17th Oct 2008 13:17
ETFS COMMODITY SECURITIES LIMITED
(Incorporated and registered in Jersey under the Companies (Jersey) Law 1991 (as amended) with registered number 90959)
(the "Issuer")
Notice regarding ETFS Leveraged Commodity Securities
Following recent falls in commodity prices generally, the Prices of ETFS Leveraged Commodity Securities ("Securities") have fallen towards their Principal Amounts of US$5.00 each or, in the case of the ETFS Leveraged Nickel Individual Securities ("LNIK"), the Price has fallen below its Principal Amount of US$5.00 to US$4.314 as at 16th October 2008. As a result of these falls in Price, the Issuer is preparing a circular to the holders of all classes of ETFS Leveraged Commodity Securities convening meetings for the purposes of seeking approval from Security Holders to reduce the Principal Amounts of each class of ETFS Leveraged Commodity Securities.
Prior to the proposed meetings of Security Holders the Issuer may, under Condition 7.18 of the Securities, suspend the right to Redeem any such Securities under Condition 7.1(a) (Settlement Pricing) whose Price falls below the Principal Amount. If this occurs, redemptions under Condition 7.1(b) (Agreed Pricing) will continue to occur normally. This procedure has been designed to ensure that all Security Holders who are able to redeem Securities, can each continue to receive a price for their Securities based on the relevant Commodity Index.
As the Price of LNIK has fallen below its Principal Amount of US$5.00, the right to Redeem such securities under Condition 7.1(a) (Settlement Pricing) has been suspended under Condition 7.18 until further notice. To enable normal Redemptions to continue all Redemptions under Agreed Pricing for LNIK will, unless otherwise agreed, be based on the settlement price of the Relevant Contract and the pricing formula as stated in the Prospectus. This will allow the creation and redemption of the Securities to continue unaffected. Accordingly the Issuer does not expect any disruption to trading in the ETFS Leveraged Commodity Securities.
The Issuer intends to terminate the temporary suspension of Redemption by Settlement Pricing once the Issuer has received approval from the Security Holders to reduce the Principal Amount as provided for in the circular to be issued in due course. The proposed meetings will not affect Security Holders of other Commodity Securities including Classic Commodity Securities, Forward Commodity Securities, and Short Commodity Securities.
Security Holders should note that the current circumstances are contemplated in the Prospectus, should there be significant falls in commodity prices and the relevant commodity indices. This notice bears no relation to the recent announcement about AIG Financial Products Corp. ("AIG-FP") and its ability to meet its obligations under the Prospectus. AIG-FP has met and is continuing to meet all its obligations.
A further announcement will be made in due course.
For further information, please contact
Christopher Osgood,
Computershare Investor Services (Channel Islands) Limited
Tel: +44 (0) 1534 825282
Fax: +44 (0) 1534 825335
E-mail address: [email protected]
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