PARAGON TREASURY PLC £250000000 3.625 Per Cent. Secured Bonds Due 2047 Issue Price
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PARAGON TREASURY PLC (incorporated in England and Wales with limited liability under the Companies Act 2006, registered number 9288564) £250,000,000 3.625 per cent. Secured Bonds due 2047 Issue Price: 99.982 per cent. The £250,000,000 3.625 per cent. Secured Bonds due 2047 (the Bonds) are issued by Paragon Treasury Plc (the Issuer). Application has been made to the Financial Conduct Authority in its capacity as competent authority (the UK Listing Authority) for the Bonds to be admitted to the Official List of the UK Listing Authority and to the London Stock Exchange plc (the London Stock Exchange) for the Bonds to be admitted to trading on the London Stock Exchange's regulated market. The London Stock Exchange's regulated market is a regulated market for the purposes of Directive 2004/39/EC (the Markets in Financial Instruments Directive). An investment in the Bonds involves certain risks. For a discussion of these risks see "Risk Factors". Subject as set out below, the net proceeds from the issue of the Bonds, or in the case of £25,000,000 in nominal amount of the Bonds (the Retained Bonds) which will be immediately purchased by the Issuer on the Issue Date (as defined below) the net proceeds of the sale of the Bonds to a third party, will be advanced by the Issuer to Elmbridge Housing Trust Limited (Elmbridge) and Richmond Upon Thames Churches Housing Trust Limited (RUTCHT and, together with Elmbridge, the Original Borrowers and each an Original Borrower) pursuant to bond loan agreements made between the Issuer and each Original Borrower to be dated on or around the Issue Date (the Original Loan Agreements and each an Original Loan Agreement) to be applied in accordance with each Original Borrower's respective charitable objects. The Original Borrower Commitments (as defined below) may be drawn prior to the initial Instalment Redemption Date (as defined below) in one or more drawings, each in a nominal amount up to an amount which corresponds to the sum of (i) the Minimum Value of the Initial Properties (as defined below) and (ii) the Minimum Value of any Additional Properties (as defined below) which have been charged in favour of the Security Trustee, for the benefit of the Issuer, less the nominal amount of all previous drawings in respect of the Original Borrower Commitments. For so long as insufficient security has been granted by the Original Borrowers in favour of the Security Trustee, for the benefit of the Issuer, to permit the drawing of the Original Borrower Commitments in full or the Original Borrowers have not otherwise drawn any part of the Original Borrower Commitments, the amount of the Original Borrower Commitments that remain undrawn shall be retained in a charged account (the Initial Cash Security Account) of the Issuer in accordance with the terms of the Account Agreement (and may be invested in Permitted Investments (as defined below)) (the Retained Proceeds). Any Retained Proceeds (and any net sale proceeds from a sale by the Issuer of Retained Bonds (less any Retained Bond Premium Amount (as defined below)) and any net issue proceeds from a further issue of Bonds pursuant to Condition 19 (Further Issues)) shall be advanced to the Original Borrowers and/or any other charitable Registered Providers of Social Housing of the Group (each as defined below) that have acceded to the Security Trust Deed as a borrower in accordance with the terms thereof (together, the Additional Borrowers and each an Additional Borrower and, together with the Original Borrowers, the Borrowers and each a Borrower) at a later date pursuant to its respective Original Loan Agreement or an additional bond loan agreement between an Additional Borrower and the Issuer (each an Additional Loan Agreement and, together with the Original Loan Agreements, the Loan Agreements and each a Loan Agreement), as applicable, to the extent that Properties of a corresponding value have been charged in favour of the Security Trustee for the benefit of the Issuer and, if applicable, subject to the sale by the Issuer of Retained Bonds and/or the issue of the Issuer of further Bonds. Interest on the Bonds is payable semi-annually in arrear on 21st January and 21st July in each year (each, an Interest Payment Date) at the rate of 3.625 per cent. per annum on their Outstanding Principal Amount (as defined below), commencing on 21st July, 2015, all as described in Condition 7 (Interest). Payments of principal of, and interest on, the Bonds will be made without withholding or deduction on account of United Kingdom taxes unless