to the accident in Fukushima, Japan. Orders were booked in the first quarter, but these were offset by cancellations, resulting in a largely unchanged order backlog. Further cancellations in the order backlog cannot be excluded.
Production rates were largely unchanged compared with the preceding quarter, although the declining sales volume prevented further inventory reductions.
The price pressure noted in earlier quarters intensified, partly due to Asian competitors capitalising on favourable currency rates. This development underlines the importance of continued focused execution of the Step Change turnaround programme. While consolidations of production capacity and cost reductions are the main factors behind the success of the program, the benefits yielded by pricing and product mix initiatives are harder to leverage in a weak business environment. The positive profitability trend continued during the first quarter in spite of the challenging business conditions. Although sales volumes were low – with correspondingly low production rates – operating profit, adjusted for metal price effects (-SEK 36 million), amounted to SEK 373 million (compared with SEK 401 million for the same period in 2012), or 10.7% (compared with 9.8% for the same period in 2012) of invoiced sales. Changed exchange rates affected earnings by -SEK 30 million compared with the preceding year and -SEK 20 million compared with the preceding quarter. Return on capital employed for the most recent 12-month period was 4.2%. Adjusted for non-recurring charges in the fourth quarter 2012, return on capital employed improved to 8.9%.
An improvement was noted in the market for Sandvik Construction during the first quarter of 2013. Having experienced a decline in the second half of 2012, order intake increased by 43% at fixed exchange rates compared with the preceding quarter and amounted to SEK 2.5 billion. However, the low order backlog at year-end resulted in a decline of 12% in invoiced sales at fixed exchange rates compared with the preceding quarter, thus totalling SEK 2.0 billion (compared with SEK 2.4 billion in the preceding quarter).
Operating profit was negatively impacted by an unfavourable product mix, changed exchange rates, as well as low sales volumes and production rates, and amounted to SEK 103 million (compared with SEK
1 Comprehensive improvement programme aimed at increasing the business area's profitability to a significantly higher and sustainable level and to strengthen the leading position in key segments.
213 million for the same period in 2012), or 5.0% (compared with 8.7% for the same period in 2012) of invoiced sales.
Overall demand for Sandvik Construction's products improved slightly during the first quarter. Demand in Europe continued to be affected by weak macroeconomic conditions. Nevertheless, the continent displayed a marked improvement from the very weak level observed in the preceding quarter, largely as a result of normal seasonality. Demand in North America developed favourably. High demand for premium surface drilling equipment in Africa/Middle East and parts of Asia was partly offset by the continued weak demand for mid-market products in China. Demand for tools, consumables and services declined somewhat due to customer destocking activities. Strong development for mobile crushing and surface drilling equipment was contrasted by a weaker trend for stationary crushing, screening and breaking equipment.
Compared with the preceding quarter, the number of employees in Sandvik Construction was reduced by 137, many of whom were reassigned to Sandvik Mining.
The low level of production in the preceding quarter was largely maintained during the first quarter of 2013 in response to the low demand. Net working capital increased in relative terms as a consequence of lower sales, and accounted for 28% of invoiced sales, compared with 25% in the fourth quarter of 2012.
Similarly to the preceding quarter, earnings were adversely affected by a larger than normal share of deliveries of systems characterised by high capital efficiency, but lower margins. While there was no reduction in inventory due to the decline in sales volume, the impact on operating profit resulting from low production rates was negative. This yielded an operating profit of SEK 103 million (compared with SEK 213 million for the same period in 2012), or 5.0% (compared with 8.7% for the same period in 2012) of invoiced sales. Changed exchange rates affected earnings by -SEK 35 million compared with the preceding year, although this was negligible compared with the preceding quarter. Return on capital employed for the most recent 12-month period was 10.9% (compared with 2.5% for the preceding 12 month period).
Demand once again fluctuated among the various product areas in the first quarter. Activity remained high for Sandvik Process Systems and demand for Wolfram's products increased. Order intake rose by 17% and invoiced sales declined by 3% compared with the preceding quarter at fixed exchange rates for comparable units. Total order intake amounted to SEK 1.3 billion and invoiced sales to SEK 1.3 billion (compared with SEK 1.1 billion and SEK 1.4 billion, respectively, in the preceding quarter). Operating profit was adversely affected by declining sales and lower profit for Wolfram, and amounted to SEK 116 million (compared with SEK 319 million for the same period in 2012), or 9.1% of invoiced sales (compared with 19.0% for the same period in 2012). The production facilities of the Diamond Innovations product area will be consolidated into one joint facility.
The level of market activity varied among Sandvik Venture's product areas. Underlying demand remained strong for Sandvik Process Systems, but the timing of projects negatively affected order intake. Wolfram noted significantly improved demand, compared with the weak level recorded in the preceding quarter, as customers restocked. The challenging business conditions continued for Diamond Innovations and Sandvik Hard Materials.
The Dormer product area was transferred to Sandvik Machining Solutions as of 1 January 2013. In 2012, Dormer sales amounted to SEK 1,231 million with an operating profit of SEK 115 million. In April 2013, it was decided to consolidate the two production facilities of the Diamond Innovations product area to the existing facility in Worthington, U.S. By consolidating production to one site, close to key customers and co-located with R&D, Diamond Innovations will enhance its opportunities to build stronger and more customer-focused operations. The consolidation will entail non-recurring charges of about SEK 200 million which will impact the second quarter, as a result of the closure of the facility in Dublin, Ireland.
The strong profitability trend continued for Sandvik Process Systems, while Sandvik Hard Materials and Diamond Innovations were negatively impacted by the challenging market. Earnings for Wolfram were significantly impacted by lower sales prices for material purchased earlier at a higher price. This implies a certain volatility in the product area's profitability depending on the price development for Wolfram. Although not new, the effect is more noticeable today since Wolfram accounts for a larger share of total sales in Sandvik Venture than in the past. The profit margin thus amounted to 9.1% (compared with 19.0% for the same period in 2012) of invoiced sales with no impact of changed exchange rates compared with the preceding year or the preceding quarter. Return on capital employed for the most recent 12 month period was 14.1% (compared with 0.2% for the preceding 12-month period).
