|
|
|
|
|
|
|
|
|
|
Per Note
|
|
Total
|
|
Public offering price(1)
|
|
|
100.000
|
%
|
€
|
600,000,000
|
|
Underwriting commission
|
|
|
0.450
|
%
|
€
|
2,700,000
|
|
Proceeds to the Company (before expenses)(1)
|
|
|
99.550
|
%
|
€
|
597,300,000
|
|
-
(1)
-
Plus
accrued interest, if any, from September 25, 2017, if settlement occurs after that date.
The
underwriters, as principals, conditionally offer the notes, subject to prior sale, if as and when issued by us, and accepted by the underwriters in accordance with the conditions
contained in the underwriting agreement referred to under "Underwriting" in this prospectus supplement. The underwriters expect to deliver the notes to purchasers in book-entry only form through the
facilities of Euroclear Bank SA/NV, as operator of the Euroclear System, and Clearstream Banking, S.A., on or about September 25, 2017.
The
notes are a new issue of securities with no established trading market. We intend to apply for listing of the notes on the New York Stock Exchange. Listing will be subject to
us fulfilling all the listing requirements of the New York Stock Exchange.
In
connection with the offering of the notes, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the notes. Such transactions, if
commenced, may be discontinued at any time. See "Underwriting."
BNP Paribas, Merrill Lynch International, ING Bank N.V., Citigroup Global Markets Limited, CIBC World Markets plc, MUFG Securities
EMEA plc, RBC Europe Limited, Scotiabank Europe plc, TD Securities (USA) LLC, Banco Santander, S.A., Bank of Montreal, London Branch, Commerzbank Aktiengesellschaft,
J.P. Morgan Securities plc, ICBC Standard Bank Plc and Raiffeisen Bank International AG are affiliates of banks that are currently lenders under our unsecured revolving credit facility.
Consequently, we may be considered to be a "connected issuer" of each of these underwriters under Canadian securities laws. See "Underwriting."
Joint Book-Running Managers
|
|
|
|
|
BNP PARIBAS
|
|
BofA Merrill Lynch
|
|
ING
|
|
|
Citigroup
|
|
|
Co-Managers
|
|
|
|
|
|
|
|
|
CIBC Capital Markets
|
|
MUFG
|
|
RBC Capital Markets
|
|
Scotiabank
|
|
TD Securities
|
BMO Capital Markets
|
|
Commerzbank
|
|
HSBC
|
|
J.P. Morgan
|
|
Santander
|
|
|
|
ICBC Standard Bank
|
|
Raiffeisen Bank International
|
The
date of this prospectus supplement is September 18, 2017.
Table of Contents
We have not, and the underwriters have not, authorized anyone to provide you with information other than the information contained or
incorporated by reference in this prospectus supplement, the accompanying prospectus or in any free writing prospectus we have authorized. We take no responsibility for and can make no assurance as to
the reliability of any other information that others may give you. We are not, and the underwriters are not, making an offer of these notes in any jurisdiction where the offer or sale is not
permitted. You should not assume that the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus or any free writing prospectus we have
authorized is accurate as of any date other than the date on the front of that document. Our business, financial condition, results of operations and prospects may have changed since
those dates.
TABLE OF CONTENTS
Prospectus Supplement
S-2
Table of Contents
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus supplement, which describes the specific terms of the notes that we
are offering and other matters relating to us and our financial condition. The second part is the accompanying short form base shelf prospectus dated August 24, 2017 (the "accompanying
prospectus"), which gives more general information about securities we may offer from time to time, some of which does not apply to the notes we are offering. The description of the terms of the notes
in this prospectus supplement supplements the description in the accompanying prospectus under "Description of the Debt Securities," and to the extent it is inconsistent with that description, the
information in this prospectus supplement replaces the information in the accompanying prospectus. Generally, when we refer to the prospectus, we are referring to both parts of this document combined.
If information in this prospectus supplement differs from information in the accompanying prospectus, you should rely on the information in this prospectus supplement.
Except
as used in "Description of the Notes," as the context otherwise requires, or as otherwise specified or used in this prospectus supplement or the accompanying prospectus, the terms
"we," "our," "us," "the Company" and "Magna International" refer to Magna International Inc. and its subsidiaries.
References
in this prospectus supplement to "$," "dollars" and "U.S. dollars" are to the currency of the United States of America; and references to "€" and
"euro" are to the single currency introduced at the third stage of the European Monetary Union pursuant to the treaty establishing the European Community, as amended.
All
amounts referred to in this prospectus supplement, the accompanying prospectus and in the documents incorporated by reference are presented in U.S. dollars, in each case,
unless otherwise stated.
The
distribution of this prospectus supplement, the accompanying prospectus and any free writing prospectus we have authorized and the offering of the notes in certain jurisdictions may
be restricted by law. Persons who come into possession of this prospectus supplement, the accompanying prospectus and any free writing prospectus we have authorized should inform themselves about and
observe any such restrictions. This prospectus supplement, the accompanying prospectus and any free writing prospectus we have authorized do not constitute, and may not be used in connection with, an
offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any
person to whom it is unlawful to make such offer or solicitation.
You
should not consider any information in this prospectus supplement, the accompanying prospectus or any free writing prospectus we have authorized to be investment, legal or tax
advice. You should consult your own counsel, accountant and other advisors for legal, tax, business, financial and related advice regarding the purchase of the notes. We are not making any
representation to you regarding the legality of an investment in the notes by you under applicable investment or similar laws.
You
should read and consider all information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus and any free writing prospectus we have
authorized before making your investment decision.
IN
CONNECTION WITH THE ISSUANCE OF THE NOTES, MERRILL LYNCH INTERNATIONAL (IN THIS CAPACITY, THE "STABILIZING MANAGER") (OR ANY PERSON ACTING ON ITS BEHALF) MAY OVER-ALLOT
NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES DURING THE STABILIZATION PERIOD AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, STABILIZATION
MAY NOT NECESSARILY OCCUR. ANY STABILIZATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE
S-3
Table of Contents
PUBLIC
DISCLOSURE OF THE TERMS OF THE OFFER OF THE NOTES IS MADE, AND, IF BEGUN, MAY CEASE AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE DATE ON WHICH THE ISSUER
RECEIVED THE PROCEEDS OF THE ISSUE AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE RELEVANT NOTES.
ANY
STABILIZATION ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE RELEVANT STABILIZING MANAGER(S) (OR PERSONS ACTING ON THEIR BEHALF) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND
RULES AND WILL BE UNDERTAKEN AT THE OFFICES OF THE STABILIZING MANAGER(S) (OR PERSONS ACTING ON THEIR BEHALF) AND ON THE NEW YORK STOCK EXCHANGE.
Notice to Prospective Investors in the European Economic Area
None of this prospectus supplement, the accompanying prospectus or any free writing prospectus is a prospectus for purposes of the
European Union's Directive 2003/71/EC (and any amendments thereto) as implemented in member states of the European Economic Area.
In
relation to each member state of the EEA (each, a "Relevant Member State"), each underwriter has represented and agreed that it has not made and will not make an offer of notes which
are the subject of the offering contemplated by this prospectus supplement to the public in that Relevant Member State other than:
-
(a)
-
to
any legal entity which is a qualified investor as defined in the Prospectus Directive;
-
(b)
-
to
fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus
Directive, subject to obtaining the prior consent of the relevant underwriter or underwriters nominated by the issuer for any such offer; or
-
(c)
-
in
any other circumstances falling within Article 3(2) of the Prospectus Directive; provided that no such offer of the notes shall require the
publication by the issuer or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospective
Directive other than in reliance of Article 3(2)(b).
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 for the notes, as the same may be varied in that
Relevant Member State and the expression "Prospectus Directive" means Directive 2003/71/EC) (as amended, including by Directive 2010/73/EU), and includes any relevant implementing measure in
the Relevant Member State.
Notice to Prospective Investors in the United Kingdom
This prospectus supplement and any other material in relation to the notes described herein is for distribution only to persons who
(i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005
(as amended, the "Financial Promotion Order"), (ii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc.") of the
Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of
section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated
(all such persons together being referred to as "relevant persons"). This prospectus supplement and any other material in relation to the notes described herein
S-4
Table of Contents
is
directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is available
only to relevant persons and will be engaged in only with relevant persons.
In
connection with the offering of the notes, the underwriters are not acting for anyone other than the Company and will not be responsible to anyone other than the Company for providing
the protections afforded to their clients nor for providing advice in relation to the offering of the notes.
BASIS OF PRESENTATION
The consolidated financial statements of Magna International Inc. and its subsidiaries have been prepared in U.S. dollars
in accordance with U.S. generally accepted accounting principles ("GAAP") and the accounting policies as set out in note 1 to the Audited Consolidated Financial Statements as at
December 31, 2016 and 2015 and for each of the years in the two year period ended December 31, 2016.
Discontinued Operations
On August 31, 2015, the Company sold substantially all of its interiors operations (excluding its seating operations) to Grupo
Antolin, with the exception of two joint ventures in China, the sale of which was completed in October 2015. Accordingly, the assets and liabilities, operating results and operating cash flows
for the previously reported interiors operations are presented as discontinued operations separate from the Company's continuing operations.
In
accordance with GAAP, comparative periods in the Company's Audited Consolidated Financial Statements and the financial information as of and for the year ended December 31,
2015 have been reclassified to present the interiors operations as a discontinued operation, and have therefore been excluded from both continuing operations and segment results for all periods
presented herein, unless otherwise noted. This has been more fully described in note 3 to the Company's Audited Consolidated Financial Statements as at December 31, 2016.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents with respect to Magna International filed with the various securities commissions or similar authorities in
each of the provinces and territories of Canada, are specifically incorporated by reference in and form an integral part of this prospectus supplement and the accompanying
prospectus:
-
(a)
-
our
Annual Information Form for the year ended December 31, 2016, dated March 28, 2017;
-
(b)
-
our
Audited Consolidated Financial Statements as at December 31, 2016 and 2015 and for each of the years in the two year period ended
December 31, 2016, together with the notes thereto and the auditors' report thereon;
-
(c)
-
Management's
Discussion and Analysis of our results of operations and financial position for the year ended December 31, 2016;
-
(d)
-
our
Unaudited Interim Consolidated Financial Statements for the three-month and six-month periods ended June 30, 2017, together with the
notes thereto;
-
(e)
-
Management's
Discussion and Analysis of our results of operations and financial position for the three-month and six-month periods ended June 30,
2017; and
-
(f)
-
our
Management Proxy Circular in connection with the annual meeting of our shareholders held on May 11, 2017.
S-5
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Any
documents of the type referred to above, any annual information form, annual or interim financial statements and annual or interim management's discussion and analysis relating
thereto, management proxy circular and any material change reports (excluding confidential material change reports) or business acquisition reports, all as filed by the Company with the various
securities commissions or similar authorities in Canada pursuant to the requirements of applicable securities legislation after the date of this prospectus supplement and prior to the termination of
the offering of the notes, shall be deemed to be incorporated by reference into this prospectus supplement and the accompanying prospectus. Any such documents of the type referred to in the preceding
sentence incorporated by reference in this prospectus supplement and the accompanying prospectus contained in reports on Form 40-F or Form 6-K which we file with or furnish to the SEC
after the date of this prospectus supplement and prior to the termination of the offering of the notes to which this prospectus supplement and accompanying prospectus relate shall be deemed to be
incorporated by reference into this prospectus supplement and the accompanying prospectus and as an exhibit to the Registration Statement on Form F-10 of which this prospectus supplement and
the accompanying prospectus form a part. In addition, any other documents contained in reports on Form 6-K, if and to the extent expressly provided in such reports on
Form 6-K, which we furnish to the SEC after the date of this prospectus supplement and prior to the termination of the offering of the notes to which this prospectus supplement and accompanying
prospectus relate shall be deemed to be incorporated as an exhibit to the Registration Statement on Form F-10 of which this prospectus supplement and the accompanying prospectus
form a part.
Any
statement contained in this prospectus supplement, the accompanying prospectus or in a document incorporated or deemed to be incorporated by reference herein and in the accompanying
prospectus shall be deemed to be modified or superseded for the purposes of this prospectus supplement and the accompanying prospectus to the extent that a statement contained herein or in the
accompanying prospectus or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein and in the accompanying prospectus modifies or supersedes such
statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or
supersedes. The making of a modifying or superseding statement is not to be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation,
an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in
which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus supplement and the accompanying prospectus.
Copies of the documents incorporated by reference herein may be obtained on request without charge from the Corporate Secretary of Magna International Inc. at 337 Magna Drive, Aurora,
Ontario, Canada L4G 7K1, telephone: (905) 726-2462, and are also available electronically at www.sedar.com or on the SEC's Electronic Data Gathering and Retrieval System website
at www.sec.gov.
Upon
a new annual information form and the related annual financial statements and accompanying management's discussion and analysis being filed by the Company with and, where required,
accepted
by, the applicable securities commissions or similar authorities in Canada during the term of this prospectus supplement and the accompanying prospectus, the previous annual information form, the
previous annual financial statements and accompanying management's discussion and analysis and all interim financial statements and accompanying management's discussion and analysis, and all material
change reports and business acquisition reports filed by the Company prior to the commencement of the then current fiscal year, shall be deemed no longer to be incorporated into this prospectus
supplement and the accompanying prospectus for purposes of future offers and sales of notes hereunder. Upon an interim financial statement and accompanying management's discussion and analysis being
filed by the Company with and, where required, accepted by, the applicable securities commissions or similar authorities in Canada during the term of this prospectus supplement and the
S-6
Table of Contents
accompanying
prospectus, all interim financial statements and accompanying management's discussion and analysis filed prior to the new interim financial statements shall be deemed no longer to be
incorporated into this prospectus supplement and the accompanying prospectus for purposes of future offers and sales of notes hereunder. Upon a new management proxy circular relating to an annual
meeting of shareholders of the Company being filed by the Company with and, where required, accepted by, the applicable securities commissions or similar authorities in Canada during the term of this
prospectus supplement and the accompanying prospectus, the management proxy circular for the preceding annual meeting of shareholders of the Company shall be deemed no longer to be incorporated by
reference into this prospectus supplement and the accompanying prospectus for purposes of future offers and sales of notes hereunder.
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus, including those documents incorporated by reference, may contain
forward-looking information or forward-looking statements (collectively, "forward-looking statements") within the meaning of applicable securities legislation (including within the meaning of the
Securities Act (Ontario) and within the meaning Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of
1934, as amended (the "Exchange Act")). These forward-looking statements include, but are not limited to, statements relating to: our use of proceeds of any offering of notes under this
prospectus supplement and the accompanying prospectus; implementation of our business strategy and capital strategy; future returns of capital to our shareholders through dividends and share
repurchases; growth prospects of our business, including through organic growth, acquisitions and joint ventures; and estimates of future environmental clean-up and remediation costs. The
forward-looking statements in this prospectus supplement and the accompanying prospectus and in the documents incorporated by reference herein and in the accompanying prospectus are presented for the
purpose of providing information about management's current expectations and plans and such information may not be appropriate for other purposes. Forward-looking statements may include financial and
other projections, as well as statements regarding
our future plans, objectives or economic performance, or the assumptions underlying any of the foregoing, and other statements that are not recitations of historical fact. We use words such as "may",
"would", "could", "should", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "outlook", "project", "estimate" and similar expressions suggesting future outcomes or
events to identify forward-looking statements.
Any
such forward-looking statements are based on information currently available to us, and are based on assumptions and analyses made by us in light of our experience and our perception
of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments
will conform with our expectations and predictions is subject to a number of risks, assumptions and uncertainties, many of which are beyond our control, and the effects of which can be difficult to
predict, including, without limitation:
-
-
the potential for a deterioration of economic conditions or an extended period of economic uncertainty;
-
-
a decline in consumer confidence, which would typically result in lower production volume levels;
-
-
the growth of protectionism and the implementation of measures that impede the free movement of goods, services, people
and capital;
-
-
planning risks created by rapidly changing economic or political conditions;
-
-
fluctuations in relative currency values;
S-7
Table of Contents
-
-
legal claims and/or regulatory actions against us;
-
-
our ability to successfully launch material new or takeover business;
-
-
underperformance of one or more of our operating divisions;
-
-
ongoing pricing pressures, including our ability to offset price concessions demanded by our customers;
-
-
warranty and recall costs;
-
-
our ability to successfully identify, complete and integrate acquisitions or achieve anticipated synergies;
-
-
our ability to conduct appropriate due diligence on acquisition targets;
-
-
an increase in our risk profile as a result of completed acquisitions;
-
-
pension liabilities;
-
-
shifts in market share away from our top customers;
-
-
shifts in market shares among vehicles or vehicle segments, or shifts away from vehicles on which we have significant content;
-
-
inability to sustain or grow our business;
-
-
risks of conducting business in foreign markets, including China, India, Eastern Europe, Brazil and other markets outside of North
America and Western Europe;
-
-
our ability to successfully compete with other automotive suppliers, including disruptive technology innovators which are entering or
expanding in the automotive industry;
-
-
our ability to consistently develop innovative products or processes;
-
-
our changing risk profile due to the increasing importance to us of product areas such as powertrain and electronics;
-
-
restructuring, downsizing and/or other significant non-recurring costs;
-
-
a reduction in outsourcing by our customers or the loss of a material production or assembly program;
-
-
a prolonged disruption in the supply of components to us from our suppliers;
-
-
shutdown of our or our customers' or sub-suppliers' production facilities due to a labor disruption;
-
-
scheduled shutdowns of our customers' production facilities (typically in the third and fourth quarters of each calendar year);
-
-
the termination or non-renewal by our customers of any material production purchase order;
-
-
exposure to, and ability to offset, commodities price increases;
-
-
restructuring actions by original equipment manufacturers, including plant closures;
-
-
work stoppages and labor relations disputes;
-
-
risk of production disruptions due to natural disasters or catastrophic events;
-
-
the security and reliability of our information technology systems;
S-8
Table of Contents
-
-
changes in our mix of earnings between jurisdictions with lower tax rates and those with higher tax rates, as well as our ability to
fully benefit tax losses;
-
-
impairment charges related to goodwill, long-lived assets and deferred tax assets;
-
-
other potential tax exposures;
-
-
changes in credit ratings assigned to us;
-
-
changes in laws and governmental regulations, including tax and transfer pricing laws;
-
-
costs associated with compliance with environmental laws and regulations;
-
-
liquidity risks;
-
-
inability to achieve future investment returns that equal or exceed past returns;
-
-
the unpredictability of, and fluctuation in, the trading price of our common shares; and
-
-
other factors set out in our most recent Annual Information Form filed with securities commissions in Canada and our most recent
Annual Report on Form 40-F filed with the SEC, and subsequent filings.
In
evaluating forward-looking statements, we caution readers not to place undue reliance on any forward-looking statements and readers should specifically consider the various factors
which could cause actual events or results to differ materially from those indicated by such forward-looking statements. Unless otherwise required by applicable securities laws, we do not intend, nor
do we undertake any obligation, to update or revise any forward-looking statements to reflect subsequent information, events, results or circumstances or otherwise.
S-9
Table of Contents
SUMMARY
The following summary highlights information from this prospectus supplement, the accompanying prospectus and
the documents incorporated by reference. It is not complete and may not contain all of the information that you should consider before investing in our notes. We encourage you to read this prospectus
supplement, the accompanying prospectus and the documents incorporated by reference in their entirety before making an investment decision, including the information set forth under the heading
"Risk Factors."
Magna International Inc.
Overview
We are a leading global automotive supplier with 327 manufacturing operations and 100 product development, engineering
and sales centres in 29 countries. Our over 161,000 employees are focused on delivering superior value to our customers through innovative products and processes built on World Class
Manufacturing. We have complete vehicle engineering and contract manufacturing expertise, as well as product capabilities which include:
|
|
|
|
|
Body
Chassis
Exterior
Seating
Powertrain
|
|
Active Driver Assistance
Vision
Closures
Roof
|
Our
success is directly dependent upon the levels of North American and European (and currently, to a lesser extent, Asian and Rest of World) car and light truck production by our
customers. Given the differences between the regions in which we operate, our operations are segmented on a geographic basis. Our segments consist of North America, Europe, Asia and Rest of World.
Consistent with the above, our internal financial reporting separately segments key internal operating performance measures between North America, Europe, Asia and Rest of World for our Chief
Executive Officer to assist in the assessment of operating performance, the allocation of resources and our long-term strategic direction and future global growth.
Our
primary customers in North America in 2016 included BMW, Daimler, Fiat Chrysler, Ford, General Motors, Honda, Hyundai-Kia, Mazda, PACCAR, Renault-Nissan, Tesla, Toyota and
Volkswagen. Our primary customers in Europe in 2016 included BMW, Daimler, Fiat Chrysler, Ford, Geely, General Motors, Hyundai-Kia, PSA Peugeot Citroën, Renault-Nissan, Tata Motors,
Toyota and Volkswagen. Our primary customers in Asia in 2016 included BMW, Chery Automobile, Daimler, Fiat Chrysler, First Automobile Works, Ford, General Motors, Great Wall Automobile, Honda,
Hyundai-Kia, PSA Peugeot Citroën, Renault-Nissan, Toyota and Volkswagen. Our primary customers in Rest of World in 2016 included BMW, Daimler, Fiat Chrysler, Ford, General Motors,
Renault-Nissan and Volkswagen.
Strategy
Our board of directors is responsible for overseeing our long-term strategy and allocating capital through a capital expenditures
budget which supports the strategic priorities approved by the board, as well as our product and program commitments to our customers. At the centre of our long-term strategic plan is our
understanding of what the 'Car of the Future' will look like, and we continue to prioritize the high-growth and high-value products and service capabilities that we expect will be most relevant in
future vehicles. Through the elements of our strategy discussed below, we seek to
S-10
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strengthen
our position as a leading global automotive supplier and generate sustainable growth in order to create long-term shareholder value.
Accelerated Focus on Innovation and Technology.
We seek to be recognized by our customers as an industry leader in innovative
products, services,
processes and the use of materials. In order to help achieve this strategic goal, we intend to continue to direct significant resources to commercialize new products and services and developing new
processes, which will provide additional value to our customers in such areas as:
-
-
weight reduction or "light-weighting";
-
-
fuel efficiency and reduced emissions;
-
-
active and passive safety; and
-
-
comfort, convenience and vehicle connectivity.
World Class Manufacturing.
Our goal is to be recognized as a leader in "World Class Manufacturing". Our global operating units
have embraced this
goal and we are committed to achieving "best in class" performance in all areas of manufacturing at each of our operating Divisions globally. In order to drive continuous improvement, we monitor our
progress in achieving our goal of World Class Manufacturing using an assessment process similar to that used by our customers in evaluating their suppliers, supplemented with elements we view as
critical to achieving world class manufacturing in accordance with our Operational Principles. Best practices, "lessons learned" and key initiatives are shared among our global operating units,
including through regular internal World Class Manufacturing conferences that bring together our senior corporate and operating group leadership.
