COMMERZBANK CAPITAL FUNDING TRUST II
Wilmington, Delaware, U.S.A.
1,862 Noncumulative Trust Preferred Securities
- ISIN: XS0248611047 -
Capitalised terms not otherwise defined herein shall have the meanings given to them in the Prospectus issued in connection with the Noncumulative Trust Preferred Securities of Commerzbank Capital Funding Trust II ("Trust Preferred Securities") dated 28 March 2006 (the "Prospectus") and approved by the Irish Financial Services Regulatory Authority.
On 16 July 2013 the Chancery Court of the State of Delaware has released the final judgement in the matter "The Bank of New York Mellon, solely in its capacity as Property Trustee pursuant to a certain Amended and Restated Trust Agreement described below vs. Commerzbank Capital Funding Trust II, Commerzbank Funding LLC II and Commerzbank Aktiengesellschaft" (the "Final Judgement").
Among other things, the Final Judgement requires Commerzbank Aktiengesellschaft (the "Bank"), Commerzbank Capital Funding LLC II (the "Company") and Commerzbank Capital Funding Trust II (the "Trust") to (i) take all necessary steps to elevate the Trust Preferred Securities to the same Lower Tier II capital class as the Silent Partnership Certificates of Dresdner Funding Trust IV (the "Restructured DresCap Trust IV Certificates"); (ii) take all necessary steps to modify the Trust Preferred Securities to give them the same senior liquidation preference as the Restructured DresCap Trust IV Certificates; (iii) amend Section 7.04 of the LLC Agreement to remove the profit-dependent trigger; and (iv) maintain the Trust Preferred Securities' accrual of capital payments at the contractually fixed rate of 5.905% per year.
On 6 January 2014, the Delaware Chancery Court entered an Order directing the Bank, the Company and the Trust to execute the All Parties’ Amendment Agreement implementing the Final Judgement, pursuant to which the parties executed (1) an Amendment Agreement to the Trust Agreement, (2) an Amendment Agreement to the LLC Agreement, (3) a Replacement Initial Debt Securities Certificate, (4) an Amended and Restated Support Undertaking, (5) a Replacement Global Certificate for the Trust Preferred Securities, and (6) a New Class B Preferred Certificate representing the 1,862 Class B Preferred Securities of the Company that remain outstanding. Pursuant to the Delaware Chancery Court’s Order, the parties executed the documents on January 16, 2014.
The amended forms of each of (i) the terms and conditions of the Trust Preferred Securities; (ii) the terms and conditions of the Class B Preferred Securities; (iii) the terms and conditions of the Initial Debt Securities; and (iv) the Support Undertaking are set out below:
Terms and Conditions of the Trust Preferred Securities
Terms and Conditions of the Class B Preferred Securities
Terms and Conditions of the Initial Debt Securities
In addition, the European Commission published on June 6, 2012 a legislative proposal for a directive establishing a framework for recovery and resolution of credit institutions and investment firms – the Draft Bank Recovery and Resolution Directive (the "BRRD") and on 10 July 2013 the draft for a Single Resolution Mechanism (“SRM”) which would likely be in the form of a European law regulation and which might contain similar or identical provisions with respect to resolution tools as in the BRRD. The resolution tools include the instrument of "bail-in" which gives "resolution authorities" the power to write down the claims of unsecured creditors of a failing institution and to convert debt claims to equity without creditors' consent. The "resolution authorities" are further to be provided with the power to write down "relevant capital instruments" (which may include capital instruments such as the Trust Preferred Securities (including the Class B Preferred Securities, the Initial Debt Securities and the Support Undertaking underlying the Trust Preferred Securities) before any resolution action is taken if and when one or more specific circumstances apply. Such circumstances include, inter alia, the determination by the "resolution authority" that the institution meets the conditions for resolution and the determination by the "resolution authority" that the institution concerned has reached the point of "non-viability".
If the applicable regulation under the SRM were to be adopted and the BRRD statutorily implemented into German law once adopted, the rights of the holders of the Initial Debt Securities may be negatively affected. Further, following such adoption and implementation, the rules under the SRM and the BRRD could result in the loss of some or all of holders’ investment in the event of non-viability or resolution of the Bank, with corresponding consequences for the holders of the Class B Preferred Securities and the Trust Preferred Securities, respectively. It is possible that these potential regulatory changes may adversely impact the market value of the Trust Preferred Securities.
Commerzbank Capital Funding Trust II and Commerzbank AG recommend brokers and exchanges to discontinue the pricing of the Trust Preferred Securities which includes accrued interest on the Trust Preferred Securities (“flat”) and commence the current pricing of the Trust Preferred Securities which does not include accrued interest on the Trust Preferred Securities. Hence, if brokers and exchanges follow such recommendation, accrued interest should be payable by a buyer with regard to the Trust Preferred Securities in addition to the quoted price.
Phone: +49 69 136 21331
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