DESCRIPTION OF THE NOTES
The following description is a summary of the material terms of our notes. The descriptions in this prospectus supplement and the
accompanying base prospectus contain a description of certain terms of the notes and the indenture under which the notes will be issued but do not purport to be complete, and reference is hereby made to the indenture that is an exhibit to the
registration statement of which this prospectus supplement and the accompanying base prospectus are a part and to the U.S. Trust Indenture Act of 1939, as amended. This summary supplements the description of debt securities in the accompanying base
prospectus and, to the extent it is inconsistent, replaces the description in the accompanying base prospectus. We urge you to read the indenture because it, and not this description, defines your rights as a holder of the notes. The following
description of the notes and the description of the debt securities contained in the accompanying base prospectus are not complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the indenture. You may
request a copy of the indenture from us as set forth under “Where You Can Find More Information” below. Whenever particular defined terms of the indenture are referred to, those defined terms are incorporated herein by reference. In this
“Description of the Notes,” references to “we,” “us” and “our” refer to ONEOK, Inc. and not to any of its subsidiaries.
General
Each series of notes will be
issued under a senior indenture (as amended and supplemented from time to time, including supplements setting forth the terms of the notes) between us, ONEOK Partners, the Intermediate Partnership and U.S. Bank National Association, as trustee (the
indenture, as supplemented, is referred to as the “indenture”).
The notes will be senior debt securities that will be our
direct, unsecured obligations and will rank equally with all of our existing and future unsecured senior indebtedness. The notes will be guaranteed by ONEOK Partners and Intermediate Partnership, two of our subsidiaries, however, such guarantors
will not otherwise be subject to the covenants, obligations and duties provided for in the indenture solely in their capacity as guarantors. Each guarantee will rank equally in right of payment with all of such guarantor’s existing and future
unsecured senior debt. The notes will be effectively junior to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of
our subsidiaries that do not guarantee the notes. Assuming we had completed this offering on March 31, 2018, after giving effect to the application of the net proceeds as described in “Use of Proceeds” in this prospectus supplement,
the notes and the guarantees would have been structurally subordinated to approximately $34.7 million of outstanding indebtedness of our
non-guarantor
subsidiaries.
We will issue the 2028 notes in an initial aggregate principal amount equal to $800,000,000. We will issue the 2048 notes in an initial
aggregate principal amount of $450,000,000.
We will issue the notes in minimum denominations of $2,000 and whole multiples of $1,000 in
excess thereof.
Because we conduct a substantial portion of our operations through our subsidiaries, our ability to service our debt,
including our obligations under the notes, and other obligations are largely dependent on the earnings of our subsidiaries and the payment of those earnings to us, in the form of distributions, dividends, loans or advances from our subsidiaries or
the repayment of loans or advances from us by our subsidiaries. Any payment of distributions, dividends, loans or advances by our subsidiaries could be subject to statutory or contractual restrictions. Our
non-guarantor
subsidiaries and affiliates have no obligation to pay any amounts due on the notes. The notes will be structurally subordinated to all of the existing and future debt and other liabilities of our
non-guarantor
subsidiaries and will be effectively subordinated to all of our and the guarantors’ future secured debt to the extent of the value of the collateral securing such debt.
The notes will not be subject to a sinking fund provision.
S-12
The notes are subject to defeasance at our option as provided in the indenture. Unless we
redeem the 2028 notes prior to maturity, the entire principal amount of the 2028 notes will mature and become due and payable, together with any accrued and unpaid interest thereon, on July 15, 2028. Unless we redeem the 2048 notes prior to
maturity, the entire principal amount of the 2048 notes will mature and become due and payable, together with any accrued and unpaid interest thereon, on July 15, 2048.
The indenture does not contain provisions that afford holders of the notes protection in the event we are involved in a highly leveraged
transaction or other similar transaction that may adversely affect such holders. The indenture does not limit our ability to issue or incur other unsecured debt or issue preferred stock.
Interest
Interest on the 2028 notes will
accrue at 4.55% per annum from July 2, 2018 and interest on the 2048 notes will accrue at 5.20% per annum from July 2, 2018. Interest on the notes will be payable in U.S. dollars semi-annually in arrears on January 15 and July 15 of each year (each,
an “Interest Payment Date”), beginning on January 15, 2019 and at maturity or, if applicable, earlier redemption. Interest payable on an Interest Payment Date will be paid to the Person in whose name the note is registered at the close of
business on January 1 or July 1, as the case may be (whether or not a business day in the City of New York), immediately preceding such Interest Payment Date. Interest payable at maturity or earlier redemption will be paid against presentation
and surrender of the related notes. Interest on the notes will be computed on the basis of a
360-day
year consisting of twelve
30-day
months.
If any Interest Payment Date, the maturity date or any redemption date is not a business day in New York, New York, the required payment shall
be made on the next succeeding day that is a business day as if it were made on the date such payment was due and no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date, maturity date or redemption
date, as the case may be, to such next business day.