Leadership Development.
A key element to the success of our business remains our ability to attract, retain and develop skilled
personnel to match
the pace of our global growth. We have implemented and continue to enhance our Leadership Development and Succession program to help identify, train and develop future leaders with the skills and
expertise needed to manage a complex, global business.
Organic Growth and M&A.
We expect to grow organically and through acquisitions. We continue to consider acquisition
opportunities that allow us to:
expand our customer base; strengthen our position in priority product areas; expand in strategically important geographic markets; or acquire innovative technologies. Additionally, we regularly
evaluate our existing product capabilities and, in some cases, we may exit product areas where our competitive position is not sufficiently strong or our level of investment return does not justify
continued investment. We may also exit product areas to the extent we believe that our capital resources could be better utilized elsewhere. In this regard, we completed a number of transactions in
recent years designed to strategically reposition our product portfolio as part of our focus on the 'Car of the Future', including our acquisition of the Getrag Group of Companies ("Getrag") which
reflects the growing importance of the powertrain product area.
Pursuing Business on Global Vehicle Platforms.
The proliferation of global vehicle platforms and increased platform and
component sharing among
automobile manufacturers requires global suppliers with financial strength and capability to support automobile manufacturers' regional product development activities and produce common products
simultaneously in multiple regions around the world. We believe that our strong financial position, operational scale, manufacturing footprint, technological know-how, focus on innovation, continuing
world class manufacturing efforts and global
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customer
relationships support us in realizing the opportunities presented by the growth in global platforms and component sharing.
Focus on Significant Markets Outside of North America and Western Europe.
In recognition of the fact that much of the future
growth potential in the
automotive industry lies in growing markets outside of North America and Western Europe, we will continue to focus on markets that have or are expected to become key regions for vehicle production,
including China, India, Eastern Europe and other markets. This strategy allows us to support the global needs of our traditional North American and European customers and to make inroads with other
customers. In emphasizing growing markets, we seek to win business supplying products that can be manufactured in multiple locations globally, to take advantage of our customers' continuing trend
towards assembling higher volumes of vehicles built on global platforms in multiple locations around the world.
Diversifying our Automotive Sales Base.
Although we sell to all of the world's largest automobile manufacturers and are present
in all significant
automobile producing regions in the world, a substantial proportion of our business has traditionally been with the Detroit 3 automobile manufacturers in North America (General Motors, Ford and
Fiat Chrysler) and the German-based automobile manufacturers in Western Europe (Daimler, Volkswagen and BMW). Although we aim to
maintain and grow our business with our traditional customers, we seek to further diversify our sales, as profitable opportunities arise, as follows:
|
|
|
Region
:
|
|
by increasing the proportion of our business in other significant markets outside of North America and Western Europe,
|
Customer
:
|
|
by increasing the proportion of our business with customers outside of our top six, including with Asian-based automobile manufacturers, and
|
Vehicle Segment
:
|
|
by increasing the proportion of our business in growing vehicle segments.
|
We
aim to further diversify our sales base in coming years by: continuing to demonstrate our technical capabilities; pursuing new programs from our customers, with particular emphasis on
global platforms; and pursuing takeover business. At the same time, we seek to protect our position in our traditional markets through innovation in technology, processes and products.
Maintaining Target Capital Structure.
We have returned significant amounts of capital to our shareholders in recent years in the
form of dividends
and share repurchases and made significant levels of investment in our business, including the acquisition of Getrag. As a result, we achieved an Adjusted Debt
(1)
ratio of
1.30 times EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) by the end of 2016 and aim to maintain such ratio in the range of 1.01.5 times EBITDA.
Going forward, we look to maintain the efficiency of our capital structure, and continue to create shareholder value by increasing our free cash flow generation and ensuring the amount of cash on our
balance sheet remains at a level reasonably required to run our business, including through an industry downturn, while maintaining an investment grade credit rating.
-
(1)
-
Adjusted
Debt is calculated by taking our long and short term debt and adding to it (a) the present value of future operating lease commitments,
(b) after-tax long term employee benefit liabilities (calculated as liabilities less assets for defined benefit pension plans, termination and long service arrangements and retirement medical
benefits) and (c) after-tax asset retirement obligation.
S-12
Table of Contents
Creating Long-Term Shareholder Value.
We believe that success in executing the elements of our strategy
discussed above, together with the following actions will help us continue to create long-term shareholder value:
-
-
reinforcing our unique, decentralized, entrepreneurial corporate culture;
-
-
maintaining our employee equity participation and profit sharing plans;
-
-
allocating capital resources efficiently to support high-growth and high-value products and services relevant to the 'Car of
the Future';
-
-
continuing to focus on growing our earnings, maximizing free cash flow and returning excess cash to shareholders in the form of share
repurchases and steadily growing dividends;
-
-
enhancing our executive compensation system to reinforce our management's focus on efficient capital allocation and reward value
creation over the long-term; and
-
-
maintaining and reinforcing our commitment to conducting business in a legal and ethical manner, including through our comprehensive
global employee training and education initiatives designed to reinforce the principles embodied in our Employee's Charter, our Operational Principles and our Code of Conduct and Ethics.
Corporate Information
We were originally incorporated under the laws of the Province of Ontario, Canada on November 16, 1961. Our charter documents
currently consist of restated articles of incorporation dated May 11, 2016, which were issued pursuant to the
Business Corporations
Act
(Ontario).
Our
registered and head office is located at 337 Magna Drive, Aurora, Ontario, Canada L4G 7K1. Our Common Shares are listed and posted for trading on the Toronto Stock
Exchange under the trading symbol "MG", and on the New York Stock Exchange under the trading symbol "MGA".
S-13
Table of Contents
The Offering
The summary below describes the principal terms of the notes. Certain of the terms and conditions described
below are subject to important limitations and exceptions. The "Description of the Notes" section of this prospectus supplement and the "Description of the Debt Securities" section of the accompanying
prospectus contain a more detailed description of the terms and conditions of the notes. As used in this section, "we," "our" and "us" refer to Magna International Inc. and not to its
subsidiaries.
|
|
|
Issuer
|
|
Magna International Inc.
|
Securities Offered
|
|
€600,000,000 aggregate principal amount of 1.500% Senior Notes due 2027.
|
Maturity Date
|
|
The notes will mature on September 25, 2027.
|
Interest Rate
|
|
The notes will bear interest at a rate of 1.500% per year.
|
Interest Payment Dates
|
|
Interest on the notes will be payable annually in arrears on September 25 of each year, beginning on September 25, 2018.
|
Currency of Payment
|
|
All payments of principal of, and premium, if any, and interest on, the notes, including any payments made upon any redemption of the notes, will be made in euros. If the euro is unavailable to us due
to the imposition of exchange controls or other circumstances beyond our control or the euro is no longer used by the member states of the European Monetary Union that have adopted the euro as their currency or for the settlement of transactions by
public institutions within the international banking community, then all payments in respect of the notes will be made in U.S. dollars until the euro is again available to us or so used. See "Description of the NotesIssuance in
Euros."
|
Denominations
|
|
We will issue the notes in minimum denominations of €100,000, and integral multiples of €1,000 in excess thereof.
|
Optional Redemption
|
|
We may redeem the notes in whole or in part at any time and from time to time at the redemption prices described in this prospectus supplement under the caption "Description of the NotesOptional
Redemption."
|
Additional Amounts
|
|
In the event that certain taxes are payable in respect of payments on the notes, we will, subject to certain exceptions, pay such additional amounts as will result, after deduction or withholding of
such taxes, in the payment of the amounts which would have been payable in respect of the notes had no such withholding or deduction been required. See "Description of the NotesPayment of Additional Amounts" in this prospectus
supplement.
|
Optional Tax Redemption
|
|
The notes may be redeemed at our option, in whole but not in part, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of
redemption, in certain circumstances in which we would become obligated to pay additional amounts under the notes as described under "Description of the NotesOptional Tax Redemption" in this prospectus supplement.
|
S-14
Table of Contents
|
|
|
Offer to Repurchase Upon Change of Control Triggering Event
|
|
If we experience a "Change of Control Triggering Event" (as defined in this prospectus supplement) with respect to the notes, unless we have exercised our right to redeem the notes, each holder of
notes will have the right to require us to repurchase all or a portion of such holder's notes at a price equal to 101% of the principal amount of the notes repurchased plus accrued and unpaid interest to, but excluding, the date of repurchase as
described more fully under "Description of the NotesOffer to Repurchase Upon Change of Control Triggering Event."
|
Ranking
|
|
The notes will be our senior unsecured obligations and will rank equally with all our existing and future senior unsecured obligations.
|
|
|
The notes will be structurally subordinated to all indebtedness and other liabilities of our subsidiaries and will be effectively subordinated to any secured indebtedness and other liabilities of ours
to the extent of the assets securing the same. At June 30, 2017, on a consolidated basis, we had outstanding approximately $13.019 billion of indebtedness and other liabilities, substantially all of which were indebtedness and other
liabilities of our subsidiaries to which the notes would have been structurally subordinated. As of the date of this prospectus supplement we had no secured debt outstanding.
|
Certain Covenants
|
|
The indenture governing the notes will, among other things, limit our and our restricted subsidiaries' ability to:
|
|
|
incur secured indebtedness;
|
|
|
enter into certain sale and leaseback
transactions; and
|
|
|
enter into certain mergers, amalgamations,
consolidations and transfers of substantially all our assets.
|
|
|
The above restrictions are subject to significant exceptions. See "Description of the NotesCovenants Applicable to the Notes" in this prospectus supplement and "Description of the Debt
SecuritiesMerger" in the accompanying prospectus.
|
Use of Proceeds
|
|
We estimate that the net proceeds from this offering will be approximately €596.1 million, after deducting the underwriting commission and our estimated expenses of the offering. We intend to use
the net proceeds for general corporate purposes. See "Use of Proceeds."
|
Listing
|
|
The notes are a new issue of securities with no established trading market. We intend to apply for listing of the notes on the New York Stock Exchange. The underwriters have advised us that they
intend to make a market in the notes after this offering is completed, but they are not obligated to do so and may discontinue any market-making at any time without notice to or the consent of noteholders.
|
S-15
Table of Contents
|
|
|
Form of Notes
|
|
The notes will be issued in book-entry only form and will be represented by global notes deposited with, or on behalf of, Clearstream Banking, S.A. ("Clearstream"), and Euroclear Bank SA/NV, as
operator of the Euroclear System ("Euroclear"), and registered in the name of the common depositary or its nominee. Beneficial interests in any of the notes will be shown on, and transfers will be effected only through, records maintained by
Clearstream and Euroclear and their participants, and these beneficial interests may not be exchanged for certificated notes, except in limited circumstances. See "Description of the NotesBook-Entry Procedures" in this prospectus
supplement.
|
Governing Law
|
|
The notes and the indenture under which they will be issued will be governed by the laws of the State of New York.
|
Trustee
|
|
The Bank of New York Mellon.
|
Paying Agent
|
|
The Bank of New York Mellon, London Branch.
|
Transfer Agent
|
|
The Bank of New York Mellon.
|
Registrar
|
|
The Bank of New York Mellon.
|
Risk Factors
|
|
You should consider carefully all the information set forth and incorporated by reference in this prospectus supplement and the accompanying prospectus and, in particular, you should evaluate the
specific factors set forth under "Risk Factors" in this prospectus supplement before deciding whether to invest in the notes.
|
S-16
Table of Contents
Selected Consolidated Financial Data
The following table sets forth our selected consolidated financial data, which has been prepared in accordance with GAAP.
As
more fully described in the "Basis of Presentation" section of this prospectus supplement, income statement data and financial position data as at and for each of the years in the two
year period ended December 31, 2016 are derived from our audited consolidated financial statements, and the income statement data and financial position data as at and for the year ended
December 31, 2015 have been adjusted to reflect the presentation of our interiors operations as discontinued operations separate from the Company's continuing operations.
The
income statement data and financial position data as at and for the six-month periods ended June 30, 2017 and 2016 are derived from our unaudited interim consolidated
financial statements. The Unaudited Interim Consolidated Financial Statements for the three-month and six-month periods ended June 30, 2017 reflect all adjustments, which consist only of normal
and recurring adjustments, necessary to present fairly the financial position at June 30, 2017 and the results of operations, changes in equity and cash flows for the three-month and six-month
periods ended June 30, 2017 and 2016. Our historical results are not necessarily indicative of our future operating results, and interim results for the six months ended June 30, 2017
are not projections for the results to be expected for the year ending December 31, 2017. You should read the following information in conjunction with our financial statements and notes
thereto and the other financial information included or incorporated by reference in this prospectus supplement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
Year Ended
December 31,
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
|
|
(in millions, except for per share data)
|
|
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vehicle Production Volumes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
8.983
|
|
|
9.108
|
|
|
17.785
|
|
|
17.477
|
|
Europe
|
|
|
11.700
|
|
|
11.533
|
|
|
21.583
|
|
|
20.954
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External Production
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
10,098
|
|
$
|
9,666
|
|
$
|
19,381
|
|
$
|
17,759
|
|
Europe
|
|
|
4,914
|
|
|
4,752
|
|
|
9,140
|
|
|
7,252
|
|
Asia
|
|
|
1,137
|
|
|
1,006
|
|
|
2,217
|
|
|
1,612
|
|
Rest of World
|
|
|
253
|
|
|
187
|
|
|
439
|
|
|
454
|
|
Complete Vehicle Assembly
|
|
|
1,156
|
|
|
1,248
|
|
|
2,190
|
|
|
2,357
|
|
Tooling, Engineering and Other
|
|
|
1,498
|
|
|
1,484
|
|
|
3,078
|
|
|
2,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales
|
|
$
|
19,056
|
|
$
|
18,343
|
|
$
|
36,445
|
|
$
|
32,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Magna International Inc.
|
|
$
|
1,147
|
|
$
|
1,050
|
|
$
|
2,031
|
|
$
|
2,013
|
|
Net income from continuing operations attributable to Magna International Inc
.
|
|
$
|
1,147
|
|
$
|
1,050
|
|
$
|
2,031
|
|
$
|
1,946
|
|
Earnings per Common Share attributable to Magna International Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
3.02
|
|
$
|
2.65
|
|
$
|
5.19
|
|
$
|
4.94
|
|
Diluted
|
|
$
|
3.01
|
|
$
|
2.63
|
|
$
|
5.16
|
|
$
|
4.88
|
|
S-17
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
Year Ended
December 31,
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
|
|
(in millions, except for per share data)
|
|
Earnings per Common Share from continuing operations attributable to Magna International Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
3.02
|
|
$
|
2.65
|
|
$
|
5.19
|
|
$
|
4.78
|
|
Diluted
|
|
$
|
3.01
|
|
$
|
2.63
|
|
$
|
5.16
|
|
$
|
4.72
|
|
Cash dividends paid per Common Share
|
|
$
|
0.55
|
|
$
|
0.50
|
|
$
|
1.00
|
|
$
|
0.88
|
|
Financial Position Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
|
$
|
666
|
|
$
|
597
|
|
$
|
974
|
|
$
|
2,863
|
|
Working capital(1)
|
|
$
|
1,872
|
|
$
|
1,675
|
|
$
|
1,468
|
|
$
|
3,868
|
|
Total assets
|
|
$
|
24,249
|
|
$
|
22,586
|
|
$
|
22,566
|
|
$
|
19,687
|
|
Financing Resources Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank indebtedness
|
|
$
|
868
|
|
$
|
441
|
|
$
|
623
|
|
$
|
25
|
|
Long-term debt due within one year
|
|
|
138
|
|
|
423
|
|
|
139
|
|
|
211
|
|
Long-term debt
|
|
|
2,427
|
|
|
2,454
|
|
|
2,394
|
|
|
2,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,433
|
|
|
3,318
|
|
|
3,156
|
|
|
2,563
|
|
Non-controlling interests
|
|
|
489
|
|
|
462
|
|
|
451
|
|
|
151
|
|
Shareholders' equity
|
|
|
10,741
|
|
|
9,538
|
|
|
9,768
|
|
|
8,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
14,663
|
|
$
|
13,318
|
|
$
|
13,375
|
|
$
|
11,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Working
capital represents current assets less current liabilities as presented in our consolidated balance sheet.
S-18
Table of Contents
RISK FACTORS
Investing in the notes involves a high degree of risk. In addition to the other information contained in this
prospectus supplement, the accompanying prospectus and the information incorporated by reference herein and in the accompanying prospectus, you should consider carefully the information set forth
under the caption "Description of the BusinessRisk Factors" in our Annual Information Form for the year ended December 31, 2016 incorporated by reference in this prospectus
supplement and the accompanying prospectus as well as the following factors relating to us and the notes before making an investment in the notes offered hereby. If any of the following events
actually occur, our business, results of operations, financial condition, cash flows or prospects could be materially adversely affected, which in turn could adversely affect the trading price of the
notes. You may lose all or part of your original investment.
We conduct a majority of our operations through our subsidiaries; the notes are effectively junior to the existing and future liabilities of our subsidiaries and to our
secured debt to the extent of the assets securing the same.
The notes are the Company's obligations exclusively and are not guaranteed by any of our subsidiaries. We conduct a majority of our
operations through our subsidiaries and substantially all of our revenues are generated by our subsidiaries. Accordingly, our ability to service our debt, including the notes, depends on the results
of operations of our subsidiaries and upon the ability of such subsidiaries to provide us with cash, whether in the form of dividends, loans or otherwise, to pay amounts due on our obligations,
including the notes. Our subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to make payments on the notes or to make any funds available for that
purpose. In addition, dividends, loans or other distributions to us from such subsidiaries may be subject to contractual and other restrictions and are subject to other business considerations.
As
a holder of equity of our subsidiaries, our right to receive any assets of any of our subsidiaries upon their bankruptcy, liquidation or reorganization, and therefore the right of the
holders of the notes to participate in those assets, will be effectively subordinated to the claims of that subsidiary's creditors. The indenture does not limit the amount of indebtedness or other
liabilities that our subsidiaries may incur. At June 30, 2017, on a consolidated basis, we had outstanding approximately $13.019 billion of indebtedness and other liabilities,
substantially all of which were indebtedness and other liabilities of our subsidiaries to which the notes would have been structurally subordinated.
The
notes are our unsecured obligations and will rank equally in right of payment with all of our other existing and future unsecured, unsubordinated obligations. The notes are not
secured by any of our assets. Claims of secured lenders with respect to assets securing their loans will be prior to any claim of the holders of the notes with respect to those assets. As of the date
of this prospectus supplement we had no secured debt outstanding.
Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our indebtedness.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the notes,
depends on our future performance, which is subject in part to our customers' production volumes, as well as economic, financial, competitive and other factors both within and beyond our control. Some
of these risks and uncertainties are described in our Annual Information Form for the year ended December 31, 2016 under the caption "Description of the BusinessRisk Factors" and
under the caption "Forward-Looking Statements" in this prospectus supplement and in the documents incorporated by reference in this prospectus supplement and the accompanying prospectus. Our business
may not
continue to generate cash flow from operations in the future sufficient to service our debt or make necessary capital expenditures. If we are unable to
S-19
Table of Contents
generate
such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly
dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in
these activities on desirable terms, which could result in a default on our debt obligations.
The notes do not restrict our ability to incur additional debt or prohibit us from taking other action that could negatively impact holders of the notes.
We are not restricted under the terms of the indenture or the notes from incurring additional indebtedness. The terms of the indenture
limit our ability to secure additional debt without also securing the notes and to enter into sale and leaseback transactions. However, these limitations are subject to significant exceptions. See
"Description of the NotesCovenants Applicable to the Notes" in this prospectus supplement. In addition, the notes do not require us to achieve or maintain any minimum financial results
relating to our financial position or results of operations. Our ability to recapitalize, incur additional debt, secure existing or future debt or take a number of other actions that are not limited
by the terms of the indenture and the notes, including repurchasing subordinated indebtedness or common stock or to transfer assets to our parent if we were to form a holding company, could
have the effect of diminishing our ability to make payments on the notes when due, causing a loss in the trading value of your notes, if any, and increasing the risk that the credit rating of the
notes is lowered or withdrawn.
We may not have sufficient cash to repurchase the notes upon the occurrence of a "Change of Control Triggering Event."
Upon the occurrence of a Change of Control Triggering Event as described under "Description of the NotesOffer to
Repurchase upon Change of Control Triggering Event," we will be required to offer to repurchase all the notes at a purchase price of 101% of the principal amount of the notes to be repurchased plus
accrued and unpaid interest to, but excluding, the date of repurchase. We may not, however, have sufficient cash at that time or have the ability to arrange necessary financing on acceptable terms to
repurchase the notes under such
circumstances. If we are unable to repurchase the notes upon the occurrence of a Change of Control Triggering Event, it would result in an event of default under the indenture. A default under the
indenture could also lead to a default under the agreements governing our existing or future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable
notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the notes.
We cannot assure you that active trading markets will develop for the notes.
The notes are a new issue of securities for which there is currently no established trading market. While we intend to apply for
listing of the notes on the New York Stock Exchange, no assurance can be given as to whether an active trading market for the notes will develop or, if one is developed, whether it will be
maintained. We have been informed by the underwriters that they intend to make a market in the notes after the offering is completed. However, the underwriters may cease their market-making at any
time without notice. In addition, the liquidity of any trading market in the notes, and the market prices quoted for the notes, may be adversely affected by changes in the overall market for this type
of security and by changes in our financial performance or prospects or in the prospects for companies in our industry generally. As a result, we cannot assure you that active trading markets will
develop for the notes. If an active trading market does not develop or is not maintained, the market price and liquidity of the notes may be adversely affected. In that case you may not be able to
sell your notes at a particular time or you may not be able to sell your notes at favorable prices.
S-20
Table of Contents
Ratings of the notes may not reflect all risks of an investment in the notes.
The notes will be rated by at least one nationally recognized statistical rating organization. Any rating is not a recommendation to
purchase, sell or hold any particular security, including the notes. These ratings do not comment as to market price or suitability for a particular investor. In addition, ratings at any time may be
lowered or withdrawn in their entirety. The ratings of the notes may not reflect the potential impact of all risks related to structure and other factors on any trading market for, or trading values
of, your notes.
Our management will have broad discretion in allocating the net proceeds of this offering.
Our management has significant flexibility in applying the net proceeds we expect to receive in this offering. We intend to use the net
proceeds from this offering for general corporate purposes. Because the net proceeds are not required to be allocated to any specific investment or transaction, you cannot determine at this time the
value or propriety of our application of the proceeds, and you may not agree with our decisions. In addition, our use of the proceeds from this offering may not yield a significant return or any
return at all. The failure by our management to apply these funds effectively could have a negative impact on our business, results of operations or financial condition. See "Use of Proceeds."
An increase in market interest rates could result in a decrease in the value of the notes.
In general, as market interest rates rise, notes bearing interest at a fixed rate generally decline in value because the premium, if
any, over market interest rates will decline. Consequently, if you purchase notes and market interest rates increase, the market values of your notes may decline. We cannot predict the future level of
market interest rates.