Sandvik´s invoiced sales for the first quarter of 2013 amounted to SEK 3,969 million (compared with SEK 4,682 million for the same period in 2012) and the operating result was -SEK 291 million (compared with SEK 42 million for the same period in 2012). The operating result for the first quarter of 2013 was negatively impacted by lower invoiced sales and non-recurring items. Income from shares in the Group subsidiaries consists primarily of dividends and Group contributions and amounted to SEK 693 million (compared with SEK 682 million for the same period in 2012) in the first quarter of 2013. Interest bearing liabilities, less cash and cash equivalents and interest bearing assets, amounted to SEK 19,573 million (compared with SEK 20,388 million at 31 December 2012). Investments in property, plant and equipment amounted to SEK 227 million (compared with SEK 264 million for the same period in 2012).
In March 2013, Sandvik acquired Cubex, an industry-leading drilling solutions provider focused on the design and manufacture of a wide range of underground in-the-hole and geotechnical drilling equipment. In April 2013, the arbitration tribunal issued its final judgment in the compulsory acquisition procedure regarding the shares in Seco Tools AB, which was initiated following completion of Sandvik's offer for the remaining shares in Seco Tools. The redemption price has thereby been set at SEK 100.93 per share, which corresponds to the undisputable amount paid to the minority shareholders in connection with Sandvik obtaining advance title to the remaining shares in June 2012.
| Business area | Company/unit | Closing date | Annual revenue (SEK million) |
No of employees |
|---|---|---|---|---|
| Sandvik Mining | Drilling solutions business of Cubex Limited (Canada) |
1 April 2013 | 270 | 110 |
| Business area | Company/unit | Closing date | Annual revenue (SEK million) |
No of employees |
|---|---|---|---|---|
| Sandvik Venture |
Sandvik Medical Solutions |
30 March 2012 |
~600 | 550 |
The Board of Directors of Sandvik (the "Board") has responsibility for Sandvik's organisation and the management of the company's business. The Board continuously monitors Sandvik's and the Group's financial position. The Board ensures that Sandvik's organisation is designed in a way that ensures that the accounts, the management of assets, and Sandvik's financial condition are satisfactorily controlled. Sandvik's President and Chief Executive Officer ("CEO") is responsible for the daily operations pursuant to guidelines and instructions issued by the Board. The distribution of responsibilities between the Board and the President and CEO is laid down in written terms of reference.
The principal tasks of the Board are to:
ensure that Sandvik's executive management functions efficiently and is suitably remunerated;
ensure that Sandvik's external financial reporting is conducted transparently and objectively and gives a fair view of Sandvik's performance, profitability, financial position and risk exposures;
The Board is elected at the annual meeting of shareholders and has eight members ("Directors"). The union organisations are entitled to representation on the Board and have appointed two additional ordinary members and two deputies.
Anders Nyrén, b. 1954. Chairman of the Board since 2010, Director of Sandvik since 2002, Vice Chairman of the Board 2006-2010.
Education and business experience: BSc (Econ.), MBA. President and CEO of AB Industrivärden since 2001, Executive Vice President and CFO of Skanska AB 1997–2001, various executive positions within AB Wilhelm Becker, STC Scandinavian Trading Co AB, STC Venture AB, OM International AB, Securum AB and Nordbanken 1979–1997.
Current Board assignments: Vice Chairman of Svenska Handelsbanken AB, Director of Telefonaktiebolaget LM Ericsson, AB Industrivärden, SCA, SSAB AB, AB Volvo and Ernströmgruppen.
Olof Faxander, b. 1970. Director of Sandvik since 2011.
Education and business experience: MSc (Material Science) and BSc (Business Administration). President and CEO of Sandvik since 1 February 2011. President and CEO of SSAB AB 2006-2010, Executive Vice President of Outokumpu Oy 2004–2006.
Current Board assignments: Chairman of the Board of Industriarbetsgivarna i Sverige Service AB, Director of Confederation of Swedish Enterprise and the Steel and Metal Employers Association.
Johan Karlström, b 1957. Director of Sandvik since 2011.
Education and business experience: MSc (Eng.), President of Skanska AB since 2008, various senior positions at BPA (currently Bravida) 1995-2000.
Current Board assignments: Director of Skanska AB.
Lars Westerberg, b. 1948. Director of Sandvik since 2010.
Education and business experience: MSc (Eng.) and BSc (Econ.), has been CEO and President of Autoliv Inc. 1999-2007, Gränges AB 1994-1999 and ESAB 1991-1994. Various positions in ESAB and ASEA from 1972.
Current board assignments: Chairman of Husqvarna AB, Director of SSAB AB, AB Volvo, Stena AB and Meda AB.
Simon Thompson, b. 1959. Director of Sandvik since 2008.
Education and business experience: MA (Geology). Various positions with Anglo American Group 1995- 2007 including Director of Anglo American plc 2005–2007, Director of AngloGold Ashanti 2004–2008, Chairman of Tarmac 2004–2007, Director of SG Warburg 1994–1995, NM Rothschild & Sons Ltd 1984– 1995.
Current Board assignments: Chairman of Tullow Oil plc., Director of Newmont Mining Corporation and AMEC plc.
Jürgen M Geissinger, b 1959. Director of Sandvik since 2012.
Education and business experience: PhD in Mechanical Engineering. President and CEO in Schaeffler AG since 1998 and various senior positions at ITT Automotive 1992-1998.
Current Board assignments: Director of the Supervisory Board of MTU Aero Engines AG and Continental AG.
Fredrik Lundberg, b. 1951. Director of Sandvik since 2006.
Education and business experience: MSc (Eng.), BSc (Econ.), D.Econ Honorary, D.Tech. Honorary. Active in L E Lundbergföretagen AB since 1977 and Chief Executive Officer since 1981.
Current Board assignments: Chairman of the Board of Holmen AB and Hufvudstaden AB, Vice Chairman of Svenska Handelsbanken AB, Director of LE Lundbergföretagen AB, AB Industrivärden and Skanska AB.
Hanne de Mora, b. 1960. Director of Sandvik since 2006.
Education and business experience: BSc (Econ.), MBA, IESE, Barcelona. One of the founders and owners, also Chairman of the Board of the management company a-connect (group) ag since 2002, partner in McKinsey & Company Inc. 1989–2002, various positions within brand management and controlling within Procter & Gamble 1986–1989.
Current Board assignments: Director of AB Volvo and IMD Foundation Board.
Tomas Kärnström, b. 1966. Director of Sandvik since 2006 (Employee representative).
Education and business experience: Principal safety representative Sandvik Materials Technology. Various positions within Sandvik since 1986.
Current Board Assignments: Chairman of Sandviken Energi Elnät AB, Sandviken Energi Aktiebolag, Sandviken Energi Vatten AB, Bångbro Kraft AB amd Marknad Energi Klimatkontroll Mekkab AB.