Optional Redemption
On or after April 15, 2028 (three months prior to their maturity date), we may redeem the 2028 notes, in whole or in part, at any time and from
time to time, on at least 30 days, but not more than 60 days, prior notice mailed to each holder of the 2028 notes to be redeemed, at a redemption price equal to 100% of the principal amount of the 2028 notes being redeemed plus accrued and unpaid
interest to the redemption date. On or after January 15, 2048 (six months prior to their maturity date), we may redeem the 2048 notes, in whole or in part, at any time and from time to time, on at least 30 days, but not more than 60 days, prior
notice mailed to each holder of the 2048 notes to be redeemed, at a redemption price equal to 100% of the principal amount of the 2048 notes being redeemed plus accrued and unpaid interest to the redemption date.
Prior to April 15, 2028 (three months prior to their maturity date) in the case of the 2028 notes and prior to January 15, 2048 (six months
prior to their maturity date) in the case of the 2048 notes, the notes of each series will be redeemable, in whole or in part, at any time and from time to time, at our option, at a redemption price equal to the greater of:
|
|
•
|
|
100% of the principal amount of the notes; or
|
|
|
•
|
|
as determined by the quotation agent, 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 the notes matured on the Par Call Date
(not including any portion of those payments of interest accrued as of the redemption date) discounted to the redemption date on a semi-annual basis assuming a
360-day
year consisting of twelve 30 day months
at the adjusted treasury rate plus 30 basis points for the 2028 notes and 35 basis points for the 2048 notes
|
plus, in each case, accrued
and unpaid interest on the notes to the redemption date.
S-13
The quotation agent means the reference treasury dealer appointed by us to serve in that
capacity. The term reference treasury dealer means Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Mizuho Securities USA LLC and Wells Fargo Securities, LLC and their respective successors. If, however, any of
Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Mizuho Securities USA LLC or Wells Fargo Securities, LLC ceases to be a primary U.S. government securities dealer in the United States, we will substitute another
primary treasury dealer.
The adjusted treasury rate means, for any redemption date, the rate per annum equal to the semi-annual
equivalent yield to maturity of the comparable treasury issue, assuming a price of the comparable treasury issue (expressed as a percentage of its principal amount) equal to the comparable treasury price for that redemption date. The comparable
treasury issue means the U.S. treasury security selected by the quotation agent as having a maturity comparable to the remaining term of such notes to be redeemed, assuming the notes matured on the Par Call Date, that would be used, at the time of a
selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such notes assuming the notes matured on the Par Call Date. The Par Call Date means
April 15, 2028, with respect to the 2028 notes, and January 15, 2048 with respect to the 2048 notes, the date that is three months and six months prior to the maturity date of the 2028 notes and the 2048 notes, respectively.
The comparable treasury price means, for any redemption date, the reference treasury dealer quotation for the redemption date.
A reference treasury dealer quotation means, with respect to any redemption date, the average, as determined by us, of the bid and asked
prices for the comparable treasury issue (expressed, in each case, as a percentage of its principal amount) quoted on the third business day preceding the redemption date.
In case of a partial redemption, selection of the notes for redemption will be made by such method as the trustee deems appropriate and fair
and may provide for the selection for redemption of portions of the principal of notes. While the notes are held pursuant to the book-entry system, selection of notes for partial redemption will be made by the depositary pursuant to its practices
and procedures. Notice of any redemption will be mailed by first class mail at least 30 days but not more than 60 days before the redemption date to each holder of the notes to be redeemed at its registered address. If any note is to be redeemed in
part only, the notice of redemption that relates to the note will state the portion of the principal amount of the note to be redeemed. A new note in a principal amount equal to the unredeemed portion of the note will be issued in the name of the
holder of the note upon surrender for cancellation of the original note. Unless we default in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the notes or the portions of the notes called for
redemption.
Mandatory Redemption
We
will not be required to make any mandatory sinking fund payments with regard to the notes or to redeem any of the notes before maturity.
Covenants
The notes will have the benefit of the covenants set forth under “Description of Debt Securities—Certain Restrictive
Covenants Under Our Senior Indenture” and “Description of Debt Securities—Consolidation, Merger and Sale of Assets” in the accompanying base prospectus.
Guarantees
ONEOK Partners and the
Intermediate Partnership will unconditionally guarantee the payment of the notes on a senior unsecured basis, however, will not otherwise be subject to the covenants, obligations and duties provided for in the indenture solely in their capacity as
guarantors. Notwithstanding the preceding sentence, ONEOK Partners and/or the Intermediate Partnership will be released from their obligations under the indenture,
S-14
and its guarantees will no longer be in effect, if such guarantor is (i) no longer our subsidiary or (ii) no longer (x) an obligor on, or issuer of, any capital markets debt
securities or (y) a guarantor of any capital markets debt securities issued by us or the other guarantor, in each case other than the notes, so long as no default or event of default under the indenture has occurred or is continuing. In such
event, such guarantor will give the trustee notice, and we and the trustee will execute and deliver a supplemental indenture reflecting the release of the guarantee. Such guarantor will also be released from its obligations under the indenture, and
its guarantee will no longer be in effect, if either a legal defeasance or satisfaction and discharge of the indenture occur.
