SUBSCRIPTION FOR OR THE PURCHASE OF THE WARRANTS IS CONSIDERED BY THE ISSUER TO BE SUITABLE ONLY FOR INVESTORS WITH EXPERIENCE IN, OR ON THE ADVICE OF PROFESSIONAL ADVISERS WITH EXPERIENCE IN, OPTION TRANSACTIONS.  POTENTIAL INVESTORS SHOULD REACH AN INVESTMENT DECISION ONLY AFTER CAREFULLY CONSIDERING, WITH THEIR ADVISERS, THE SUITABILITY OF THE WARRANTS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, TAKING INTO ACCOUNT THE RISK FACTORS RELATING TO THE WARRANTS SET OUT BELOW.

1.1                Factors Affecting Warrant Value

The value at which a Warrant may be bought or sold on ASX is expected to be dependent upon such factors as the price at which the Shares that make up the Underlying Parcel are trading on ASX, the strike level of the Warrants, the Required Number of Warrants for a particular Series, the time remaining to expiry, interest rates and risks applicable to stock markets generally.

Investment in the Warrants is speculative.  The Warrants may be significantly less valuable on the Relevant Expiry Date or may expire worthless.  This means that Holders may either lose money or sustain a total loss on their investment.

Investors should note that the Warrants may terminate early, and the Relevant Expiry Date may be postponed, in the circumstances described in the relevant Offering Circular.  Postponement or early termination may affect the value of the Warrants and may result in a partial or total loss of the investment.

1.2                Performance by the Issuer and Guarantor of Obligations

The value of the Warrants depends on the ability of the Issuer to fulfil its obligations under the Terms on exercise, early termination or expiry, and the ability of the Guarantor to fulfil its obligations under the deed of guarantee (see clause 1.9).

Investors must make their own assessment of the ability of the Issuer to meet its obligations in respect of the Warrants and the ability of the Guarantor to meet its obligations under the deed of guarantee.  Nothing in this Offering Circular is, or may be relied upon as being, a representation as to any future event or a promise as to the future of the Issuer’s or Guarantor’s ability to perform their respective obligations.

1.3                Possible Illiquidity of Trading Market

Investors should be aware that there is no firm indication as to how the Warrants will trade in the secondary market.  Nor is there sufficient evidence as to whether that market will be liquid or illiquid.

The Issuer has arranged for its Broker to conduct market making activities in relation to the Warrants by the provision of bids and offers made in a spread around the prevailing market price to help ensure liquidity in the market for the Warrants.

1.4                General Market Risks

General movement in local and international stock markets, prevailing and anticipated economic conditions and interest rates, investor sentiment and general economic conditions could all affect the market price of Warrants (in the same way that they affect other investments).

Investors are warned that the price of the Warrants may fall in value as rapidly as it may rise and Holders may sustain a total loss of their investment.  Prospective purchasers should therefore ensure that they understand the nature of the Warrants and carefully study the risk factors set out in this Offering Circular before they invest in the Warrants.

1.5                Investment Decisions

The information in this Offering Circular is intended to provide investors and their professional advisers information they would reasonably require and reasonably expect to find for the purpose of making an informed assessment of the capacity of the Issuer to fulfil its obligations under the Warrants and the risks, rights and obligations associated with the Warrants.  It is impossible in a document of this type to take into account the investment objectives, financial situation and particular needs of each investor.  Accordingly, nothing on this Site should be construed as a recommendation by the Issuer or any associate of the Issuer or any other person concerning investment in the Warrants.

Readers should not rely on the Offering Circular other than in respect of those matters referred to above, and should not rely on it as the sole basis for any investment decision in relation to Warrants.

1.6                Exercise of Discretion by the Issuer

Investors should note that a number of provisions of the Terms confer discretions on the Issuer which could affect the value of the Warrants.  These include the powers to nominate Extraordinary Postponing Events and Extraordinary Termination Events, to determine whether rights offered have value and to calculate or modify the method of calculation of the Exercise Price or the nature of the Underlying Parcel.