required by law. In the event that any such withholding or deduction is so required, the Issuer may opt to gross up payments due to the Bondholders in respect thereof as described in Condition 10 (Taxation). The Bonds may be redeemed at any time upon the prepayment by a Borrower of its loan (each a Loan) in whole or in part in accordance with the terms of its Loan Agreement at the higher of their Outstanding Principal Amount and an amount calculated by reference to the sum of (i) the yield on the relevant outstanding United Kingdom government benchmark gilt having the nearest duration to that of the Bonds and (ii) 0.20 per cent., together with accrued interest. The Bonds will also be redeemed (a) at their Outstanding Principal Amount, plus accrued interest, in an aggregate Outstanding Principal Amount equal to the nominal amount outstanding of the relevant Loan in the event of a mandatory prepayment of a Loan following the relevant Borrower ceasing to be a Registered Provider of Social Housing (other than if such Borrower regains its status as a Registered Provider of Social Housing within 180 days) or a Loan becoming repayable as a result of a Borrower Default (as defined in each Loan Agreement) and (b) at their Outstanding Principal Amount, plus accrued interest, in full in the event of any withholding or deduction on account of United Kingdom taxes being required and the Issuer not opting to pay (or having so opted to pay having notified the Bond Trustee (as defined below) of its intention to cease to pay) additional amounts in respect of such withholding or deduction. Unless previously redeemed, or purchased and cancelled, the Bonds will be redeemed at their Outstanding Principal Amount in ten equal instalments on each Interest Payment Date from, and including, 21st July, 2042 to, and including, 21st January, 2047 (each an Instalment Redemption Date and the latter being, the Maturity Date). The Group is rated "A2" by Moody's Investors Service Limited (Moody's). It is also expected that the Bonds will be rated "A2" by Moody's. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. Moody's is established in the European Union and is registered under Regulation (EC) No. 1060/2009 (as amended). As such Moody's is included in the list of credit rating agencies published by the European Securities and Markets Authority (ESMA) on its website in accordance with such Regulation. The Bonds will be issued in denominations of £100,000 and integral multiples of £1,000 in excess thereof. The Bonds will initially be represented by a temporary global bond (the Temporary Global Bond), without principal receipts or interest coupons, which will be deposited on or about 21st January, 2015 (the Closing Date) with a common safekeeper for Euroclear Bank S.A./N.V. (Euroclear) and Clearstream Banking, société anonyme (Clearstream, Luxembourg). Interests in the Temporary Global Bond will be exchangeable for interests in a permanent global bond (the Permanent Global Bond and, together with the Temporary Global Bond, the Global Bonds), without principal receipts or interest coupons, on or after 2nd March, 2015 (the Exchange Date), upon certification as to non-U.S. beneficial ownership. Interests in the Permanent Global Bond will be exchangeable for definitive Bonds only in certain limited circumstances. See "Form of the Bonds and Summary of Provisions relating to the Bonds while in Global Form". Joint Bookrunners Lloyds Bank The Royal Bank of Scotland The date of this Prospectus is 19th January, 2015. This Prospectus comprises a prospectus for the purposes of Directive 2003/71/EC (the Prospectus Directive). The Issuer accepts responsibility for the information contained in this Prospectus. To the best of the knowledge of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. The figures referred to in the Valuation Report of Savills Advisory Services Limited (the Valuer) in the sections entitled "The Property Market Overview", "Existing Use Value – Social Housing – Valuation Approach" and "Appendix 4 – Property Market Overview" were obtained from Halifax, Annual Survey of Hours and Earnings, HM Revenue & Customs, the Nationwide House Price Index, HM Land Registry, Social Housing and Savills Prime Rental Market Bulletin. The Issuer confirms that such figures have been accurately reproduced and that, as far as the Issuer is aware and is able to ascertain from information published by Halifax, Annual Survey of Hours and Earnings, HM Revenue & Customs, the Nationwide House Price Index, HM Land Registry, Social Housing and Savills Prime Rental Market Bulletin, no facts have been omitted which would render the reproduced figures inaccurate or misleading. Each Original