The United Kingdom's impending departure from the European Union could adversely affect us.
The United Kingdom held a referendum on June 23, 2016 in which a majority of voters voted to exit the European Union
("Brexit"). Negotiations have commenced to determine the future terms of the United Kingdom's relationship with the European Union, including, among other things, the terms of trade between the
United Kingdom and the European Union. The effects of Brexit will depend on any agreements the United Kingdom makes to retain access to European Union markets either during a
transitional period or more permanently. Brexit could adversely affect European and worldwide economic and market conditions and could contribute to instability in global financial and foreign
exchange markets, including volatility in the value of the euro. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the
United Kingdom determines which European Union laws to retain, amend, replace or replicate. Any of these effects of Brexit, and others we cannot anticipate, could adversely affect our business,
results of operations, financial condition and cash flows, and could negatively impact the value of the notes.
If you are able to resell your notes, many other factors may affect the price you receive, which may be lower than you believe to be appropriate.
If you are able to resell your notes, the price you receive will depend on many other factors that may vary over time,
including:
-
-
our financial performance;
-
-
the amount of indebtedness we have outstanding;
-
-
the market for similar securities;
-
-
market interest rates;
-
-
the liquidity of the market in which the notes trade;
S-21
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-
-
the redemption and repayment features of the notes to be sold;
-
-
the time remaining to maturity of your notes; and
-
-
the ratings assigned to the notes or any other of our indebtedness by any credit rating agencies.
As
a result of these factors, you may be able to sell your notes only at prices below those you believe to be appropriate, including prices below the price you paid for them.
An investment in the notes by a purchaser whose home currency is not the euro entails significant risks.
An investment in securities that are denominated and payable in a currency other than the currency of the country in which the
purchaser is resident or the currency in which the purchaser primarily conducts its business or activities (in each case, the "home currency") entails significant risks not associated with
securities denominated and payable in the home currency. Accordingly, an investment in the notes by a purchaser whose home currency is not the euro entails significant risks. These risks include the
possibility of significant changes in rates of exchange between the noteholder's home currency and the euro and the possibility of the imposition or subsequent modification of foreign exchange
controls. These risks generally depend on factors over which we have no control, such as economic, financial and political events and the supply of and demand for the relevant currencies. In recent
years, rates of exchange between the euro and certain currencies including the U.S. dollar have been highly volatile and noteholders should be aware that such volatility may occur in the
future. Fluctuations in any particular exchange rate that have occurred in the past, however, are not necessarily indicative of fluctuations in the rate that may occur during the term of the notes.
Depreciation of the euro against a noteholder's home currency would result in a decrease in the effective yield of the notes below its coupon rate and, in certain circumstances, could result in a loss
to the noteholder.
If, as permitted by the notes, we make payments in U.S. dollars when we are unable to obtain euros, you will be exposed to significant risks if your home currency is
not U.S. dollars.
If the euro is unavailable to us due to the imposition of exchange controls or other circumstances beyond our control, or the euro is
no longer used by the member states of the European Monetary Union that have adopted the euro as their currency or for the settlement of transactions by public institutions within the international
banking community, then all payments in respect of the notes will be made in U.S. dollars until the euro is again available to us or so used. The amount payable on any date in euros will be
converted into U.S. dollars on the basis of the market exchange rate for euros. See "Description of the NotesIssuance in Euros." Any payment in respect of the notes so made in
U.S. dollars will not constitute an event of default under the indenture governing the notes. If your home currency is not U.S. dollars, any such payment will expose you to significant
risks similar to those described above under "An investment in the notes by a purchaser whose home currency is not the euro entails significant risks."
In a lawsuit for payment on the notes, a noteholder may bear currency exchange risk.
The notes will be governed by, and construed in accordance with, the laws of the State of New York, and a lawsuit for payment on
the notes may be heard in a state or federal court in the State of New York. A New York state statute presently in effect, but subject to amendment, would require a New York state
court hearing such a lawsuit to render its decision or award in euros. The judgment entered on that award, however, will be denominated in U.S. dollars, and converted at the exchange rate
prevailing on the date of the judgment's entry. Consequently, in a lawsuit for payment on the notes, investors would bear currency exchange risk until a New York state court judgment is
entered, which could be a long time. A Federal court sitting in New York with diversity jurisdiction over a dispute arising in connection with the notes would be expected to apply the foregoing
New York law.
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In
courts outside of New York, noteholders may not be able to obtain a judgment in a currency other than U.S. dollars. For example, a judgment for money in an action based
on the notes in many other U.S. federal or state courts ordinarily would be enforced in the United States only in U.S. dollars. The date used to determine the rate of conversion
of euros into U.S. dollars would depend upon various factors, including which court renders the judgment.
Investors in the notes may have difficulty enforcing civil liabilities.
We are a corporation existing under the laws of the Province of Ontario. A majority of our directors and executive officers, and some
of the experts named in this document, are resident outside the United States, and a majority of our assets and a majority of the assets of such persons are located outside the
United States. As a result, it may be difficult for you to effect service of process within the United States upon such persons to enforce against them judgments of the courts of the
United States predicated upon, among other things, the civil liability provisions of the federal securities laws of the United States. In addition, it may be difficult for you to
enforce, in original actions brought in courts in jurisdictions located outside the United States, among other things, civil liabilities predicated upon such securities laws.
S-23
Table of Contents
CURRENCY CONVERSION
Principal, premium, if any, and interest payments on the notes, including any payments made upon any redemption of the notes, will be
payable in euros. If the euro is unavailable to us due to the imposition of exchange controls or other circumstances beyond our control, or the euro is no longer used by the member states of the
European Monetary Union that have adopted the euro as their currency or for the settlement of transactions by public institutions within the international banking community, then all payments in
respect of the notes will be made in U.S. dollars until the euro is again available to us or so used. The amount payable on any date in euros will be converted into U.S. dollars on the
basis of the most recently available market exchange rate for euros. See "Description of the NotesIssuance in Euros." Any payment in respect of the notes so made in U.S. dollars
will not constitute an event of default under the indenture governing the notes.
Investors
will be subject to foreign exchange risks as to payments of principal of, and premium, if any, and interest on, the notes that may have important economic and tax consequences
to them. See "Risk Factors" in this prospectus supplement. You should consult your own counsel, accountant and other advisors for legal, tax, business, financial and related advice regarding the
purchase of the notes.
On
September 8, 2017, the euro/U.S. dollar rate of exchange was €1.00/$1.2041, as announced by the U.S. Federal Reserve Board.
EARNINGS COVERAGE RATIOS
The following earnings coverage ratios have been prepared in accordance with Canadian securities law requirements and are included in
this prospectus supplement in accordance with Canadian disclosure requirements.
Based
on GAAP, our interest requirements on all indebtedness amounted to approximately $95 million for the twelve months ended December 31, 2016 and approximately
$91 million for the twelve months ended June 30, 2017. Our reported net income, before interest on debt and income taxes, was $2,832 million for the twelve months ended
December 31, 2016 and $2,944 million for the twelve months ended June 30, 2017, which was approximately 30 and 32 times our interest requirements for the respective
periods.
After
giving effect to the offering of the notes under this prospectus supplement as if the offering had occurred on the first day of such 12 month periods respectively, based on
GAAP, our interest requirements on all indebtedness would have amounted to approximately $106 million for the twelve months ended December 31, 2016 and approximately $102 million
for the twelve months ended June 30, 2017. Our reported net income, before interest on debt and income taxes, for the twelve months ended December 31, 2016 and June 30, 2017 set
forth above would have been 27 and 29 times our interest requirements for the respective periods.
USE OF PROCEEDS
We estimate that the net proceeds from this offering will be approximately €596.1 million, after deducting the
underwriting commission and our estimated expenses of the offering. We intend to use the net proceeds for general corporate purposes.
S-24
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CAPITALIZATION
The following table sets forth our consolidated cash and cash equivalents and capitalization as at June 30, 2017, on a
historical basis and as adjusted to give effect to the offering of the notes and the application of the estimated net proceeds therefrom of approximately €596.1 million, or
$717.8 million based on the euro/U.S. dollar exchange rate as of September 8, 2017, as described under "Use of Proceeds." This table should be read in conjunction with our
Unaudited Interim Consolidated Financial Statements for the three-month and six-month periods ended June 30, 2017 and the related notes thereto, respectively, incorporated by reference in this
prospectus supplement and the accompanying prospectus.
|
|
|
|
|
|
|
|
|
|
As at
June 30, 2017
|
|
|
|
Actual
|
|
As Adjusted
|
|
|
|
(in millions, except share data)
|
|
Cash and cash equivalents
|
|
$
|
666
|
|
$
|
1,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt:
|
|
|
|
|
|
|
|
Bank indebtedness
|
|
$
|
868
|
|
$
|
868
|
|
Long-term debt due within one year
|
|
|
138
|
|
|
138
|
|
Notes offered hereby
|
|
|
|
|
|
722
|
|
Long-term debt
|
|
|
2,427
|
|
|
2,427
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
3,433
|
|
|
4,155
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
Capital stock
|
|
|
|
|
|
|
|
Common Shares (issued: 372,531,177)
|
|
|
3,711
|
|
|
3,711
|
|
Contributed surplus
|
|
|
124
|
|
|
124
|
|
Retained earnings
|
|
|
7,868
|
|
|
7,868
|
|
Accumulated other comprehensive income
|
|
|
(962
|
)
|
|
(962
|
)
|
|
|
|
|
|
|
|
|
Total shareholders' equity
|
|
|
10,741
|
|
|
10,741
|
|
Non-controlling interests
|
|
|
489
|
|
|
489
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
14,663
|
|
$
|
15,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-25
Table of Contents
DESCRIPTION OF THE NOTES
For purposes of the accompanying prospectus, the notes are "debt securities." We refer you to the "Description of the Debt Securities"
in the accompanying prospectus, which you should read carefully. The following description of the particular terms of the notes offered by this prospectus supplement supplements, and to the extent
inconsistent with the description in the accompanying prospectus replaces, that description. The notes will be issued under a base indenture, dated as of June 16, 2014, between us and The Bank
of New York Mellon (the "trustee"), as supplemented by a fourth supplemental indenture, to be dated as of September 25, 2017, establishing the terms of the notes. We refer to the
base indenture, as so supplemented, as the "indenture." The following summary of certain provisions of the indenture and the notes does not purport to be complete and is qualified in its entirety by
reference to the actual provisions of the indenture and the notes.
Except
as otherwise defined in this prospectus supplement, capitalized definitional terms used in this prospectus supplement have the meanings specified in the accompanying prospectus.
The notes will be issued only in fully registered, book-entry form, in minimum denominations of €100,000, and integral multiples of €1,000 in excess thereof. The
book-entry system is described under "Book-Entry Procedures" below. As used in this section, "we," "our" and "us" refer to Magna International Inc. and not to its subsidiaries.
General
The notes will mature on September 25, 2027. We will issue the notes in an initial aggregate principal amount of
€600,000,000. If any interest payment date or the maturity date or any date of earlier redemption or repayment for the notes falls on a day that is not a business day, the related
payment will be made on the next business day as if it were made on the date such payment was due, and no interest will accrue on the amounts so payable for the period from and after such date to the
next business day. As used in this prospectus supplement, "business day" means any day, other than a Saturday or a Sunday, (i) which is not a day on which banking institutions in the City of
New York or London are authorized or required by law, regulation or executive order to close and (ii) on which the Trans-European Automated Real-Time Gross Settlement Express Transfer
system (the TARGET2 system) or any successor thereto, is open.
We
may, without the consent of the holders of the notes, "reopen" the notes and issue additional debt securities that have the same terms as the notes being offered by this prospectus
supplement (except for the issue date and, in some cases, the public offering price and the first interest payment date). These additional debt securities, together with the notes offered by this
prospectus supplement, would constitute a single series of debt securities under the indenture.
The
notes will be our senior unsecured obligations and will rank equally with all our existing and future senior unsecured obligations. The notes will be structurally subordinated to all
indebtedness and other liabilities of our subsidiaries and will be effectively subordinated to any secured indebtedness and other liabilities of ours to the extent of the assets securing the same. At
June 30, 2017, on a consolidated basis, we had outstanding approximately $13.019 billion of indebtedness and other liabilities, substantially all of which were indebtedness and other
liabilities of our subsidiaries to which the notes would have been structurally subordinated. As of the date of this prospectus supplement we had no secured debt outstanding.
At
the time of repayment of the notes, whether at maturity, or upon earlier repayment or redemption as described below, we may designate one or more of our subsidiaries to acquire the
notes for its own account and to pay to holders a cash purchase price for the notes that is equal to the amounts otherwise due upon maturity or such earlier repayment or redemption. Notwithstanding
the foregoing, we will remain the sole obligor under the notes and holders will continue to be entitled to look solely to us for payment of all amounts due under the notes. For greater certainty, in
addition to
S-26
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the
foregoing, either we or one or more of our subsidiaries may also purchase outstanding notes at any time and from time to time at prevailing market prices or at such price as the holder of the
notes being purchased may agree.
The
principal of each note payable at maturity or earlier redemption will be paid against presentation and surrender of the note at the office or agency maintained for such purpose in
London, initially the corporate trust office of the paying agent, located at One Canada Square, London E14 3AL, United Kingdom, or if in book-entry form, by electronic means,
in euros.
Issuance in Euros
Initial noteholders will be required to pay for the notes in euros, and principal, premium, if any, and interest payments in respect of
the notes will be payable in euros. If the euro is unavailable to us due to the imposition of exchange controls or other circumstances beyond our control or the euro is no longer used by the member
states of the European Monetary Union that have adopted the euro as their currency for the settlement of transactions by public institutions within the international banking community, then all
payments in respect of the notes will be made in U.S. dollars until the euro is again available to us or so used. The amount payable on any date in euros will be converted to
U.S. dollars on the basis of the Market Exchange Rate (as defined below) on the second business day before that payment is due, or if such Market Exchange Rate is not then available, on
the basis of the most recently available Market Exchange Rate on or before the date that payment is due. Any payment in respect of the notes so made in U.S. dollars will not constitute an event
of default under the indenture. Neither the trustee nor the paying agent shall be responsible for obtaining exchange rates, effecting conversions or otherwise handling re-denominations. See "Risk
Factors" beginning on page S-19 of this prospectus supplement.
"
Market Exchange Rate
" means the noon buying rate in the City of New York for cable transfers of euros as certified for customs
purposes (or, if not so certified, as otherwise determined) by the Federal Reserve Bank of New York.
Noteholders
will be subject to foreign exchange risks as to payments of principal and interest that may have important economic and tax consequences to them. See "Risk Factors" beginning
on page S-19 of this prospectus supplement.
Interest
The notes will bear interest at a rate of 1.500% per year. Interest will accrue from September 25, 2017. Interest is payable
annually on September 25 of each year to the holders of record at the close of business on the September 10 (whether or not that date is a business day) immediately preceding such
interest payment date. Interest on the notes will be computed on the basis of an ACTUAL/ACTUAL (ICMA) (as defined in the rulebook of International Capital Market Association) day count
convention. The first interest payment date will be September 25, 2018.
Optional Redemption
We may redeem the notes, in whole or in part, at any time and from time to time, prior to June 25, 2027 (the "Initial Par
Call Date," which is the date three months prior to the maturity date of the notes) at our option, at a redemption price equal to the greater of:
-
(1)
-
100%
of the principal amount of the notes being redeemed; and
-
(2)
-
the
sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed that would be due if such notes
matured on the Initial Par Call Date but for the redemption (not including any portion of such payments of interest accrued to the date of redemption), discounted to the date of redemption on
an annual basis
S-27
Table of Contents
plus,
in each case, accrued and unpaid interest on the notes being redeemed to, but excluding, the redemption date.
In
addition, at any time on or after the Initial Par Call Date, we may redeem the notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of
the principal amount of the notes being redeemed, plus accrued and unpaid interest on the notes being redeemed to, but excluding, the redemption date.
"
Comparable Government Bond
" means, in relation to any Comparable Government Bond Rate calculation, at the discretion of an Independent
Investment Banker, a German government bond whose maturity is closest to the maturity of the notes to be redeemed (assuming for such purpose that the notes were to mature on the Initial Par Call
Date), or if the Independent Investment Banker in its discretion determines that such similar bond is not in issue, such other German government bond as such Independent Investment Banker may, with
the advice of three brokers of, and/or market makers in, German government bonds selected by such Independent Investment Banker, determine to be appropriate for determining the Comparable Government
Bond Rate.
"
Comparable Government Bond Rate
" means the gross redemption yield on the Comparable Government Bond assuming such Comparable Government
Bond were to be purchased on the third business day prior to the date fixed for redemption at the middle market price, expressed as a percentage (rounded to three decimal places, with
0.0005 being rounded upwards), for the Comparable Government Bond prevailing at 11:00 a.m. (London time) on such business day as determined by an Independent Investment Banker.
"
Independent Investment Banker
" means any of BNP Paribas, Merrill Lynch International, ING Bank N.V. or Citigroup Global Markets
Limited and their respective successors, as selected by the Company, or, if each such firm is unwilling or unable to select the Comparable Government Bond, an independent investment banking
institution of international standing appointed by the Company.
Unless
we default in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the notes or portions thereof called for redemption on such date.
Holders of notes to be redeemed will receive notice thereof by first-class mail at least 30 and not more than 60 days prior to the date fixed for redemption. If fewer than all the notes are to
be redeemed, the trustee will select, not more than 60 days prior to the redemption date, the particular notes or portions thereof for redemption from the notes outstanding not previously
called by such method as the trustee deems fair and appropriate or in accordance with the procedures of Euroclear or Clearstream; provided that unredeemed portions of any notes redeemed in part shall
remain in denominations of €100,000 and integral multiples of €1,000 in excess thereof.
Payment of Additional Amounts
All payments made by or on behalf of us under or with respect to the notes shall be made free and clear of and without withholding or
deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities related thereto) imposed or
levied by or on behalf of the Government of Canada or any province or territory thereof or by any authority or agency therein or thereof having power to tax (hereinafter "Canadian Taxes"), unless we
are required to withhold or deduct Canadian Taxes by law or by the interpretation or administration thereof by the relevant government authority or agency. If we are so required to withhold or deduct
any amount for or on account of Canadian Taxes from any payment made under or with respect to the notes, then, subject to the provisions of the indenture described in the immediately following
paragraph, we will pay to each holder or beneficial owner of notes as
S-28
Table of Contents
additional
interest such additional amounts ("Additional Amounts") as may be necessary so that the net amount received by each such holder or beneficial owner after such withholding or deduction
(and after deducting any Canadian Taxes on such Additional Amounts) will not be less than the amount such holder or beneficial owner would have received if such Canadian Taxes had not been
withheld or deducted. However, no Additional Amounts will be payable with respect to a payment made to a holder or beneficial owner of notes:
-
(1)
-
with
which we do not deal at arm's length (for the purposes of the Income Tax Act (Canada)) at the time of the making of such payment;
-
(2)
-
which
is subject to such Canadian Taxes by reason of the holder or beneficial owner of notes being a resident, domicile or national of, or engaged in
business or maintaining a permanent establishment or other physical presence in or otherwise having some connection with Canada or any province or territory thereof otherwise than by the mere holding
of the notes or the receipt of payments thereunder;
-
(3)
-
which
is subject to such Canadian Taxes by reason of the failure of the holder or beneficial owner of the notes to comply with any certification,
identification, documentation or other reporting requirements if compliance is required by law, regulation, administrative practice or an applicable treaty as a precondition to exemption from, or a
reduction in the rate of deduction or withholding of, such Canadian Taxes;
-
(4)
-
which
is subject to any estate, inheritance, gift, sales, transfer, capital gains, excise or personal property or similar tax, assessment or governmental
charge;
-
(5)
-
which
is subject to any Canadian Taxes that are imposed with respect to any payment on a note to any holder or beneficial owner who is a fiduciary,
partnership, limited liability company or any person other than the sole beneficial owner of such payment, to the extent that a beneficiary or settlor with respect to such fiduciary, a member of such
a partnership or limited liability company or the beneficial owner of such payment would not have been entitled to the Additional Amounts had such beneficiary, settlor, member or beneficial owner been
the actual holder or beneficial owner of such note;
-
(6)
-
who
is a "specified shareholder" of ours or who does not deal at arm's length with a "specified shareholder" of ours as defined in subsection 18(5)
of the Income Tax Act (Canada);
-
(7)
-
which
is subject to any tax, assessment, withholding or deduction required by sections 1471 through 1474 of the U.S. Internal Revenue
Code of 1986, as amended ("FATCA"), any current or future Treasury Regulations or rulings promulgated thereunder, any law, regulation or other official guidance enacted in any jurisdiction
implementing FATCA, any intergovernmental agreement between the United States and any other jurisdiction to implement FATCA, or any agreement with the U.S. Internal Revenue Service under
FATCA; or
-
(8)
-
which
is subject to Canadian Taxes by reason of any combination of (1) through (7) above.
As
soon as practicable after we pay the amount withheld or deducted to the relevant governmental authority in accordance with applicable law, we will provide the trustee with official
receipts or other documentation satisfactory to the trustee evidencing the payment of the Canadian Taxes with respect to which Additional Amounts are paid.
We
will pay any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies that arise from the execution, delivery, enforcement
or registration of the notes, the indenture or any other document or instrument in relation thereof, or the receipt of any payments with respect to the notes.
S-29
Table of Contents
Wherever
in this "Description of the Notes" or in the accompanying prospectus under the caption "Description of the Debt Securities" there is mentioned, in any context, the payment of
principal (and premium, if any), interest, if any, or any other amount payable under or with respect to a note, such mention will be deemed to include mention of the payment of Additional
Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.
The
foregoing obligations will survive termination, defeasance or discharge of the indenture.
Optional Tax Redemption
We may redeem the notes at our option, at any time as a whole but not in part, at a redemption price equal to the principal amount
thereof together with accrued and unpaid interest to, but excluding, the date fixed for redemption, upon the giving of a notice as described below, if we
determine that:
-
(1)
-
as
a result of (A) any change in or amendment to the laws (or any regulations or rulings promulgated thereunder) of Canada or of any political
subdivision or taxing authority thereof or therein affecting taxation, or (B) any change in the official position regarding the application or interpretation of such laws, regulations or
rulings by any legislative body, court, governmental agency or regulatory authority (including a holding by a court of competent jurisdiction), which change or amendment is announced or becomes
effective on or after the date of this prospectus supplement, we have or will become obligated to pay, on the next succeeding date on which interest is due, Additional Amounts with respect to the
notes to any holder or beneficial owner thereof; or
-
(2)
-
on
or after the date of this prospectus supplement, any action has been taken by any taxing authority of, or any decision has been rendered by a court of
competent jurisdiction in Canada, including any of those actions specified in (1), whether or not such action was taken or such decision was rendered with respect to us, or any change, amendment,
application or interpretation has been officially proposed, which, in any such case, will result in us becoming obligated to pay, on the next succeeding date on which interest is due, Additional
Amounts with respect to the notes,
and,
in any such case, we, in our business judgment, determine that such obligation cannot be avoided by the use of reasonable measures available to us.