Jan Kjellgren, b. 1952. Director of Sandvik since 2008 (Employee representative).
Education and business experience: Senior R&D engineer, AB Sandvik Coromant. Various positions within Sandvik since 1981.
Current Board assignments: Nil.
Thomas Andersson, b 1962. Director of Sandvik since 2012 (Employee representative).
Education and business experience: Chairman of the Union Committee, Metal Workers' Union, AB Sandvik Coromant, Gimo. Various operator positions within Gimoverken since 1984. Construction firm Anders Diös 1980-1984.
Current Board assignments: Nil.
Alicia del Carmen Espinosa, b. 1967. Director of Sandvik since 2010 (Employee representative).
Education and business experience: MSc (Eng.), Flow Manager at Sandvik Materials Technology. Various positions within Sandvik since 2000.
Current Board assignments: Nil.
Percy Barnevik, Honorary Chairman, b. 1941. Chairman of the Board of Sandvik 1983–2002.
Auditor in charge: George Pettersson, b. 1964. Auditor in charge, Authorised Public Accountant. Other auditing assignments: B&B Tools AB, Holmen AB, Hufvudstaden AB, L E Lundbergföretagen AB and Skanska AB.
Current Board assignments: Nil.
Bo Severin, b. 1955. Secretary to the Sandvik Board of Directors since 2000. Education and business experience: Master of Laws. General Counsel in Sandvik.
Current Board assignments: Director of International Council of Swedish Industry.
The business address for the Members of the Board is currently Kungsbron 1, Uppgång G, Plan 6, Box 510, Stockholm SE-10130, Sweden.
The President and CEO of Sandvik, the Executive Vice President and CFO of Sandvik, the five presidents of each of the five business areas, and three Executive Vice Presidents make up Group Executive Management. In addition, the Group Executive Management team was extended to include two country managers and one Senior Vice President and Head of Group R&D. Group Executive Management meets every month and deals with the Group's financial development, Group-wide development projects, leadership and competence sourcing, and other strategic issues. The members of Extended Group Executive Management participate at the meetings at which general strategic issues are discussed and additional expertise is required. The Group has established twelve Group functions responsible for Group-wide activities within financial reporting, strategy, treasury, information technology ("IT"), communications, internal control, legal affairs, personnel, taxes, investor relations, corporate social responsibility issues and intellectual rights, and patents and trademarks. Intellectual rights and patents and trademarks are managed by a separate wholly owned Group entity. In addition to Group Executive Management, business areas and Group functions, there are a number of councils commissioned to coordinate Group-wide strategic areas such as environment, health and safety, research and development, purchasing, IT, finance and human resources ("HR").
As of the date of this Base Prospectus, the present members of the Group Executive Management include:
Born 1970. Employed 2011. Previously President and CEO of SSAB AB and in leading positions in Outokumpu Oy.
Born 1971. Employed since 2012. Previously President of Ericsson Central Europe, CFO/COO of Ericsson North America, CFO of Ericsson Brazil and in other finance-related positions within the Ericsson company.
Anna Vikström Persson, Executive Vice President and Head of Human Resources.
Born 1970. Employed 2011. Previously Executive Vice President and Head Group Human Resources in SSAB AB, Head of Human Resources at Ericsson's Swedish Operations and in leading positions in Ericsson Group.
Tomas Nordahl, President of Sandvik Venture and Head of IT, sourcing and strategy.
Born 1968. Employed since 2011. Previously various positions at Boston Consulting Group.
Jonas Gustavsson, President of Sandvik Machining Solutions.
Born 1967. Employed 2008. Previously Vice President Operations Rotax, various positions at Bombardier and ABB. President of Sandvik Materials Technology 2011 - 31 January 2013.
Gary Hughes, President of Sandvik Mining.
Born 1958. Employed 1997. President of Underground Mining within Sandvik Mining and Construction 2010 - 2012 and various positions within Sandvik since 1997.
Petra Einarsson, President of Sandvik Materials Technology. Born 1967. Employed 1990. Various positions within Sandvik since 1990.
Bo Severin, Executive Vice President and General Counsel.
Born 1955. Employed 1988 in the legal department and was appointed General Counsel in 2000.
Andy Taylor, Acting President of Sandvik Construction; Vice President Finance Sandvik Construction.
Born 1969. Employed 1994. Various positions within the Sandvik Group since 1994.
Jessica Alm, Executive Vice President Group Communications.
Born 1977. Employed since 2006. Various positions within Sandvik since 2006.
Olle Wijk, Senior Vice President and Head of R&D, Chairman of Sandvik's R&D Board.
Born 1951. Employed since 1987. Professor in process metallurgy, many leading position within Sandvik and since 2005 Head of R&D for Sandvik Materials Technology.
Ajay Sambrani, Country Manager India.
Born 1966. Employed since 2006. Managing Director Sandvik Asia Pvt. Ltd since 2011.
Zhiqiang (ZZ) Zhang, Country Manager China and Managing.
Born 1961. Employed since 2012. Director Sandvik China Holding Co. Ltd since 2012. Various senior positions at the Siemens Group.
Dinggui Gao has been appointed as President of Sandvik Construction and will commence in this role in place of Andy Taylor at a time, to be determined, later this year. Dinggui Gao was born in 1964 and employed in 2013. He has held various positions, amongst others, in the Bosch Group and Honeywell Group.
The business address for the Group Executive Management is currently Kungsbron 1, Uppgång G, Plan 6, Box 510, Stockholm SE-101 30, Sweden.
According to the Board's Procedural Guidelines, the Remuneration Committee shall undertake the tasks prescribed by the Code (as defined below), which includes preparing proposals to the Board of Directors regarding proposed guidelines for remuneration of and proposed long-term incentive programmes for senior executives. Since the 2012 Annual General Meeting, the members of the Remuneration Committee have been the Board's Chairman Anders Nyrén (also Chairman of the Remuneration Committee), Johan Karlström and Lars Westerberg. The Remuneration Committee's recommendations to the Board cover:
Based on the recommendations of the Remuneration Committee, the Board of Directors decides the remuneration of and terms of employment for the President and CEO. The President decides on the remuneration to be paid to the other senior executives following consultation with the Remuneration Committee. During 2012, the Remuneration Committee met on six occasions.