ONEOK
Partners’ and the Intermediate Partnership’s guarantees will be senior unsecured obligations of ONEOK Partners and the Intermediate Partnership and will rank equally in right of payment with their guarantees of our $2.5 billion
revolving credit agreement and our other outstanding series of senior notes, together with any of their other existing and future indebtedness that is not expressly subordinated to their guarantees. ONEOK Partners’ and the Intermediate
Partnership’s guarantees will be structurally subordinated to all indebtedness of our other subsidiaries.
Events of Default
The notes will have the events of default set forth under “Description of Debt Securities—Events of Default” in the accompanying
base prospectus.
Further Issues
We
may from time to time, without the consent of existing holders, create and issue additional notes having the same terms and conditions as either or both series of notes in all respects, except for issue date, issue price and, if applicable, the
first payment of interest on the additional notes. Additional notes issued in this manner will be consolidated with, and will form a single series with, the applicable series of outstanding notes. If any such additional notes are not fungible with
the applicable series of outstanding notes for U.S. federal income tax purposes, they will be issued with a different CUSIP number (or other applicable identifying number).
Governing Law
The indenture and the
notes for all purposes shall be governed by and construed in accordance with the laws of the State of New York.
Trustee and Paying Agent
We maintain customary banking relationships with U.S. Bank National Association, the trustee, paying agent and registrar under the indenture
and the notes.
Book-Entry System
We
have obtained the information in this section concerning The Depository Trust Company (“DTC”), Clearstream Banking, S.A
.
, Luxembourg (“Clearstream, Luxembourg”) and Euroclear Bank S.A./N.V. (“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 DTC, Clearstream, Luxembourg and Euroclear as they are currently in effect. Those systems could change their rules and procedures at any time.
The notes will initially be represented by one or more fully registered global notes. Each such global note will be deposited with, or on
behalf of, DTC or any successor thereto and registered in the name of Cede & Co. (DTC’s nominee). You may hold your interests in the global notes in the United States through DTC, or in Europe through Clearstream, Luxembourg or
Euroclear, either as a participant in such systems or indirectly
S-15
through organizations which are participants in such systems. Clearstream, Luxembourg and Euroclear will hold interests in the global notes on behalf of their respective participating
organizations or customers through customers’ securities accounts in Clearstream, Luxembourg’s or Euroclear’s names on the books of their respective depositaries, which in turn will hold those positions in customers’ securities
accounts in the depositaries’ names on the books of DTC. Citibank, N.A will act as depositary for Clearstream, Luxembourg and JP Morgan Chase Bank will act as depositary for Euroclear.
So long as DTC or its nominee is the registered owner of the global securities representing the notes, DTC or such nominee will be considered
the sole owner and holder of the notes for all purposes of the notes and the indenture. Except as provided below, owners of beneficial interests in the notes will not be entitled to have the notes registered in their names, will not receive or be
entitled to receive physical delivery of the notes in definitive form and 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 person owning a beneficial interest in a note must rely on the procedures of DTC or its nominee and, if such person is not a participant, on the procedures of the participant through which such person owns its interest,
in order to exercise any rights of a holder of notes.
Unless and until we issue the notes in fully certificated, registered form under
the limited circumstances described below under the heading “—Certificated Notes”:
|
|
•
|
|
you will not be entitled to receive a certificate representing your interest in the notes;
|
|
|
•
|
|
all references in this prospectus supplement or in the accompanying base prospectus to actions by holders will refer to actions taken by DTC upon instructions from its direct participants; and
|
|
|
•
|
|
all references in this prospectus supplement or the accompanying base prospectus to payments and notices to holders will refer to payments and notices to DTC or Cede & Co., as the registered holder of the
notes, for distribution to you in accordance with DTC procedures.
|
The Depository Trust Company
DTC will act as securities depositary for the notes. The notes will be issued as fully registered notes registered in the name of
Cede & Co. DTC has advised us that it is:
|
|
•
|
|
a limited-purpose trust company organized under the New York Banking Law;
|
|
|
•
|
|
a “banking organization” under the New York Banking Law;
|
|
|
•
|
|
a member of the Federal Reserve System;
|
|
|
•
|
|
a “clearing corporation” under the New York Uniform Commercial Code; and
|
|
|
•
|
|
a “clearing agency” registered under the provisions of Section 17A of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”).
|
DTC holds securities that its direct participants deposit with DTC. DTC facilitates the settlement among direct participants of securities
transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in direct participants’ accounts, thereby eliminating the need for physical movement of securities certificates.
Direct participants of DTC include securities brokers and dealers (including the underwriters), banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its direct participants. Indirect participants of DTC, such as securities brokers and dealers, banks and trust companies, can also access the DTC system if they maintain a custodial
relationship with a direct participant.
If you are not a direct participant or an indirect participant and you wish to purchase, sell or
otherwise transfer ownership of, or other interests in, notes, you must do so through a direct participant or an indirect
S-16
participant. DTC agrees with and represents to DTC participants that it will administer its book-entry system in accordance with its rules and
by-laws
and
requirements of law. The U.S. Securities and Exchange Commission (the “SEC”) has on file a set of the rules applicable to DTC and its direct participants.
