18th Sep 2008 12:10
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR TO THE GENERAL PUBLIC IN THE UNITED KINGDOM OR JERSEY.
Announcement Thursday 18 September 2008
Commodity Securities and AIG - Update
ETF Securities Limited ("ETF Securities") would like to update investors and all market participants regarding the Exchange Traded Commodities (ETCs) issued by ETFS Commodity Securities Limited ("ETFS Commodity Securities") and which are backed by matching contracts from AIG Financial Products Corp. and guaranteed by American International Group, Inc (collectively "AIG").
ETF Securities is in discussion with its market makers, Authorised Participants and the Exchanges (London Stock Exchange, Deutsche Borse, Borsa Italiana and Euronext) to seek to have trading in ETCs issued by ETFS Commodity Securities resuming in an orderly fashion as soon as possible.
AIG continues to honour all of its obligations under our agreements with them, including processing all creations and redemptions in the usual manner and paying all redemptions due on time.
ETF Securities is actively working on possible ways of providing investors with liquidity, including:
Arranging suitable collateral for market-makers and/or helping to facilitate other structures which overcome credit risk on settlement; and
Permitting holders to lodge redemption notices directly with the issuer (currently only Authorised Participants are permitted to do this).
However, we can give no assurance as to whether these or other alternatives can be implemented at this stage.
ETF Securities is also working on a possible restructuring of the ETFS Commodity Securities product to reduce concerns about third-party credit risk. As part of this effort,
ETF Securities has obtained the agreement of AIG to negotiate the terms of an agreement under which AIG would be obligated to provide to ETFS Commodity Securities, and at all times to maintain, collateral to support 100 per cent of the aggregate Prices of all the Commodity Contracts provided by AIG underlying the ETCs issued by ETFS Commodity Securities. ETF Securities hopes that such an agreement will be reached and implemented in the next few weeks but there are no assurances given that such agreement will be reached. If such agreement cannot be reached, AIG has agreed to an accelerated redemption of all the securities if the Issuer decides to compulsorily redeem all outstanding securities.
ETF Securities and CSL will make a further announcement in due course.
In the meantime trading and operations of all other products administered by ETF Securities remain unaffected.
Conference Call
ETF Securities will be hosting conference calls on Thursday and Friday at 11am GMT (UK time) to discuss the current situation with regard to the ETCs issued by ETFS Commodity Securities. For details, please see ETF Securities' website or Email [email protected] for details.
ETF Securities will continue to update investors and market participants via our website (www.etfsecurities.com) and via the Regulatory News Service (RNS) if there is any change to the situation.
For further information, please contact:
Graham Tuckwell, Chairman, ETF Securities Ltd
Hector McNeil, Head of Sales, ETF Securities Ltd
Tel: +44 20 7448 4330
Roman Townsend, Penrose Financial Tel: +44 20 7786 4875
This release does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any transferable securities to be issued by the ETF Securities Limited group ("ETFS"), nor shall it or any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto. Any offer, invitation or solicitation shall be made solely by means of a prospectus and recipients of this release who are considering a purchase of securities are reminded that any such purchase should be made solely on the basis of the information contained in such prospectus and any supplementary prospectus(es). This release does not constitute any recommendation regarding the securities of ETFS. The communication of this release is not being made by, and this release has not been approved by, an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000 (the "FSMA"). Accordingly this release is not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of this release or any other document issued in connection with the offer and sale of any ETCs is only being made to and directed at those persons in the United Kingdom falling within the definition of Investment Professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), or high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order or any person to whom it may otherwise lawfully be made (all such persons together being referred to as "relevant persons"). The communication of this release (or any other document issued in connection with the offer and sale of the ETCs) must not be acted upon or relied upon by persons who are not relevant persons. Persons distributing this release must satisfy themselves that it is lawful to do so. All applicable provisions of the FSMA must be complied with in respect of anything done in relation to the ETCs in, from or otherwise involving the United Kingdom. This is not an offer of securities for sale in the United States. Securities issued by the ETFS group ("Securities") have not been and will not be registered under the US Securities Act or any other applicable law of the United States. These Securities are being offered and sold only outside the United States to non-US persons in reliance on the exemption from registration provided by Regulation S of the US Securities Act. The Issuer has not been and does not intend to become registered as an investment company under the Investment Company Act and related rules. These Securities and any beneficial interest therein may not be reoffered, resold, pledged or otherwise transferred in the United States or to US persons. If the Issuer determines that any Security Holder is a Prohibited US Person (being a US Person who is not a "qualified purchaser" as defined in the Investment Company Act), the Issuer may redeem the Securities held by that Security Holder in accordance with the provisions described in the Prospectus. The Securities may not be purchased with plan assets of any "employee benefit plan" within the meaning of section 3(3) of the United States Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any "plan" described in section 4975(e)(1) of the United States Internal Revenue Code of 1986, as amended (the "Code") or any entity whose underlying assets include "plan assets" of any of the foregoing by reason of an employee benefit plan's or other plan's investment in such entity, which employee benefit plan, plan or entity is subject to Title I of ERISA or section 4975 of the Code or any United States Federal, state, or local law or non-United States law that is substantially similar to the prohibited transaction provisions of section 406 of ERISA or section 4975 of the Code (any such employee benefit plan, plan or entity, a "Prohibited Benefit Plan Investor"). If the Issuer determines that any Security Holder is a Prohibited Benefit Plan Investor, the Issuer may redeem the Securities held by that Security Holder in accordance with the provisions described in the Prospectus relating to those Securities." "Dow Jones," "AIG®" "Dow Jones-AIG Commodity IndexSM," "DJ-AIGCISM", "Dow Jones-AIG Commodity 3-Month Forward Index" are service marks of Dow Jones & Company, Inc. and American International Group, Inc. ("American International Group"), as the case may be, and will be licensed for use for certain purposes by ETF Securities Ltd. ETCs based on the DJ-AIGCISM or related subindices (including single commodity sub-indices) or 3-Month Forward Indexes are not sponsored, endorsed, sold or promoted by Dow Jones, AIG Financial Products Corp. ("AIG-FP"), American International Group, or any of their respective subsidiaries or affiliates, and none of Dow Jones, AIGFP, American International Group, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product(s).
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