Since the 2012 Annual General Meeting, the members of the Audit Committee have been Hanne de Mora (Chairman of the Audit Committee), Anders Nyrén and Simon Thompson. In 2012, the Audit Committee held six meetings at which the company's external auditors and representatives of the company's management were present. Areas addressed by the Audit Committee mainly related to:
The Nomination Committee is a preparatory body that prepares proposals for, among other things, the nomination of Board of Directors auditors (where necessary) and fees for adoption at the General Meeting. The 2012 Annual General Meeting adopted an instruction for the Nomination Committee, which included a procedure for appointing the Nomination Committee, valid until a General Meeting resolves on a change. In accordance with this instruction the Nomination Committee should comprise representatives of the four largest shareholders, in terms of the number of votes, on the final business day in August plus the Board Chairman (convener). The Nomination Committee for 2013 Annual General Meeting comprised Anders Nyberg, Håkan Sandberg, Kaj Thorén, Marianne Nilsson and Anders Nyrén. Up to the Annual General Meeting on 25 April 2013, the Nomination Committee met on three occasions. Through Sandvik's Board Chairman, the Nomination Committee received information concerning the Board's own evaluation and Sandvik's operations, stage of development and overall status. The Nomination Committee discussed the general criteria that Board members should fulfil, including the independence requirement, took into account the number of Board assignments that each Board member has in other companies, and addressed the issue of more even gender distribution.
Corporate governance defines roles and responsibilities for shareholders, the Board of Directors and Executive Management. It also covers the Group's control and management system.
Corporate governance within Sandvik is based on applicable legislation, the rules and regulations of the OMX Nordic Exchange in Stockholm, Swedish Code of Corporate Governance Code (the "Code") and internal guidelines. For additional information on the Swedish Code of Corporate Governance and information on the annual meeting of shareholders, refer to the website of The Swedish Corporate Governance Board, www.bolagsstyrningskollegiet.se. Any content of the website of The Swedish Corporate Governance Board shall not form part of this Base Prospectus.
Anders Nyrén is the president of Industrivärden. Fredrik Lundberg is a member of the board of Industrivärden. Industrivärden owns shares representing slightly more than 11% of the voting rights in Sandvik. Anders Nyrén and Fredrik Lundberg are thus not independent in relation to major shareholders as defined in the Code. Furthermore, Olof Faxander, as President and CEO of Sandvik, is not independent in relation to Sandvik and the Group Executive Management. The remaining five members elected at the Annual General Meeting on 25 April 2013 are all independent in relation to Sandvik, Group Executive Management and major shareholders. The composition of the Board is, therefore, meeting the requirements laid down in the Code that a minimum of two of those members that are independent in relation to the company and its management shall also be independent in relation to major shareholders.
There are no potential conflicts of interest between the duties to Sandvik of the persons who listed under "Members of the Board" and "President and Group Executive Management" above and their private interests or other duties.
Matters may come before the Board of Directors as to which one or more members of the Board of Directors has a potential conflict of interest. If such a matter arises, any member of the Board of Directors with a potential conflict of interest will not participate in the discussion or voting with respect to such matter in accordance with the rules and regulations of the Code.
Sandvik is listed on the OMX Nordic Exchange in Stockholm and is one of the Exchange's oldest companies. Sandvik's is also listed on the Nordic exchanges in Helsinki and Copenhagen. The Sandvik shares can also be traded in the United States in the form of American Depositary Receipts. The Swedish Financial Supervisory Authority (the "Finansinspektionen") maintains a public register of senior executives in listed companies, and publishes changes in their shareholdings on a daily basis.
Sandvik's authorised and issued share capital is SEK 1,505 million and consists of 1,254 million shares. Each share carries one vote. As at 31 December 2012 Sandvik's ten largest shareholders held approximately 39% of the total number of shares. They are as follows: AB Industrivärden (11.4%), JPM Chase (administrates shares held in trust) (4.9%), Swedbank Robur Funds (4.7%), Handelsbanken's Pension Foundation (3.8%), Omnibus Account W FD OM80 (3.6%), Alecta Pension Insurance (2.9%), L E Lundbergföretagen AB (2.3%), Göranssonska Foundations (2.0%), AMF - insurance and funds (2.0%) and Nordea Investment Funds (1.9%).
As far as Sandvik is aware no shareholders agreement exists between above shareholders.
The information set out in this Base Prospectus shall be read in conjunction with Sandvik's audited financial statements for 2012 and 2011 and the consolidated unaudited interim financial statements for the three months ended 31 March 2013.
Sandvik's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") adopted by the International Accounting Standards Board ("IASB") and interpretations of such standards by the International Financial Reporting Interpretations Committee ("IFRIC"), as endorsed by the EU Commission. In addition, the standard RFR 1:2, supplementary accounting standards for group accounts, issued by the Swedish Financial Accounting Standards Council has been applied. The financial statements are presented on pages 48 to 102 of the Annual Report for 2012 and pages 44 to 98 of the Annual Report for 2011.
The quarterly financial statements are prepared under IFRS and are unaudited.
Sandvik Australia Holdings Pty Ltd (formerly Sandvik Mining and Construction Australia Holdings Pty Ltd), an indirectly wholly owned subsidiary of Sandvik, is a company limited by shares and is incorporated and domiciled in the Commonwealth of Australia. Sandvik Australia was established on 11 May 1989 and is registered under the Corporations Act 2001 in New South Wales with Australian Company Number 003 771 373. Sandvik Australia's registered office and principal place of business is at 60-62 Qantas Drive, Eagle Farm Qld 4009, Australia and the telephone number is +61 7 3637 7400.
The issued share capital of Sandvik Australia comprises 26,500 redeemable non-participating preference shares fully paid to A\$1,000 each and 6,000,002 ordinary shares fully paid to A\$1 each, all of which are held by Sandvik Finance BV. Sandvik Australia does not know of any arrangements which may at a subsequent date result in a change of control of Sandvik Australia.
Sandvik Australia's principal activities are the holding of investments in controlled entities and acting as Head Entity of the Sandvik Australian tax-consolidated group (the "Australian Group"), comprising Sandvik Australia and all of the wholly-owned Australian entities of the Group. Sandvik Australia is dependent on the performance of the Australian Group for the satisfaction of its obligations. The principal activities of the Australian Group are the manufacture, importation and sale of mining and materials handling equipment and associated parts, tools, consumables and provision of maintenance services on mining and materials handling equipment.
Notes issued by Sandvik Australia will be unconditionally and irrevocably guaranteed by Sandvik.
