Base Prospectus - Malta Financial Services Authority

comparable Floating Rate Notes tied to the same reference rate. In addition, the new floating rate
at any time may be lower than the rates on other Notes. If the Issuer converts from a floating rate
to a fixed rate in such circumstances, the fixed rate may be lower than then prevailing rates on its
Notes.
Notes issued at a substantial discount or premium
The market values of securities issued at a substantial discount or premium to their nominal
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 term of the securities,
the greater the price volatility as compared to conventional interest-bearing securities with
comparable maturities.
The Issuer’s obligations under Subordinated Notes are subordinated
The Issuer’s obligations under Dated Subordinated Notes will be unsecured and subordinated.
In the event of a liquidation, dissolution or other winding-up of the Issuer by way of public
administration, the relevant Noteholders’ claims shall be subordinated in right of payment only to
the claims against the Issuer of all unsubordinated creditors of the Issuer and to claims preferred
under Norwegian law generally. The Issuer’s obligations under Undated Subordinated Notes will be
unsecured and subordinated and will rank junior in priority of payment to the claims of Senior
Creditors and payments of principal and interest in respect of such Notes will be conditional upon
the Issuer being Solvent (as defined in Condition 3(b)) at the time of payment by the Issuer.
‘‘Senior Creditors’’ means creditors of the Issuer who are depositors or other unsubordinated
creditors of the Issuer or whose claims are, or are expressed to be, subordinated (whether only in
the event of the liquidation, dissolution, administration or other winding-up of the Issuer or
otherwise) to the claims of depositors and other unsubordinated creditors of the Issuer but have a
fixed maturity, except those whose claims rank, or are expressed to rank, pari passu with or junior
to the claims of the Noteholders and the Couponholders.
There are no events of default in relation to Dated or Undated Subordinated Notes. Subject
to the right of the Issuer to defer payment of interest pursuant to Condition 4(f), in the event that
the Issuer fails to pay interest or principal when due on any Dated Subordinated Note or Undated
Subordinated Note, the holders of such Notes shall be entitled to bring proceedings against the
Issuer for payment of such amounts.
Although Dated and Undated Subordinated Notes may pay a higher rate of interest than
comparable Notes which are not subordinated, there is a significant risk that an investor in
Subordinated Notes will lose all or some of his investment should the Issuer become insolvent.
Under certain conditions, interest payments under Undated Subordinated Notes must be deferred
If the Issuer discloses in its quarterly report to the Financial Supervisory Authority of Norway
(Kredittilsynet) that it is in breach of the capital adequacy requirements of the Norwegian Ministry
of Finance applicable to the Issuer, on the next following Interest Payment Date relating to
Undated Subordinated Notes, the Issuer shall be entitled to defer payment of interest accrued in
respect of such Undated Subordinated Notes and any such deferral shall not constitute a failure to
comply with the provisions of such Undated Subordinated Notes.
The Issuer will pay all deferred interest, and interest on that deferred interest, on all Undated
Subordinated Notes inter alia as soon as, after giving effect to such payments, it no longer would
be required to defer interest under the terms described above or at the option of the Issuer at any
time. The Issuer will make this payment in respect of all Undated Subordinated Notes on the next
scheduled Interest Payment Date that occurs in respect of any issue of Undated Subordinated
Notes, unless it elects to make the payment earlier.
In no event will holders of Undated Subordinated Notes be able to accelerate the maturity of
their Undated Subordinated Notes; such holders will have claims only for amounts then due and
payable on their Undated Subordinated Notes. After the Issuer has fully paid all deferred interest
on any issue of Undated Subordinated Notes and if that issue of Undated Subordinated Notes
remains outstanding, future interest payments on such Undated Subordinated Notes will be subject
to further deferral as described above.
Any deferral of interest payments will likely have an adverse effect on the market price of
Undated Subordinated Notes. In addition, as a result of the interest deferral provision for Undated
Subordinated Notes, the market price of such Undated Subordinated Notes may be more volatile
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