Holders do not have the power to direct the Issuer concerning the exercise of any discretion.  However, in relation to many of these discretions, the Issuer may only exercise those discretions with the consent of ASX, unless that consent is unreasonably withheld or delayed.

The fact that Warrants may become significantly less valuable over their term and in certain circumstances automatically terminate or expire worthless, means that the purchaser of a Warrant may lose some or all of the purchase price paid for the Warrants.

1.7                Extraordinary Events

The Issuer may, with the consent of ASX, terminate the Warrants before their Relevant Expiry Date on the occurrence of an Extraordinary Event, which is held to be an Extraordinary Termination Event.

An Extraordinary Termination Event is an event which is beyond the reasonable control of the Issuer and which in the reasonable opinion of the Issuer has or will have a material adverse effect on its ability to perform its obligations or hedge its exposure with respect to the Warrants.  The Extraordinary Events are set out in the relevant Offering Circular.

If the Warrants terminate early, Holders will be entitled to receive the intrinsic value of the Warrants, which is calculated in accordance with the Business Rules.  See clause the relevant Offering Circular.

The Relevant Expiry Date may also be postponed for up to 10 Business Days if an Extraordinary Event has occurred and is continuing on the Relevant Expiry Date.  This is known as an Extraordinary Postponing Event.

1.8                Legislative Risks

A number of risks may exist and impact on a Holder of a Warrant as a result of Australian legislative regulation and tax law.  Prospective Holders should seek independent professional advice on the nature of these risks.

The acquisition and/or exercise of a Warrant may have implications for Holders under Chapter 6 of the Corporations Act, in particular those provisions that relate to an acquisition by a person of shares or other securities that would give rise to a relevant interest (as defined in the Corporations Act). 

The issues raised in the relevant Offering Circular in the context of warrants are complex, and are dependant on individual circumstances and the interpretation of the law in this area.  Holders should obtain their own legal advice on this issue.

The acquisition and/or exercise of a Warrant may also have implications for certain Holders under the provisions of the Foreign Acquisitions and Takeovers Act 1975 (Cth).  Potential Holders should obtain their own legal advice on this question.

1.9                National Guarantee Fund - not a Guarantor in all cases

Claims against the National Guarantee Fund may only be made in respect of secondary trading in Warrants between brokers on ASX and cannot be made in relation to the primary issue of Warrants by the Issuer.

The capacity of the Issuer to settle all outstanding Warrants is not guaranteed by ASX, the National Guarantee Fund or Options Clearing House.

1.10             Potential Conflicts of Interest

Companies in the Issuer group of companies and the Issuer itself may buy and sell Warrants, Shares and other securities relating to the Warrants or the Shares, either as principal or agent.  This trading may impact positively or negatively on the price at which the Warrants trade on ASX.

The rights of Holders against the Issuer are set out in the Terms.  The Issuer and its Broker are not in a fiduciary relationship with Holders.  Any profits earned and losses incurred by the Issuer and its Broker in their trading activities in Warrants will accrue entirely to them independent of the Issuer's obligations to Holders.

1.11             Suspension of Warrant Trading

Trading of Warrants on the stock market conducted by ASX may be halted or suspended by ASX.  This may occur whenever ASX deems such action appropriate in the interests of maintaining a fair and orderly market in Warrants or otherwise deems such action advisable in the public interest or to protect investors.  Matters that may be considered also include circumstances where the Issuer becomes unable or unwilling or fails to comply with the ASX Business Rules or if ASX in its absolute discretion thinks fit.

Except where it is determined to be an Extraordinary Termination Event, the Warrants will continue notwithstanding any delisting, withdrawal of trading status or suspension of the Warrants from ASX.

 

This outline of risks does not purport to disclose all of the risks or other relevant considerations relating to an investment in the Citi MLI.  The Citi MLI is considered by the Issuer to be suitable only for investors who understand and accept the risks involved. The Issuer recommends that you obtain independent financial advice before entering into the Citi MLI.

You should note that the Citi MLI is a speculative financial product and you should be aware that the return on the Citi MLI:

„      may be less than the return you could earn on other investments; and

„      may not necessarily reflect the return you would realise if you actually owned the Delivery Assets and received the distributions paid during the period.