The directors of Sandvik Australia, their respective business occupations and their respective principal outside activities are set out below. The business address of each officer is at 60-62 Qantas Drive, Eagle Farm Qld 4009, Australia.
| Name | Business occupation | Principal outside activities |
|---|---|---|
| Rowan James Melrose | Director | CRC Mining Australia |
| Alexander Karl Zeme | Director | - |
| Matthew Dean Coogan | Director | H.R. Outlook Pty Ltd |
There are no existing or potential conflicts of interest between any duties of the directors of Sandvik Australia and/or their private interests and other duties.
KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity.
The Company Secretary of Sandvik Australia is Jonathan Nichol.
The following is a general description of certain EU tax considerations relating to the Notes and also certain Swedish and Australian tax considerations relating to the holders of the Notes. It does not purport to be a complete analysis of all tax considerations relating to the Notes, whether in those countries or elsewhere, and is neither intended to be nor should be construed as legal or tax advice. The section on Swedish taxation does not, amongst others, address the rules regarding reporting obligations for, among others, payers of interest, or Notes that are held on an "investment saving account" (Sw. investeringssparkonto) that are subject to a specific tax regime or credit of foreign taxes. Prospective purchasers of Notes should consult their own tax advisers as to which countries' tax laws could be relevant to acquiring, holding and disposing of Notes and receiving payments of interest, principal and/or other amounts under the Notes and the consequences of such actions under the tax laws of those countries (including the applicability and effect of tax treaties for the avoidance of double taxation). This summary is based upon the law as in effect on the date of this Base Prospectus and is subject to any change in law that may take effect after such date.
Under EC Council Directive 2003/48/EC on the taxation of savings income (the "EU Savings Tax Directive"), each Member State is required to provide to the tax authorities of another Member State details of payments of interest or other similar income paid by a person within its jurisdiction to, or collected by such a person for, an individual resident or certain limited types of entity established in that other Member State; however, for a transitional period, Austria and Luxembourg may instead apply a withholding system in relation to such payments, deducting tax at rates rising over time to 35 per cent (the end of that transitional period is dependent upon the conclusion of certain agreements relating to information exchange within certain other countries). Luxembourg has recently announced that it will no longer apply the withholding tax. They intend to implement the EU Savings Tax Directive with effect from 1 January 2015 and will provide details of payments of interest (or similar income) as from this date.
A number of non-EU countries and certain dependent or associated territories of certain Member States have adopted similar measures (either provision of information or transitional withholding) in relation to payments made by a person within its jurisdiction to, or collected by such a person for, an individual resident in a Member State. In addition, the Member States have entered into provision of information or transitional withholding arrangements with certain of those dependent or associated territories in relation to payments made by a person in a Member State to, or collected by such a person for, an individual resident or certain limited types of entity established in one of those territories.
The European Commission has proposed certain amendments to the EU Savings Tax Directive, which may, if implemented, amend or broaden the scope of the requirements described above. Investors who are in any doubt as to their position should consult their professional advisers.
Payments of any principal amount or any amount that is considered to be interest for Swedish tax purposes to the holder of any Notes should not be subject to Swedish income tax, provided that such a holder is not resident in the Kingdom of Sweden for Swedish tax purposes and provided that such a holder does not have a permanent establishment in the Kingdom of Sweden to which the Notes are effectively connected.
Swedish withholding tax, or Swedish tax deduction, is not imposed on payments of any principal amount or any amount that is considered to be interest for Swedish tax purposes, except for certain payments of interest (and other returns on Notes) to a private individual (or an estate of a deceased individual) with residence in the Kingdom of Sweden for Swedish tax purposes (see "Holders resident in the Kingdom of Sweden" below).
Generally, for Swedish corporations and private individuals (and estates of deceased individuals) with residence in the Kingdom of Sweden for Swedish tax purposes, all capital income (e.g. income that is considered to be interest for Swedish tax purposes and capital gains on Notes) will be taxable. Specific tax consequences, however, may be applicable to certain categories of corporations, e.g. life insurance companies. Further, specific tax consequences may be applicable if, and to the extent, a holder of Notes realises a capital loss on the Notes and to any currency exchange gains or losses.
If amounts that are considered to be interest for Swedish tax purposes are paid by Euroclear Sweden or by another legal entity domiciled in the Kingdom of Sweden, including a Swedish branch, to a private individual (or an estate of a deceased individual) with residence in the Kingdom of Sweden for Swedish tax purposes, Swedish preliminary taxes are normally withheld by Euroclear Sweden or the legal entity on such payments. Swedish preliminary taxes should normally also be withheld on other returns on Notes (but not capital gains), if such returns are paid out together with such a payment of interest referred to above.
As for payments by the Guarantor under the Sandvik AB Guarantee considered to be interest for Swedish tax purposes to holders of Notes not resident in the Kingdom of Sweden for Swedish tax purposes, please refer to the section "Holders not resident in the Kingdom of Sweden" above regarding the tax treatment of such holders of Notes.
As for payments by the Guarantor under the Sandvik AB Guarantee considered to be interest for Swedish tax purposes (and other returns on Notes) to holders of Notes resident in the Kingdom of Sweden for Swedish tax purposes, please refer to the section "Holders resident in the Kingdom of Sweden" above regarding the tax treatment of such holders of Notes.
The following is only a general summary of the Australian tax consequences. Purchasers of Notes should consult their own tax advisers concerning the consequences, in their particular circumstances, under Australian tax laws, and the laws of any other taxing jurisdiction, of the ownership of or any dealing in any Notes. Any such dealing would need to comply with the selling restrictions and securities law generally. Unless otherwise indicated, capitalised terms used in the summary are defined in Condition 1 in "Terms and Conditions of the Notes".
The following is a summary of some of the Australian tax consequences for Noteholders, at the date of this Base Prospectus, of payments of interest (and amounts in the nature of interest) on Notes and certain other matters. It does not purport to be an exhaustive description of all tax consequences, and in particular, does not deal with the position of certain classes of Noteholders (such as dealers in securities). Prospective Noteholders should be aware that the particular terms of issue of any Notes may affect the tax treatment of those Notes. The following is a general guide and should be treated with appropriate caution. Noteholders should consult their professional advisers.
Under Australian law, as currently in effect, the Noteholder will not incur or become liable for any taxes or duties of whatever nature in respect of principal and premium, if any, or of interest on a Note, other than withholding tax on interest, if the Noteholder is not a resident of Australia for Australian tax purposes and does not carry on business in Australia through a permanent establishment to which the holding of such Notes or interest therein is attributable or effectively connected (within the meaning of applicable Australian tax legislation and double taxation agreements).
