National Grid 2008 Annual Report Download - page 361

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 33810
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.7.1, Doc: 8, Page: 18
Description: EXH 2(B).7.1
0/1772.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/772/1*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 33810
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.7.1, Doc: 8, Page: 18 Description: EXH 2(B).7.1
0/1772.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/772/1*
Partly-paid Instruments
The Issuer may issue Instruments where the issue price is payable in more than one instalment. Failure to pay any subsequent
instalment could result in an investor losing all of its investment.
Variable rate Instruments with a multiplier or other leverage factor
Instruments with variable interest rates can be volatile investments. If they are structured to include multipliers or other levera
g
e
factors, or caps or floors, or any combination of those features or other similar related features, their market values may be
even more volatile than those for securities that do not include those features.
Fixed/Floating Rate Instruments
Fixed/Floatin
g
Rate Instruments may bear interest at a rate that the Issuer may elect to convert from a fixed rate to a floatin
g
rate, or from a floating rate to a fixed rate. The Issuer’s ability to convert the interest rate will affect the secondary market and
the market value of such Instruments since the Issuer may be expected to convert the rate when it is likely to produce a lower
overall cost of borrowin
g
. If the Issuer converts from a fixed rate to a floatin
g
rate, the spread on the Fixed/Floatin
g
Rate
Instruments may be less favourable than the prevailin
g
spreads on comparable Floatin
g
Rate Instruments tied to the same
reference rate. In addition, the new floatin
g
rate at any time may be lower than the rates on other Instruments. If the Issuer
converts from a floating rate to a fixed rate, the fixed rate may be lower than the prevailing rates on its Instruments.
Instruments issued at a substantial discount or premium
The market values of securities issued at a substantial discount or premium to their nominal amount tend to fluctuate more in
relation to general changes in interest rates than do prices for conventional interest-bearin
g
securities. Generally, the lon
g
er the
remaining term of the securities, the greater the price volatility as compared to conventional interest-bearin
g
securities with
comparable maturities.
Risks related to Instruments generally
Set out below is a brief description of certain risks relating to the Instruments generally:
Modification, waivers and substitution
The Terms and Conditions of the Instruments contain provisions for callin
g
meetin
g
s of Instrumentholders to consider matters
affectin
g
their interests
g
enerally. These provisions permit defined majorities to bind all Instrumentholders includin
g
Instrumentholders who did not attend and vote at the relevant meetin
g
and Instrumentholders who voted in a manner contrary
to the majority.
The Terms and Conditions of the Instruments also provide that the Trustee may, without the consent of Instrumentholders,
a
g
ree to (a) any modification of any of the provisions of the Trust Deed that is of a formal, minor or technical nature or is made
to correct a manifest error, (b) any other modification (except as mentioned in the Trust Deed), and any waiver or authorisation
of any breach or proposed breach, of any of the provisions of the Trust Deed that is in the opinion of the Trustee not materially
prejudicial to the interests of the Instrumentholders or (c) the substitution of another company as principal debtor under any
Instruments in place of the Issuer, in the circumstances described in Condition 11 of the Terms and Conditions of the
Instruments.
European Monetary Union
If the United Kin
g
dom joins the European Monetary Union prior to the maturity of the Instruments, there is no assurance that
this would not adversely affect investors in the Instruments. It is possible that prior to the maturity of the Instruments the United
Kin
g
dom may become a participatin
g
Member State and that the Euro may become the lawful currency of the United Kin
g
dom.
In that event (i) all amounts payable in respect of any Instruments denominated in Sterlin
g
may become payable in Euro (ii) the
law
18
(vii) the timin
g
of chan
g
es in a Relevant Factor may affect the actual yield to investors, even if the avera
g
e level is consistent
with their expectations. In
g
eneral, the earlier the chan
g
e in the Relevant Factor, the
g
reater the effect on yield.