In
the event that we elect to redeem the notes pursuant to the provisions set forth in the preceding paragraph, we will deliver to the trustee an opinion of independent legal counsel of
recognized standing stating that we would be obligated to pay Additional Amounts as a result of a change in tax laws or regulations or the application or interpretation of such laws
or regulations.
Notice
of intention to redeem the debt securities as described above will be given to the holders not more than 60 nor less than 30 days prior to the date fixed for
redemption and will specify the date fixed for redemption.
No Sinking Fund
The notes will not be entitled to any sinking fund.
Offer to Repurchase Upon Change of Control Triggering Event
Upon the occurrence of a Change of Control Triggering Event with respect to the notes, unless we have exercised our right to redeem the
notes in whole as described under "Optional Redemption" above by giving irrevocable notice to the trustee in accordance with the indenture, each holder of notes will have the right to
require us to purchase all or a portion of such holder's notes pursuant to the offer described below (the "
Change of Control Offer
"), at a
purchase price equal to 101% of the
S-30
Table of Contents
principal
amount thereof plus accrued and unpaid interest to, but excluding, the date of purchase (the "
Change of Control Payment
").
Within
30 days following the date upon which the Change of Control Triggering Event occurs or, at our option, prior to any Change of Control but after the public announcement of
the pending Change of Control, we will be required to send, by first class mail, a notice to each holder of notes, with a copy to the trustee, which notice will govern the terms of the Change of
Control Offer. Such notice will state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date such notice is mailed, other than
as may be required by law (the "
Change of Control Payment Date
"). The notice, if mailed prior to the date of consummation of the Change of
Control, will state that the Change of Control Offer is conditioned on the Change of Control being consummated on or prior to the Change of Control Payment Date. Holders of notes electing to have
notes purchased pursuant to a Change of Control Offer will be required to surrender their notes to the paying agent at the address specified in the notice, or transfer their notes to the paying agent
by book-entry transfer pursuant to the applicable procedures of the paying agent, prior to the close of business on the third business day prior to the Change of Control Payment Date.
On
the Change of Control Payment Date, we will, to the extent lawful:
-
-
accept or cause a third party to accept for payment all notes or portions of notes properly tendered pursuant to the Change of
Control Offer;
-
-
at or prior to 10:00 a.m., London time, deposit or cause a third party to deposit with the paying agent an amount equal to the
Change of Control Payment in respect of all notes or portions of notes properly tendered; and
-
-
deliver or cause to be delivered to the trustee the notes properly accepted together with an officers' certificate stating the
aggregate principal amount of notes or portions of notes being repurchased.
We
will not be required to make a Change of Control Offer with respect to the notes if a third party makes such an offer in the manner, at the times and otherwise in compliance with the
requirements for such an offer made by us and such third party purchases all the notes properly tendered and not withdrawn under its offer. In addition, we will not repurchase any notes if there has
occurred and is continuing on the Change of Control Payment Date an event of default under the indenture, other than a default in the payment of the Change of Control Payment on the Change of Control
Payment Date.
We
must comply in all material respects with the requirements of Rule 14e-1 under the Exchange Act, and any other securities laws and regulations thereunder to the extent those
laws and regulations are applicable in connection with the repurchase of the notes as a result of a Change of Control Triggering Event. To the extent that the provisions of any such securities laws or
regulations conflict with the Change of Control Offer provisions of the notes, we will be required to comply with those securities laws and regulations and will not be deemed to have breached our
obligations under the Change of Control Offer provisions of the notes by virtue of any such conflict.
For
purposes of the foregoing discussion of a Change of Control Offer, the following definitions are applicable:
"
Change of Control
" means the occurrence of any of the following after the date of issuance of
the notes:
-
(1)
-
the
direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger, amalgamation or consolidation), in one or a
series of related transactions, of all or substantially all our assets and the assets of our subsidiaries taken as a whole to any "person"
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Notwithstanding
the foregoing, a transaction will not be deemed to involve a change of control under clause (2) above if (1) we become a direct or indirect wholly-owned
subsidiary of a holding company and (2)(A) the direct or indirect holders of the Voting Stock of such holding company immediately following that transaction are substantially the same as the holders
of our Voting Stock immediately
prior to that transaction or (B) immediately following that transaction no person (as that term is used in Section 13(d)(3) of the Exchange Act) (other than a holding company
satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company.
"
Change of Control Triggering Event
" means the notes cease to be rated Investment Grade by each of the Rating Agencies on any date during
the period (the "
Trigger Period
") commencing 60 days prior to the first public announcement by us of any Change of Control
(or pending Change of Control) and ending 60 days following consummation of such Change of Control (which Trigger Period will be extended following consummation of a Change of Control
for so long as any of the Rating Agencies has publicly announced that it is considering a possible ratings change). However, a Change of Control Triggering Event otherwise arising by virtue of a
particular reduction in rating shall be deemed not to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Change of Control Triggering Event for purposes
of the definition of Change of Control Triggering Event) if the Rating Agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or
inform the trustee in writing at our request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the
applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Change in Control Triggering Event). If a Rating Agency is not providing a rating
for the notes at the commencement of any Trigger Period, the notes will be deemed to have ceased to be rated Investment Grade by such Rating Agency during that Trigger Period.
Notwithstanding
the foregoing, no Change of Control Triggering Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of
Control has actually been consummated.
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"
Continuing Director
" means, as of any date of determination, any member of our board of directors who:
-
(1)
-
was
a member of our board of directors on the date of the issuance of the notes; or
-
(2)
-
was
nominated for election or elected or appointed to our board of directors with the approval of a majority of the Continuing Directors who were members of
our board of directors at the time of such nomination, election or appointment (either by a specific vote or by approval of our proxy statement in which such member was named as a nominee for election
as a director, without objection to such nomination).
"
Investment Grade
" means a rating of Baa3 or better by Moody's (or its equivalent under any successor rating category of Moody's)
and a rating of BBB or better by S&P (or its equivalent under any successor rating category of S&P), and the equivalent investment grade credit rating from any replacement
rating agency or rating agencies selected by us under the circumstances permitting us to select a replacement rating agency and in the manner for selecting a replacement rating agency, in each case as
set forth in the definition of "Rating Agency."
"
Moody's
" means Moody's Investors Service, Inc., a subsidiary of Moody's Corporation, and its successors.
"
Person
" means any individual, corporation, partnership, limited liability company, business trust, association, joint-stock company,
joint venture, trust, incorporated or unincorporated organization or other entity or government or any agency or political subdivision thereof.
"
Rating Agency
" means each of Moody's and S&P;
provided
, that if any of Moody's or S&P
ceases to provide rating services to issuers or investors, we may appoint another "nationally recognized statistical rating organization" as defined under Section 3(a)(62) of the Exchange Act
as a replacement for such Rating Agency;
provided,
that we shall give notice of such appointment to the trustee.
"
S&P
" means S&P Global Ratings Services, a business unit of Standard & Poor's Financial Services, LLC, and
its successors.
"
Voting Stock
" of any specified Person as of any date means the capital stock of such Person that is at the time entitled to vote
generally in the election of the board of directors of such Person.
The
definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of "all or substantially all" the
properties or assets of Magna International and its subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase "substantially all," there is no precise,
established definition of the phrase under applicable law. Accordingly, the applicability of the requirement that we offer to repurchase the notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all the assets of Magna International and its subsidiaries taken as a whole to another "person" or "group" (as those terms are used in Section 13(d)(3) of
the Exchange Act) may be uncertain.
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Covenants Applicable to the Notes
The following covenants will be applicable to the notes.
We may not, and may not permit our restricted subsidiaries to, create, assume, or guarantee any indebtedness for borrowed money secured
by mortgages, pledges, liens, encumbrances, conditional sale or title retention agreements or other security interests, which we refer
to collectively as security interests, on any principal properties or any shares of capital stock or other equity interests or indebtedness (held as an asset) of any of our restricted subsidiaries
without making effective provision for securing the notes equally and ratably with the secured debt. Notwithstanding this limitation on secured debt, we and our restricted subsidiaries may have debt
secured by:
-
-
(a) any security interest on any property hereafter acquired or constructed by us or a restricted subsidiary (including any
improvement on an existing property) to secure or provide for the payment of all or any part of the purchase price or construction cost of such property, including, but not limited to, any
indebtedness incurred by us or a restricted subsidiary prior to, at the time of, or within 365 days after the later of the acquisition, the completion of construction (including any
improvements on an existing property) or the commencement of commercial operation of such property, which indebtedness is incurred for the purpose of financing or refinancing all or any part of the
purchase price thereof or construction or improvements thereon; or (b) any security interest upon property existing at the time of acquisition thereof, whether or not assumed by us or such
restricted subsidiary; or (c) any security interest existing on the property or on the outstanding shares of capital stock or other equity interests or indebtedness of a person at the time such
person or an affiliate of such person shall become a restricted subsidiary (including any such security interest to secure or provide for the payment of all or any part of the purchase price of or
consideration for any such transaction); or (d) a security interest on property or shares of capital stock or other equity interests in or indebtedness of a person existing at the time such
person or an affiliate of such person is merged into or consolidated or amalgamated with us or a restricted subsidiary or at the time of a sale, lease or other disposition of the properties of a
person as an entirety or substantially as an entirety to us or a restricted subsidiary (including any such security interest to secure or provide for the payment of all or any part of the purchase
price of or consideration for any such merger, consolidation, amalgamation, lease or other acquisition);
provided, however
, that no such security
interest shall extend to any other principal property of ours or such restricted subsidiary prior to such acquisition or to the other principal property thereafter acquired other than additions or
improvements to such acquired property;
-
-
security interests in property of ours or a restricted subsidiary in favor of the United States of America or any State
thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or in favor of Canada or any province thereof, or any other
country, or any department, agency or instrumentality or political subdivision of Canada or any province thereof or such other country (including, without limitation, security interests to secure
indebtedness of the pollution control or industrial revenue bond type), in order to permit us or a restricted subsidiary to perform any contract or subcontract made by us or it with or at the request
of any of the foregoing, or to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred for the purpose of financing all or any
part of the purchase price or the cost of constructing or improving the property subject to such security interests;
-
-
any security interest existing at the date of original issuance of the notes;
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-
-
any security interest on any property or assets of any restricted subsidiary to secure indebtedness owing by it to us or to a
restricted subsidiary;
-
-
mechanics', materialmen's, carriers' or other like liens arising in the ordinary course of business (including construction of
facilities) in respect of obligations which are not due or which are being contested in good faith;
-
-
any security interest arising by reason of deposits with, or the giving of any form of security to, any governmental agency or any
body created or approved by law or governmental regulations, which is required by law or governmental regulation as a condition to the transaction of any business, or the exercise of any privilege,
franchise or license;
-
-
security interests for taxes, assessments or governmental charges or levies not yet delinquent, or the security interests for taxes,
assessments or government charges or levies already delinquent but the validity of which is being contested in good faith;
-
-
security interests (including judgment liens) arising in connection with legal proceedings so long as such proceedings are being
contested in good faith and, in the case of judgment liens, execution thereon is stayed;
-
-
landlords' liens on fixtures located on premises leased by us or a restricted subsidiary in the ordinary course of business; or
-
-
any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of any security
interest permitted by the indenture.
In
addition to these exceptions, we or a restricted subsidiary may issue, assume or guarantee other secured debt without securing the notes if the total amount of secured debt
outstanding (not including secured debt permitted by the exceptions set forth in the bullets above) and the aggregate value of sale and leaseback transactions (not including sale and
leaseback transactions the proceeds of which have been applied in accordance with the last sentence under "Restrictions on Sale and Leaseback Transaction" below) at the time does not
exceed 10% of Consolidated Shareholders' Equity, determined as of a date not more than 90 days prior thereto.
"
Consolidated Shareholders' Equity
" means, at any date, our shareholders' equity and that of our consolidated subsidiaries determined on a
consolidated basis as of such date in accordance with United States generally accepted accounting principles;
provided that
, our consolidated
shareholders' equity and that of our consolidated subsidiaries is to be calculated without giving effect to (i) the application of ASC 715-Compensation-Retirement Benefits or (ii) the
cumulative foreign currency translation adjustment. The term "
consolidated subsidiary
" means, as to any person, each subsidiary of such person (whether
now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of such person in accordance with
United States generally accepted accounting principles.
The
term "
value
" means as at any particular time with respect to a sale and leaseback transaction, an amount equal to the present value
(discounted at the rate of interest implicit in the terms of the lease) of the obligations of the lessee under such lease for net rental payments during the remaining term of the lease (including any
period for which such lease has been extended). For purposes of the foregoing, "net rental payments" under any lease for any period means the sum of the rental and other payments required to be paid
in such period by the lessee thereunder, not including, however, any amounts required to be paid by such lessee (whether or not designated as rental or additional rental) on account of maintenance and
repairs, insurance, taxes, assessments or similar charges.
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We and our restricted subsidiaries may not engage in sale and leaseback transactions (excluding such transactions between us and our
restricted subsidiaries or between our restricted subsidiaries) whereby a principal property that is owned by us or one of our restricted subsidiaries and that has been in full operation for more than
365 days is sold or transferred with the intention of taking back a lease of such property (except a lease for a term of no more than three years entered into with the intent that the use by us
or such restricted subsidiary of such property will be discontinued on or before the expiration of such term).
The
sale and leaseback of a principal property is not prohibited, however, if we and the applicable restricted subsidiary would be permitted under the indenture to incur secured debt
equal in amount to the amount realized or to be realized upon the sale or transfer secured by a lien on the principal property to be leased without equally and ratably securing the notes. We and our
restricted subsidiaries may also engage in an otherwise prohibited sale and leaseback transaction if an amount equal to the value of the principal property so leased is applied, subject to credits for
delivery by us to the trustee of debt securities issued under the base indenture (including the notes) we have previously purchased or otherwise acquired and specified voluntary redemptions of debt
securities issued under the base indenture (including the notes), to the retirement (other than mandatory retirement), within 365 days of the effective date of the arrangement, of indebtedness
for borrowed money incurred or assumed by us or a restricted subsidiary, as shown on our most recent consolidated balance sheet and, in the case of our indebtedness, the indebtedness is not
subordinated to the notes.
The indenture provides that, so long as the notes are outstanding, we will not, and will not cause or permit any of our restricted
subsidiaries to, transfer (whether by merger, consolidation, amalgamation or otherwise) principal property that has a gross book value (without deduction for any depreciation reserves) at the date as
of which the determination is being made in excess of two percent of the consolidated net tangible assets of us and our restricted subsidiaries to any unrestricted subsidiary, unless we or a
restricted subsidiary shall apply within one year after the effective date of the transaction, or shall have committed within one year of the effective date to apply,
an amount equal to the fair value of the principal property at the time of transfer:
-
-
to the acquisition, construction, development or improvement of properties, facilities or equipment which are, or upon the
acquisition, construction, development or improvement will be, a principal property or properties or a part thereof;
-
-
to the redemption of debt securities issued under the base indenture (including the notes);
-
-
to the repayment of indebtedness for borrowed money of us or any of our restricted subsidiaries, other than any indebtedness owed to
any restricted subsidiary or our subordinated indebtedness; or
-
-
in part to an acquisition, construction, development or improvement and in part to redemption and/or repayment, in each case as
described above.
The
fair value of any principal property for purposes of this paragraph will be as determined by our board of directors or an authorized committee thereof. In lieu of applying all or any
part of any amount to redemption of debt securities issued under the base indenture, we may, within one year of the transfer, deliver to the trustee under the indenture debt securities of any series,
other than debt securities made the basis of a reduction in a mandatory sinking fund payment, for cancellation and thereby reduce the amount to be applied to the redemption of debt securities by an
amount equivalent to the aggregate principal amount of the debt securities so delivered.
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The following are the meanings of terms that are important in understanding the covenants previously described:
"
person
" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, limited liability
company, unincorporated organization or other entity or government or any agency or political subdivision thereof.
"principal property
" means any manufacturing plant, warehouse, office building or parcel of real property located in Canada, the
United States, its territories and possessions, Puerto Rico or Mexico, including fixtures and manufacturing machinery and equipment but excluding leases and other contract rights which might
otherwise be deemed real property, owned by us or any restricted subsidiary, whether owned on the date of original issuance of the notes or thereafter, other than such plant, warehouse, office
building or parcel of real property or portion thereof (including fixtures and manufacturing machinery and equipment) which, in the opinion of our board of directors or an authorized committee thereof
(evidenced by a certified board resolution thereof delivered to the trustee), is not of material importance to the business conducted by us and our restricted subsidiaries taken as a whole.
"
restricted subsidiary
" means any subsidiary other than an unrestricted subsidiary, and any subsidiary which is an unrestricted subsidiary
but which is designated by our board of directors to be a restricted subsidiary. Our board of directors may not designate any subsidiary to be a restricted subsidiary if we would thereby breach any
covenant or agreement contained in the indenture, assuming for the purpose of determining whether such a breach would occur that any secured debt of that subsidiary was incurred at the time of the
designation and that any sale and leaseback transaction to which the subsidiary is then a party was entered into at the time of the designation.
"
secured debt
" means indebtedness for money borrowed that is secured by a security interest in (a) any principal property or
(b) any shares of capital stock or other equity interests or indebtedness (held as an asset) of any restricted subsidiary.
"
subsidiary
" means any person of which we, or we and one or more of our subsidiaries, or any one or more subsidiaries, directly or
indirectly own more than 50% of the voting stock or other voting equity interests of such person and that, by virtue of such ownership, is controlled by us or by us and one or more of our subsidiaries
or any one or more subsidiaries. For purposes of the foregoing, the term "control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and
policies of a person.
"
unrestricted subsidiary
" means:
-
-
any subsidiary acquired or organized after the date of original issuance of the notes, other than any subsidiary acquired or organized
after that date that is a successor, directly or indirectly, to any restricted subsidiary (whether by merger, consolidation or amalgamation of such restricted subsidiary with, or transfer of all or
substantially all assets of such restricted subsidiary to, such subsidiary or otherwise);
-
-
any subsidiary whose principal business or assets are located outside Canada, the United States, its territories and
possessions, Puerto Rico or Mexico;
-
-
any subsidiary the principal business of which consists of financing or assisting in financing of customer construction projects or
the acquisition or disposition of products of dealers, distributors or other customers;
-
-
any subsidiary whose principal business is the ownership, leasing, purchasing, selling or development of real property; or
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-
-
any subsidiary substantially all the assets of which consist of stock or other securities of a subsidiary or subsidiaries referred to
above in this sentence, unless and until that subsidiary is designated by our board of directors to be a restricted subsidiary.
Defeasance
The defeasance provisions described under "Description of the Debt SecuritiesDefeasance and Covenant Defeasance" in the
accompanying prospectus will be applicable to the notes. If we exercise this option, we may be discharged from certain of our obligations with respect to the notes, including those described under
"Covenants Applicable to the Notes" in this prospectus supplement.
Trustee
The Bank of New York Mellon will act as the trustee, transfer agent and registrar for the notes. The Bank of New York
Mellon, London Branch will initially act as the paying agent.
Book-Entry Procedures
We have obtained the information in this section concerning Clearstream and Euroclear and their book-entry systems and procedures from
sources that we believe to be reliable. We take no responsibility for an accurate portrayal of this information. In addition, the description of the clearing systems in this section reflects our
understanding of the rules and procedures of Clearstream and Euroclear as they are currently in effect. Those systems could change their rules and procedures at any time.
The notes will be issued in the form of one or more global notes in fully registered form, without coupons, and will be deposited with,
or on behalf of, Euroclear or Clearstream, and registered in the name of the nominee of the common depositary for, and in respect of interests held through, Euroclear and Clearstream. Except as
described herein, certificates will not be issued in exchange for beneficial interests in the global notes.
Except
as set forth below, the global notes may be transferred, in whole and not in part, only to nominees of the common depositary or to any successor common depositary and such
successor's nominees.
Beneficial
interests in the global notes will be represented, and transfers of such beneficial interests will be effected, through accounts of financial institutions acting on behalf of
beneficial owners as direct or indirect participants in Euroclear or Clearstream. Those beneficial interests will be in denominations of €100,000 and integral multiples of
€1,000 in excess thereof. Investors may hold beneficial interests in the notes directly through Euroclear or Clearstream, if they are participants in such systems, or indirectly
through organizations that are participants in such systems.
Owners
of beneficial interests in the global notes will not be entitled to have notes registered in their names, and, except as described herein, will not receive or be entitled to
receive physical delivery of notes in definitive form. So long as the common depositary for Euroclear and Clearstream is the registered owner of the global notes, the common depositary for all
purposes will be considered the sole holder of the notes represented by the global notes under the indenture and the global notes. Except as provided below, beneficial owners will not be considered
the owners or holders of the notes under the indenture, including for purposes of receiving any reports delivered by us or the trustee pursuant to the indenture. Accordingly, each beneficial owner
must rely on the procedures of the clearing systems and, if such person is not a participant of the clearing systems, on the procedures of the participant through which such person owns its interest,
to exercise any rights of a holder under the
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indenture.
Under existing industry practices, if we request any action of holders or a beneficial owner desires to give or take any action which a holder is entitled to give or take under the
indenture, the clearing systems would authorize their participants holding the relevant beneficial interests to give or take action and the participants would authorize beneficial owners owning
through the participants to give or take such action or would otherwise act upon the instructions of beneficial owners. Conveyance of notices and other communications by the clearing systems to their
participants, by the participants to indirect participants and by the participants and indirect participants to beneficial owners will be governed by arrangements among them, subject to any statutory
or regulatory requirements as may be in effect from time to time. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in certificated
form. These limits and laws may impair the ability to transfer beneficial interests in global notes.
We
have been advised by Clearstream and Euroclear, respectively, as follows:
Clearstream has advised that it is incorporated under the laws of Luxembourg and licensed as a bank and professional depositary.
Clearstream holds securities for its participating organizations and facilitates the clearance and settlement of securities transactions among its participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement of certificates. Clearstream provides to its participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in several countries. Clearstream has
established an electronic bridge with the Euroclear Operator (as defined below) to facilitate the settlement of trades between the nominees of Clearstream and Euroclear. As a registered bank in
Luxembourg, Clearstream is subject to regulation by the Luxembourg Commission for the Supervision of the Financial Sector. Clearstream customers are recognized financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations and may include the underwriters. Indirect access to Clearstream
is also available to others, such as banks, brokers, dealers and trust companies that clear through, or maintain a custodial relationship with, a Clearstream participant, either directly
or indirectly.
Distributions
with respect to notes held beneficially through Clearstream will be credited to cash accounts of Clearstream participants in accordance with its rules
and procedures.