Australia imposes a withholding tax on certain payments of interest and amounts in the nature of interest made to non-residents of Australia where the payer is either resident in Australia (such as Sandvik Australia) or is not resident in Australia but incurs the interest in carrying on a business at or through a permanent establishment in Australia. The current rate of Australian interest withholding tax is 10 per cent.
Interest on Notes held by non-residents of Australia will qualify for the exemption from Australian interest withholding tax under section 128F of the Tax Act where certain conditions are satisfied. For the exemption under section 128F of the Tax Act to be available:
However, the exemption under section 128F of the Tax Act will not be available if:
("Offshore Associate"), other than one acting in the capacity of a dealer, manager or underwriter in relation to the placement of Notes or in the capacity of a clearing house, custodian, funds manager or responsible entity of a registered scheme (within the meaning of the Corporations Act (Cth)); or
(b) the Issuer knows, or has reasonable grounds to suspect, at the time of payment that interest in respect of a Note is to be paid to an Offshore Associate of the Issuer other than one receiving the payment in the capacity of a clearing house, paying agent, custodian, funds manager or responsible entity of an Australian registered scheme (within the meaning of the Corporations Act (Cth)).
Sandvik Australia (where it is the Issuer) proposes to issue the Notes in a manner which will satisfy the public offer test and which otherwise meets the requirements of section 128F of the Tax Act.
"Tax Act" means the Income Tax Assessment Act 1936 (Cth), the Income Tax Assessment Act 1997 (Cth) or the Taxation Administration Act 1953 (Cth).
The Australian government has signed new or amended double tax conventions ("New Treaties") with a number of countries (each a "Specified Country") which contain an exemption from Australian interest withholding tax. The New Treaties apply to interest derived by a resident of a Specified Country.
Broadly the New Treaties effectively prevent Australian interest withholding tax applying to interest derived by:
(a) governments of the Specified Countries and certain governmental authorities and agencies in a Specified Country; and
(b) a "financial institution" resident in a Specified Country which is unrelated to and dealing wholly independently with the Issuer. The term "financial institution" refers to either a bank or any other enterprise which substantially derives its profits by carrying on a business of raising and providing finance. However, interest paid under a "back-to-back loan" or an economically equivalent arrangement will not qualify for this exemption.
The category of Specified Countries currently includes the United States, the United Kingdom, France, Japan, New Zealand, South Africa, Norway and Finland.
If the Issuer should at any time be compelled by law to deduct or withhold an amount in respect of any taxes, duties, assessments or governmental charges, the Issuer must pay an additional amount as may be necessary in order to ensure that the net amount received by the Noteholder after such deduction or withholding equals the amount which would have been receivable had no such deduction or withholding been required. However, no such additional amounts will be payable in respect of any Note or Coupon:
The Issuer has been advised that under Australian law as presently in effect:
(c) no Note will be subject to death, estate or succession duties imposed by Australia, or by any political subdivision or authority therein having power to tax, if held at the time of death;
(d) withholding tax may be imposed at the rate of (currently) 46.5 per cent. on payments of interest on the Notes unless the payee has quoted an Australian tax file number ("TFN"), (in certain circumstances) an Australian Business Number ("ABN") or proof of some other exemption (as appropriate). This type of withholding tax will not apply to payments to Noteholders who are not residents of Australia for Australian tax purposes and do not hold their Notes in the course of carrying on business at or through a permanent establishment in Australia;
The following is a summary of certain Hong Kong tax considerations relating to the purchase, ownership and disposition of the Notes by a Noteholder. This summary is based on the tax laws of Hong Kong and their published interpretation as currently in effect and which are subject to change. This summary is for general information only and does not address all of the Hong Kong tax considerations that may be relevant to specific holders in light of their particular circumstances.
No withholding tax is payable in Hong Kong in respect of payments of principal or interest on the Notes or in respect of any capital gains arising from the sale of the Notes.
Hong Kong profits tax is chargeable on every person carrying on a trade, profession or business in Hong Kong in respect of profits arising in or derived from Hong Kong from such trade, profession or business (excluding profits arising from the sale of capital assets).
Interest on the Notes will be subject to profit tax in the following circumstances:
(iii) interest on the Notes is received by or accrues to a financial institution (as defined in the Inland Revenue Ordinance (Cap.112) of Hong Kong) and arises through or from the carrying on by the financial institution of its business in Hong Kong.
Sums received by or accrued to a financial institution by way of gains or profits arising through or from the carrying on by the financial institution of its business in Hong Kong from the sale, disposal or redemption of Bearer Notes will be subject to profits tax.
Sums derived from the sale, disposal or redemption of Bearer Notes will be subject to Hong Kong profits tax where received by or accrued to a person, other than a financial institution, who carries on a trade, profession or business in Hong Kong and the sum has a Hong Kong source. Similarly, such sums in respect of Registered Notes received by or accrued to either the aforementioned person and/or a financial institution will be subject to Hong Kong profits tax if such sums have a Hong Kong source. The source of such sums will generally be determined by having regard to the manner in which the Notes are acquired and disposed.
Stamp duty will not be payable on the issue of Bearer Notes provided either:
If stamp duty is payable it is payable by the Issuer on the issue of Bearer Notes at a rate of 3 per cent. of the market value of the Notes at the time of issue. No stamp duty will be payable on any subsequent transfer of Bearer Notes.
No stamp duty is payable on the issue of Registered Notes. Stamp duty may be payable on any transfer of Registered Notes if the relevant transfer is required to be registered in Hong Kong. Stamp duty will, however, not be payable on any transfer of Registered Notes provided that either:
If stamp duty is payable in respect of the transfer of Registered Notes, it will be payable at the rate of 0.1 per cent. each by the buyer and seller (i.e. a total of 0.2 per cent.) normally by reference to the value of the consideration. If, in the case of either the sale or purchase of such Registered Notes, stamp duty is not paid, both the seller and the purchaser may be liable jointly and severally to pay any unpaid stamp duty and also any penalties for late payment. If stamp duty is not paid on or before the due date (two days after the sale or purchase if effected in Hong Kong or 30 days if effected elsewhere) a penalty of up to 10 times the duty payable may be imposed. In addition, stamp duty is payable at the fixed rate of HK\$5 on each instrument of transfer executed in relation to any transfer of the Registered Notes if the relevant transfer is required to be registered in Hong Kong.
The European Commission has published a proposal for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the "participating Member States").
The proposed FTT has very broad scope and could, if introduced in its current form, apply to certain dealings in the Notes (including secondary market transactions) in certain circumstances. The issuance and subscription of Notes should, however, be exempt.