Purchases of notes under DTC’s system must be made by or through direct participants, which will receive a credit for the notes on
DTC’s records. The ownership interest of each beneficial owner is in turn to be recorded on the records of direct participants and indirect participants. Beneficial owners will not receive written confirmation from DTC of their purchase, but
beneficial owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the direct participants or indirect participants through which such beneficial owners
entered into the transaction. Transfers of ownership interests in the notes are to be accomplished by entries made on the books of participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their
ownership interests in notes, except as provided below in “—Certificated Notes.”
To facilitate subsequent transfers, all
notes deposited with DTC are registered in the name of DTC’s nominee, Cede & Co. The deposit of notes with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual beneficial owners of the notes. DTC’s records reflect only the identity of the direct participants to whose accounts such notes are credited, which may or may not be the beneficial owners. The participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct 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.
Clearstream, Luxembourg
Clearstream, Luxembourg advises that it is incorporated under the laws of Luxembourg as a professional depository. Clearstream, Luxembourg
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, thus eliminating the need for physical movement of
certificates. Clearstream, Luxembourg provides to its customers, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream,
Luxembourg interfaces with domestic markets in a number of countries. Clearstream, Luxembourg is an indirect participant in DTC.
Clearstream, Luxembourg customers are recognized financial institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other organizations. Indirect access to Clearstream, Luxembourg is also available to others, such as banks, brokers, dealers and trust companies that clear through, or maintain a
custodial relationship with, a Clearstream, Luxembourg customer either directly or indirectly.
The Euroclear System
Euroclear has advised us that the Euroclear System was created in 1968 to hold securities for participants in the Euroclear System and to clear
and settle transactions between Euroclear participants through simultaneous electronic book-entry delivery against payment, thus eliminating the need for physical movement of certificates and risk from lack of simultaneous transfers of securities
and cash. Transactions may now be settled in many currencies, including U.S. dollars. The Euroclear System provides various other services, including securities lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC described below.
S-17
The Euroclear System is operated by Euroclear (the “Euroclear Operator”), under
contract with Euroclear Clearance System, S.C., a Belgian cooperative corporation. The Euroclear Operator conducts all operations, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the cooperative. The cooperative establishes policy for the Euroclear System 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 the Euroclear System is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly. Euroclear
is an indirect participant in DTC.
The Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the
Euroclear System and applicable Belgian law govern securities clearance accounts and cash accounts with the Euroclear Operator. Specifically, these terms and conditions govern:
|
|
•
|
|
transfers of securities and cash within the Euroclear System;
|
|
|
•
|
|
withdrawal of securities and cash from the Euroclear System; and
|
|
|
•
|
|
receipts of payments with respect to securities in the Euroclear System.
|
All securities in
the Euroclear System 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 securities through Euroclear participants.
Euroclear further advises that investors that
acquire, hold and transfer interests in the notes by book-entry through accounts with the Euroclear Operator or any other securities intermediary are subject to the laws and contractual provisions governing their relationship with their
intermediary, as well as the laws and contractual provisions governing the relationship between such an intermediary and each other intermediary, if any, standing between themselves and the notes.
The Euroclear Operator advises that under Belgian law, investors that are credited with securities on the records of the Euroclear Operator
have a
co-property
right in the fungible pool of interests in securities on deposit with the Euroclear Operator in an amount equal to the amount of interests in securities credited to their accounts. In the
event of the insolvency of the Euroclear Operator, Euroclear participants would have a right under Belgian law to the return of the amount and type of interests in securities credited to their accounts with the Euroclear Operator. If the Euroclear
Operator did not have a sufficient amount of interests in securities on deposit of a particular type to cover the claims of all Euroclear participants credited with such interests in securities on the Euroclear Operator’s records, all Euroclear
participants having an amount of interests in securities of such type credited to their accounts with the Euroclear Operator would have the right under Belgian law to the return of their pro rata share of the amount of interest in securities
actually on deposit.
Under Belgian law, the Euroclear Operator is required to pass on the benefits of ownership in any interests in
securities on deposit with it, such as dividends, voting rights and other entitlements, to any person credited with such interests in securities on its records.
Book-Entry Format
Under the book-entry format, the trustee will pay interest or principal payments to Cede & Co., as nominee of DTC. DTC will forward
the payment to the direct participants, who will then forward the payment to the indirect participants (including Clearstream, Luxembourg or Euroclear) or to you as the beneficial owner. You may experience some delay in receiving your payments under
this system. Neither we, the trustee under the indenture nor any paying agent has any direct responsibility or liability for the payment of principal or interest on the notes to owners of beneficial interests in the notes.
S-18
DTC is required to make book-entry transfers on behalf of its direct participants and is required
to receive and transmit payments of principal, premium, if any, and interest on the notes. Any direct participant or indirect participant with which you have an account is similarly required to make book-entry transfers and to receive and transmit
payments with respect to the notes on your behalf. We and the trustee under the indenture have no responsibility for any aspect of the actions of DTC, Clearstream, Luxembourg or Euroclear or any of their direct or indirect participants. In addition,
we and the trustee under the indenture have no responsibility or liability for any aspect of the records kept by DTC, Clearstream, Luxembourg, Euroclear or any of their direct or indirect participants relating to or payments made on account of
beneficial ownership interests in the notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. We also do not supervise these systems in any way.