2.1                 Factors affecting the value of the Citi MLI

The value of the Citi MLI is expected to depend upon such factors as the performance of the Reference Index, the volatility of the Reference Index, the amount of time remaining before the Maturity Date and the prevailing interest rates. In case of Early Maturity, your return may be reduced by reference to the costs incurred by the Issuer as a result.

2.2                 General Market Risks

The risk of movements in the Reference Index resulting from the general economic and political climate, general movements in local and international stock markets, prevailing and anticipated economic conditions, investor sentiment and interest rates and other events and factors outside the control of the Issuer could all affect the level of the Reference Index and the value of the Citi MLI.  These risks are generally applicable to most equity investments.

2.3                 Performance by the Issuer

The value of the Citi MLI depends on the ability of the Issuer to perform its obligations under the Terms.  These obligations are unsecured contractual obligations of the Issuer which will rank equally with the Issuer's other unsecured contractual obligations and debt other than liabilities mandatorily preferred by law.  You should make your own assessment of the ability of the Issuer to meet its obligations concerning the Citi MLI and its general credit worthiness.  The relevant PDS provides further information about the Issuer.

2.4                 Risk of Early Maturity

If an Early Maturity Event occurs, the Issuer may call an Early Maturity whereby Maturity will be brought forward from the full period to the Early Maturity Date nominated by the Issuer.  The Maturity process will occur and you may either take physical delivery of the Delivery Parcel (unless the Issuer advises that this is not possible) or receive a cash payment under the Agency Sale Arrangement of an equivalent value.  However the number of Delivery Assets or cash amount you receive will be determined by reference to the fair economic value of the Citi MLI at 5:00 p.m. Sydney time on the Early Maturity Date as determined by the Issuer.  In determining this value the Issuer may deduct any costs, losses or expenses that it incurs in relation to the Early Maturity.  This may result in you receiving an amount less than the Investment Amount because the capital protection will not apply.  The most you could receive back is the Maximum Capped Return (if one is specified).   This will depend on how the Reference Index has performed over the life of the Citi MLI.

The term "Early Maturity Event" is defined in the Terms of the relevant PDS.  This section is only intended to alert you to the possibility of an Early Maturity.  You should read the relevant PDS to fully understand your rights and obligations if there is an Early Maturity.

2.5                 Citi MLI is not transferable

The Citi MLI is unlisted, it is not transferable and the only way you can redeem your investment in the Citi MLI is to contact the Issuer and request an Early Maturity.  If you request an Early Maturity you may well receive an amount less than your original Investment Amount.  The most you could receive back is the Maximum Capped Return (if one is specified).  You should the relevant PDS to fully understand your rights and obligations if you request an Early Maturity.

2.6                 Adjustment Events and changes to the Terms

The Terms may be amended or varied if an Adjustment Event occurs or in certain other limited situations such as to comply with the law or correct an error or inconsistency in the Terms.  If this happens then the Issuer has very wide powers to make adjustments to the Terms (including adjusting any formulas or terms or replacing the Delivery Assets with other securities).  However, the Issuer will carry out the adjustment so as to put both you and the Issuer in substantially the same economic position as you and the Issuer would have been in had the Adjustment Event not occurred.  If this is not possible then there may be an Early Maturity. You should read the relevant PDS to fully understand your rights and obligations if an Adjustment Event occurs.

2.7                 Potential Conflicts of Interest

The Issuer and other Citigroup companies may conduct transactions as principal and as agent in various securities, including the Delivery Assets and the Reference Index.  These trading activities may affect (positively or negatively) the price at which the Delivery Assets trade or the level of the Reference Index at any point in time.

2.8                 Exercise of Discretion by the Issuer

Some provisions of the Terms confer discretions on the Issuer.  The exercise or non-exercise of these discretions could adversely affect the value of the Citi MLI.  As an investor, you do not have the power to direct the Issuer concerning the exercise of any discretion.  The discretions are set out in the Terms contained in the relevant PDS.