Euroclear has advised that it was created in 1968 to hold securities for its participants and to clear and settle transactions between
Euroclear participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Euroclear includes various other services, including securities lending and borrowing and interfaces with domestic markets in several countries. Euroclear is operated
by Euroclear Bank SA/NV (the "Euroclear Operator"). All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts
are accounts with the Euroclear Operator. Euroclear participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include
the underwriters. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly
or indirectly.
Securities
clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related operating procedures of
Euroclear, and applicable Belgian law (collectively, the "Terms and Conditions"). The Terms and Conditions
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govern
transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear. All securities in
Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf
of Euroclear participants and has no records of or relationship with persons holding through Euroclear participants.
Distributions
with respect to the notes held beneficially through Euroclear will be credited to the cash accounts of Euroclear participants in accordance with the Terms
and Conditions.
So long as the common depositary for Euroclear or Clearstream, or such common depositary's nominee, is the registered holder of the
global notes, the common depositary for Euroclear or Clearstream, or such common depositary's nominee, as the case may be, will be considered the sole owner or holder of the notes represented by such
global notes for all purposes under the indenture and the notes. Payments of principal, interest and additional amounts, if any, in respect of the global notes will be made to the common depositary
for Euroclear or Clearstream, or such common depositary's nominee, as the case may be, as registered holder thereof. None of us, the trustee, any underwriter and any affiliate of any of the above or
any person by whom any of the above is controlled (as such term is defined in the Securities Act) will have any responsibility or liability for any records relating to or payments made on
account of, beneficial ownership interests in the global notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
Distributions
of principal, premium, if any, and interest with respect to the global notes will be credited in euros to the extent received by Euroclear or Clearstream from the common
depositary or its nominee to the cash accounts of Euroclear or Clearstream customers in accordance with the relevant system's rules and procedures.
Due
to the fact that Euroclear and Clearstream can only act on behalf of participants, who in turn act on behalf of indirect participants, the ability of a person having an interest in
the global notes to pledge such interest to persons or entities that do not participate in the relevant clearing system, or otherwise take actions in respect of such interest, may be affected by the
lack of a physical certificate in respect of such interest.
We understand that investors that hold beneficial interests in the notes through Clearstream or Euroclear accounts will follow the
settlement procedures that are applicable to conventional eurobonds in registered form. Subject to applicable procedures of Clearstream and Euroclear, beneficial interests in the notes will be
credited to the securities custody accounts of Clearstream and Euroclear participants on the business day following the settlement date, for the value on the settlement date.
Due to the fact that the purchaser determines the place of delivery, it is important to establish at the time of trading of any notes
where both the purchaser's and seller's accounts are located to ensure that settlement can be made on the desired value date.
We
understand that secondary market trading between Clearstream and/or Euroclear participants will occur in the ordinary way following the applicable rules and operating procedures of
Clearstream and Euroclear. Secondary market trading will be settled using procedures applicable to conventional eurobonds in global registered form.
You
should be aware that investors will only be able to make and receive deliveries, payments and other communications involving the notes through Clearstream and Euroclear on days when
those
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systems
are open for business. Those systems may not be open for business on days when banks, brokers and other institutions are open for business in the United States.
In
addition, because of time-zone differences, there may be problems with completing transactions involving Clearstream and Euroclear on the same business day as in the
United States. U.S. investors who wish to transfer their interests in the notes, or to make or receive a payment or delivery of the notes, on a particular day, may find that the
transactions will not be performed until the next business day in Luxembourg or Brussels, depending on whether Clearstream or Euroclear is used.
Clearstream
or Euroclear will credit payments to the cash accounts of Clearstream customers or Euroclear participants, as applicable, in accordance with the relevant system's rules and
procedures, to the extent received by its depositary. Clearstream or the Euroclear Operator, as the case may be, will take any other action permitted to be taken by a holder under the indenture on
behalf of a Clearstream customer or Euroclear participant only in accordance with its relevant rules and procedures.
Clearstream
and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of beneficial interests in the notes among participants of Clearstream and Euroclear.
However, they are under no obligation to perform or continue to perform those procedures, and they may discontinue those procedures at any time.
Subject to certain conditions, the notes represented by the global notes are exchangeable for certificated notes in definitive form of
like tenor in minimum denominations of €100,000 principal amount and multiples of €1,000 in excess thereof if: (i) the common depositary notifies
us that it is unwilling or unable to continue as depositary for the global notes and we fail to appoint a successor depositary within 90 calendar days; or (ii) there has occurred and is
continuing an Event of Default with respect to the notes.
In
all cases, certificated notes delivered in exchange for any global note or beneficial interest therein will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the common depositary (in accordance with its customary procedures).
Payments
(including principal, premium and interest) and transfers with respect to notes in certificated form may be executed at the office or agency maintained for such purpose in
London (initially the corporate trust office of the paying agent) or, at our option, by check mailed to the holders thereof at the respective addresses set forth in the register of holders of the
notes (maintained by the registrar), provided that all payments (including principal, premium and interest) on notes in certificated form, for which the holders thereof have given wire transfer
instructions, will be required to be made by wire transfer of immediately available funds to the accounts specified by the holders thereof. No service
charge will be made for any registration of transfer, but payment of a sum sufficient to cover any tax or governmental charge payable in connection with that registration may be required.
The
paying agent for the notes will initially be The Bank of New York Mellon, London Branch.
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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of the material U.S. federal income tax considerations of the ownership and disposition of the
notes applicable to a U.S. holder (as defined below). This discussion is based upon provisions of the Internal Revenue Code of 1986, as amended, applicable U.S. Treasury
regulations, administrative rulings and judicial decisions in effect as of the date of this prospectus supplement, any of which may subsequently be changed, possibly retroactively, or interpreted
differently by the Internal Revenue Service, or the "IRS," so as to result in U.S. federal income tax consequences different from those discussed below. Except where noted, this discussion
deals only with a note held as a capital asset by a U.S. holder who purchases the note on original issuance at the first price at which a substantial portion of the notes is sold for cash to
persons other than bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers. This discussion does not address all aspects of
U.S. federal income taxes and does not deal with all tax consequences that may be relevant to U.S. holders in light of their personal circumstances or particular situations,
such as:
-
-
tax consequences to dealers in securities or currencies, financial institutions, regulated investment companies, real estate
investment trusts, tax-exempt entities, insurance companies and traders in securities that elect to use a mark-to-market method of tax accounting for their securities;
-
-
tax consequences to persons holding notes as part of a hedging, integrated, conversion or constructive sale transaction or
a straddle;
-
-
tax consequences to U.S. holders whose "functional currency" is not the U.S. dollar;
-
-
tax consequences to entities treated as partnerships for U.S. federal income tax purposes and investors therein;
-
-
tax consequences to certain former citizens or residents of the United States;
-
-
alternative minimum tax consequences, if any;
-
-
any state, local or foreign tax consequences; and
-
-
estate or gift taxes.
If
an entity that is treated as a partnership for U.S. federal income tax purposes holds notes, the tax treatment of a partner or member generally will depend upon the status of
the partner or member and the activities of the entity. Investors in such an entity should consult their own tax advisors. U.S. holders considering the purchase of the notes should consult
their own tax advisors concerning the U.S. federal income tax consequences in light of their own specific situation, as well as consequences arising under the U.S. federal estate or gift
tax laws or under the laws of any other taxing jurisdiction.
For
purposes of this discussion, the term "U.S. holder" refers to a beneficial owner of the notes that is, for U.S. federal income
tax purposes:
-
-
an individual citizen or resident of the United States;
-
-
a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized
in or under the laws of the United States, any state thereof or the District of Columbia;
-
-
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
-
-
a trust, if it (1) is subject to the primary supervision of a court within the United States and one or more
U.S. persons have the authority to control all substantial decisions of the trust, or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated
as a U.S. person.
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U.S. HOLDERS
SHOULD CONSULT WITH THEIR OWN TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN INCOME, FRANCHISE, PERSONAL PROPERTY AND ANY OTHER TAX
CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF THE NOTES.
Certain Contingent Payments
We will be obligated to make payments of amounts in excess of the principal amount of the notes as described under "Description of the
NotesOffer to Repurchase Upon Change of Control Triggering Event," "Description of the NotesOptional Redemption" and "Description of the NotesPayment of
Additional Amounts" in this prospectus supplement. We intend to take the position that the possibility of such payments should not cause the notes to be treated as contingent payment debt instruments
under U.S. federal income tax law. Our position is not binding on the IRS. If the IRS takes a contrary position, a U.S. holder may be required (i) to accrue interest income under
the rules governing original issue discount, or "OID," at a rate higher than the stated interest rate on the notes, and (ii) to treat as ordinary income, rather than capital gain, any gain on
the sale, exchange or retirement of the notes. In addition, the U.S. dollar value of the OID and corresponding foreign currency gain or loss would be calculated under rules similar to the rules
discussed in the first paragraph of "Interest Income" below. U.S. holders should consult their tax advisors about the risk of the notes being treated as contingent payment debt
instruments. The remainder of this discussion assumes that the notes will not be contingent payment debt instruments.
Interest Income
It is anticipated that the notes will be issued with less than a
de minimis
amount
(as set forth in the applicable U.S. Treasury regulations) of OID. In such case, interest paid on
the notes generally will be taxable to a U.S. holder as ordinary interest income at the time such payments are accrued or received (in accordance with the U.S. holder's regular
method of tax accounting for U.S. federal income tax purposes). If, however, the notes are issued with OID, a U.S. holder will be required to include the difference in income as OID as
it accrues in accordance with a constant-yield method, based on compounding of interest before the receipt of cash attributable to this income. If the notes are issued with OID, OID will be determined
for any accrual period in euro and then translated into U.S. dollars in the same manner as interest income accrued by a U.S. holder on the accrual basis, as described below.
U.S. holders will recognize exchange gain or loss when any OID is paid (including, upon the sale of a note, the receipt of proceeds that include amounts attributable to any OID previously
included in income) to the extent of the difference between the U.S. dollar value of such payment (determined by translating euro received at the spot rate on the date such payment is received)
and the U.S. dollar value of the accrued OID (determined in the same manner as for accrued interest as described below). The remainder of this discussion assumes that the notes will not be
issued with OID. This discussion also assumes that interest and principal on the notes is not paid in U.S. dollars. U.S. holders should consult their own tax advisors regarding the tax
treatment if interest and principal on the notes is paid in U.S. dollars.
A
U.S. holder that uses the cash method of accounting and that receives a payment of interest in euro (including a payment attributable to accrued but unpaid interest upon the
sale, exchange, redemption, repurchase or other taxable disposition of a note) will be required to include in income the U.S. dollar value of the euro payment received (determined based on the
spot rate on the date the payment is received), regardless of whether the payment is in fact converted to U.S. dollars at that time.
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A
U.S. holder that uses the accrual method of accounting will accrue interest income in euro and translate that amount into U.S. dollars based on the average spot rate of
exchange in effect for the accrual period or, with respect to an accrual period that spans two taxable years, at the average spot rate for the partial period within the applicable taxable year.
Alternatively, an accrual method U.S. holder may elect to translate interest income into U.S. dollars at the spot rate on the last day of the accrual period (or the last day of
the taxable year in the case of an accrual period that spans two taxable years) or, if the date of receipt is within five business days of the last day of the interest accrual period, the spot rate on
the date of receipt. A U.S. holder that makes this election must apply it consistently to all debt instruments from year to year and cannot change the election without the consent of the IRS. A
U.S. holder that uses the accrual method will recognize exchange gain or loss with respect to accrued interest income on the date the interest payment (or proceeds from a sale, exchange,
redemption, repurchase or other taxable disposition attributable to accrued interest) is actually received. The amount of exchange gain or loss recognized will equal the difference, if any, between
the U.S. dollar value of the euro payment received (determined based on the spot rate on the date the payment is received) in respect of the accrual period and the U.S. dollar value of
interest income that has accrued during the accrual period (as determined above), regardless of whether the payment is in fact converted to U.S. dollars. This exchange gain or loss
generally will be treated as ordinary income or loss and generally will be U.S.-source income for purposes of computing a U.S. holder's U.S. foreign tax credit limitation.
Interest
income earned with respect to a note will constitute foreign-source income for U.S. federal income tax purposes and will generally be considered "passive category
income," which may be relevant in calculating the U.S. foreign tax credit limitation. The rules governing the U.S. foreign tax credit are complex and, therefore, U.S. holders
should consult their own tax advisors regarding the availability of the U.S. foreign tax credit in their particular circumstances.
Sale, Exchange, Redemption, Repurchase or other Taxable Disposition of the Notes
A U.S. holder will generally recognize gain or loss equal to the difference between the amount realized on the sale, exchange,
redemption, repurchase or other taxable disposition of a note (except to the extent the amount realized is attributable to accrued interest not previously included in income, which will be taxable as
ordinary interest income) and the U.S. holder's adjusted tax basis in such note. A U.S. holder's adjusted tax basis in the note generally will be the U.S. dollar value of the euro
used to purchase the note at the spot exchange rate on the purchase date. If the note is traded on an established securities market, as the notes are expected to be, a cash basis U.S. holder
(and if it elects, an accrual basis U.S. holder) will determine the U.S. dollar value of the euro amount paid for the note on the settlement date of the purchase.
The
amount realized on the sale, exchange, redemption, repurchase or other taxable disposition of a note for an amount in euro will generally be the U.S. dollar value of such euro
based on the spot exchange rate on the date the note is disposed of; provided, however, that if the note is traded on an established securities market, as the notes are expected to be, a cash basis
U.S. holder (and if it elects, an accrual basis U.S. holder) will determine the U.S. dollar value of such euro on the settlement date of the disposition. If an accrual
method U.S. holder makes either of the elections described above, such election must be applied consistently to all debt instruments from year to year and cannot be changed without the consent
of the IRS. If a note is not traded on an established securities market (or, if a note is so traded, but a U.S. holder is an accrual basis U.S. holder that has not made the settlement
date election), a U.S. holder will recognize exchange gain or loss (taxable as ordinary income or loss) to the extent that the U.S. dollar value of the euro received (based on the spot
rate on the settlement date) differs from the U.S. dollar value of the amount realized.
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Except
as discussed below with respect to exchange gain or loss, any gain or loss recognized by a U.S. holder on a taxable disposition of the note will be capital gain or loss.
If, at the time of the sale, exchange, redemption, repurchase or other taxable disposition of the note, a U.S. holder is treated as holding the note for more than one year, such capital gain or
loss will be a long-term capital gain or
loss. Otherwise, such capital gain or loss will be a short-term capital gain or loss. In the case of certain non-corporate U.S. holders (including individuals), long-term capital gains are
generally eligible for reduced rates of U.S. federal income taxation. A U.S. holder's ability to deduct capital losses may be limited.
Gain
or loss realized upon the sale, exchange, redemption, repurchase or other taxable disposition of a note that is attributable to fluctuations in currency exchange rates will be
ordinary income or loss. Gain or loss attributable to fluctuations in currency exchange rates generally will equal the difference between (i) the U.S. dollar value of a
U.S. holder's purchase price for the note in euro, determined on the date the note is disposed of, and (ii) the U.S. dollar value of a U.S. holder's purchase price for the
note in euro, determined on the date the U.S. holder acquired the note (or, in each case, determined on the settlement date if the notes are traded on an established securities market, as the
notes are expected to be, and the U.S. holder is either a cash basis or an electing accrual basis holder). Payments received that are attributable to accrued interest will be treated in
accordance with the rules applicable to payments of interest described above. The exchange gain or loss will be recognized only to the extent of the total gain or loss realized by a U.S. holder
on the sale, exchange, redemption, repurchase or other taxable disposition of the note, and generally will be ordinary income or loss.
Gain
or loss generally will be U.S.-source income for purposes of computing a U.S. holder's U.S. foreign tax credit limitation.
Exchange of Foreign Currencies
A U.S. holder's tax basis in the euro received as interest on or on the sale or other taxable disposition of a note will be the
U.S. dollar value of such euro at the spot rate in effect on the date of receipt of the euro. Any gain or loss recognized by a U.S. holder on a sale, exchange or other taxable
disposition of the euro will be ordinary income or loss and generally will be U.S.-source income for purposes of computing a U.S. holder's U.S. foreign tax credit limitation.
Tax Return Disclosure Requirements
Certain U.S. Treasury regulations meant to require the reporting of certain tax shelter transactions cover transactions
generally not regarded as tax shelters, including certain foreign currency transactions giving rise to losses in excess of a certain minimum amount (e.g., $50,000 in the case of an individual
or trust), such as the receipt or accrual of interest or a sale, exchange, retirement or other taxable disposition of a foreign currency note or of foreign currency received in
respect of a foreign currency note. U.S. holders considering the purchase of the notes should consult with their own tax advisors to determine the U.S. federal income tax return
disclosure obligations, if any, with respect to an investment in the notes or the disposition of euro, including any requirement to file IRS Form 8886 (Reportable Transaction Statement).
Medicare Tax on Unearned Income
The Health Care and Reconciliation Act of 2010 requires certain U.S. holders that are individuals, estates or trusts to pay an
additional 3.8% tax on "net investment income," which includes, among other things, interest on and gains from the sale or other taxable disposition of notes. U.S. holders should consult their
tax advisors regarding the application of this tax.
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Information Reporting and Backup Withholding
Information reporting requirements generally will apply to interest on the notes and the proceeds of a sale of a note paid to a
U.S. holder unless the U.S. holder is an exempt recipient (such as a corporation). Backup withholding will apply to those payments if the U.S. holder fails to provide its correct
taxpayer identification number, or certification of exempt status, or if the U.S. holder is notified by the IRS that it has failed to report in full payments of interest and dividend income.
Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a U.S. holder's U.S. federal income tax liability provided the required
information is furnished timely to the IRS.
MATERIAL CANADIAN INCOME TAX CONSIDERATIONS
The following summary describes the principal Canadian federal income tax considerations generally applicable to a purchaser who
acquires notes, including entitlement to all payments thereunder, at the issue price as a beneficial owner pursuant to this offering and who, at all relevant times, for purposes of the application of
the Income Tax Act (Canada) and the Income Tax Regulations (collectively, the "Tax Act"), (1) is not, and is not deemed to be, resident in Canada, (2) deals at arm's length
with us and with any transferee resident (or deemed to be resident) in Canada to whom the purchaser disposes of the notes, (3) does not use or hold the notes in a business carried on in
Canada, and (4) is not a "specified non-resident shareholder" of us for purposes of the Tax Act or a non-resident person not dealing at arm's length with a "specified shareholder"
(within the meaning of Subsection 18(5) of the Tax Act) of us, (a "Holder"). Special rules, which are not discussed in this summary, may apply to a non-Canadian holder that is an insurer
that carries on an insurance business in Canada and elsewhere. This summary assumes that no interest paid on the notes will be in respect of a debt or other obligation to pay an amount to a person
with whom we do no deal at arm's length within the meaning of the Tax Act.
This
summary is based on the current provisions of the Tax Act and on our understanding of the current administrative policies and assessing practices of the Canada Revenue Agency
published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada)
prior to the date hereof (the"Proposed Amendments") and assumes that all Proposed Amendments will be enacted in the form proposed. However, no assurances can be given that the Proposed Amendments will
be enacted as proposed, or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative policy or assessing practice whether by legislative,
administrative or judicial action nor does it take into account tax legislation or considerations of any province, territory or foreign jurisdiction, which may differ from those discussed herein.
This summary is of a general nature only and is not, and is not intended to be, legal or tax advice to any particular holder. This summary is not exhaustive of
all Canadian federal income tax considerations. Accordingly, prospective purchasers of notes should consult their own tax advisors having regard to their own particular
circumstances.
No
Canadian withholding tax will apply to interest, principal or premium paid or credited to a Holder by us on a note or to the proceeds received by a Holder on the disposition of a note
including a redemption, repurchase or payment on maturity.
No
other tax on income or gains will be payable by a Holder on interest, principal or premium on a note or on the proceeds received by a Holder on the disposition of a note including a
redemption, repurchase or payment on maturity.
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UNDERWRITING
We intend to offer the notes through the underwriters. BNP Paribas, Merrill Lynch International, ING Bank N.V. and Citigroup
Global Markets Limited are acting as representatives of the underwriters named below. Subject to the terms and conditions contained in an underwriting agreement, dated the date of this prospectus
supplement, among us and the underwriters, we have agreed to sell to the underwriters and the underwriters severally have agreed to purchase from us, the principal amount of the notes listed opposite
their names below:
|
|
|
|
|
Underwriter
|
|
Principal
Amount
of Notes
|
|
BNP Paribas
|
|
€
|
136,500,000
|
|
Merrill Lynch International
|
|
|
136,500,000
|
|
ING Bank N.V.
|
|
|
84,000,000
|
|
Citigroup Global Markets Limited
|
|
|
51,000,000
|
|
CIBC World Markets plc
|
|
|
19,800,000
|
|
MUFG Securities EMEA plc
|
|
|
19,800,000
|
|
RBC Europe Limited
|
|
|
19,800,000
|
|
Scotiabank Europe plc
|
|
|
19,800,000
|
|
TD Securities (USA) LLC
|
|
|
19,800,000
|
|
Banco Santander, S.A.
|
|
|
15,000,000
|
|
Bank of Montreal, London Branch
|
|
|
15,000,000
|
|
Commerzbank Aktiengesellschaft
|
|
|
15,000,000
|
|
HSBC Bank plc
|
|
|
15,000,000
|
|
J.P. Morgan Securities plc
|
|
|
15,000,000
|
|
ICBC Standard Bank Plc
|
|
|
9,000,000
|
|
Raiffeisen Bank International AG
|
|
|
9,000,000
|
|
|
|
|
|
|
Total
|
|
€
|
600,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
underwriters have agreed to purchase all of the notes sold pursuant to the underwriting agreement if any of the notes are purchased. If an underwriter defaults, the underwriting
agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated.
We
have agreed to indemnify the several underwriters and their controlling persons against certain liabilities, including liabilities under the Securities Act, or to contribute to
payments the underwriters may be required to make in respect of those liabilities.
The
underwriters are offering the notes, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the
validity of the notes, and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer's certificates and legal opinions. The underwriting agreement
provides that the obligations of the underwriters to purchase the notes included in this offering may be terminated at their discretion if there is a material adverse change in the financial markets
which makes it impracticable to proceed with the offering and may also be terminated upon the occurrence of certain stated events. The underwriters reserve the right to withdraw, cancel or modify
offers to the public and to reject orders in whole or in part. The offering price and the other terms of the notes have been determined by negotiation between us and the underwriters.
We
have agreed that, until settlement of this notes offering, we will not, without the prior written consent of BNP Paribas, Merrill Lynch International, ING Bank N.V. and
Citigroup Global Markets Limited, offer, sell, or contract to sell, or otherwise dispose of, directly or indirectly, or announce the
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offering
of, any debt securities similar to the notes issued or guaranteed by us. BNP Paribas, Merrill Lynch International, ING Bank N.V. and Citigroup Global Markets Limited in their sole
discretion may release any of the securities subject to these lock-up agreements at any time without notice.