The trustee will not recognize you as a holder under the indenture, and you can only exercise the rights of a holder indirectly through DTC
and its direct participants. DTC has advised us that it will only take action regarding a note if one or more of the direct participants to whom the note is credited directs DTC to take such action and only in respect of the portion of the aggregate
principal amount of the notes as to which that participant or participants has or have given that direction. DTC can only act on behalf of its direct participants. Your ability to pledge notes to
non-direct
participants, and to take other actions, may be limited because you will not possess a physical certificate that represents your notes.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the notes unless authorized by a direct
participant in accordance with DTC’s procedures. Under its usual procedures, DTC will mail an omnibus proxy to us as soon as possible after the record date. The omnibus proxy assigns Cede & Co.’s consenting or voting rights to
those direct participants to whose accounts the notes are credited on the record date (identified in a listing attached to the omnibus proxy).
Clearstream, Luxembourg or Euroclear will credit payments to the cash accounts of Clearstream, Luxembourg customers or Euroclear participants
in accordance with the relevant system’s rules and procedures, to the extent received by its depositary. These payments will be subject to tax reporting in accordance with relevant U.S. tax laws and regulations. Clearstream, Luxembourg 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, Luxembourg customer or Euroclear participant only in accordance with its relevant rules and
procedures and subject to its depositary’s ability to effect those actions on its behalf through DTC.
DTC, Clearstream, Luxembourg
and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of the notes among participants of DTC, Clearstream, Luxembourg 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.
Transfers Within and Among Book-Entry Systems
Transfers between DTC’s direct participants will occur in accordance with DTC rules. Transfers between Clearstream, Luxembourg customers
and Euroclear participants will occur in accordance with its applicable rules and operating procedures.
DTC will effect cross-market
transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Clearstream, Luxembourg customers or Euroclear participants, on the other hand, in accordance with DTC rules on behalf of the
relevant European international clearing system by its depositary. However, cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in that system in accordance with
its rules and procedures and within its established deadlines (European time). The relevant European international clearing system will, if the transaction meets its settlement requirements, instruct its depositary to effect final settlement on its
behalf by delivering or receiving securities in DTC, and making or receiving payment in accordance with normal
S-19
procedures for
same-day
funds settlement applicable to DTC. Clearstream, Luxembourg customers and Euroclear participants may not deliver instructions
directly to the depositaries.
Because of time-zone differences, credits of securities received in Clearstream, Luxembourg or Euroclear
resulting from a transaction with a DTC direct participant will be made during the subsequent securities settlement processing, dated the business day following the DTC settlement date. Those credits or any transactions in those securities settled
during that processing will be reported to the relevant Clearstream, Luxembourg customer or Euroclear participant on that business day. Cash received in Clearstream, Luxembourg or Euroclear as a result of sales of securities by or through a
Clearstream, Luxembourg customer or a Euroclear participant to a DTC direct participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream, Luxembourg or Euroclear cash amount only as of the
business day following settlement in DTC.
Although DTC, Clearstream, Luxembourg and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of notes among their respective participants, they are under no obligation to perform or continue to perform such procedures and such procedures may be discontinued at any time.
Same-Day
Settlement and Payment
The underwriters will settle the notes in immediately available funds. We will make principal and interest payments on the notes in immediately
available funds or the equivalent. Secondary market trading between DTC direct participants will occur in accordance with DTC rules and will be settled in immediately available funds using DTC’s
Same-Day
Funds Settlement System. Secondary market trading between Clearstream, Luxembourg customers and Euroclear participants will occur in accordance with their respective applicable rules and operating procedures and will be settled using the procedures
applicable to conventional eurobonds in immediately available funds. No assurance can be given as to the effect, if any, of settlement in immediately available funds on trading activity (if any) in the notes.
Certificated Notes
Unless and until they are exchanged, in whole or in part, for notes in definitive form in accordance with the terms of the notes, the notes may
not be transferred except (1) as a whole by DTC to a nominee of DTC or (2) by a nominee of DTC to DTC or another nominee of DTC or (3) by DTC or any such nominee to a successor of DTC or a nominee of such successor.
We will issue notes to you or your nominees, in fully certificated registered form, rather than to DTC or its nominees, only if:
|
|
•
|
|
the depositary notifies us that it is unwilling or unable to continue as a depositary for the global security certificates and no successor depositary has been appointed within 90 days after this notice;
|
|
|
•
|
|
an event of default occurs and is continuing with respect to the notes; or
|
|
|
•
|
|
we determine in our sole discretion that we will no longer have notes represented by global securities.
|
If any of the three above events occurs, DTC is required to notify all direct participants that notes in fully certificated registered form
are available through DTC. DTC will then surrender the global note representing the notes along with instructions for
re-registration.
The trustee will reissue the notes in fully certificated registered form
and will recognize the registered holders of the certificated notes as holders under the indenture.
Unless and until we issue the notes
in fully certificated, registered form, (1) you will not be entitled to receive a certificate representing your interest in the notes; (2) all references in this prospectus supplement or in the accompanying base prospectus to actions by
holders will refer to actions taken by the depositary upon
S-20
instructions from their direct participants; and (3) all references in this prospectus supplement or the accompanying base prospectus to payments and notices to holders will refer to
payments and notices to the depositary, as the registered holder of the notes, for distribution to you in accordance with its policies and procedures.