Under current proposals the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain dealings in the Notes where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, "established" in a participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a participating Member State.
The FTT proposal remains subject to negotiation between the participating Member States and is the subject of legal challenge. It may therefore be altered prior to any implementation, the timing of which remains unclear. Additional EU Member States may decide to participate. Prospective holders of the Notes are advised to seek their own professional advice in relation to the FTT.
Notes may be sold from time to time by an Issuer to any one or more of the Dealers. The arrangements under which Notes may from time to time be agreed to be sold by an Issuer to, and purchased by, the Dealers are set out in an amended and restated Dealer Agreement dated 17 July 2013 (the "Dealer Agreement") and made between the Issuers, the Guarantor and the Dealers. Any such agreement will, inter alia, make provision for the form and terms and conditions of the relevant Notes, the price at which such Notes will be purchased by the Dealers and the commissions or other agreed deductibles (if any) payable or allowable by the relevant Issuer in respect of such purchase. The Dealer Agreement makes provision for the resignation or termination of appointment of existing Dealers and for the appointment of additional or other Dealers either generally in respect of the Programme or in relation to a particular Tranche of Notes.
United States of America: Regulation S Category 2; TEFRA D or TEFRA C as specified in the relevant Final Terms or neither if TEFRA is specified as not applicable in the relevant Final Terms.
The Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S.
The Bearer Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to a United States person, except in certain transactions permitted by U.S. tax regulations. Terms used in this paragraph have the meanings given to them by the United States Internal Revenue Code and regulations thereunder.
Each Dealer has agreed, and each further Dealer appointed under the Programme will agree, that, except as permitted by the Dealer Agreement, it will not offer, sell or deliver the Notes, (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution of the Notes comprising the relevant Tranche, as certified to the Fiscal Agent or the Issuer and the Guarantor (if applicable) by such Dealer (or, in the case of a sale of a Tranche of Notes to or through more than one Dealer, by each of such Dealers as to the Notes of such Tranche purchased by or through it, in which case the Fiscal Agent or the Issuer shall notify each such Dealer when all such Dealers have so certified) within the United States or to, or for the account or benefit of, U.S. persons, and such Dealer will have sent to each dealer to which it sells Notes during the distribution compliance period relating thereto a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons.
In addition, until 40 days after the commencement of the offering of Notes comprising any Tranche, any offer or sale of Notes within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act.
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the "Relevant Implementation Date") it had not made and will not make an offer of Notes which would be the subject of the offering contemplated by this Base Prospectus as completed by the Final Terms in relation thereto (or would be the subject of the offering contemplated by a Drawdown Prospectus, as the case may be) to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, make an offer of such Notes to the public in that Relevant Member State:
(a) Approved prospectus: if the Final Terms or Drawdown Prospectus in relation to the Notes specify that an offer of those Notes may be made other than pursuant to Article 3(2) of the Prospectus Directive in that Relevant Member State (a "Non-exempt Offer"), following the date of publication of a prospectus in relation to such Notes which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, provided that any such prospectus which is not a Drawdown Prospectus has subsequently been completed by the Final Terms contemplating such Non-exempt Offer, in accordance with the Prospectus Directive, in the period beginning and ending on the dates specified in such prospectus or Final Terms, as applicable and the Issuer and the Guarantor (if applicable) has consented in writing to its use for the purpose of that Non-exempt Offer;
provided that no such offer of Notes referred to in (b) to (d) above shall require an Issuer, the Guarantor (if applicable) or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
For the purposes of this provision, the expression an "offer of Notes to the public" in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.
Each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that:
where the issue of the Notes would otherwise constitute a contravention of Section 19 of the FSMA by the Issuer;
(b) Financial promotion: it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which section 21(1) of the FSMA does not apply to the relevant Issuer and the Guarantor (if applicable); and
(c) General compliance: it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom.
Each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that it will not, directly or indirectly, offer for subscription or purchase or issue invitations to subscribe for or buy Notes or distribute any draft or definite document in relation to any such offer, invitation or sale in the Kingdom of Sweden except in circumstances that will not result in a requirement to prepare a prospectus pursuant to the provisions of the Swedish Financial Instruments Trading Act (Lagen (1991:980), om handel med finansiella instrument).
No prospectus or other disclosure document (as defined in the Corporations Act (Cth)) in relation to the Programme or the Notes has been, or will be, lodged with the Australian Securities and Investments Commission ("ASIC").
Each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, in relation to the Notes, that it:
unless:
For the purposes of this selling restriction, the Notes include interests or rights in the Notes held in the system operated by Austraclear Ltd (ABN 94 002 060 773) for holding securities and the electronic recording and settling of transactions in those securities between members of that system (the "Austraclear System") or any other clearing system.
Transfers of Notes are subject to the further limitations and restrictions specified in Condition 3(i) in "Terms and Conditions of the Notes".
The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended, the "FIEA") and, accordingly, each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that it will not offer or sell any Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (as defined under Item 5, Paragraph 1, Article 6 of the Foreign Exchange and Trade Act (Act No. 228 of 1949, as amended)), or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of a resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with the FIEA and other relevant laws,regulations and ministerial guidelines of Japan.
Each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that the Notes are not being offered or sold and may not be offered or sold, directly or indirectly, in the People's Republic of China (for such purposes, not including the Hong Kong and Macau Special Administrative Regions or Taiwan). This Base Prospectus or any information contained or incorporated by reference herein does not constitute an offer to sell or the solicitation of an offer to buy any securities in the PRC. This Base Prospectus, any information contained herein or the Notes have not been, and will not be, submitted to, approved by, verified by or registered with any relevant governmental authorities in the PRC and thus may not be supplied to the public in the PRC or used in connection with any offer for the subscription or sale of the Notes in the PRC.
The Notes may only be invested by the qualified PRC domestic institutional investors or other entities in the PRC that have obtained appropriate government approvals for conducting outbound investment in the Notes of the type being offered or sold. Investors are responsible for obtaining all relevant governmental approvals, verifications, licences or registrations (if any) from all relevant PRC governmental authorities, including, but not limited to, the State Administration of Foreign Exchange, the China Securities Regulatory Commission, the China Banking Regulatory Commission, and other relevant regulatory bodies, and complying with all relevant PRC regulations, including, but not limited to, any relevant foreign exchange regulations and/or overseas investment regulations.