BNP
Paribas, Merrill Lynch International, ING Bank N.V., Citigroup Global Markets Limited, CIBC World Markets plc, MUFG Securities EMEA plc, RBC Europe
Limited, Scotiabank Europe plc, Banco Santander, S.A., Bank of Montreal, London Branch, Commerzbank Aktiengesellschaft, HSBC Bank plc, J.P. Morgan Securities plc, ICBC
Standard Bank Plc and Raiffeisen Bank International AG are not U.S. registered broker-dealers, and will not effect any offers or sales of any notes in the United States unless it
is through their respective U.S. registered broker-dealer affiliates, BNP Paribas Securities Corp., Merrill Lynch, Pierce, Fenner & Smith Incorporated, ING Financial Markets LLC,
Citigroup Global Markets Inc., CIBC World Markets Corp., MUFG Securities Americas Inc., RBC Capital Markets, LLC, Scotia Capital (USA) Inc., Santander Investment
Securities Inc., BMO Capital Markets Corp., Commerz Markets LLC, HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and RB International Markets
(USA) LLC.
ICBC
Standard Bank Plc is restricted in its U.S. securities dealings under the United States Bank Holding Company Act and may not underwrite, subscribe, agree to purchase or
procure purchasers to purchase notes that are offered or sold in the United States. Accordingly, ICBC Standard Bank Plc shall not be obligated to, and shall not, underwrite, subscribe, agree to
purchase or procure purchasers to purchase notes that may be offered or sold by other underwriters in the United States. ICBC Standard Bank Plc shall offer and sell the notes constituting part
of its allotment solely outside the United States.
Commissions
The underwriters have advised us that they propose to initially offer the notes at the price indicated on the cover of this prospectus
supplement plus accrued interest from the original issue date of such notes, if any, and may offer notes to dealers at such prices less a concession not in excess of 0.250% of the principal amount of
the notes. The underwriters may allow, and dealers may reallow, a concession not in excess of 0.150% of the principal amount of the notes on sales to other dealers.
After
the initial offering of the notes, the public offering price, selling concessions and reallowances or any other term of the offering may be changed.
The
expenses of the offering, not including the underwriting commission, are estimated to be $1.45 million and are payable by us.
New Issue of Notes
The notes are a new issue of securities with no established trading market. Although we intend to apply to list the notes on the
New York Stock Exchange, no assurance can be given that we will be able to list the notes. We have been advised by the underwriters that they presently intend to make a market in the notes
after completion of the offering. However, they are under no obligation to do so and may discontinue any market-making activities at any time without any notice. Even if the notes are listed on the
New York Stock Exchange, we cannot assure the liquidity of the trading market for the notes or that an active public market for the notes will develop. If an active public trading market for
the notes does not develop, the market price and liquidity of the notes may be adversely affected. If the notes are traded, they may trade at a discount from their initial public offering price,
depending on prevailing interest rates, the market for similar securities, our performance and other factors.
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Settlement
It is expected that delivery of the notes will be made against payment therefor on or about September 25, 2017, which will be
the fifth London business day following the date of pricing of the notes (this settlement cycle being referred to as "T+5"). Under E.U. Central Securities Depositaries Regulation, trades in the
secondary market generally are required to settle in two London business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade notes on the
date of pricing or the next two succeeding London business days will be required, by virtue of the fact that the notes initially will settle in T+5, to specify an alternate settlement cycle at the
time of any such trade to prevent a failed settlement.
Price Stabilization and Short Positions
In connection with this offering of the notes, Merrill Lynch International, in its role as stabilizing manager (the "Stabilizing
Manager") for its own account may, to the extent permitted by applicable laws and directives, 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 Stabilizing Manager (or persons acting on behalf of the Stabilizing Manager) will undertake any
stabilization action. Any stabilization action may begin on or after the date on which adequate public disclosure of the final terms of the offer of the 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 issuance of the notes and 60 days after the date of the allotment of the notes. Any stabilization action or
overallotment commenced will be carried out in accordance with applicable laws and regulations.
The
underwriters may purchase and sell notes in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of notes than they are required to purchase in the offering. Any of these activities may stabilize or maintain the market
price of the notes above independent market levels. The underwriters are not required to engage in any of these activities, and may end any of them at any time.
Other Relationships
The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may
include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Some
of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us and our
affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.
In
addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities
activities may involve securities and/or instruments of ours or our affiliates. Certain of the underwriters or their affiliates that have a lending relationship with us routinely hedge their credit
exposure to us consistent with their customary risk management policies. Typically, such underwriters and their affiliates would hedge such exposure by entering into transactions which consist of
either the purchase of credit default swaps or the creation of short positions in our securities, including potentially the notes offered hereby. Any such credit default swaps or short positions could
adversely affect future trading prices of the notes offered hereby. The underwriters and their affiliates may also make investment recommendations and/or publish or express
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independent
research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and
instruments.
Each
of BNP Paribas, Merrill Lynch International, ING Bank N.V., Citigroup Global Markets Limited, CIBC World Markets plc, MUFG Securities EMEA plc,
RBC Europe Limited, Scotiabank Europe plc, TD Securities (USA) LLC, Banco Santander, S.A., Bank of Montreal, London Branch, Commerzbank Aktiengesellschaft, J.P. Morgan
Securities plc, ICBC Standard Bank Plc and Raiffeisen Bank International AG are affiliates of banks which are members of a syndicate of lenders that has made available to us a
$2.75 billion unsecured revolving credit facility. Consequently, we may be considered to be a "connected issuer" of each of these underwriters under Canadian securities laws. As at
June 30, 2017, approximately $53 million was outstanding under such credit facility. Our credit facility also acts as a backstop to our commercial paper programs, on a dollar for dollar
basis, which further reduced availability under the credit facility by $821 million, as at June 30, 2017. We are in compliance with the terms of, and the lenders have not waived any
breach of, the agreements governing the credit facility since their respective dates of execution. The decision to distribute the notes, including the
determination of the terms of this offering, has been made through negotiations between us and the underwriters. The affiliated lenders of the underwriters did not have any involvement in that
decision or determination. Our financial position has not changed substantially and adversely since the indebtedness under the credit facility was incurred. The proceeds of the offering will not be
applied for the benefit of the underwriters or their affiliates.
This
prospectus supplement does not qualify the distribution of the notes for sale in the Province of Ontario or any of the other provinces or territories of Canada. Any sales of notes
in any province or territory of Canada may only be made pursuant to an exemption from the prospectus requirements of Canadian securities laws.
Selling Restrictions
This prospectus supplement has been prepared on the basis that any offer of the notes in any Member State of the European Economic Area
will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of the notes.
In
relation to each member state of the EEA (each, a "Relevant Member State"), each underwriter has represented and agreed that it has not made and will not make an offer of notes which
are the subject of the offering contemplated by this prospectus supplement to the public in that Relevant Member State other than:
-
(a)
-
to
any legal entity which is a qualified investor as defined in the Prospectus Directive;
-
(b)
-
to
fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus
Directive, subject to obtaining the prior consent of the relevant underwriter or underwriters nominated by the issuer for any such offer; or
-
(c)
-
in
any other circumstances falling within Article 3(2) of the Prospectus Directive; provided that no such offer of the notes shall require the
publication by the issuer or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospective
Directive other than in reliance of Article 3(2)(b).
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 for the notes, as the same may be varied in that
Relevant Member
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State
and the expression "Prospectus Directive" means Directive 2003/71/EC (as amended, including by Directive 2010/73/EU), and includes any relevant implementing measure in the Relevant
Member State.
This prospectus supplement and any other material in relation to the notes described herein is for distribution only to persons who
(i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005
(as amended, the "Financial Promotion Order"), (ii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc.") of the
Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of
section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated
(all such persons together being referred to as "relevant persons"). This prospectus supplement and any other material in relation to the notes described herein is directed only at relevant
persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is available only to relevant persons and
will be engaged in only with relevant persons.
Each
underwriter has represented and agreed that:
-
(a)
-
it
has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in
investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 ("FSMA")) received by it in connection with the issue or sale of the notes in circumstances
in which Section 21(1) of the FSMA does not apply to us;
-
(b)
-
it
has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the notes in, from or
otherwise involving the United Kingdom.
The notes may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not
constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities and
Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the
Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the notes may be issued or may be in the possession of any person for the purpose of issue
(in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so
under the laws of Hong Kong) other than with respect to notes which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of
the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
The notes have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25
of 1948, as amended) and, accordingly, each of the underwriters, on behalf of itself and each of its affiliates that participates in the initial distribution of the notes, has undertaken that it has
not offered or sold and will not offer or sell any notes, directly or indirectly, in Japan or to, or for the benefit of, any Japanese Person (as defined below) or to others for re-offering or
resale,
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directly
or indirectly, in Japan or to, or for the benefit of, any Japanese Person except pursuant to an exemption from the registration requirements of the Financial Instruments and Exchange Law of
Japan (Law No. 25 of 1948, as amended), and under circumstances which will result in compliance with all applicable laws, regulations and guidelines promulgated by the relevant Japanese
governmental and regulatory authorities and in effect at the relevant time. For the purposes of this paragraph, "Japanese Person" shall mean any person resident in Japan, including any corporation or
other entity organized under the laws of Japan.
This prospectus supplement has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this
prospectus supplement and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the notes may not be circulated or distributed, nor may
the notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional
investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person pursuant to Section 275(1), or any
person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions
of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.
Where
the notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
-
(a)
-
a
corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments
and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
-
(b)
-
a
trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who
is an accredited investor,
shares,
debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months after
that corporation or that trust has acquired the notes pursuant to an offer made under Section 275 of the SFA except:
-
(a)
-
to
an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the
SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are
acquired at a consideration of not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities
or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA;
-
(b)
-
where
no consideration is or will be given for the transfer; or
-
(c)
-
where
the transfer is by operation of law.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Osler, Hoskin & Harcourt LLP, Toronto, Ontario, with respect
to matters of Canadian federal and Ontario laws. The validity of the notes will be passed upon for the Company by Sidley Austin LLP, New York, New York. The underwriters have been
represented by Shearman & Sterling LLP, New York, New York with respect to United States legal matters.
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INDEPENDENT AUDITORS
The consolidated financial statements as at December 31, 2016 and 2015, and for each of the two years in the period ended
December 31, 2016, incorporated by reference in this prospectus supplement and the accompanying prospectus, and the effectiveness of the Company's internal control over financial reporting,
have been audited by Deloitte LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference. Such consolidated financial
statements have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. Deloitte LLP is independent with respect to the
Company in accordance with the Rules of Professional Conduct of the Chartered Professional Accountants of Ontario, and within the meaning of the Exchange Act and the applicable rules and regulations
thereunder adopted by the SEC and the Public Company Accounting Oversight Board (United States).
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No securities regulatory authority has expressed an opinion about these securities and it is an offense to claim otherwise.
This short form prospectus has been filed under legislation in the Province of Ontario that permits certain information about these securities to be
determined after this prospectus has become final and that permits the omission from this prospectus of that information. The legislation requires the delivery to purchasers of a prospectus supplement
containing the omitted information within a specified period of time after agreeing to purchase any of these securities.
This short form base shelf prospectus and each document deemed to be incorporated by reference herein constitutes a public offering of these securities only in those
jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities.
Information has been incorporated by reference in this short form base shelf prospectus from documents filed with the Ontario Securities Commission.
Copies of the documents incorporated herein by
reference may be obtained on request without charge from the Corporate Secretary of Magna International Inc. at 337 Magna Drive, Aurora,
Ontario, Canada L4G 7K1, telephone: (905) 726-2462, and are also available electronically at www.sedar.com.
SHORT FORM BASE SHELF PROSPECTUS
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New Issue
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August 24, 2017
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MAGNA INTERNATIONAL INC.
U.S. $2,000,000,000
Senior Debt Securities
We intend to offer from time to time senior debt securities (which we refer to in this prospectus as the "debt securities") in one or more series with a total offering price
not to exceed U.S. $2,000,000,000 (or the U.S. dollar equivalent thereof if any of the debt securities are denominated in a currency or a currency unit other than U.S. dollars)
during the 25-month period that this prospectus, including any amendments thereto, remains valid.
All
information omitted from this short form base shelf prospectus will be contained in one or more prospectus supplements that will be delivered to purchasers together with this prospectus. You
should read this prospectus and the applicable supplement carefully before you invest. Any such supplement to this prospectus will be incorporated by reference into this prospectus as of the date of
the supplement, but only for the purposes of the offering of debt securities to which the supplement relates.
We
may sell the debt securities to or through one or more underwriters, dealers or agents. The names of the underwriters, dealers or agents will be set forth in supplements to this prospectus.
The
debt securities will constitute our senior unsecured obligations and will rank equally with all our other existing and future senior unsecured obligations.
We are permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this prospectus in accordance with the disclosure requirements
of Canada. Prospective investors should be aware that such requirements are different from those of the United States.
Prospective investors should be aware that the acquisition of the debt securities described herein may have tax consequences both in the United States and in Canada.
Such consequences for investors who are resident in, or citizens of, the United States may not be described fully herein.
The enforcement by investors of civil liabilities under United States federal securities laws may be affected adversely by the fact that we are an Ontario corporation, a
majority of our assets are located outside of the United States and a majority of our directors and officers and some of the experts named in this prospectus are resident outside of the
United States and a majority of their assets are located outside of the United States.
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These securities have not been approved or disapproved by the U.S. Securities and Exchange Commission (the "SEC") or any U.S. state securities regulator
nor has the SEC or any U.S. state securities regulator passed upon the accuracy or adequacy of this prospectus or any applicable prospectus supplement. Any representation to the contrary is a
criminal offense.
This
prospectus does not qualify for issuance debt securities in respect of which the payment of principal and/or interest may be determined, in whole or in part, by reference to one or more
underlying interests, including, for example, an equity or debt security, a statistical measure of economic or financial performance including, but not limited to, any currency, consumer price or
mortgage index, or the price or value of one or more commodities, indices or other items, or any other item or formula, or any combination or basket of the foregoing items. For greater certainty, this
prospectus may qualify for issuance debt securities in respect of which the payment of principal and/or interest may be determined, in whole or in part, by reference to published rates of a central
banking authority or one or more financial institutions, such as a prime rate or a bankers' acceptance rate, or to recognized market benchmark interest rates such as LIBOR.
There is no market through which the debt securities may be sold and purchasers may not be able to resell debt securities purchased under this prospectus. This may affect the
pricing of the debt securities in the secondary market, the transparency and availability of trading prices, the liquidity of the debt securities, and the extent of issuer regulation. See "Plan of
Distribution".
All
amounts referred to in this prospectus and in the documents incorporated by reference are presented in U.S. dollars, in each case, unless otherwise stated.
The
head and registered office of Magna International Inc. is located at 337 Magna Drive, Aurora, Ontario, Canada L4G 7K1.
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FORWARD-LOOKING STATEMENTS
This prospectus, including those documents incorporated by reference, may contain forward-looking information or forward-looking statements
(collectively, "forward-looking statements") within the meaning of applicable securities legislation (including within the meaning of the
Securities Act
(Ontario) and within the meaning Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act")).
These forward-looking statements include, but are not limited to, statements relating to: our use of proceeds of any offering of debt securities under this prospectus or supplement thereto;
implementation of our business and capital strategy; future returns of capital to our shareholders, including through dividends and share repurchases; growth prospects of our business, including
through organic growth, acquisitions and joint ventures; and estimates of future environmental clean-up and remediation costs. The forward-looking information in this prospectus and in the documents
incorporated by reference herein is presented for the purpose of providing information about management's current expectations and plans and such information may not be appropriate for other purposes.
Forward- looking statements may include financial and other projections, as well as statements regarding our future plans, objectives
or economic performance, or the assumptions underlying any of the foregoing, and other statements that are not recitations of historical fact. We use words such as "may", "would", "could", "should",
"will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "outlook", "project", "estimate" and similar expressions suggesting future outcomes or events to identify
forward-looking statements. Any such forward-looking statements are based on information currently available to us, and are based on assumptions and analyses made by us in light of our experience and
our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. However, whether actual results and
developments will conform with our expectations and predictions is subject to a number of risks, assumptions and uncertainties, many of which are beyond our control, and the effects of which can be
difficult to predict, including, without limitation:
-
-
the potential for a deterioration of economic conditions or an extended period of economic uncertainty;
-
-
a decline in consumer confidence, which would typically result in lower production volume levels;
-
-
the growth of protectionism and the implementation of measures that impede the free movement of goods, services, people and capital;
-
-
planning risks created by rapidly changing economic or political conditions;
-
-
fluctuations in relative currency values;
-
-
legal claims and/or regulatory actions against us;
-
-
our ability to successfully launch material new or takeover business;
-
-
underperformance of one or more of our operating Divisions;
-
-
ongoing pricing pressures, including our ability to offset price concessions demanded by our customers;
-
-
warranty and recall costs;
-
-
our ability to successfully identify, complete and integrate acquisitions or achieve anticipated synergies;
-
-
our ability to conduct appropriate due diligence on acquisition targets;
-
-
an increase in our risk profile as a result of completed acquisitions;
-
-
scheduled shutdowns of our customers' production facilities (typically in the third and fourth quarters of each calendar year);
-
-
the termination or non-renewal by our customers of any material production purchase order;
-
-
exposure to, and ability to offset, commodities price increases;
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-
restructuring actions by OEMs, including plant closures;
-
-
work stoppages and labour relations disputes;
-
-
risk of production disruptions due to natural disasters or catastrophic event;
-
-
the security and reliability of our information technology systems;
-
-
pension liabilities;
-
-
changes in our mix of earnings between jurisdictions with lower tax rates and those with higher tax rates, as well as our ability to fully
benefit tax losses;
-
-
shifts in market share away from our top customers;
-
-
shifts in market shares among vehicles or vehicle segments, or shifts away from vehicles on which we have significant content;
-
-
inability to sustain or grow our business;
-
-
risks of conducting business in foreign markets, including China, India, Eastern Europe, Brazil and other markets outside of North America and
Western Europe;
-
-
our ability to successfully compete with other automotive suppliers, including disruptive technology innovators which are entering or expanding
in the automotive industry;
-
-
our ability to consistently develop innovative products or processes;
-
-
our changing risk profile due to the increasing importance to us of product areas such as powertrain and electronics;
-
-
restructuring, downsizing and/or other significant non-recurring costs;
-
-
a reduction in outsourcing by our customers or the loss of a material production or assembly program;
-
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a prolonged disruption in the supply of components to us from our suppliers;
-
-
shutdown of our or our customers' or sub-suppliers' production facilities due to a labour disruption;
-
-
impairment charges related to goodwill, long-lived assets and deferred tax assets;
-
-
other potential tax exposures;
-
-
changes in credit ratings assigned to us;
-
-
changes in laws and governmental regulations, including tax and transfer pricing laws;
-
-
costs associated with compliance with environmental laws and regulations;
-
-
liquidity risks;
-
-
inability to achieve future investment returns that equal or exceed past returns;
-
-
a reduction or suspension of our dividend;
-
-
the unpredictability of, and fluctuation in, the trading price of our common shares; and
-
-
other factors set out in our most recent Annual Information Form filed with securities commissions in Canada and our most recent Annual Report
on Form 40-F filed with the SEC, and subsequent filings.
In
evaluating forward-looking statements, we caution readers not to place undue reliance on any forward-looking statements and readers should specifically consider the various factors
which could cause actual events or results to differ materially from those indicated by such forward-looking statements. Unless otherwise required by applicable securities laws, we do not intend, nor
do we
undertake any obligation, to update or revise any forward-looking statements to reflect subsequent information, events, results or circumstances or otherwise.
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DOCUMENTS INCORPORATED BY REFERENCE
The following documents with respect to Magna International Inc. (which we refer to in the prospectus as the "Company"), filed with the
various securities commissions or similar authorities in each of the provinces and territories of Canada, are specifically incorporated by reference in and form an integral part of this
prospectus:
-
(a)
-
our
Annual Information Form for the year ended December 31, 2016, dated March 28, 2017;
-
(b)
-
our
Audited Consolidated Financial Statements as at December 31, 2016 and 2015 and for each of the years in the two year periods ended December 31,
2016, together with the notes thereto and the auditors' report thereon;
-
(c)
-
Management's
Discussion and Analysis of our results of operations and financial position for the year ended December 31, 2016;
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(d)
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our
Unaudited Interim Consolidated Financial Statements for the three-month and six-month periods ended June 30, 2017, together with the notes thereto;
-
(e)
-
Management's
Discussion and Analysis of our results of operations and financial position for the three-month and six-month periods ended June 30,
2017; and
-
(f)
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our
Management Proxy Circular in connection with the annual meeting of our shareholders held on May 11, 2017.
Any
documents of the type referred to above, any annual information form, annual or interim financial statements and annual or interim management's discussion and analysis relating
thereto, management proxy circular and any material change reports (excluding confidential material change reports) or business acquisition reports, all as filed by the Company with the various
securities commissions or similar authorities in Canada pursuant to the requirements of applicable securities legislation after the date of this prospectus and prior to the termination of the offering
of the debt securities under any prospectus supplement to which this prospectus relates, shall be deemed to be incorporated by reference into this prospectus. Any such documents of the type referred
to in the preceding sentence incorporated by reference in this prospectus contained in reports on Form 40-F or Form 6-K which we file with or furnish to the SEC after the date of this
prospectus and prior to the termination of the offering of the debt securities to which this prospectus relates shall be deemed to be incorporated by reference into this prospectus and as an exhibit
to the Registration Statement on Form F-10 of which this prospectus forms a part. In addition, any other documents contained in reports on Form 6-K, if and to the extent
expressly provided in such reports on Form 6-K, which we furnish to the SEC after the date of this prospectus and prior to the termination of the offering of the debt securities to which this
prospectus relates shall be deemed to be incorporated as an exhibit to the Registration Statement on Form F-10 of which this prospectus forms a part.
Any
statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of
this prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes
such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies
or supersedes. The making of a modifying or superseding statement is not to be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the
circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus. Copies of the documents
incorporated by reference herein may be obtained on request without charge from the Corporate
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Secretary
of Magna International Inc. at 337 Magna Drive, Aurora, Ontario, Canada L4G 7K1, telephone: (905) 726-2462, and are also available electronically at
www.sedar.com.
A
prospectus supplement containing the specific terms of any offering of debt securities will be delivered to purchasers of such debt securities together with this prospectus and will be
deemed to be incorporated by reference in this prospectus as of the date of the prospectus supplement solely for the purposes of the offering of the debt securities covered by that prospectus
supplement unless otherwise expressly provided therein.