S-21
U.S. FEDERAL TAX CONSIDERATIONS
The following summary describes the material U.S. federal income tax consequences and, in the case of a
non-U.S.
holder (as defined below), the material U.S. federal estate tax consequences, of purchasing, owning and disposing of the notes. This summary applies to you only if you are a beneficial owner of notes
and you acquire the notes in this offering for cash at a price equal to the issue price of that series of notes. The issue price of a series of notes is the first price at which a substantial amount of the notes of that series are sold for money to
investors (other than to bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers).
This summary deals only with notes held as capital assets (generally, investment property) and does not deal with special tax situations such
as:
|
|
•
|
|
dealers in securities or currencies;
|
|
|
•
|
|
U.S. holders (as defined below) whose functional currency is not the U.S. dollar;
|
|
|
•
|
|
persons holding notes as part of a conversion, constructive sale, wash sale or other integrated transaction or a hedge, straddle or synthetic security;
|
|
|
•
|
|
persons subject to the alternative minimum tax;
|
|
|
•
|
|
certain U.S. expatriates;
|
|
|
•
|
|
financial institutions;
|
|
|
•
|
|
controlled foreign corporations, passive foreign investment companies and regulated investment companies and shareholders of such corporations;
|
|
|
•
|
|
an accrual method taxpayer that, for U.S. federal income tax purposes, is required to accelerate the recognition of any item of gross income with respect to the notes as a result of such income being recognized on an
applicable financial statement (as defined in Section 451(b) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”));
|
|
|
•
|
|
entities that are
tax-exempt
for U.S. federal income tax purposes and retirement plans, individual retirement accounts and
tax-deferred
accounts;
|
|
|
•
|
|
pass-through entities, including partnerships and entities and arrangements classified as partnerships for U.S. federal income tax purposes, and beneficial owners of pass-through entities; and
|
If you are a partnership (or an entity or arrangement classified as a partnership for U.S. federal income tax purposes) holding notes or a
partner in such a partnership, the U.S. federal income tax treatment of a partner in the partnership generally will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level, and you
should consult your own tax advisor regarding the U.S. federal income and estate tax consequences of purchasing, owning and disposing of the notes.
This summary does not discuss all of the aspects of U.S. federal income and estate taxation that may be relevant to you in light of your
particular investment or other circumstances. In addition, this summary does not discuss any U.S. state or local, or
non-U.S.,
income tax consequences, any tax consequences under the Medicare tax on certain
investment income or other tax consequences. This summary is based on U.S. federal income and estate tax law, including the provisions of the Internal Revenue Code, Treasury regulations, administrative rulings and judicial authority, all as in
effect or in existence as of the date of this prospectus supplement. Subsequent developments in U.S. federal income and estate tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material
effect on the U.S. federal income and
S-22
estate tax consequences of purchasing, owning and disposing of notes as set forth in this summary. We cannot assure you that the Internal Revenue Service (the “IRS”) will not challenge
one or more of the tax consequences described in this summary, and we have not obtained, nor do we intend to obtain, any ruling from the IRS with respect to the tax consequences of the purchase, ownership or disposition of the notes. Before you
purchase notes, you should consult your own tax advisor regarding the particular U.S. federal, state and local and
non-U.S.
income and other tax consequences of acquiring, owning and disposing of the notes
that may be applicable to you.
U.S. Holders
The following summary applies to you only if you are a U.S. holder (as defined below).
Definition of a U.S. Holder
A “U.S. holder” is a beneficial owner of a note or notes that is, for U.S. federal income tax purposes:
|
|
•
|
|
an individual citizen or resident of the United States;
|
|
|
•
|
|
a corporation (or other entity classified 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 the source of that income; or
|
|
|
•
|
|
a trust, if (1) a U.S. court is able to exercise primary supervision over the trust’s administration and one or more “U.S. persons” (within the meaning of the Internal Revenue Code) has the authority
to control all of the trust’s substantial decisions, or (2) the trust has a valid election in effect under applicable Treasury regulations to be treated as a “U.S. person.”
|
Payments of Interest
Interest on your notes will be taxed as ordinary interest income. In addition:
|
|
•
|
|
if you use the cash method of accounting for U.S. federal income tax purposes, you will have to include the interest on your notes in your gross income at the time you receive the interest; and
|
|
|
•
|
|
if you use the accrual method of accounting for U.S. federal income tax purposes, you will have to include the interest on your notes in your gross income at the time the interest accrues.
|
Sale or Other Disposition of Notes
Upon the sale, redemption, retirement, exchange or other taxable disposition (each, a “disposition”) of the notes, you generally will
recognize taxable gain or loss equal to the difference, if any, between:
|
|
•
|
|
the amount realized on the disposition (less any amount attributable to accrued but unpaid interest, which will be taxable as ordinary interest income to the extent not yet included in your gross income in the manner
described under “U.S. Federal Tax Considerations—U.S. Holders—Payments of Interest”); and
|
|
|
•
|
|
your tax basis in the notes.
|
Your tax basis in your notes generally will be their cost. Your
gain or loss generally will be capital gain or loss. This capital gain or loss will be long-term capital gain or loss if at the time of the disposition you have held the notes for more than one year. Subject to limited exceptions, your capital
losses cannot be used to offset your ordinary income. If you are a
non-corporate
U.S. holder (including an individual), under current law, your long- term capital gain generally is subject to a preferential
rate of U.S. federal income tax.