Each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that:
Each Dealer has acknowledged, and each further Dealer appointed under the Programme will be required to acknowledge, that this Base Prospectus has not been registered as a prospectus with the Monetary Authority of Singapore under the Securities and Futures Act, Cap. 289 of Singapore (the "SFA"). Accordingly, each Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that the Notes may not be offered or sold, nor may the Notes be the subject of an invitation for subscription or purchase, nor may this Base Prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase of the Notes be circulated or distributed, whether directly or indirectly, to any person in Singapore other than (a) to an institutional investor under Section 274 of the SFA, (b) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to an offer referred to in Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA or (c) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the Notes are subscribed or purchased under Section 275 of the SFA by persons who are relevant persons specified in Section 276 of the SFA, namely:
securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within 6 months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except:
Each Dealer has severally represented, warranted and undertaken, and each further Dealer appointed under the Programme will be required to severally represent, warrant and agree, to the Issuers and the Guarantor that it has complied and will comply to the best of its knowledge and belief in all material respects with all applicable laws and regulations in each country or jurisdiction in or from which it purchases, offers, sells or delivers Notes or possesses, distributes or publishes this Base Prospectus or any Final Terms or any related offering material, in all cases at its own expense unless agreed otherwise. Other persons into whose hands this Base Prospectus or any Final Terms comes are required by the Issuers, the Guarantor (if applicable) and the Dealers to comply with all applicable laws and regulations in each country or jurisdiction in or from which they purchase, offer, sell or deliver Notes or possess, distribute or publish this Base Prospectus or any Final Terms or any related offering material, in all cases at their own expense.
The Dealer Agreement provides that the Dealers shall not be bound by any of the restrictions relating to any specific jurisdiction (set out above) to the extent that such restrictions shall, as a result of change(s) or change(s) in official interpretation, after the date hereof, of applicable laws and regulations, no longer be applicable but without prejudice to the obligations of the Dealers described in the paragraph headed "General" above.
Selling restrictions may be supplemented or modified with the agreement of the relevant Issuer and the Guarantor (if applicable). Any such supplement or modification may be set out in a supplement to this Base Prospectus.
There are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which Sandvik Australia is aware), which may have, or have had during the 12 months prior to the date of this Base Prospectus, a significant effect on the financial position or profitability of Sandvik Australia and/or its Subsidiaries.
Since 31 December 2012 there has been no material adverse change in the prospects of Sandvik Australia and since 31 December 2012 there has not been any significant change in the financial or trading position of Sandvik Australia and its Subsidiaries.
The consolidated financial statements of Sandvik Australia, as set out in the annual report of Sandvik Australia for 2012, as of and for the years ended 31 December 2012 and 31 December 2011 have been audited without qualification by KPMG, of Riparian Plaza, 71 Eagle Street, Brisbane Qld 4000, Australia, chartered accountants, who have given and have not withdrawn, their consent to the inclusion of their report in this Base Prospectus in the form and context in which it is included.
The liability of KPMG Australia, in relation to the performance of their professional services provided to Sandvik Australia, including, without limitation, KPMG Australia's audit of the consolidated financial statements described above is limited under the Institute of Chartered Accountants in Australia (NSW) Scheme approved by the New South Wales Professional Standards Council pursuant to the Professional Standards Act 1994 (NSW), including the Treasury Legislation Amendment (Professional Standards) Act (the "Accountants Scheme"). The Accountants Scheme limits the civil liability of KPMG Australia to ten times reasonable fees for the service up to A\$75 million. The Accountants Scheme does not limit liability for breach of trust, fraud or dishonesty.
Copies of the following documents (together with English translations thereof) may be inspected during normal business hours at the offices of the Fiscal Agent at the Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, United Kingdom for 12 months from the date of this Base Prospectus:
(a) the constitutive documents of each of the Obligors;
Annual report 2012 of Sandvik Australia containing the audited consolidated financial statements of Sandvik Australia in respect of the years ended 31 December 2012 and 31 December 2011
Kungsbron 1 Uppgång G, Plan 6, Box 510 Stockholm SE-101 30 Sweden
Sandvik Australia Holdings Pty Ltd 60-62 Qantas Drive Eagle Farm Qld 4009 Australia
5 The North Colonnade Canary Wharf London E14 4BB United Kingdom
Senator House 85 Queen Victoria Street London EC4V 4HA United Kingdom
Winchester House 1 Great Winchester Street London EC2N 2DB United Kingdom
8 Canada Square London E14 5HQ United Kingdom
Ropemaker Place 25 Ropemaker Street London EC2Y 9AJ United Kingdom
Kungträdgårdsgatan 8 106 40 Stockholm Sweden
One Basinghall Avenue London EC2V 5DD United Kingdom
Swedbank AB SE-105 34 Stockholm Sweden
Citigroup Centre Canada Square Canary Wharf London E14 5LB United Kingdom
2-12 Holmens Kanal DK-1092 Copenhagen K Denmark
Peterborough Court 133 Fleet Street London EC4A 2BB United Kingdom
J.P. Morgan Securities plc 25 Bank Street Canary Wharf London E14 5JP
Christianbro, Strandgade 3 DK-1401, Copenhagen K Denmark
29 boulevard Haussmann 75009 Paris France
Blasieholmstorg 11 SE-106_70 Stockholm Sweden
The Royal Bank of Scotland plc 135 Bishopsgate London EC2M 3UR United Kingdom
14th Floor, Citigroup Centre Canada Square Canary Wharf London E14 5LB United Kingdom
14th Floor, Citigroup Centre Canada Square Canary Wharf London E14 5LB United Kingdom
14th Floor, Citigroup Centre Canada Square Canary Wharf London E14 5LB United Kingdom
14th Floor, Citigroup Centre Canada Square Canary Wharf London E14 5LB United Kingdom
To the Obligors as to English law:
To the Obligors as to the law of New South Wales and the federal law of the Commonwealth of Australia:
3 More London Riverside London SE1 2AQ United Kingdom
Norton Rose Fulbright Australia Level 18
Grosvenor Place 225 George Street Sydney NSW 2000 Australia
Clifford Chance LLP 10 Upper Bank Street London E14 5JJ United Kingdom
Advokatfirman Vinge KB Smålandsgatan 20 Box 1703 111 87 Stockholm Sweden
To the Obligors as to Swedish law:
Mannheimer Swartling Norrlandsgatan 21 Box 1711 11 87 Stockholm Sweden
To the Dealers as to English law: To the Dealers as to Swedish law:
Tegelbacken 4A Box 16106 103 23 Stockholm Sweden
Riparian Plaza 17 Eagle Street Brisbane Qld 4000 Australia
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