Upon
a new annual information form and the related annual financial statements and accompanying management's discussion and analysis being filed by the Company with and, where required,
accepted by, the applicable securities commissions or similar authorities in Canada during the term of this prospectus, the previous annual information form, the previous annual financial statements
and accompanying management's discussion and analysis and all interim financial statements and accompanying management's discussion and analysis, and all material change reports and business
acquisition reports filed by the Company prior to the commencement of the then current fiscal year, shall be deemed no longer to be incorporated into this prospectus for purposes of future offers and
sales of debt securities hereunder. Upon an interim financial statement and accompanying management's discussion and analysis being filed by the Company with and, where required, accepted by, the
applicable securities commissions or similar authorities in Canada during the currency of this prospectus, all interim financial statements and accompanying management's discussion and analysis filed
prior to the new interim financial statements shall be deemed no longer to be incorporated into this prospectus for purposes of future offers and sales of debt securities hereunder. Upon a new
management proxy circular relating to an annual meeting of shareholders of the Company being filed by the Company with and, where required, accepted by, the applicable securities commissions or
similar authorities in Canada during the term of this prospectus, the management proxy circular for the preceding annual meeting of shareholders of the Company shall be deemed no longer to be
incorporated by reference into this prospectus for purposes of future offers and sales of debt securities hereunder.
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AVAILABLE INFORMATION
In addition to the continuous disclosure obligations under the securities laws of the provinces and territories of Canada, we are subject to the
informational reporting requirements of the Exchange Act, and in accordance therewith file reports and other information with the SEC. Such reports and other information filed by us may be inspected
and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Prospective investors may call the SEC at 1-800-SEC-0330 for
further information regarding the public reference facilities. The SEC also maintains a website, at www.sec.gov, that contains reports and other information filed by us with the SEC. Our common shares
are listed on the Toronto Stock Exchange and the New York Stock Exchange and reports and other information concerning us may be inspected at the offices of the New York Stock Exchange,
20 Broad Street, New York, NY 10005.
We
have filed with the SEC a registration statement of which this prospectus forms a part on Form F-10 under the U.S. Securities Act of 1933, as amended
(the "Securities Act"), with respect to the debt
securities. This prospectus does not contain all of the information set forth in the registration statement, certain parts of which are omitted in accordance with the rules and regulations of the SEC.
For further information with respect to us and the debt securities, reference is made to the registration statement and the exhibits thereto, which will be publicly available as described in the
preceding paragraph.
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ABOUT MAGNA INTERNATIONAL INC.
We are a leading global automotive supplier with 327 manufacturing operations and 100 product development, engineering and sales
centres in 29 countries. Our over 161,000 employees are focused on delivering superior value to our customers through innovative products and processes built on World Class
Manufacturing. We have complete vehicle engineering and contract manufacturing expertise, as well as product capabilities which include:
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Body
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Active Driver Assistance
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Chassis
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Vision
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Exterior
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Closures
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Seating
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Roof
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Powertrain
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We
also have electronic and software capabilities across many of these areas.
Our
registered and head office is located at 337 Magna Drive, Aurora, Ontario, Canada L4G 7K1. Our common shares are listed and posted for trading on the Toronto Stock
Exchange under the trading symbol "MG", and on the New York Stock Exchange under the trading symbol "MGA".
Additional
information regarding the Company is incorporated by reference into this prospectus. See "Documents Incorporated by Reference".
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RISK FACTORS
An investment in the debt securities is subject to various risks. From time to time, the market experiences significant price and volume
volatility that may affect the market price of our debt securities for reasons unrelated to our performance. Additionally, the debt securities are subject to market value fluctuations based upon
factors which influence our operations, such as legislative or regulatory developments, competition, technological change and global capital market activity and based upon our performance and
financial results and perceptions of our creditworthiness.
Before
deciding whether to invest in any debt securities, investors should consider carefully the risks set out herein and incorporated by reference in this prospectus (including
subsequently filed documents incorporated by reference) and, if applicable, those described in a prospectus supplement relating to a specific offering of debt securities. Prospective investors should
consider the categories of risks identified and discussed in the Annual Information Form and Management's Discussion and Analysis of the Company incorporated herein by reference.
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USE OF PROCEEDS
Unless otherwise specified in a prospectus supplement, the net proceeds to us from the sale of the debt securities will be added to our general
funds and utilized for general corporate purposes.
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DESCRIPTION OF THE DEBT SECURITIES
The following description of the debt securities sets forth the material terms and provisions of the debt securities to which any prospectus
supplement may relate. The particular terms of the debt securities offered by any prospectus supplement and the extent, if any, to which the provisions described in this prospectus may apply to the
offered debt securities will be described in the prospectus supplement relating to the offered debt securities. As used in this section, the terms "we," "us," "our," "Magna International" and the
"Company" refer to Magna International Inc., a corporation incorporated under the laws of the Province of Ontario, Canada, and not any of its subsidiaries, unless the context
otherwise requires.
The
debt securities will be issued under an indenture between Magna International and The Bank of New York Mellon (the "trustee"), a form of which has been filed as an
exhibit to the registration statement of which this prospectus is a part. The indenture relating to the debt securities, as amended or otherwise supplemented by any supplemental indentures, is
referred to in this prospectus as the indenture.
The
following summaries of the material provisions of the indenture and the debt securities do not purport to be complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of the indenture, including the definitions of specified terms used in the indenture, and the debt securities. Wherever particular articles, sections or defined terms
of an indenture are referred to, it is intended that those articles, sections or defined terms will be incorporated herein by reference, and the statement in connection with which reference is made is
qualified in its entirety by the article, section or defined term in the indenture.
General
The indenture does not limit the amount of debt, either secured or unsecured, which we may issue under the indenture or otherwise. The debt
securities may be issued in one or more series with the same or various maturities and may be sold at par, at a premium to par or at a discount to par. We have the right to "reopen" a previous issue
of a series of debt by issuing additional debt securities of such series.
We
conduct a substantial portion of our operations through our subsidiaries. Our right, and hence the rights of our creditors and shareholders, to participate in any distribution of
assets of any of our subsidiaries upon its liquidation or reorganization or otherwise and the ability of a holder of debt securities to benefit as our creditor from any distribution are subject to
prior claims of the creditors of the subsidiary, except to the extent that any claim of ours as a creditor of the subsidiary may be recognized. Accordingly, the debt securities will be structurally
subordinated to the prior claims of the creditors of our subsidiaries. The debt securities will also effectively rank junior in right of payment to any of our secured debt.
The
prospectus supplement relating to the particular series of debt securities offered thereby will describe the following terms of the offered
debt securities:
-
-
the title of the offered debt securities;
-
-
any limit upon the aggregate principal amount of the offered debt securities;
-
-
the date or dates (or the manner of calculating the date or dates) on which the principal of the offered debt securities
is payable;
-
-
the rate or rates (or the manner of calculating the rate or rates) at which the offered debt securities shall bear interest, if any, the
date or dates from which such interest shall accrue, the interest payment dates on which such interest shall be payable and the regular record date for the interest payable on any interest
payment date;
-
-
the place or places where the principal of and premium, if any, and interest, if any, on the offered debt securities will be payable;
-
-
the period or periods within which, the price or prices at which, the currency or currency units in which, and the terms and conditions upon
which the offered debt securities may be redeemed, in whole or in part, at our option;
-
-
our obligation, if any, to redeem or purchase the offered debt securities pursuant to any sinking fund or analogous provisions or at the option
of a holder thereof and the period or periods within which, the price or prices in the currency at which, the currency or currency units in which, and the terms and conditions upon which the offered
debt securities shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
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-
-
the denominations in which the offered debt securities shall be issuable if other than denominations of $1,000 and any integral multiple
thereof;
-
-
if other than the currency of the United States of America, the currencies in which payments of interest or principal of
(and premium, if any, with respect to) the offered debt securities are to be made;
-
-
if the interest on or principal of (or premium, if any, with respect to) the offered debt securities are to be payable, at our election
or at the election of a holder thereof or otherwise, in a currency other than that in which such debt securities are payable, the period or periods within which, and the other terms and conditions
upon which, such election may be made, and the time and manner of determining the exchange rate between the currency in such debt securities are denominated or stated to be payable and the currency in
which such debt securities or any of them are to be so payable;
-
-
the extent to which any offered debt securities will be issuable in permanent global form, the manner in which any payments on a permanent
global debt security will be made, and the appointment of any depository relating thereto;
-
-
the applicability of specified provisions relating to discharge and defeasance described in this prospectus with respect to the offered debt
securities;
-
-
any deletions from, modifications of or additions to the events of default or covenants with respect to the offered debt securities of such
series, whether or not such events of default or covenants are consistent with the events of default or covenants set forth herein; and
-
-
any other terms of the series (which terms shall not be inconsistent with the provisions of the related indenture).
Unless otherwise indicated in any prospectus supplement, principal of and premium, if any, and interest, if any, on the offered debt securities
will be payable, and transfers of the offered debt securities will be registrable, at the corporate trust office of the trustee. Alternatively, at our option, payment of interest may be made by check
mailed to the address of the person entitled thereto as it appears in the debt security register.
Denominations, Registration and Transfer
Unless otherwise indicated in any prospectus supplement, the offered debt securities will be issued only in fully registered form without
coupons in denominations of $1,000 or any integral multiple of $1,000, or the equivalent in foreign currency. No service charge will be made for any registration of transfer or exchange of offered
debt securities, but we may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with any transfer or exchange.
If
the purchase price of any of the offered debt securities is denominated in a foreign currency or currencies or foreign currency unit or units or if the principal of, premium, if any,
or interest, if any, on any series of offered debt securities is payable in a foreign currency or currencies or foreign currency unit or units, the restrictions, elections, tax consequences, specific
terms and other information with respect to the issue of offered debt securities and the foreign currency or currencies or foreign currency unit or units will be described in the related prospectus
supplement.
We
will not be required to issue, register the transfer of, or exchange debt securities of any series during the period from 15 days prior to the mailing of a notice of redemption
of debt securities of that series to close of business on the date the notice is mailed. We will also not be required to register the transfer of or exchange any debt security so selected for
redemption, except the unredeemed portion of any debt security being redeemed in part.
Payment of Additional Amounts
Unless otherwise specified in the applicable prospectus supplement, all payments made by or on behalf of us under or with respect to the debt
securities shall be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including
penalties, interest and other liabilities related thereto) imposed or levied by or on behalf of the
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Government
of Canada or any province or territory thereof or by any authority or agency therein or thereof having power to tax (hereinafter "Canadian Taxes"), unless we are required to withhold or
deduct Canadian Taxes by law or by the interpretation or administration thereof by the relevant government authority or agency. If we are so required to withhold or deduct any amount for or on account
of Canadian Taxes from
any payment made under or with respect to the debt securities of a series, then, subject to the provisions of the indenture described in the immediately following paragraph, we will pay to each holder
or beneficial owner of debt securities as additional interest such additional amounts ("Additional Amounts") as may be necessary so that the net amount received by each such holder or beneficial owner
after such withholding or deduction (and after deducting any Canadian Taxes on such Additional Amounts) will not be less than the amount such holder or beneficial owner would have received if
such Canadian Taxes had not been withheld or deducted. However, no Additional Amounts will be payable with respect to a payment made to a holder or beneficial owner of debt
securities:
-
(1)
-
with
which we do not deal at arm's length (for the purposes of the
Income Tax Act
(Canada)) at the time
of the making of such payment;
-
(2)
-
which
is subject to such Canadian Taxes by reason of the holder or beneficial owner of debt securities being a resident, domicile or national of, or engaged in
business or maintaining a permanent establishment or other physical presence in or otherwise having some connection with Canada or any province or territory thereof otherwise than by the mere holding
of the debt securities or the receipt of payments thereunder;
-
(3)
-
which
is subject to such Canadian Taxes by reason of the failure of the holder or beneficial owner of the debt securities to comply with any certification,
identification, documentation or other reporting requirements if compliance is required by law, regulation, administrative practice or an applicable treaty as a precondition to exemption from, or a
reduction in the rate of deduction or withholding of, such Canadian Taxes;
-
(4)
-
which
is subject to any estate, inheritance, gift, sales, transfer, capital gains, excise or personal property or similar tax, assessment or governmental charge;
-
(5)
-
which
is subject to any Canadian Taxes that are imposed with respect to any payment on a debt security to any holder or beneficial owner who is a fiduciary,
partnership, limited liability company or any person other than the sole beneficial owner of such payment, to the extent that a beneficiary or settlor with respect to such fiduciary, a member of such
a partnership or limited liability company or the beneficial owner of such payment would not have been entitled to the Additional Amounts had such beneficiary, settlor, member or beneficial owner been
the actual holder or beneficial owner of such debt security;
-
(6)
-
who
is a "specified shareholder" of ours or who does not deal at arm's length with a "specified shareholder" of ours as defined in subsection 18(5) of the
Income Tax Act
(Canada);
-
(7)
-
which
is subject to any tax, assessment, withholding or deduction required by sections 1471 through 1474 of the U.S. Internal Revenue Code of
1986, as amended ("FATCA"), any current or future Treasury Regulations or rulings promulgated thereunder, any law, regulation or other official guidance enacted in any jurisdiction implementing FATCA,
any intergovernmental agreement between the United States and any other jurisdiction to implement FATCA, or any agreement with the U.S. Internal Revenue Service under FATCA; or
-
(8)
-
which
is subject to Canadian Taxes by reason of any combination of (1) through (7) above.
Notwithstanding
the foregoing, in all cases, unless otherwise specified in the applicable prospectus supplement, no Additional Amounts will be payable under the provisions above in
respect of any debt securities in excess of the Additional Amounts which would be required to be paid if, at all relevant times, the holder or beneficial owner of such debt securities were a resident
of the United States for purposes of and was entitled to the benefits of the Canadian-U.S. Income Tax Convention (1980), as amended, including any existing protocols thereto. As a result
of the limitation on the payment of Additional Amounts discussed above, the Additional Amounts received by certain holders or beneficial owners of the debt securities may be less than the amount of
Canadian Taxes withheld or deducted or the amount of Canadian Taxes (and related amounts) levied or imposed giving rise to the obligation to pay the Additional Amounts and, accordingly, the net
amount received by such holders or beneficial owners of the debt securities will be less than the amount such holders or beneficial owners would have received had there been no such withholding or
deduction in respect of Canadian Taxes or had such Canadian Taxes (and related amounts) not been levied or imposed.
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As
soon as practicable after we pay the amount withheld or deducted to the relevant governmental authority in accordance with applicable law, we will provide the trustee with official
receipts or other documentation satisfactory to the trustee evidencing the payment of the Canadian Taxes with respect to which Additional Amounts are paid.
We
will pay any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies that arise from the execution, delivery, enforcement
or registration of the debt securities, the indenture or any other document or instrument in relation thereof, or the receipt of any payments with respect to the debt securities.
Wherever
in this "Description of the Debt Securities" there is mentioned, in any context, the payment of principal (and premium, if any), interest, if any, or any other amount
payable under or with respect to a debt security, such mention will be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were
or would be payable in respect thereof.
The
foregoing obligations will survive termination, defeasance or discharge of the indenture.
Optional Tax Redemption
Unless otherwise specified in the applicable prospectus supplement, we may redeem the debt securities of a series at our option, at any time as
a whole but not in part, at a redemption price equal to the principal amount thereof together with accrued and unpaid interest to the date fixed for redemption, upon the giving of a notice as
described below, if we determine that:
-
(1)
-
as
a result of (A) any change in or amendment to the laws (or any regulations or rulings promulgated thereunder) of Canada or of any political
subdivision or taxing authority thereof or therein affecting taxation, or (B) any change in the official position regarding the application or interpretation of such laws, regulations or
rulings by any legislative body, court, governmental agency or regulatory authority (including a holding by a court of competent jurisdiction), which change or amendment is announced or becomes
effective on or after the date of the prospectus supplement relating to the offer and sale of the debt securities of such series, we have or will become obligated to pay, on the next succeeding date
on which interest is due, Additional Amounts with respect to the debt securities of such series to any holder or beneficial owner thereof; or
-
(2)
-
on
or after the date of the prospectus supplement relating to the offer and sale of the debt securities of such series, any action has been taken by any taxing
authority of, or any decision has been rendered by a court of competent jurisdiction in Canada, including any of those actions specified in (1), whether or not such action was taken or such decision
was rendered with respect to us, or any change, amendment, application or interpretation has been officially proposed, which, in any such case, will result in us becoming obligated to pay, on the next
succeeding date on which interest is due, Additional Amounts with respect to the debt securities of such series,
and,
in any such case, we, in our business judgment, determine that such obligation cannot be avoided by the use of reasonable measures available to us.
In
the event that we elect to redeem the debt securities of such series pursuant to the provisions set forth in the preceding paragraph, we will deliver to the trustee an opinion of
independent legal counsel of recognized standing stating that we would be obligated to pay Additional Amounts as a result of a change in tax laws or regulations or the application or interpretation of
such laws or regulations.
Notice
of intention to redeem the debt securities as described above will be given not more than 60 nor less than 30 days prior to the date fixed for redemption and will
specify the date fixed for redemption.
Merger
The indenture provides that we may not, without the consent of the holders of debt securities, consolidate, amalgamate or merge with or into, or
sell, lease, transfer or convey all or substantially all of our assets to, another person, unless:
-
-
immediately after giving effect to the transaction, no default under the indenture has occurred and is continuing;
-
-
the successor person (if other than us) is organized and existing under the laws of Canada or a province thereof or the
United States or a state thereof or the District of Columbia; and
-
-
the successor person (if other than us) expressly assumes the due and punctual payment of the principal of and premium, if any, and
interest on all debt securities, according to their tenor, and the due and punctual performance and observance of all the covenants and conditions of the indenture to be performed by us.
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In
addition, we must provide to the trustee an opinion of legal counsel that any such transaction and any assumption by a successor person complies with the applicable provisions of the
indenture and that we have complied with all conditions precedent provided in the indenture relating to such transaction.
Other
than the covenant described above, or as set forth in any accompanying prospectus supplement, the indenture does not contain any covenants or other provisions designed to afford
holders of the debt securities protection in the event of a takeover, recapitalization or a highly-leveraged transaction of or involving us.
Modification of the Indenture
With the consent of the holders of more than 50% in aggregate principal amount of any series of debt securities then outstanding under the
indenture, modifications and alterations of the terms of the indenture may be made by us and the trustee which affect the rights of the holders of that series of debt securities. However, no
modification or alteration may, without the consent of all holders of any series of debt securities then outstanding affected thereby:
-
-
extend the fixed maturity of any debt security of that series;
-
-
reduce the rate or extend the time of payment of interest of any debt security of that series;
-
-
reduce the principal amount of any debt security of that series or any premium thereon;
-
-
change the place of payment or make the principal thereof or interest or premium thereon payable in any coin or currency other than that
provided in the debt securities of that series;
-
-
reduce the percentage of debt securities of that series, the holders of which are required to
consent to:
-
-
any supplemental indenture;
-
-
rescind and annul a declaration that the debt securities of that series are due and payable as a result of the occurrence of an event
of default;
-
-
waive any past default under the indenture and its consequences; and
-
-
waive compliance with other specified provisions of the indenture.
The
holders of more than 50% in aggregate principal amount of the debt securities of each series then outstanding may waive our compliance with some of the restrictive provisions of the
indenture applicable to the debt securities of such series, which may include covenants, if any, which are specified in the applicable prospectus supplement. In addition, as described under
"Events of Default" below, holders of more than 50% in aggregate principal amount of the debt securities of any series then outstanding may waive past events of default with respect to
the debt securities of such series in specified circumstances and may, subject to certain conditions, direct the trustee in enforcement of remedies.
We
and the trustee may, without the consent of any holders, modify and supplement the indenture:
-
-
to evidence the succession of another person to us under the indenture, or successive successions, and the assumption by the successor person
of the covenants, agreements and obligations of us pursuant to the indenture;
-
-
to add to the covenants applicable to us such further covenants, restrictions, conditions or provisions as our board of directors shall
consider to be for the protection of the holders of debt securities of any or all series, and to make the occurrence, or the occurrence and continuance, of a default in any of such additional
covenants, restrictions, conditions or provisions a default or event of default with respect to such series permitting the enforcement of all or any of the several remedies provided in the indenture;
provided,
however
, that in respect of any such additional covenant, restriction or condition, such supplemental indenture may provide for a particular
period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the
remedies available to the trustee upon such default;
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-
-
to cure any ambiguity or to correct or supplement any provision contained in the indenture or in any supplemental indenture which may be
defective or inconsistent with any other provision contained in the indenture or in any supplemental indenture;
-
-
to convey, transfer, assign, mortgage or pledge any property to or with the trustee;
-
-
to make other provisions in regard to matters or questions arising under the indenture as shall not adversely affect the interests of the
holders in any material respect;
-
-
to secure the debt securities for the benefit of the holders;
-
-
to evidence and provide for the acceptance of appointment by another corporation as a successor trustee under the indenture with respect to one
or more series of debt securities and to add to or change any of the provisions of the indenture as shall be necessary to provide for or facilitate the administration of the trusts under the indenture
by more than one trustee;
-
-
to modify, amend or supplement the indenture in such a manner as to permit the qualification of any supplemental indenture under the Trust
Indenture Act of 1939, as amended, as then in effect;
-
-
to change or eliminate any of the provisions of the indenture,
provided, however,
that any such
change or elimination shall become effective only when there is no debt security outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the
benefit of such provision;
-
-
to conform the terms of the indenture or the debt securities to the description thereof contained in any prospectus (which term includes any
applicable supplement to such prospectus) or other offering document or memorandum relating to the offer and sale of those debt securities; and
-
-
to establish any additional form of debt security and to provide for the issuance of any additional series of debt securities.
Defeasance and Covenant Defeasance
We may, at our option and at any time, terminate our obligations with respect to the outstanding debt securities of a series ("Defeasance").
Defeasance means that we will be deemed to have paid and discharged the entire indebtedness represented by the outstanding debt securities, except for (1) the rights of the holders of
outstanding debt securities to receive payment in respect of the principal of and premium, if any, and interest on such debt securities when such payments are due, (2) our obligations to
register and transfer or exchange any debt securities, replace mutilated, destroyed, lost or stolen debt securities, maintain an office or agency for payments in respect of the debt securities and
segregate and hold money in trust, (3) the rights, powers, trusts, duties and immunities of the trustee, and (4) the Defeasance provisions of the indenture. In addition, we may, at our
option and at any time, elect to terminate certain of our obligations with respect to the debt securities of a series (including any covenants applicable to the debt securities of such series that may
be specified in an applicable prospectus supplement), and any omission to comply with such obligations will not constitute a default or an event of default with respect to the debt securities
("Covenant Defeasance").