S-23
Information Reporting and Backup Withholding
In general, information reporting requirements may apply to payments to a U.S. holder of interest on the notes and the proceeds of a
disposition of the notes.
In general, “backup withholding” (currently at a rate of 24%) may apply:
|
|
•
|
|
to any payments made to you of principal of and interest on your note, and
|
|
|
•
|
|
to payment of the proceeds of a sale or other disposition of your note,
|
if you are a U.S.
holder and you fail to provide a correct taxpayer identification number or otherwise comply with applicable requirements of the backup withholding rules and you do not otherwise establish an exemption.
Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be credited against your U.S.
federal income tax liability (which may result in you being entitled to a refund of U.S. federal income tax), provided that the required information is timely provided to the IRS.
Non-U.S.
Holders
The following summary applies to you if you are a beneficial owner of a note and you are neither a U.S. holder (as defined above) nor a
partnership (or an entity or arrangement classified as a partnership for U.S. federal income tax purposes) (a
“non-U.S.
holder”).
U.S. Federal Withholding Tax
Subject to the discussions below regarding backup withholding and FATCA (as defined below), U.S. federal withholding tax generally will not
apply to payments by us or our paying agent (in its capacity as such) of principal of the notes and, under the “portfolio interest” exception of the Internal Revenue Code, interest on your notes, provided that in the case of interest:
|
|
•
|
|
you do not, directly or indirectly, actually or constructively, own 10 percent or more of the total combined voting power of all classes of our stock entitled to vote within the meaning of Section 871(h)(3) of
the Internal Revenue Code and the Treasury regulations thereunder;
|
|
|
•
|
|
you are not a controlled foreign corporation for U.S. federal income tax purposes that is related, directly or indirectly, to us through sufficient stock ownership (as provided in the Internal Revenue Code);
|
|
|
•
|
|
you are not a bank receiving interest described in Section 881(c)(3)(A) of the Internal Revenue Code;
|
|
|
•
|
|
such interest is not effectively connected with your conduct of a U.S. trade or business and, if required by an applicable income tax treaty, is not attributable to a U.S. “permanent establishment” (or, if you
are an individual, a fixed base) maintained by you; and
|
|
|
•
|
|
you provide a signed written statement, on a properly completed IRS Form
W-8BEN
or
W-8BEN-E
(or
other applicable form) which can reliably be associated with you, certifying under penalties of perjury that you are not a U.S. person within the meaning of the Internal Revenue Code to:
|
|
|
(A)
|
the applicable withholding agent; or
|
|
|
(B)
|
a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business and holds your notes on your behalf and that certifies to the
applicable withholding agent under penalties of perjury that it, or the bank or financial institution between it and you, has received the signed, written statement described above from you and provides the applicable withholding agent with a copy
of this statement.
|
S-24
The applicable Treasury regulations provide alternative methods for satisfying the certification
requirement described in this section. In addition, under these Treasury regulations, special rules apply to pass-through entities and this certification requirement may also apply to beneficial owners of pass-through entities.
If you cannot satisfy the requirements of the “portfolio interest” exception described above, payments of interest made to you will
be subject to 30% U.S. federal withholding tax unless you provide the applicable withholding agent with a properly completed (1) IRS Form
W-8ECI
stating that interest paid on your notes is not subject to
U.S. federal withholding tax because it is effectively connected with your conduct of a trade or business in the United States, or (2) IRS Form
W-8BEN
or
W-8BEN-E
(or other applicable form) claiming an exemption from or reduction in this withholding tax under an applicable income tax treaty.
Any gain recognized upon a disposition of your note (other than any amount attributable to accrued but unpaid interest not yet included in
your gross income, which is subject to the rules for interest described above) generally will not be subject to U.S. federal withholding tax, subject to the discussions below regarding backup withholding and FATCA.
U.S. Federal Income Tax
Except for the possible application of U.S. federal withholding tax (discussed above) and backup withholding and FATCA (discussed below), you
generally will not be subject to U.S. federal income tax on payments of principal of and interest on your notes, or on any gain realized from (or accrued interest treated as received in connection with) the disposition of your notes unless:
|
|
•
|
|
in the case of interest payments or disposition proceeds representing accrued interest, you cannot satisfy the requirements of the “portfolio interest” exception described above (and your U.S. federal income
tax liability has not otherwise been fully satisfied through the U.S. federal withholding tax described above);
|
|
|
•
|
|
in the case of gain, you are an individual who is present in the United States for 183 days or more during the taxable year of the sale or other disposition of your notes and specific other conditions are met (in which
case, except as otherwise provided by an applicable income tax treaty, the gain, which may be offset by U.S. source capital losses, generally will be subject to a flat 30% U.S. federal income tax, even though you are not considered a resident alien
under the Internal Revenue Code); or
|
|
|
•
|
|
the interest or gain is effectively connected with your conduct of a U.S. trade or business and, if required by an applicable income tax treaty, is attributable to a U.S. “permanent establishment” (or, if you
are an individual, a fixed base) maintained by you.
