QUEENS BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL | ||
B e f o r e :
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NOMURA INTERNATIONAL Plc | Claimant | |
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CREDIT SUISSE FIRST BOSTON INTERNATIONAL | Defendant |
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Lord Grabiner QC (instructed by Messrs Norton Rose) and Mr P. Reed and Ms J. Bowyer (of Messrs Norton Rose) for the Defendant
Hearing dates: 3rd and 4th February - 2003
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Crown Copyright ©
Mr Justice Langley :
The Confirmation.
The ISDA Definitions.
(a) any obligation of a Reference Entity … determined pursuant to the method described in Section 2.19 … that is payable in an amount equal to its outstanding principal balance or Due and Payable Amount, as applicable … (b) each Reference Obligation … and (c) any other obligation of a Reference Entity specified as such in the related Confirmation.
Method for Determining Deliverable Obligations. With respect to any Credit Derivative Transaction, the term "Deliverable Obligation" may be defined as each obligation of each Reference Entity described by the Deliverable Obligation Category specified in the related Confirmation, and having the Obligation Characteristics, if any, specified in the related Confirmation.
The following terms shall have the following meanings:
(a) "Obligation Category" means … Bond or loan ….
(b) "Deliverable Obligation Characteristics" means any one or more of … Not Contingent … (… as defined in Section 2.18(b)) ….
(vii) "Not Contingent" means any obligation (A) the payment or repayment of principal in respect of which is not in an amount determined by reference to any formula or index or which is not subject to any contingency and (B) which bears interest at a fixed or floating rate ….
The Exchangeable Bonds.
Condition 9(a)
Exchange Period and Exchange Price: A Bondholder shall have the right (the "Exchange Right") to exchange ("exchange") all or any of its Bonds for registered ordinary shares of 25 pence each in the capital of Railtrack Group … credited as fully paid. Upon exchange the right of the exchanging Bondholder to repayment of the principal amount … shall be satisfied by redemption of the Bond to be exchanged in cash at its principal amount and an application of the proceeds (by the Issuer irrevocably acting on behalf of the Bondholder) … in subscription for the relevant number of Ordinary Shares and thereupon the exchanging Bondholder shall have no further claim against the Issuer ….
Condition 9(d)
"Automatic Exchange by the Trustee: The Trust Deed provides that the Trustee may, at its absolute discretion (and without any responsibility for any loss occasioned thereby) within the period commencing on the date six days immediately prior to, and ending at the close of business on the second London business day immediately prior to, the date fixed for redemption from time to time of any of the Bonds … elect (on behalf of relevant Bondholders) by notice in writing to the Issuer and Railtrack Group plc to exercise the Exchange Rights in respect of such Bonds pursuant to Condition 9(a) and exchange the … Bonds … for Ordinary Shares by reference to the Exchange Price applicable on such date if … the Trustee is satisfied or is advised by an investment bank in London of international repute … that the net proceeds of an immediate sale of the Ordinary Shares arising from such exchange … would be likely to exceed by 5 per cent or more the amount of the redemption moneys and interest which would otherwise be payable in respect of such … Bonds.
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All of the Ordinary Shares issued on such exchange shall be sold by, or on behalf of, the Trustee as soon as practicable and … the net proceeds of sale … shall be held by the Trustee and distributed rateably to the holders of such … Bonds.