In
order to exercise either Defeasance or Covenant Defeasance:
-
-
we must irrevocably deposit with the trustee, in trust, for the benefit of the holders, cash in United States dollars,
U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the
principal of and premium, if any, and interest on the outstanding debt securities to maturity;
-
-
we must deliver to the trustee an opinion of counsel to the effect that the holders of the outstanding debt securities will not recognize
income, gain or loss for United States federal income tax purposes as a result of such Defeasance or Covenant Defeasance, and will be subject to United States federal income tax on the
same amounts, in the same manner and at the same times as would have been the case if such Defeasance or Covenant Defeasance had not occurred (in the case of Defeasance, such opinion must refer
to and be based upon a ruling of the Internal Revenue Service issued, or a change in applicable federal income tax laws occurring, after the date hereof);
-
-
we must deliver to the trustee an opinion of Canadian counsel or a ruling from the Canada Revenue Agency to the effect that the holders of the
outstanding debt securities of such series will not recognize income, gain or loss for Canadian federal, provincial or territorial income or other Canadian tax purposes as a result of such defeasance
and will be subject to Canadian federal, provincial or territorial income and other Canadian tax on the same amounts, in the same manner and at the same times as would have been the case if such
Defeasance or Covenant Defeasance had not occurred (and for the purposes of such opinion, such Canadian counsel will assume that holders of the outstanding debt securities of such series
include holders who are not resident in Canada);
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-
-
no default or event of default shall have occurred and be continuing on the date of such deposit or, insofar as the penultimate bullet point
under the first paragraph under "Events of Default" is concerned, at any time during the period ending the 91st day after the date of deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such period);
-
-
such Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, the indenture or any
material agreement or instrument to which we are a party or by which we are bound; and
-
-
we shall have delivered to the trustee an officers' certificate and an opinion of counsel, each stating that all conditions precedent under the
indenture to either Defeasance or Covenant Defeasance, as the case may be, have been complied with.
Satisfaction and Discharge
The indenture provides that it will be discharged and will cease to be of further effect (except as to any surviving rights of registration of
transfer or exchange of the debt securities, as expressly provided for in the indenture) as to all outstanding debt securities of a series when (1) either (a) all the debt securities of
that series theretofore authenticated and delivered (except lost, stolen or destroyed debt securities which have been replaced or paid and debt securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by us and thereafter repaid to us) have been delivered to the trustee for cancellation or (b) all debt securities of that series not
theretofore delivered to the trustee for cancellation have become due and payable or will become due and payable at maturity within one year or are to be called for redemption within one year and we
have irrevocably deposited or caused to be deposited with the trustee funds in an amount sufficient to pay and discharge the entire indebtedness on the debt securities not theretofore delivered to the
trustee for cancellation, for principal of and premium, if any, and interest on the debt securities to the date of deposit or to the maturity date or date of redemption, as the case may be;
(2) we have paid or have caused to be paid all other sums payable under the indenture by us, including all amounts payable to the trustee; and (3) we have delivered to the trustee an
officers' certificate and an opinion of counsel stating that all conditions precedent under the indenture relating to the satisfaction and discharge of the indenture have been complied with.
Events of Default
As to any series of debt securities, an event of default is defined in the indenture as being:
-
-
failure to pay any interest on the debt securities of that series when due, which failure continues for 30 days;
-
-
failure to pay principal or premium, if any, with respect to the debt securities of that series when due;
-
-
failure to pay or satisfy any sinking fund payment or similar obligation with respect to debt securities of that series when due;
-
-
failure to observe or perform any other covenant, warranty or agreement in the indenture or the debt securities of that series, other than a
covenant, warranty or agreement, a default in whose performance or whose breach is specifically dealt with in the section of the indenture governing events of default, if the failure continues for
75 days after written notice by the trustee or the holders of at least 25% in aggregate principal amount of the debt securities of that series then outstanding;
-
-
uncured or unwaived failure to pay principal of our other indebtedness for borrowed money (excluding any non-recourse indebtedness) when due,
including any other series of debt securities, beyond any period of grace with respect thereto, or any acceleration of the maturity thereof, if the aggregate principal amount of such indebtedness is
in excess of $150,000,000 and the default in payment is not being contested by us in good faith and by appropriate proceedings, such indebtedness (other than indebtedness due upon acceleration) is not
discharged or such acceleration is not rescinded or annulled, in each case, within 30 days after notice thereof as provided in the indenture;
-
-
specified events of bankruptcy, insolvency, receivership or reorganization; or
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-
-
any other event of default provided with respect to debt securities of that series.
For
purposes of the foregoing, "non-recourse indebtedness" means indebtedness of ours or any subsidiary of ours in respect of which the recourse of the holder of such indebtedness,
whether direct or indirect and whether contingent or otherwise, is effectively limited to specified assets, and with respect to which neither we nor any subsidiary of ours provides any additional
credit support.
So long as the debt securities of any series remain outstanding, we will be required to furnish annually to the trustee a certificate of one of
our corporate officers stating whether, to the best of such officer's knowledge, we are in default under any of the provisions of the indenture, and specifying all defaults, and the nature thereof, of
which such officer has knowledge.
The
indenture provides that the trustee will, within 90 days after the occurrence of a default known to the trustee with respect to any series for which there are debt securities
outstanding, give to the holders of those debt securities notice of defaults known to it, including events specified above without grace periods. Except in the case of default in the payment of
principal, premium, if any, or interest on any of the debt securities of any series or the payment of any sinking fund installment on the debt securities of any series, the trustee may withhold notice
to the holders if the trustee in good faith determines that withholding notice is in the interest of the holders of the debt securities.
The
trustee or the holders of not less than 25% in aggregate principal amount of the outstanding debt securities of any series may declare the debt securities of that series immediately
due and payable upon the occurrence of any event of default after expiration of any applicable grace period. In some cases, the holders of a majority in principal amount of the debt securities of any
series then outstanding may waive any past default and its consequences, except a default in the payment of principal, premium, if any, or interest, including sinking fund payments.
In case an event of default with respect to any series of debt securities occurs and is continuing, the indenture provides that the trustee will
be under no obligation to exercise any of its rights or powers under the indenture at the request, order or direction of any of the holders of debt securities outstanding of any series unless the
holders have offered to the trustee indemnity satisfactory to it. The right of a holder to institute a proceeding with respect to the indenture is subject to conditions precedent including notice and
indemnity to the trustee, but the holder has a right to receipt of principal, premium, if any, and interest on their due dates or to institute suit for the enforcement thereof, subject to specified
limitations with respect to defaulted interest.
The
holders of a majority in principal amount of the debt securities outstanding of the series in default will have the right to direct the time, method and place for conducting any
proceeding for any remedy available to the trustee, or exercising any power or trust conferred on the trustee. Any direction by the holders will be in accordance with law and the provisions of the
related indenture, provided that the trustee may decline to follow any such direction if the trustee determines on the advice of counsel that the proceeding may not be lawfully taken or would be
materially or unjustly prejudicial to holders not joining in the direction. The trustee will be under no obligation to act in accordance with the direction unless the holders offer the trustee
security or indemnity satisfactory to it against costs, expenses and liabilities which may be incurred thereby.
Provision of Financial Information
We will be required to file with the trustee, within 15 days after we are required to file the same with the SEC, copies of the annual
and other reports which we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. If we are not so required to file such reports to the SEC under such
sections, then we will be required to file with the trustee and the SEC, in accordance with the rules and regulations prescribed by the SEC, such of the supplementary and periodic reports, if any,
which may be required pursuant to Section 13 of the Exchange Act, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and
regulations. Any documents filed by us with the SEC via the SEC's EDGAR system will be deemed filed with the trustee as of the time such documents are filed via the SEC's EDGAR system.
Governing Law
The indenture and the debt securities will be governed by, and construed in accordance with, the laws of the State of New York.
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Concerning the Trustee
Under the indenture, the trustee is required to transmit reports in accordance with Section 313 of the Trust Indenture Act to all holders
regarding its eligibility and qualifications as trustee under the indenture and specified related matters.
The
trustee has obtained an order from the Ontario Securities Commission pursuant to subsection 46(4) of the
Business Corporations
Act
(Ontario) exempting the indenture from Part V of the
Business Corporations Act
(Ontario). The trustee, its officers
and directors, and the assets of the trustee are located outside of Ontario and, as a result, it may be difficult for a holder of debt securities to enforce rights against the trustee, its
officers or directors or the trustee's assets. A holder of debt securities may have to enforce such rights in the United States.
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FORMS OF THE DEBT SECURITIES
Except as provided in an applicable prospectus supplement, each debt security will generally be represented by one or more global securities
representing the entire issuance of securities. We will issue debt securities evidenced by certificates in definitive form to a particular investor only in limited circumstances. Both certificated
securities in definitive form and global securities will be issued in registered form, where our obligation runs to the holder of the security named on the face of the security. Definitive securities
name you or your nominee as the owner of the security, and in order to transfer or exchange these securities or to receive payments other than interest or other interim payments, you or your nominee
must physically deliver the securities to the trustee, registrar, paying agent or other agent, as applicable. Global securities name a depository or its nominee as the owner of the debt securities.
The depositary maintains a computerized system that will reflect each investor's beneficial ownership of the securities through an account maintained by the investor with its broker/ dealer, bank,
trust company or other representative. See "Book-Entry Procedures and Settlement".
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BOOK-ENTRY PROCEDURES AND SETTLEMENT
General
Except as may otherwise be provided in an applicable prospectus supplement, offered debt securities will be issued in the form of book-entry
(global) securities. Upon issuance, all book-entry securities will be represented by one or more fully registered global securities, without coupons. Each global security will be deposited with, or on
behalf of, The Depository Trust Company ("DTC"), or a successor thereto, a securities depository, and will be registered in the name of DTC or a successor or nominee of DTC. DTC or such successor or
nominee of DTC will thus be the only registered holder of these debt securities.
Interests
in the global securities may be held through either DTC in the United States or through Clearstream Banking, S.A., Luxembourg, which we refer to as Clearstream,
or Euroclear Bank S.A./N.V., as operator of the Euroclear System, which we refer to as Euroclear, in Europe if they are participants of such systems, or indirectly through organizations which
are participants in such systems. Clearstream and Euroclear will hold interests on behalf of their participants through customers' securities accounts in Clearstream's and Euroclear's names on the
books of their respective U.S. depositaries, which in turn will hold such interests in customers' securities accounts in the depositaries' names on the books of DTC.
DTC
has advised us that it is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act.
Clearstream
has advised us that it is incorporated under the laws of Luxembourg as a professional depositary. Clearstream holds securities for its customers and facilitates the clearance
and settlement of securities transactions between its customers through electronic book-entry changes in accounts of its customers, thereby eliminating the need for physical movement of certificates.
Clearstream provides to its customers, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing.
Clearstream interfaces with domestic markets in several countries. As a professional depositary, Clearstream is subject to regulation by the Luxembourg Commission for the Supervision of the Financial
Sector. Clearstream customers are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and other
organizations and may include the underwriters. Indirect access to Clearstream is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Clearstream customer either directly or indirectly.
Euroclear
has advised us that it was created in 1968 to hold securities for participants of Euroclear and to clear and settle transactions between Euroclear participants through
simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash.
Euroclear provides various other services, including securities lending and borrowing and interfaces with domestic markets in several countries. Euroclear is operated by Euroclear
Bank S.A./N.V., which we refer to as the Euroclear Operator, under contract with Euroclear plc, a company organized under the laws of England and Wales, which we refer to as the
Cooperative. All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for Euroclear on behalf of Euroclear participants. Euroclear
participants include banks (including central banks), securities brokers and dealers, and other professional financial intermediaries and may include the underwriters. Indirect access to Euroclear is
also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly.
We
understand that the Euroclear Operator is licensed by the Belgian Banking and Finance Commission to carry out banking activities on a global basis. As a Belgian bank, it is regulated
and examined by the Belgian Banking and Finance Commission.
We
have provided the descriptions of the operations and procedures of DTC, Clearstream and Euroclear in this prospectus solely as a matter of convenience. These operations and procedures
are solely within the control of those organizations and are subject to change by them from time to time. None of us, the underwriters nor the trustee takes any responsibility for these operations or
procedures, and you are urged to contact DTC, Clearstream and Euroclear or their participants directly to discuss these matters.
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Purchasers
of debt securities may only hold interests in the global securities through DTC if they are participants in the DTC system. Participants include both U.S. and
non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. Access to the DTC system is also available to others such as both U.S.
and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a participant, either directly or
indirectly. DTC will maintain accounts showing the security holdings of its participants, and these participants will in turn maintain accounts showing the security holdings of their customers. Some
of these customers may themselves be securities intermediaries holding securities for their customers. Thus, each beneficial owner of a book-entry security will hold that security indirectly through
various intermediaries.
The
debt securities of each beneficial owner of a book-entry security will be evidenced solely by entries on the books of the beneficial owner's securities intermediary. The actual
purchaser of the debt securities will generally not be entitled to have the debt securities represented by the global securities registered in its name and will not be considered the owner under the
terms of the debt securities and their governing documents. That means that we and any trustee, issuing and paying agent, registrar or other agent of ours for the debt securities will be entitled to
treat the registered holder, DTC, as the holder of the debt securities for all purposes. In most cases, a beneficial owner will also not be able to obtain a paper certificate evidencing the holder's
ownership of debt securities. The book-entry system for holding securities eliminates the need for physical movement of certificates and is the system through which most publicly traded securities are
held in the United States. However, the laws of some jurisdictions require some purchasers of securities to take physical delivery of their securities in definitive form. These laws may impair
the ability to own, transfer or pledge beneficial interests in book-entry securities.
A
beneficial owner of book-entry securities represented by a global security may exchange the securities for definitive (paper) securities
only if:
-
-
DTC is unwilling or unable to continue as depository for such global security and we do not appoint a qualified replacement for DTC within
90 days; or
-
-
there shall have occurred and be continuing an event of default with respect to the debt securities represented by such global security.
Unless
we indicate otherwise, any global security that is so exchangeable will be exchangeable in whole for definitive securities in registered form, with the same terms and of an equal
aggregate amount. Definitive securities will be registered in the name or names of the person or persons specified by DTC in a written instruction to the registrar of the debt securities. DTC may base
its written instruction upon directions that it receives from its participants.
In
this prospectus, for book-entry securities, references to actions taken by security holders will mean actions taken by DTC upon instructions from its participants, and references to
payments and notices of redemption to security holders will mean payments and notices of redemption to DTC as the registered holder of the debt securities for distribution to participants in
accordance with DTC's procedures. Each sale of a book-entry security will settle in immediately available funds through DTC unless otherwise stated.
Payments
on debt securities represented by the global securities will be made to DTC as the registered owner thereof. We expect that DTC, upon receipt of any payment on the debt
securities represented by a global security, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the global note as shown in the
records of DTC. We also expect that payments by participants to owners of beneficial interests in the global note held through such participants will be governed by standing instructions and customary
practice as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. The participants will be responsible for those payments.
Distributions
on debt securities held beneficially through Clearstream will be credited to cash accounts of its customers in accordance with its rules and procedures, to the extent
received by the U.S. depositary for Clearstream.
Securities
clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of
the Euroclear System, and applicable Belgian law (collectively, the "Terms and Conditions"). The Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of
securities and cash from Euroclear, and
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receipts
of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance
accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf of Euroclear participants and has no record of or relationship with persons holding through Euroclear participants.
Distributions
on debt securities held beneficially through Euroclear will be credited to the cash accounts of its participants in accordance with the Terms and Conditions, to the extent
received by the U.S. depositary for Euroclear.
Neither
we nor the trustee will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interest in the
book-entry securities or for maintaining, supervising or reviewing any records relating to the beneficial ownership interests.
The
information in this section "Book-Entry Procedures and Settlement" has been obtained from sources that we believe to be reliable, but we take no responsibility for the accuracy
thereof.
Clearstream and Euroclear
Links have been established among DTC, Clearstream and Euroclear (two international clearing systems that perform functions similar to
those that DTC performs in the U.S.), to facilitate the initial issuance of book-entry securities and cross-market transfers of book-entry securities associated with secondary market trading.
Although
DTC, Clearstream and Euroclear have agreed to the procedures provided below in order to facilitate transfers, they are under no obligation to perform such procedures, and the
procedures may be modified or discontinued at any time.
Clearstream
and Euroclear will record the ownership interests of their participants in much the same way as DTC, and DTC will record the aggregate ownership of each of the
U.S. depositaries of Clearstream and Euroclear, as participants in DTC.
When
book-entry securities are to be transferred from the account of a DTC participant to the account of a Clearstream participant or a Euroclear participant, the purchaser must send
instructions to Clearstream or
Euroclear through a participant at least one business day prior to settlement. Clearstream or Euroclear, as the case may be, will instruct its U.S. agent to receive book-entry securities
against payment. After settlement, Clearstream or Euroclear will credit its participant's account. Credit for the book-entry securities will appear on the next day (European time).
Because
settlement is taking place during New York business hours, DTC participants can employ their usual procedures for sending book-entry securities to the relevant
U.S. agent acting for the benefit of Clearstream or Euroclear participants. The sale proceeds will be available to the DTC seller on the settlement date. Thus, to the DTC participant, a
cross-market transaction will settle no differently than a trade between two DTC participants.
When
a Clearstream or Euroclear participant wishes to transfer book-entry securities to a DTC participant, the seller must send instructions to Clearstream or Euroclear through a
participant at least one business day prior to settlement. In these cases, Clearstream or Euroclear will instruct its U.S. agent to transfer the book-entry securities against payment. The
payment will then be reflected in the account of the Clearstream or Euroclear participant the following day, with the proceeds back-valued to the value date (which would be the preceding day, when
settlement occurs in New York). If settlement is not completed on the intended value date (i.e., the trade fails), proceeds credited to the Clearstream or Euroclear participant's account
would instead be valued as of the actual settlement date.
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EARNINGS COVERAGE RATIOS
The following earnings coverage ratios do not reflect the issuance of any debt securities under this prospectus.
Based
on U.S. GAAP, our interest requirements on all indebtedness amounted to $95 million for the twelve months ended December 31, 2016 and our interest requirements
on all indebtedness amounted to $91 million for the twelve months ended June 30, 2017. Our reported net income, before interest on debt and income taxes, was $2,832 million for
the twelve months ended December 31, 2016, which was 30 times our interest requirements for that period and our reported net income, before interest on debt and income taxes, was
$2,944 million for the twelve months ended June 30, 2017, which was 32 times our interest requirements for that period.
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PLAN OF DISTRIBUTION
We may sell the debt securities being offered by this prospectus in four ways: (1) through agents, (2) through underwriters,
(3) through dealers and/or (4) directly to one or more purchasers (where permitted by applicable law).
We
may designate agents from time to time to solicit offers to purchase these debt securities. We will name any such agent, who may be deemed to be an underwriter as that term is defined
in the Securities Act, and state any commissions we are to pay to that agent in the applicable prospectus supplement. That agent will be acting on a reasonable efforts basis for the period of its
appointment or, if indicated in the applicable prospectus supplement, on a firm commitment basis.
If
we use a dealer to offer and sell these debt securities, we will sell the debt securities to the dealer, as principal, and will name the dealer in the applicable prospectus
supplement. The dealer may then resell the debt securities to the public at varying prices to be determined by that dealer at the time of resale.
There
is no market through which the debt securities may be sold and purchasers may not be able to resell debt securities purchased under this prospectus. This may affect the pricing of
the debt securities in the secondary market, the transparency and availability of trading prices, the liquidity of the debt securities, and the extent of issuer regulation.
If
so indicated in the applicable prospectus supplement, one or more firms, which we refer to as "remarketing firms," acting as principals for their own accounts or as agents for us, may
offer and sell these debt securities as part of a remarketing upon their purchase, in accordance with their terms. We will identify any remarketing firm, the terms of its agreement, if any, with us
and its compensation in the applicable prospectus supplement.
Remarketing
firms, agents, underwriters and dealers may be entitled under agreements with us to indemnification by us against some civil liabilities, including liabilities under the
Securities Act, and may be customers of, engage in transactions with or perform services for us in the ordinary course of business.
If
so indicated in the applicable prospectus supplement, we will authorize agents, underwriters or dealers to solicit offers by some purchasers to purchase debt securities from us at the
public offering price stated in the applicable prospectus supplement under delayed delivery contracts providing for payment and delivery on a specified date in the future. These contracts will be
subject to only those conditions described in the applicable prospectus supplement, and the applicable prospectus supplement will state the commission payable for solicitation of these offers.
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INTERESTS OF EXPERTS
The consolidated financial statements as at December 31, 2016 and 2015, and for each of the two years in the period ended
December 31, 2016, incorporated by reference in this prospectus, and the effectiveness of the Company's internal control over financial reporting, have been audited by Deloitte LLP, an
independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference. Such consolidated financial statements have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and auditing. The offices of Deloitte LLP are located at 22 Adelaide Street West, Toronto, Ontario,
M5H 0A9. Deloitte LLP is independent with respect to the Company in accordance with the Rules of Professional Conduct of the Chartered Professional Accountants of Ontario, and within the
meaning of the Exchange Act and the applicable rules and regulations thereunder adopted by the SEC and the Public Company Accounting Oversight Board (United States) (PCAOB).
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LEGAL MATTERS
Unless otherwise specified in the prospectus supplement, certain legal matters relating to the debt securities offered by a prospectus
supplement will be passed upon, on our behalf, by Sidley Austin LLP, New York, New York, and by Osler, Hoskin & Harcourt LLP, Toronto, Ontario. As of the date of
this prospectus, the partners and associates of Osler, Hoskin & Harcourt LLP, as a group, beneficially own, directly or indirectly, less than 1% of our outstanding securities.
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LIMITATIONS ON ENFORCEMENT OF U.S. LAWS AGAINST THE COMPANY,
OUR MANAGEMENT AND OTHERS
We are a company existing under the laws of the Province of Ontario, Canada. A majority of our assets are located outside of the
United States and a majority of our directors and officers and some of the experts named in this prospectus are resident outside of the United States and a majority of their assets are
located outside of the United States. As a result, it may be difficult for United States investors to effect service of process within the United States upon those directors,
officers or experts who are not residents of the United States, or to realize in the United States upon judgments of courts of the United States predicated upon civil liability of
such directors, officers or experts under United States federal securities laws. A monetary judgment of a United States court predicated solely upon civil liability under
United States federal securities laws would probably be enforceable in Canada if the United States court in which the judgment was obtained had a basis for jurisdiction in the matter
that was recognized by a Canadian court for such purposes. In addition, it may be difficult for United States investors to enforce, in original actions brought in courts in jurisdictions
located outside the United States, among other things, civil liabilities predicated upon such securities laws.
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DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been filed with the SEC as part of or incorporated by reference in the registration statement of which this
prospectus forms a part: the documents listed in (a)(f) under "Documents Incorporated by Reference"; the form of the indenture; the Statement of Eligibility of Trustee; consent of
Deloitte LLP; and Powers of Attorney.
27
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€600,000,000
1.500% Senior Notes due 2027
PROSPECTUS SUPPLEMENT
September 18, 2017
Joint Book-Running Managers
BNP PARIBAS
BofA Merrill Lynch
ING
Citigroup
Co-Managers
CIBC Capital Markets
MUFG
RBC Capital Markets
Scotiabank
TD Securities
BMO Capital Markets
Commerzbank
HSBC
J.P. Morgan
Santander
ICBC Standard Bank
Raiffeisen Bank International
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