|
If you are engaged in a trade or business in the United States and
interest or gain in respect of your notes is effectively connected with the conduct of your trade or business (and, if required by an applicable income tax treaty, is attributable to a U.S. “permanent establishment” (or, if you are an
individual, a fixed base) maintained by you), the interest or gain generally will be subject to U.S. federal income tax on a net basis at the regular graduated rates and in the manner applicable to a U.S. holder (although the interest will be exempt
from U.S. federal withholding tax discussed in the preceding paragraphs if you provide to the applicable withholding agent a properly completed IRS Form
W-8ECI
on or before any payment date to claim the
exemption). In addition, if you are a
non-U.S.
holder that is a corporation, you may be subject to a branch profits tax equal to 30% of your effectively connected earnings and profits for the taxable year, as
adjusted for certain items, unless a lower rate applies to you under an applicable income tax treaty.
U.S. Federal Estate Tax
Unless otherwise provided in an applicable estate tax or other treaty, if you are an individual and are not a U.S. citizen or a
resident of the United States (as specially defined for U.S. federal estate tax purposes) at the
S-25
time of your death, your notes generally will not be subject to the U.S. federal estate tax, unless, at the time of your death:
|
|
•
|
|
you directly or indirectly, actually or constructively, own 10 percent or more of the total combined voting power of all classes of our stock entitled to vote within the meaning of section 871(h)(3) of the Internal
Revenue Code and the Treasury regulations thereunder; or
|
|
|
•
|
|
stated interest on your notes is effectively connected with your conduct of a trade or business within the United States.
|
Backup Withholding and Information Reporting
Backup withholding will not apply to payments of interest on the notes to you if you have provided to the applicable withholding agent the
required certification that you are not a “U.S. person” within the meaning of the Internal Revenue Code as described in “U.S. Federal Tax
Considerations—Non-U.S.
Holders—U.S. Federal
Withholding Tax” above, and provided that the applicable withholding agent does not have actual knowledge or reason to know that you are a U.S. person. However, the applicable withholding agent may be required to report to the IRS and your
payments of interest on the notes and the amount of U.S. federal income tax, if any, withheld with respect to those payments. Copies of the information returns reporting such interest payments and any withholding may also be made available to the
tax authorities in the country in which you reside under the provisions of a treaty or agreement.
The gross proceeds from the disposition
of your notes may be subject, in certain circumstances discussed below, to information reporting and backup withholding (currently at a rate of 24%). If you sell your notes outside the United States through a
non-U.S.
office of a
non-U.S.
broker and the sales proceeds are paid to you outside the United States, then the backup withholding and information reporting requirements
generally will not apply to that payment. However, information reporting, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made outside the United States, if you sell your notes through a
non-U.S.
office of a broker that is a U.S. person (as defined in the Internal Revenue Code) or has certain enumerated connections with the United States, unless the broker has documentary evidence in its files that
you are not a U.S. person and certain other conditions are met or you otherwise establish an exemption. If you receive payments of the proceeds of a sale of your notes to or through a U.S. office of a broker, the payment is subject to both backup
withholding and information reporting unless you provide a properly completed IRS Form
W-8BEN
or
W-
8BEN-E
(or other applicable
form) certifying that you are not a U.S. person or you otherwise establish an exemption, provided the broker does not have actual knowledge or reason to know that you are a U.S. person or the conditions of any other exemption are not, in fact,
satisfied.
You should consult your own tax advisor regarding application of backup withholding in your particular circumstance and the
availability of and procedure for obtaining an exemption from backup withholding. Backup withholding is not an additional tax, and any amounts withheld under the backup withholding rules from a payment to you will be allowed as a credit against your
U.S. federal income tax liability (which may result in your being entitled to a refund of U.S. federal income tax), provided the required information is timely furnished to the IRS.
Foreign Account Tax Compliance Act
The Foreign Account Tax Compliance Act and related Treasury guidance (collectively referred to as “FATCA”) impose U.S. federal
withholding tax at a rate of 30% on payments to certain foreign entities of (i) U.S.-source interest (including interest paid on the notes) and (ii) the gross proceeds from the sale or other disposition after December 31, 2018 of an
obligation that produces U.S.-source interest (including a disposition of the notes). This withholding tax generally applies to a foreign entity, whether acting as a beneficial owner or an intermediary, unless such foreign entity complies with
(a) certain information reporting requirements regarding its U.S. account holders and its U.S. owners and (b) certain withholding obligations regarding certain
S-26
payments to its account holders and certain other persons. Accordingly, the entity through which a U.S. holder or a
non-U.S.
holder holds its notes will
affect the determination of whether such withholding is required. We will not pay any additional amounts to U.S. holders or
non-U.S.
holders in respect of any amounts withheld under FATCA. U.S. holders that
own their interests in a note through a foreign entity or intermediary, and
non-U.S.
holders, are encouraged to consult their tax advisors regarding FATCA.
S-27